Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 27671 

Settlement Part where the issues are 

particularly complex even if specific 

dollar thresholds are not met? Should 

the Chief ALJ be able to adjust the dollar 

thresholds for cases eligible for 

mandatory settlement part processes 

based upon the Review Commission’s 

case load? 

7. Should cases be permitted to 

remain in mandatory settlement part 

proceedings for more than 18 months 

without the approval of the Chief ALJ? 

8. Should the parties be allowed to 

elect to not participate in a mandatory 

settlement part proceeding and, instead, 

request that the case proceed directly to 

a hearing on the merits? 

The Review Commission welcomes 

any other comments or suggestions 

regarding Settlement Part. 

Dated: May 1, 2012. 

Debra Hall, 

Acting Executive Director. 

[FR Doc. 2012–11080 Filed 5–10–12; 8:45 am] 

BILLING CODE 7600–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R09–OAR–2012–0345; FRL–9671–2] 

State of Hawaii; Regional Haze Federal 

Implementation Plan 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Announcement of public 

hearing. 

SUMMARY: EPA is announcing that 

public hearings will be held on May 31, 

2012 and June 1, 2012 for the proposed 

rule, ‘‘State of Hawaii; Regional Haze 

Federal Implementation Plan’’, which 

will be posted on EPA’s Web site by 

May 16, 2012. 

DATES: The public hearings will be held 

on May 31, 2012 and June 1, 2012. See 

SUPPLEMENTARY INFORMATION section for 

further details about the public 

hearings. 

ADDRESSES: See SUPPLEMENTARY

INFORMATION section for hearing 

locations. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions about the public 

hearings, please contact Gregory Nudd, 

EPA Region 9, 415–947–4107, 

nudd.gregory@epa.gov. If you are a 

person with a disability under the ADA 

and require a reasonable 

accommodation for this event, please 

contact Philip Kum at 

kum.philip@epa.gov or at (415) 947– 

3566 by May 16, 2012. 

SUPPLEMENTARY INFORMATION: Section 

169A of the Clean Air Act (CAA) 

establishes as a national goal the 

‘‘prevention of any future, and the 

remedying of any existing, impairment 

of visibility in mandatory Class I 

Federal areas which impairment results 

from manmade air pollution.’’ Hawaii 

has two Class I areas: Hawaii Volcanoes 

National Park on the Big Island and 

Haleakala National Park on Maui. 

Regional haze is visibility impairment 

caused by the cumulative air pollutant 

emissions from numerous sources over 

a wide geographic area. EPA’s proposed 

Regional Haze Federal Implementation 

Plan (FIP) for Hawaii will address the 

requirements of the CAA and EPA’s 

regulations regarding regional haze. The 

proposed rule, ‘‘State of Hawaii; 

Regional Haze Federal Implementation 

Plan’’, will be available by May 16, 2012 

on the following Web site: http:// 

www.epa.gov/region9/air/actions/ 

hawaii.html and will subsequently be 

published in the Federal Register. 

The proposed rule and information on 

which the proposed rule relies will also 

be available in the docket for this action. 

Generally, documents in the docket for 

this action will be available 

electronically at www.regulations.gov 

and in hard copy at EPA Region IX, 75 

Hawthorne Street San Francisco, 

California. While all documents in the 

docket are listed at 

www.regulations.gov, some information 

may be publicly available only at the 

hard copy location (e.g., copyrighted 

material, large maps), and some may not 

be publicly available in either location 

(e.g., CBI). To inspect the hard copy 

materials, please schedule an 

appointment during normal business 

hours with the contact listed in the FOR

FURTHER INFORMATION CONTACT section. 

Public hearings: EPA will hold two 

public hearings at the following dates, 

times and locations to accept oral and 

written comments into the record: 

Date: May 31, 2012. 

Time: Open House: 5:30–6:30 p.m. 

Public Hearing: 6:30–8:30 p.m. 

Location: The University of Hawaii, 

Maui College in the Pilina Multipurpose 

Room, 310 W. Kaahumanu Ave., 

Kahului, Hawaii 96732. 

Date: June 1, 2012. 

Time: Open House: 4:30–5:30 p.m. 

Public Hearing: 5:30–7:30 p.m. 

Location: Waiakea High School in the 

Cafeteria, 155 W. Kawili St., Hilo, 

Hawaii 96720. 

To provide opportunities for 

questions and discussion, EPA will hold 

open houses prior to the public 

hearings. During these open houses, 

EPA staff will be available to informally 

answer questions on our proposed 

action and this supplemental proposed 

rule. Any comments made to EPA staff 

during the open houses must still be 

provided formally in writing or orally 

during a public hearing in order to be 

considered in the record. 

The public hearings will provide the 

public with an opportunity to present 

data, views, or arguments concerning 

the proposed Regional Haze FIP for 

Hawaii. EPA may ask clarifying 

questions during the oral presentations, 

but will not respond to the 

presentations at that time. Written 

statements and supporting information 

submitted during the comment period 

will be considered with the same weight 

as any oral comments and supporting 

information presented at the public 

hearing. Please consult the proposed 

rule for guidance on how to submit 

written comments to EPA. 

At the public hearing, the hearing 

officer may limit the time available for 

each commenter to address the proposal 

to five minutes or less if the hearing 

officer determines it is appropriate. Any 

person may provide written or oral 

comments and data pertaining to our 

proposal at the public hearing. We will 

include verbatim transcripts, in English, 

of the hearing and written statements in 

the rulemaking docket. 

Dated: May 1, 2012. 

Elizabeth Adams, 

Acting Air Division Director, Region IX. 

[FR Doc. 2012–11426 Filed 5–10–12; 8:45 am] 

BILLING CODE 6560–50–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 438, 441, and 447 

[CMS–2370–P] 

RIN 0938–AQ63 

Medicaid Program; Payments for 

Services Furnished by Certain Primary 

Care Physicians and Charges for 

Vaccine Administration Under the 

Vaccines for Children Program 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

implement new requirements in 

sections 1902(a)(13), 1902(jj), 1932(f), 

and 1905(dd) of the Social Security Act, 

as amended by the Patient Protection 

and Affordable Care Act of 2010 (the 

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27672 Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 

Affordable Care Act). It implements 

Medicaid payment for primary care 

services furnished by certain physicians 

in calendar years (CYs) 2013 and 2014 

at rates not less than the Medicare rates 

in effect in those CYs or, if greater, the 

payment rates that would be applicable 

in those CYs using the CY 2009 

Medicare physician fee schedule 

conversion factor (CF). This minimum 

payment level applies to specified 

primary care services furnished by a 

physician with a specialty designation 

of family medicine, general internal 

medicine, or pediatric medicine, and 

also applies to services paid through 

Medicaid managed care plans. It would 

also provide for a 100 percent Federal 

matching rate for any increase in 

payment above the amounts that would 

be due for these services under the 

provisions of the State plan as of July 1, 

2009. In this proposed rule, we specify 

which services and types of physicians 

qualify for the minimum payment level 

in CYs 2013 and 2014, and the method 

for calculating the payment amount and 

any increase for which increased 

Federal funding is due. 

In addition, this proposed rule would 

update the interim regional maximum 

fees that providers may charge for the 

administration of pediatric vaccines to 

federally vaccine-eligible children 

under the Pediatric Immunization 

Distribution Program, more commonly 

known as the Vaccines for Children 

(VFC) program. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on June 11, 2012. 

ADDRESSES: In commenting, please refer 

to file code CMS–2370–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. 

Follow the ‘‘Submit a comment’’ 

instructions. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–2370–P, P.O. Box 8016, Baltimore, 

MD 21244–8016. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address ONLY: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–2370–P, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey 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.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786– 

7195 in advance to schedule your 

arrival with one of our staff members. 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

Submission of comments on 

paperwork requirements. You may 

submit comments on this document’s 

paperwork requirements by following 

the instructions at the end of the 

‘‘Collection of Information 

Requirements’’ section in this 

document. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Mary Cieslicki, (410) 786–4576, or 

Linda Tavener, (410) 786–3838, for 

issues related to payments for primary 

care physicians. 

Mary Beth Hance, 410–786–4299, for 

issues related to charges for the 

administration of pediatric vaccines. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http:// 

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 

8:30 a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

I. Executive Summary and Background 

A. Executive Summary 

1. Purpose 

This proposed rule implements new 

requirements in sections 1902(a)(13), 

1902(jj), 1905(dd) and 1932(f) of the 

Social Security Act requiring payment 

by State Medicaid agencies of at least 

the Medicare rates in effect in CYs 2013 

and 2014 or, if higher, the rate using the 

CY 2009 conversion factor (CF) for 

primary care services furnished by a 

physician with a specialty designation 

of family medicine, general internal 

medicine, or pediatric medicine. Also, 

this proposed rule implements the 

statutory payment provisions uniformly 

across all States, defines, for purposes of 

enhanced Federal match, eligible 

primary care physicians, identifies 

eligible primary care services, and 

specifies how the increased payment 

should be calculated. Finally, this 

proposed rule provides general 

guidelines for implementing the 

increased payment for primary care 

services delivered by managed care 

plans. 

This proposed rule also proposes 

updates to vaccine rates that have not 

been updated since the VFC program 

was established in 1994. We propose to 

update these rates due to inflation and 

we are proposing to use the Medicare 

Economic Index (MEI). 

2. Summary of the Major Provisions 

a. Payments to Physicians for Primary 

Care Services 

This proposed rule would implement 

Medicaid payment for primary care 

services furnished by certain physicians 

in calendar years (CYs) 2013 and 2014 

at rates not less than the Medicare rates 

in effect in those CYs or, if greater, the 

payment rates that would be applicable 

in those CYs using the CY 2009 

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Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 27673 

conversion factor (CF). It would also 

provide for a 100 percent Federal 

matching rate for any increase in 

payment above the amounts that would 

be due for these services under the 

provisions of the State plan as of July 1, 

2009. This proposed rule is necessary to 

promote access to primary care services 

in the Medicaid program before and 

during the expansion of coverage that 

begins in 2014. These proposals 

implement the Affordable Care Act. 

b. Vaccine Administration Under the 

Vaccines for Children (VFC) Program 

This proposed rule proposes to 

update the interim regional maximum 

fees that providers may charge for the 

administration of pediatric vaccines to 

federally vaccine-eligible children 

under the Pediatric Immunization 

Distribution Program, more commonly 

known as the Vaccines for Children 

(VFC) program. We are proposing to use 

the MEI which is a price index that is 

used by CMS to update Medicare 

physician payments. We believe the 

MEI is the best tool to update these rates 

because: (1) It reflects input price 

inflation faced by physicians inclusive 

of the time period when the national 

average was established in 1994, and (2) 

we believe that input prices associated 

with this specific type of physicianprovided service are consistent with 

overall input prices. The MEI was most 

recently updated at the end of 2011. 

3. Summary of the Costs and Benefits 

Provision description Total costs Total benefits 

Payments to Physicians for Primary Care Services.The overall economic impact of this proposed 

rule is an estimated $5.52 billion in CY 

2013 and $5.66 billion in CY 2014. In CY 

2013, the Federal cost is approximately 

$5.74 billion with $225 million in State savings. In CY 2014, the Federal cost is approximately $5.96 billion with $300 million in 

State savings. Of this amount, the aggregate economic impact, as a result of this 

proposed rule requiring States to reimburse 

specified physicians for vaccine administration at the lesser of the Medicare rate or 

the VFC regional maximum during CYs 

2013 and 2014, is estimated at an additional $970 million in Federal costs. The 

Federal costs for funding that increase, in 

State payments during CYs 2013 and 2014, 

are estimated at $490 million and $480 million, respectively. 

The overall benefit of this rule is the expected 

increase in provider participation by primary 

care physicians resulting in better access to 

primary and preventive health services by 

Medicaid beneficiaries. 

Increase in Vaccine for Children Program Maximum Ceiling.This rule raises the maximum rate that States 

could pay providers for the administration of 

vaccines under the VFC program in subsequent years after CY 2014. States are not 

anticipated to raise their VFC ceilings in 

2013 and 2014 because of the implementation of the primary care payment increase. 

The overall benefit of this provision is that it 

gives States the ability to increase their 

VFC vaccine administration rates. 

C. Background 

1. Payments to Physicians for Primary 

Care Services: Statutory and Regulatory 

Framework 

a. Improving Primary Care 

On March 23, 2010, the Patient 

Protection and Affordable Care Act 

(Pub. L. 111–148) was enacted and on 

March 30, 2010, the Health Care and 

Education Reconciliation Act of 2010 

(HCERA) (Pub. L. 111–152) was enacted; 

together they are known as the 

Affordable Care Act. This proposed rule 

would implement the new requirements 

in sections 1902(a)(13), 1902(jj), 1932(f), 

and 1905(dd) of the Act, as amended by 

the Affordable Care Act. Section 

1902(a)(13) of the Act requires payment 

by State Medicaid agencies of at least 

the Medicare rates in effect in calendar 

years (CYs) 2013 and 2014 or, if higher, 

the rate that would be applicable using 

the CY 2009 Medicare conversion factor 

(CF), for primary care services furnished 

by a physician with a specialty 

designation of family medicine, general 

internal medicine, or pediatric 

medicine. 

Primary care for any population is 

critical to ensuring continuity of care, as 

well as to providing necessary 

preventive care, which improves overall 

health and can reduce health care costs. 

The availability of primary care is 

particularly important for Medicaid 

enrollees to establish a regular source of 

care and to provide care to a population 

that is more prone to chronic health 

conditions that can be appropriately 

managed by primary care physicians. 

Primary care physicians provide 

services that are considered to be a core 

part of the Medicaid benefit package. 

Additionally, these physicians can 

perform the vital function of 

coordinating care, including specialty 

care. 

As we move towards CY 2014 and the 

expansion of Medicaid eligibility, it is 

critical that a sufficient number of 

primary care physicians participate in 

the program. Section 1902(a)(13) of the 

Act will encourage primary care 

physicians to participate in Medicaid by 

increasing payment rates. 

b. Medicaid Payment to Providers 

Section 1902(a)(30)(A) of the Act 

requires that Medicaid payments be 

consistent with efficiency, economy, 

and quality of care and be sufficient to 

enlist enough providers so that care and 

services are available under the plan at 

least to the extent that such care and 

services are available to the general 

population in the geographic area. In 

meeting these requirements, States have 

broad discretion in establishing and 

updating Medicaid service payment 

rates to primary care providers. For 

instance, many States reimburse based 

on the cost of providing the service, a 

review of the amount paid by 

commercial payers in the private 

market, or as a percentage of rates paid 

under the Medicare program for 

equivalent services. States may update 

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27674 Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 

rates based on specific trending factors 

such as the MEI or a Medicaid specific 

trend factor that incorporates a Statedetermined inflation adjustment rate. 

Increasingly, States are providing 

medical assistance through managed 

care plans under contracts with 

managed care organizations (MCOs) and 

other organized delivery systems, such 

as prepaid inpatient health plans 

(PIHPs) and prepaid ambulatory health 

plans (PAHPs). The contract between 

the State and the managed care plan 

requires the plan to provide access to 

and make payments to primary care 

physicians using the funds the State 

pays to the managed care plan. Indeed, 

according to the Medicaid and CHIP 

Payment and Access Commission 

(MACPAC), 49 million Medicaid 

beneficiaries receive care through some 

form of Medicaid managed care. 

Section 1902(a)(13)(C) of the Act 

requires that States pay a minimum 

payment amount for certain primary 

care services delivered by designated 

primary care physicians. Primary care 

services are defined in new section 

1902(jj) of the Act and include certain 

specified procedure codes for evaluation 

and management (E&M) services and 

certain vaccine administration codes. 

Under this provision, States must 

reimburse at least as much as the 

Medicare physician fee schedule 

(MPFS) rate in CYs 2013 and 2014 or, 

if greater, the payment rate that would 

apply using the CY 2009 Medicare CF. 

The requirement for payment at the 

Medicare rate extends to primary care 

services paid on a fee-for-service (FFS) 

basis, as well as to those paid by 

Medicaid managed care plans. This 

proposed regulation would specify 

which services and physicians qualify 

for the increased payment amount in 

CYs 2013 and 2014, and the method for 

calculating that payment. 

Section 1905(dd) of the Act provides 

for a higher FMAP for the required 

increase in physician payment. For FFS 

expenditures, the FMAP rate will be 100 

percent of the difference between the 

Medicaid State plan rate in effect on 

July 1, 2009, and the amount required 

to be paid under section 1902(a)(13)(C) 

of the Act. That means that States will 

be fully reimbursed for these increased 

payments by the Federal government. 

One goal of this proposed rule is to 

define the payment provisions further 

so that States may uniformly identify 

the rate differential. Specifically, we 

propose a payment methodology that 

would take into account potential 

changes in Medicare rates between CYs 

2013 and 2014 and CY 2009 that is 

independent of the legislatively 

required payment reductions caused by 

Medicare’s sustainable growth rate 

mechanism. Furthermore, this proposed 

rule would address Medicare’s use of 

different fee schedules that take into 

account the site of service (for example, 

physician’s office, or outpatient 

department of a hospital) and 

geographical location of the provider. 

The Affordable Care Act amended 

section 1932(f) of the Act to clarify that 

States must incorporate the requirement 

for increased payment to primary care 

providers into contracts with managed 

care organizations. We propose general 

guidelines for States to follow when 

identifying the amounts by which MCOs 

must increase existing payments to 

primary care providers, and any 

additional capitation costs to the State 

attributable to such required increases 

in existing payments. We are also 

proposing to extend this same treatment 

to PIHPs and PAHPs through 

regulations at part 438, to the extent that 

primary care provider payments are 

made by these entities. 

We seek comments on how best to 

implement through regulation the 

requirement that managed care plans 

(whether capitated, partially capitated 

or on a FFS basis) pay primary care 

providers at the Medicare rate for 

primary care services, consistent with 

those paid on a FFS basis. Additionally, 

we seek comments from States and 

others on the best way to adequately 

identify the increase in managed care 

capitation payments made by the State 

that is attributable to the increased 

provider payment, for the purpose of 

claiming 100 percent FFP. We are 

particularly interested in ensuring that 

primary care physicians receive the 

benefit of the increased payment. 

Section 1932(f) of the Act, as amended 

by the Affordable Care Act, requires that 

the managed care contracts pay 

providers at the applicable Medicare 

rate levels. We propose to review 

managed care contracts to ensure that 

this requirement is imposed on 

managed care plans by the State. We 

also propose to require managed care 

plans to report to the State the payments 

made to physicians under this provision 

to justify any adjustments to the 

capitation rates paid by the State under 

the contract. In proposing this approach, 

we are mindful of balancing the need for 

adequate documentation of the payment 

with the administrative burden it places 

on States and managed care plans. We 

are requesting comment on these 

provisions and additional suggestions 

on how to ensure that managed care 

plans provide the necessary data to the 

State, as well as how to ensure and 

monitor that managed care plans 

appropriately pass on to physicians the 

portion of the increased capitation rate 

that is attributable to the primary care 

rate increase. 

This proposed rule also addresses 

identification of the rate differential 

eligible for 100 percent Federal 

matching funds for vaccine 

administration, as set forth in section 

1905(dd) of the Act. In 2011, the vaccine 

administration billing codes were 

changed so it is not possible to track the 

Medicaid State plan rate in CY 2009 

directly to the rates applicable in CYs 

2013 and 2014. We are requesting 

comment on our proposal for imputing 

the CY 2009 rate. 

c. Medicare Payment to Primary Care 

Providers 

Medicare provides health insurance 

coverage to people who are aged 65 and 

over, or who meet other special criteria, 

under title XVIII of the Act. For 

institutional care, such as hospital and 

nursing home care, Medicare makes 

payments to providers using prospective 

payment systems. Payment for 

physicians’ services under Medicare is 

based on the MPFS. The MPFS assigns 

relative value units (RVUs) for each 

procedure, as well as practice cost 

indices (GPCIs) for geographic 

variations in payments, and a global CF, 

which converts RVUs into dollars. 

Individual fee schedule amounts for the 

MPFS are the product of the geographic 

adjustment, RVUs, and CF. Site of 

service (for example, physician office or 

outpatient hospital) is reflected as an 

adjustment to the RVUs. We generally 

issue the MPFS final rule for the 

subsequent calendar year on or before 

November 1st each year. The MPFS 

final rule includes the RVUs and CF for 

the upcoming calendar year, which 

permits the calculation of rates. Updates 

may occur throughout the year, but 

normally occur quarterly. 

2. Vaccine Administration Under the 

Vaccines for Children (VFC) Program 

The Omnibus Budget Reconciliation 

Act of 1993 (OBRA 1993), (Pub. L. 103– 

66), created the Vaccines for Children 

(VFC) Program), which became effective 

October 1, 1994. Section 13631 of OBRA 

1993 added section 1902(a)(62) to the 

Act to require that States provide for a 

program for the purchase and 

distribution of pediatric vaccines to 

program-registered providers for the 

immunization of vaccine-eligible 

children in accordance with section 

1928 of the Act. Section 1928 of the Act 

requires each State to establish a VFC 

Program (which may be administered by 

the State Department of Health) under 

which certain specified groups of 

children are entitled to receive qualified 

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pediatric immunizations without charge 

for the cost of the vaccine. 

Under the VFC Program, a provider, 

in administering a qualified pediatric 

vaccine to a federally vaccine-eligible 

child, may not impose a charge for the 

cost of the vaccine. Section 

1928(c)(2)(C)(ii) of the Act allows a 

provider to impose a fee for the 

administration of a qualified pediatric 

vaccine as long as the fee, in the case 

of a federally vaccine-eligible child, 

does not exceed the costs of such 

administration (as determined by the 

Secretary based on actual regional costs 

for such administration). However, a 

provider may not deny administration 

of a qualified pediatric vaccine to a 

vaccine-eligible child due to the 

inability of the child’s parents or legal 

guardian to pay the administration fee. 

II. Provisions of the Proposed 

Regulation 

A. Payments to Physicians for Primary 

Care Services 

1. Primary Care Services Furnished by 

Physicians With Specified Specialty and 

Subspecialty (§ 447.400) 

a. Specified Specialties and 

Subspecialties 

Section 1902(a)(13)(C) of the Act 

specifies that physicians with a 

specialty designation of family 

medicine, general internal medicine, 

and pediatric medicine qualify as 

primary care providers for purposes of 

increased payment. This proposed rule 

provides that services provided by 

subspecialists related to the primary 

care specialists designated in the statute 

would also qualify for higher payment. 

These subspecialists would be 

recognized in accordance with the 

American Board of Medical Specialties 

designations. For example, a pediatric 

cardiologist would qualify for payment 

if he or she rendered one of the 

specified primary care services by virtue 

of that physician’s subspecialty within 

the qualifying specialty of internal 

medicine. Additionally, this proposed 

rule would specify a method for States 

to use in identifying practitioners who 

may receive the increased payment. 

The inclusion of subspecialists is 

based on three factors. We first 

considered that many primary care 

subspecialists render the primary care 

services specified in this rule. 

Stakeholders, including physicians, 

States, and independent policy makers 

strongly emphasized this point in their 

engagement with CMS on this proposed 

rule. Many stressed the importance of 

subspecialists, particularly pediatric 

subspecialists, in the provision of 

primary care and strongly recommended 

that they be eligible for the higher 

payment. Additionally, we see no 

justification for including only 

subspecialists in one specialty 

designation and, therefore, we are 

proposing that all subspecialists within 

the three specialty designations be 

eligible for increased payment for 

primary care services. Finally, we 

believe the statute provides the latitude 

to include related subspecialists within 

these specialty designations. 

Therefore, we are proposing that all 

subspecialists recognized by the 

American Board of Medical Specialties 

within the three specialty designations 

be eligible for increased payment for 

primary care services. That is, we 

propose that all subspecialists within 

the specialty designations of family 

medicine, general internal medicine, 

and pediatric medicine as recognized by 

the American Board of Medical 

Specialties be eligible for increased 

payment. In this rule, we propose to 

specify how States would identify the 

specialists and subspecialists eligible for 

increased payment. Identification of 

eligible physicians is critical to ensure 

that only specified physicians receive 

increased payment. 

Under our proposal, States would be 

required to establish a system to require 

physicians to identify to the Medicaid 

agency their specialty or subspecialty 

before an increased payment is made. 

For program integrity purposes, the 

State will be required to confirm the 

self-attestation of the physician before 

paying claims from that provider at the 

higher Medicare rate. We propose that 

this be done either by verifying that the 

physician is Board certified in an 

eligible specialty or subspecialty or 

through a review of physician’s practice 

characteristics. 

Specifically, for a physician who 

attests that he or she is an eligible 

primary care specialist or subspecialist 

but who is not Board certified 

(including those who are Board-eligible, 

but not certified), a review of the 

physician’s billing history must be 

performed by the Medicaid agency. We 

are proposing that at least 60 percent of 

the codes billed by the physician for all 

of CY 2012 must be for the E&M codes 

and vaccine administration codes 

specified in this regulation. For a new 

physician who enrolls during either CY 

2013 or CY 2014 and who attests that he 

or she is within one of the eligible 

specialties or subspecialties and who is 

not Board certified, we propose that 

following the end of the CY in which 

enrollment occurs, the State would 

review the physician’s billing history to 

confirm that 60 percent of codes billed 

during the CY of enrollment were for 

primary care services eligible for 

payment under sections 1902(a)(13)(C) 

and 1902(jj) of the Act. 

To summarize, we would not limit 

specified providers to physicians who 

are Board certified. States would be 

required to verify the eligibility of nonBoard certified physicians through a 

review of the physician’s practice 

characteristics. 

We developed this proposal for the 

use of a supporting history of codes 

billed to qualify physicians for 

increased payment after reviewing the 

statutory requirements for the Medicare 

Incentive Payments for Primary Care 

Services payments authorized by 

section 5501(a) of the Affordable Care 

Act, which amended section 1833 of the 

Act. That provision specifically requires 

that primary care services account for at 

least 60 percent of the allowed charges 

billed by a practitioner for services to be 

eligible for increased payment. We 

propose that the same standard be 

applied to the Medicaid payments 

under section 1902(a)(13)(C) of the Act 

although we propose that verification 

would be based on the number of codes 

billed for the specified primary care 

services, rather than charges. The use of 

billing codes rather than allowed 

charges helps to assure that physicians 

providing a certain volume of primary 

care services are uniformly recognized 

for higher payment across States, 

regardless of variations in service 

charges. 

We are seeking comment on whether 

60 percent or some other percentage 

threshold would be more appropriate to 

determine whether a non Board certified 

physician qualifies for increased 

payment. 

In developing the overall 

requirements for verification of 

physician self-attestation, we 

considered that there are no pre-existing 

Federal Medicaid requirements 

concerning provider designation of a 

specialty or subspecialty. Because State 

practices vary on recognizing specialty 

or subspecialty designations for 

different purposes, reliance solely on 

self-attestation would result in a lack of 

uniformity in the application of 

minimum payment levels. Selfattestation alone would not provide an 

objective and auditable standard to 

document that a provider is one of the 

types of primary care physicians 

designated in statute. For this reason, 

we believe imposing the requirement for 

either Board certification in a 

nationally-recognized specialty or 

subspecialty or a supporting history of 

codes billed using the Medicare 

standard is merited. 

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When making a payment, the State 

would have the choice of initially 

reimbursing a newly enrolled physician 

at the Medicare rate or the Medicaid 

State plan rate used for services 

provided by physicians who do not 

qualify for the increased payment. If the 

State chooses to reimburse a physician 

initially at the higher Medicare rate and 

later finds through the review of codes 

billed that the physician did not qualify, 

increased payments to which the 

provider was not entitled under the 

State plan would be considered as 

overpayments. Conversely, the State 

could choose to reimburse the newly 

enrolled physician at the Medicaid State 

plan rate applicable to services provided 

by physicians who do not qualify for 

increased payment, and then make 

supplemental payments promptly upon 

determining qualification for the 

increased payments. 

We are soliciting comments on 

whether the proposed timeframes, or 

something else, for establishing a 

supporting history of codes billed for a 

physician who is not Board certified is 

appropriate. We are attempting to 

minimize any implementation burden 

while also ensuring that proper audit 

controls are in place to prevent 

inappropriate application of this 

provision. 

b. Furnished by a Specified Physician 

Section 1902(a)(13)(c)of the Act 

requires increased payment for 

‘‘primary care services furnished in CYs 

2013 and 2014 by a physician with a 

primary specialty designation of family 

medicine, general internal medicine, or 

pediatric medicine.’’ This regulation 

would specify that the increased 

payment applies only for services under 

the ‘‘physicians’ services’’ benefit at 

section 1905(a)(5)(A) of the Act and in 

regulations at § 440.50. 

Increased payment would not be 

available for services provided by a 

physician delivering services under any 

other benefit under section 1905(a) of 

the Act such as, but not limited to, the 

FQHC or RHC benefits because, in those 

instances, payment is made on a facility 

basis and is not specific to the 

physician’s services. Section 

1902(a)(13)(c) of the Act requires 

payment ‘‘for primary care 

services* * * furnished by a physician 

with a primary specialty designation of 

family medicine, general internal 

medicine, or pediatric medicine at a rate 

no less than 100 percent of the payment 

rate that applies to such services and 

physicians under Part B of Title XVIII.’’ 

Therefore, we believe that the statute 

limits payment to physicians who, if 

Medicare providers, would be 

reimbursed using the MPFS. The MPFS 

is not used to reimburse physicians in 

settings such as FQHCs or RHCs; 

therefore, we believe physicians 

delivering primary care services at 

FQHCs and RHCs are not eligible for 

increased payments under section 

1902(a)(13) of the Act. Furthermore, we 

note that the Medicaid statute already 

provides a payment methodology for 

FQHCs and RHCs that is designed to 

reimburse those providers at cost. 

In specifying that payment is made for 

qualified primary care services under 

the physicians’ services benefit at 

§ 440.50, the increased payment for 

primary care services would be required 

for services furnished ‘‘by or under the 

personal supervision’’ of a physician 

who is one of the primary care specialty 

or subspecialty types designated in the 

regulation. In Medicaid, many primary 

care physician services are actually 

furnished under the personal 

supervision of a physician by 

nonphysician practitioners, such as 

nurse practitioners and physician 

assistants. Such services are billed 

under the supervising physician’s 

program enrollment number and are 

treated in both Medicare and Medicaid 

as services of the supervising physician. 

Consistent with that treatment, we 

propose that primary care services 

would be paid at the higher rates if 

properly billed under the provider 

number of a physician who is enrolled 

as one of the specified primary care 

specialists or subspecialists, regardless 

of whether furnished by the physician 

directly, or under the physician’s 

personal supervision. This would align 

with Medicaid’s longstanding practice 

in providing physician services, as well 

as Medicare’s Part B FFS payment 

methodology for professional services. 

Additionally, this policy would 

recognize the important role that 

nonphysician practitioners working 

under the supervision of physicians 

have in the delivery of primary care 

services. 

c. Eligible Primary Care Services 

(§ 447.400(b)) 

We propose that Healthcare Common 

Procedure Coding System (HCPCS) E&M 

codes 99201 through 99499 and vaccine 

administration codes 90460, 90461, 

90471, 90472, 90473 and 90474 or their 

successors would be eligible for higher 

payment and FFP. These codes are 

specified by the statute and include 

those primary care E&M codes not 

reimbursed by Medicare. 

We believe that non-Medicare covered 

primary care services should be 

included because these services 

represent a core component of services 

commonly delivered in the Medicaid 

program. We reviewed Medicaid 

payment data from 2007, 2008, and 

2009 for these services as a percentage 

of primary care expenditures, and found 

that they represent 6 percent of primary 

care payments (as distinguished from 

service volume). We believe this 

percentage warrants the inclusion of 

these non-Medicare reimbursed codes to 

achieve the purpose of encouraging 

primary care providers to serve the 

Medicaid population. 

Where there are differences in codes 

reimbursed by Medicaid and Medicare 

we attribute this mostly to the fact that 

children represent a population not 

typically served by the Medicare 

program. As a result, the scope of 

primary care services is not equivalent 

between the two programs. We believe 

that the statute provides the latitude to 

include codes for which the Medicare 

program sets and publishes RVUs, even 

if Medicare payment is not actually 

made for the service. 

Specifically, we are proposing to 

include as primary care services the 

following E&M codes that are not 

reimbursed by Medicare: 

• New Patient/Initial Comprehensive 

Preventive Medicine—codes 99381 

through 99387; 

• Established Patient/Periodic 

Comprehensive Preventive Medicine— 

codes 99391 through 99397; 

• Counseling Risk Factor Reduction 

and Behavior Change Intervention— 

codes 99401 through 99404, 99408, 

99409, 99411, 99412, 99420 and 99429; 

• E&M/Non Face-to-Face physician 

Service—codes 99441 through 99444. 

2. Amount of Required Minimum 

Payments (§ 447.405) 

Section 1902(a)(13)(C) of the Act 

requires payment not less than the 

amount that applies under the MPFS in 

CYs 2013 and 2014 or, if greater, the 

payment rate that would be applicable 

if the 2009 CF were used to calculate the 

MPFS. 

a. Use of Fee Schedule Amount 

Applicable to the Geographic Location 

of Service 

We are proposing that States be 

required to use the MPFS rate 

applicable to the site of service and 

geographic location of the service at 

issue. The Medicare Part B rates vary by 

geographic location and site of service. 

For example, rates are higher for 

services provided in an office setting as 

opposed to the outpatient hospital 

setting. We propose that States would be 

required to use the MPFS payment 

amounts applicable to the site of service 

and geographic location because we 

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believe these are integral to the MPFS 

payment system. Individual fee 

schedule amounts for the MPFS are the 

product of the geographic adjustment, 

RVUs, and CF that converts adjusted 

RVUs into dollar amounts. Site of 

service is reflected as an adjustment to 

the RVUs used to set the rate. 

We are proposing that States be 

required to use the MPFS as published 

by CMS. Medicare primary care 

incentive payments made pursuant to 

section 5501 of the Affordable Care Act, 

which amended section 1833 of the Act, 

would not be included. Section 5501(a) 

provides for incentive payments for a 

subset of the codes covered by this 

regulation. The payments are not made 

as increases in fee schedule amounts 

and are not reflected in the MPFS. 

b. Payment for Services Unique to 

Medicaid 

For services reimbursed by Medicaid 

but not Medicare, we propose that 

payment would be made under a fee 

schedule developed by CMS and issued 

prior to the beginning of CYs 2013 and 

2014. We propose that rates for nonMedicare reimbursed services would be 

established using the Medicare CF in 

effect in CYs 2013 and 2014 (or the CY 

2009 CF, if higher) and the RVUs 

recommended by the American Medical 

Association’s (AMA) Specialty Society 

Relative Value Update Committee (RUC) 

and published by CMS for CYs 2013 and 

2014. We are specifically seeking 

comments from States and others on the 

most appropriate way to set payment 

rates for services not reimbursed by 

Medicare. 

c. Updates to Medicare Part B Fee 

Schedule 

We recognize the potential for 

multiple updates to the MPFS in CYs 

2013 and 2014. Those rates are 

published by CMS on or before 

November 1st of the preceding calendar 

year, but are subject to periodic 

adjustments or updates throughout the 

calendar year. In addition, the Medicare 

Part B rates vary by geographic location 

and site of service. 

We propose to permit States the 

option of complying with the 

requirements of section 1902(a)(13)(C) 

of the Act by either adopting annual 

rates or by using a methodology to 

update rates to reflect changes made by 

Medicare during the year. That is, States 

could adopt the MPFS in effect at the 

beginning of CYs 2013 and 2014 (or, if 

the CY 2009 CF is higher, the CY 2013 

or CY 2014 RVUs multiplied by the CY 

2009 MPFS CF), and apply those rates 

throughout the applicable calendar year 

without adjustments or updates. Using 

this methodology, mid-year updates 

made to the MPFS during the respective 

calendar year would not be reflected in 

Medicaid payments. Alternatively, a 

State could elect to adjust Medicaid 

payments to reflect mid-year updates 

made to the MPFS, but the State’s 

methodology would have to specify the 

timing for such adjustments. 

In consulting with State Medicaid 

agencies and other stakeholders, we 

were urged not to require multiple rate 

adjustments based on fluctuations in the 

MPFS, but to identify the MPFS for each 

year as of a single point in time. That 

annual fee schedule would serve as the 

basis of the rates paid by Medicaid 

during each of the 2 years that section 

1902(a)(13)(C) of the Act is in effect. 

Based on the feedback, we propose 

giving States the choice to apply or not 

apply mid-year updates. 

3. State Plan Requirements (§ 447.410) 

Under the proposed rule, States 

would be required to submit a State 

plan amendment (SPA) to reflect the fee 

schedule rate increases for eligible 

primary care physicians under section 

1902(a)(13)(A) of the Act. The purpose 

of this proposed requirement is to 

assure that when States make the 

increased reimbursement to physicians, 

they have State plan authority to do so 

and they have notified physicians of the 

change in reimbursement as required by 

Federal regulations. 

4. Availability of Federal Financial 

Participation (FFP) (§ 447.415) 

Section 1905(dd) of the Act allows 

States to receive 100 percent FFP for 

expenditures equal to the difference 

between the Medicaid State plan rate for 

primary care services in effect on July 1, 

2009, and the Medicare rates in effect in 

CYs 2013 and 2014 or, if greater, the 

payment rate that would be applicable 

using the CY 2009 Medicare CF. To 

claim the enhanced Federal match, 

States must make payments to specified 

physicians at the appropriate MPFS rate 

and must develop a method of 

identifying both the rate differential and 

eligible physicians for services 

reimbursed on an FFS for service basis 

and through managed care plans. States 

must be able to document the difference 

between the July 1, 2009 Medicaid rate 

and the applicable Medicare rate for 

specified providers that is claimable at 

the 100 percent matching rate. This 

requirement applies also to services 

provided to individuals eligible for both 

Medicaid and Medicare. This means 

that increased FFP will be available also 

for higher Medicaid payments for 

Medicare cost sharing for individuals 

who are eligible for both programs. 

a. FFP in Payments for Individuals 

Eligible for Both Medicare and Medicaid 

When a service is provided to an 

individual who is eligible for Medicare 

and Medicaid, Medicare reimburses the 

physician 80 percent of its fee schedule 

rate while Medicaid pays the remaining 

cost. Currently, States have two options 

for such payments consistent with 

section 1902(n) of the Act. A State may 

pay the provider the full amount 

necessary to result in aggregate payment 

to the provider equal to the MPFS rate 

(the full Medicare cost sharing amount), 

or only the amount (if any) to result in 

aggregate payment equal to the State’s 

Medicaid rate. For example, under the 

second option, if the Medicare allowed 

amount is $100 and the Medicaid rate 

is $75, then Medicare pays $80 and 

there is no additional amount paid by 

Medicaid. Historically, most States have 

chosen to pay providers only up to the 

lower Medicaid rate. 

In CYs 2013 and 2014, the Medicaid 

rate for primary care services by the 

specified physicians will equal the 

Medicare rate. As a result, these 

physicians should receive payment up 

to the full Medicare rate for primary 

care services and 100 percent FFP will 

be available for the full amount of the 

Medicare cost sharing amount that 

exceeds the amount that would have 

been payable under the State plan in 

effect on July 1, 2009. 

b. Identifying the July 1, 2009 Payment 

Rate 

For the purpose of identifying the 

differential between the Medicaid rate 

and the Medicare rate, we propose to 

define the Medicaid ‘‘rate’’ under the 

approved Medicaid State plan as the 

final rate paid to a provider inclusive of 

all supplemental or increased payments 

paid to that provider. For example, 

many States currently pay physicians 

affiliated with academic medical centers 

the Medicaid State plan rate plus a 

supplemental amount that together 

equal the average amount paid by 

commercial third party payers. 

Therefore, in calculating the rate 

differential, these States would 

determine the CY 2009 rate inclusive of 

any supplemental payment. 

c. Federal Funding for Increased 

Payments for Vaccine Administration 

There are a number of factors affecting 

the identification of the cost of vaccine 

administration eligible for 100 percent 

FFP. They include the following issues: 

• The structure of the billing codes 

for vaccine administration changed in 

2011 such that four of the codes used in 

2009 were replaced by two codes. 

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• Some States did not use the 

designated billing codes in effect in 

2009. 

• Prior to CY 2011, billing codes for 

vaccine administration did not permit 

payment for additional vaccine/toxoid 

components. 

• Vaccines for Children (VFC) 

program requirements do not permit 

payment for each vaccine/toxoid 

component administered and limit 

provider charges to the regional VFC 

ceiling amount. 

Prior to CY 2011 vaccine 

administration billing codes did not 

permit additional vaccine 

administration payments for vaccines 

with more than one vaccine/toxoid 

component. All providers, including 

those participating in the VFC program, 

received one payment per vaccine 

regardless of the number of vaccine/ 

toxoid components. In this rule, we 

clarify that qualifying physicians, 

excluding those participating in the VFC 

program, must receive additional 

payments during CYs 2013 and 2014 for 

vaccines with multiple vaccine/toxoid 

components administered to Medicaid 

beneficiaries. 

The vaccine administration billing 

codes recognized for reimbursement 

under the statute are: 90465, 90466, 

90567, 90568, 90471, 90472, 90473 and 

90474 or their successor codes. In 2011, 

the coding structure for vaccine 

administration changed such that four 

pediatric billing codes specified in 

section 1902(jj) of the Act (90465, 

90466, 90767, and 90468) were replaced 

by just two billing codes (90460 and 

90461). Moreover, the four deleted 

codes represented vaccine 

administrations by various routes (for 

example, intranasal vs. injectable) to 

children under age 8. However, new 

code 90460 represents the initial 

vaccine/toxoid administered through all 

routes to children under 18 while code 

90461 represents additional vaccines/ 

toxoids administered. As a result, States 

will not be able to identify the rate 

differential by comparing payments for 

the codes used in CY 2009 to those in 

use in CYs 2013 and 2014. 

IMMUNIZATION CODES BEFORE AND

AFTER 2011 

Prior to 2011 Effective 2011 

90465, 90466, 90467, 90468 90460, 90461 

90471 .................................... 90471 

90472 .................................... 90472 

90473 .................................... 90473 

90474 .................................... 90474 

We propose that the State impute the 

CY 2009 rate for code 90460 based on 

the average payment amount for the 

deleted codes weighted by service 

volume. That is, each of the four CY 

2009 rates for vaccine administration 

would be multiplied by their respective 

percentages of service volume and then 

added to determine one payment 

amount as demonstrated in the 

following example: 

• 90465 = $10 × 0.50 service volume 

= $5.00 

• 90466 = $10 × 0.10 service volume 

= $1.00 

• 90467 = $8 × 0.30 service volume = 

$2.40 

• 90468 = $8 × 0.10 service volume = 

0.80 

• Total cost equals $9.20 for the new, 

single code, 90460. 

Code 90461 represents payment for 

the administration of additional 

vaccine/toxoid components in a 

vaccine. Code 90461 is an add-on code 

that cannot be used without code 90460. 

Because there were only single 

payments for vaccines prior to 2011, we 

believe the rate for code 90461 should 

be $0. We believe that this is an 

equitable method of setting the 2009 

Medicaid base for code 90460, but 

welcome comments. For VFC providers, 

if the rate paid in July 2009 was lower 

than the regular Medicaid State plan 

administration fee for non-VFC 

providers, then the rate for VFC 

providers should be used as the 2009 

base for code 90460. The majority of 

vaccines administered to Medicaideligible children under the age of 18 are 

administered as part of the Vaccines for 

Children (VFC) program. Section 

1928(c)(2)(ii) of the Act provides that 

administration fees for vaccines 

provided under the VFC program cannot 

exceed the cost of administration as 

determined by the Secretary for that 

program. An additional concern for VFC 

vaccines is that, under the terms of the 

VFC program, providers can still only 

bill a flat fee per vaccine given by 

injection or by intranasal or oral routes, 

regardless of the number of vaccines/ 

toxoid components, and must use only 

code 90460. In order to permit providers 

participating in the VFC program to 

benefit from the provisions of the 

Affordable Care Act, this rule proposes 

that States be required to reimburse VFC 

providers at the lesser of the 2013 and 

2014 Medicare rates or the maximum 

regional VFC amount in those years. 

States should qualify for 100% FFP for 

these increased reimbursements. This 

policy is consistent with Medicare 

which limits provider payment to the 

lesser of the fee schedule amount or 

provider charges, since VFC provider 

charges are limited to the regional 

maximum administration fee. Since the 

VFC statute prohibits payment for 

additional vaccines/toxoids, VFC 

providers would only receive payment 

for administration fees billed using code 

90460. We invite comment on whether 

these proposed provisions give 

sufficient effect to the legislative intent 

to increase provider payments to 

Medicare levels, or whether we should 

instead adopt policies that we describe 

below as alternatives considered in 

developing this proposed rule. 

In proposing a method to determine 

the CY 2009 rate for code 90460, our 

goal is to identify a uniform 

methodology that is not 

administratively burdensome. We are 

seeking comments on this proposal and 

encourage States and other stakeholders 

to provide additional options for 

identifying the rate differential. 

An additional issue related to the 

changes made by the Affordable Care 

Act for vaccine administration is that, in 

CY 2009, some States did not reimburse 

providers using the designated vaccine 

administration billing codes. Rather, 

some States paid providers on the basis 

of non standard billing codes developed 

for the purpose of identifying the type 

of vaccine being administered. In 

instances where both the vaccine and 

administration fee were billed using the 

vaccine code, States will be required to 

identify the CY 2009 payment for 

vaccine administration separate from 

the vaccine itself. 

5. Primary Care Service Payments Made 

by Managed Care Plans, and Enhanced 

Federal Match (§ 438.6 and § 438.804) 

As amended by the Affordable Care 

Act, section 1932(f) of the Act requires 

that the managed care plans pay 

physicians at the applicable Medicare 

rates. We propose to implement the 

managed care requirements through a 

State-by-State review of managed care 

contracts and applicable procedures. We 

will review managed care contracts to 

ensure that they— 

• Provide for payment at the 

minimum Medicare primary care 

payment levels; 

• Require that eligible physicians 

receive direct benefit of the payment 

increase for each of the primary care 

services specified in this rule. This 

requirement must be met regardless of 

whether a physician is salaried, or 

receives a fee for service or capitated 

payment. We emphasize that increased 

payment must correspond directly to 

the volume and payment amounts 

associated with the primary care 

services specified in this rule; 

• Require that all information needed 

to adequately document expenditures 

eligible for 100 percent FFP is reported 

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by MCOs, PIHPs, and PAHPs to the 

States which, in turn, will report these 

data to CMS; and 

• Specify that States must receive 

from MCOs, PIHPs and PHAPs data on 

primary care services which qualify for 

payment under this rule. The managed 

care reporting requirements would 

ensure that States have data on 

increased provider payments necessary 

to justify any adjustments to the 

capitation rates paid by the State under 

the contract. 

Additionally, we will review each 

State’s proposed methodology for 

identifying the discrete amount paid for 

each of the eligible primary care 

services that qualifies for 100 percent 

FFP. Both the managed care contracts 

and the State’s methodology for 

identifying payment amounts made for 

each primary care services must be 

submitted to CMS for review prior to the 

start of CY 2013. 

We acknowledge the diversity of 

payment arrangements between 

managed care plans and primary care 

physicians, and we will not require that 

managed care plans modify the terms of 

their payments to eligible primary care 

physicians beyond the increase in 

payments for primary care services 

required by the statute. 

In proposing this approach, we are 

mindful of balancing the need for 

adequate documentation of the payment 

with the administrative burden it places 

on States and managed care plans. We 

are requesting comment on these 

provisions and additional suggestions 

on how to ensure that managed care 

plans provide the necessary data to the 

State, as well as how to ensure and 

monitor that managed care plans 

appropriately pass on to physicians the 

portion of the increased capitation rate 

that is attributable to the primary care 

rate increase. 

States have expressed concern about 

their ability to align capitated payment 

made as of July 1, 2009 to payment 

made for services provided in CYs 2013 

and 2014 for the purpose of claiming 

increased FFP. We recognize the 

particular challenges inherent in 

identifying the payment differential 

eligible for 100 percent FFP for primary 

care services provided by managed care 

plans because such payments are not 

necessarily linked to individual services 

and physicians. We believe that the 

most reasonable way to apply this 

provision for managed care rates is to do 

the following: 

Step I: Identify the proportion of total 

capitation linked to primary care. 

Step II: Identify the fee schedule 

amount incorporated into the actuarial 

model for primary care services 

represented by the proportion of 

payment for primary care services. Here, 

we assume the visit rate equals $25. 

Step III: Determine the annualized 

cost built into the actuarial model for 

primary care. Here we assume 8 visits 

annually. $25 per visit rate × 8 visits 

annually = $200 

Step IV: Determine the per visit cost 

discounted for volume. $200/12 = 

$16.67 

In this example, $16.67 equals the 

imputed amount of the payment made 

on a fee for services basis for an 

individual primary care service. The 

State would compare this amount to the 

Medicare rate paid in CYs 2013 and 

2014 to determine the payment 

differential eligible for 100 percent 

Federal matching funds. In proposing 

this methodology, we realize there may 

be multiple ways to achieve 

implementation and specifically request 

comments on this portion of the 

proposed rule. 

To be clear, we are proposing that 

States would be required to submit the 

methodology they intend to use to 

identify the increment of the capitation 

payment attributable to increased 

provider rates to CMS for approval prior 

to the beginning of CY 2013. Further, we 

propose that, absent approval of its 

methodology from CMS, States would 

not be able to claim the enhanced 

Federal match for capitation payments 

to managed care plans. 

This proposal was developed with 

input from States. During a January 27, 

2011 all-State call specific to the impact 

of the amended section 1932(f) of the 

Act on managed care, States reported 

that the amount and type of data 

managed care plans report to them 

varies greatly both across and within 

States. States expressed the need to be 

able to identify the rate differential for 

the purpose of claiming 100 percent FFP 

and to do so in a manner that is 

reasonable and documented. We are 

seeking additional comments on how 

States might best meet these 

requirements. 

B. Vaccine Administration Under the 

Vaccines for Children (VFC) Program 

1. General Statement 

At this time, we are proposing to add 

42 CFR part 441 subpart K to codify the 

requirements of the Vaccines for 

Children Program. The general 

requirements of the VFC program will 

be found at § 441.510, and state that 

federally-purchased vaccines under the 

VFC Program are made available to 

children who are 18 years of age or 

younger and who are any of the 

following: 

• Eligible for Medicaid. 

• Not insured. 

• Not insured for the vaccine and 

who are administered pediatric vaccines 

by a federally-qualified health center 

(FQHC) or rural health clinic (RHC). 

• An Indian, as defined in section 4 

of the Indian Health Care Improvement 

Act. 

Under the VFC program, vaccines 

must be administered by programregistered providers. Section 1928(c) of 

the Act defines a program-registered 

provider as any health care provider 

that— 

• Is licensed or authorized to 

administer pediatric vaccines under the 

law of the State in which the 

administration occurs without regard to 

whether or not the provider is a 

Medicaid-participating provider. 

• Submits to the State an executed 

provider agreement in the form and 

manner specified by the Secretary. 

• Has not been found, by the 

Secretary or the State to have violated 

the provider agreement or other 

applicable requirements established by 

the Secretary or the State. 

Section 1928 of the Act requires each 

State to establish a VFC Program (which 

may be administered by the State 

Department of Health) and include this 

program in the State plan (§ 441.505) 

under which certain specified groups of 

children are entitled to receive qualified 

pediatric immunizations without charge 

for the cost of the vaccine. 

In the October 3, 1994 Federal 

Register, we published a notice with 

comment period entitled, ‘‘Charges for 

Vaccine Administration Under the 

Vaccines for Children (VFC) Program’’ 

(59 FR 50235) (hereinafter referred to as 

the ‘‘October 1994 VFC notice’’) that set 

forth, by State, the interim regional 

maximum charges for the VFC program. 

These charges represented the 

maximum amount that a provider in a 

State could charge for the 

administration of qualified pediatric 

vaccines to federally vaccine-eligible 

children under the VFC Program. This 

proposed rule would announce updates 

to those fees for use on an interim basis. 

This is the first proposed update of the 

interim regional maximum 

administration fees since 1994. We 

received comments in response to the 

October 1994 VFC notice and we have 

reviewed them. We expect to address 

those comments in a separate document. 

We will respond to public comments 

provided in response to this proposed 

rule. We are interested in receiving 

comments on this proposed rule and 

suggestions for potential updates that 

could be made to the administration 

fees to ensure that the VFC regional 

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maximum rates are increased to reflect 

a more current cost of vaccine 

administration. As discussed in the 

October 1994 VFC notice, the interim 

maximum administration fees apply to 

all VFC program-registered providers 

that administer pediatric vaccines to 

federally vaccine-eligible children. The 

fees do not apply to children receiving 

free vaccines under State purchase 

programs or any other arrangement. 

In accordance with section 

1928(c)(2)(C)(ii) of the Act, we are 

proposing § 441.500 to state that 

physicians participating in the VFC 

program can charge federally vaccineeligible children who are not enrolled in 

Medicaid the maximum administration 

fee (if that fee reflects the provider’s cost 

of administration) regardless of whether 

the State has established a lower 

administration fee under the Medicaid 

program. Families of children who are 

enrolled in the VFC program because 

they are either uninsured or do not have 

insurance that covers vaccines would be 

impacted by this proposed regulation. 

Providers can bill the families of those 

children at the State’s regional 

maximum rate for the administration of 

a vaccine. Therefore, if the proposed 

updated rates were to become effective, 

those families could be billed at the 

published rate for that State. However, 

section 1928(c)(2)(B)(iii) of the Social 

Security Act says that ‘‘[t]he provider 

will not deny administration of a 

qualified pediatric vaccine to a vaccineeligible child due to the inability of the 

child’s parent to pay an administration 

fee.’’ A recent survey of providers 

participating in VFC shows that 

approximately 37 percent of those 

providers actually charge the State’s 

maximum administration fee to families 

of children who are uninsured or who 

do not have insurance that covers 

vaccines. The remaining 61 percent of 

providers surveyed either write off the 

charge or charge a lesser amount. We 

solicit comments specifically on the 

impact of the increased fees on 

uninsured and underinsured VFCeligible children. However, as discussed 

in the October 1994 VFC notice, and as 

proposed in new § 441.515(e), there 

would be no Federal Medicaid matching 

funds available for administration since 

these children are not eligible for 

Medicaid. Although the cost of the 

vaccines for the VFC program is funded 

under Title XIX of the Act, Medicaid 

will not pay for the administration of 

vaccines provided to children under the 

VFC program who are not Medicaideligible. A provider may only bill 

Medicaid for the administration of a 

vaccine if the child is eligible under 

Medicaid. 

2. Methodology Used To Establish 

Administration Charges 

In 1994, to obtain national average 

rates for the administration of vaccines, 

we contracted with the American 

Academy of Pediatrics (AAP) to 

purchase data on the normal fee charged 

by its members for administering the 

vaccines covered by this program. This 

was because there was no reliable data 

available on physicians’ actual cost that 

would provide a valid base for setting 

these maximum charges on a 

nationwide scale. The final national 

average administration charge we 

obtained from the AAP was $15.09. The 

national average was then adjusted for 

regional variations, using indices 

established for the MPFS. 

Before the publication of this 

proposed rule, we attempted to 

determine the availability of Medicaid 

cost data; however, just as in 1994, there 

is no data readily available on 

physician’s actual costs that would 

provide a valid basis for recalculating 

these maximum fees. Therefore, in 

§ 441.515, we are proposing to update 

the maximum administration fees based 

on the data and formula established in 

the October 1994 VFC notice. We 

continue to believe, given the nature of 

the program and the requirements 

applicable to participating providers, 

that charge data, adjusted for regional 

variations, is a reasonable proxy for 

calculating these maximum fees. To 

adjust the administration charge of 

$15.09 for inflation, we are proposing to 

use the Medicare Economic Index (MEI), 

which is a price index that is used by 

CMS to update Medicare physician 

payments. We are proposing to use the 

MEI because: (1) It reflects input price 

inflation faced by physicians inclusive 

of the time period when the national 

average was established in 1994, and (2) 

we believe that input prices associated 

with this specific type of physicianprovided service are consistent with 

overall input prices. The MEI was most 

recently updated at the end of 2011 

(76 FR 73275 through 73276, November 

28, 2011). Therefore, we have calculated 

the proposed update based on the MEI 

up through and including CY 2012. 

Using that index, we have determined 

that the updated national average 

administration charge would be $21.80. 

As in the October 1994 VFC notice, 

we would adjust the national average for 

regional variations, using indices 

established for the MPFS. The national 

average was weighted by the geographic 

adjustment factors (GAF), which reflects 

a weighted sum of the three geographic 

practice cost indexes (GPCIs) (work, 

practice expense, and malpractice 

insurance) for a given Medicare PFS 

locality. 

The GAF is a proxy for differences in 

the cost of operating a medical practice 

among various geographic areas, and is 

used as a comparison among Medicare 

PFS localities (73 FR 69726, 69740 

November 19, 2008). Consistent with 

the methodology in the October 1994 

VFC notice, when there was more than 

one GAF per State, we would select the 

highest GAF within the State and use 

that GAF to adjust the average national 

vaccination administration charge for 

the entire State to assure that 

administration charges would fall 

within our established maximum rates. 

The MPFS localities (and 

corresponding GAFs) are grouped by 

State and sub-State areas. As discussed 

in the October 1994 VFC notice, we 

developed the regional maximum 

charges for each ‘‘State’’ because the 

geographic area of a State is clearly 

identifiable by boundary lines 

recognized nationwide, as opposed to a 

sub-State area. In this proposed rule, we 

see no reason to change that 

interpretation. 

We are also proposing to revise the 

national average for each State to reflect 

the fully implemented sixth 

comprehensive update to the MPFS 

GPCIs and updated GAFs. For more 

information on the methodology used 

for the most recent GPCI update, we 

refer readers to the CY 2012 MPFS final 

rule with comment period (76 FR 73026 

through 73474). Consistent with that 

rule, the cost share weights for 

determining the GAF equation are 

48.266 percent for physician work, 

47.439 percent for practice expense, and 

4.295 percent for malpractice insurance. 

We derived the proposed interim 

amounts specified in the chart under 

section II of this proposed rule as the 

maximum allowable charges for the 

administration of qualified pediatric 

vaccines for each State on the basis of 

the formula: National charge data × 

updated GAFs = maximum VFC fee. 

(See Table 1.) 

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TABLE 1—EXAMPLE OF THE APPLICATION OF THE FORMULA FOR OHIO

Average national administration charge = $21.80. 

Work expense = 0.998; practice expense = 0.927. 

Malpractice expense = 1.24. 

Using Medicare weights to weigh components of— 

Work expense = 48.266 percent. 

Practice expense = 47.439 percent. 

Malpractice expense = 4.295 percent. 

Calculation: 

Work expense: 0.998 × 48.266 percent = 0.482. 

Practice expense: 0.927 × 47.439 percent = 0.439. 

Malpractice expense: 1.24 × 4.295 percent = 0.053. 

Total expense = 0.975. 

Ohio’s updated maximum fee for administration of the vaccine is: $21.80 × 0.975 = $21.25. 

The maximum updated 

administration fee would be effective 

with the publication of a final notice or 

regulation. We request comments on the 

methodology used to calculate this 

administration fee update and will 

consider revisions to the regional 

maximum fees in response to public 

comments. The proposed updated 

maximum fees are set forth in Table 2. 

TABLE 2—REGIONAL MAXIMUM ADMINISTRATION FEE BY STATE

State Current regional 

maximum fee 

Updated regional 

maximum fee 

Alabama ................................................................................................................................................... $14.26 $19.79 

Alaska ...................................................................................................................................................... 17.54 27.44 

Arizona ..................................................................................................................................................... 15.43 21.33 

Arkansas .................................................................................................................................................. 13.30 19.54 

California .................................................................................................................................................. 17.55 26.03 

Colorado .................................................................................................................................................. 14.74 21.68 

Connecticut .............................................................................................................................................. 16.56 23.41 

Delaware .................................................................................................................................................. 16.55 22.07 

District of Columbia ................................................................................................................................. 15.13 24.48 

Florida ...................................................................................................................................................... 16.06 24.01 

Georgia .................................................................................................................................................... 14.81 21.93 

Guam ....................................................................................................................................................... ................................ 23.11 

Hawaii ...................................................................................................................................................... 15.71 23.11 

Idaho ........................................................................................................................................................ 14.34 20.13 

Illinois ....................................................................................................................................................... 16.79 23.87 

Indiana ..................................................................................................................................................... 14.47 20.32 

Iowa ......................................................................................................................................................... 14.58 19.68 

Kansas ..................................................................................................................................................... 14.80 20.26 

Kentucky .................................................................................................................................................. 14.17 19.93 

Louisiana .................................................................................................................................................. 15.22 21.30 

Maine ....................................................................................................................................................... 14.37 21.58 

Maryland .................................................................................................................................................. 15.49 23.28 

Massachusetts ......................................................................................................................................... 15.78 23.29 

Michigan ................................................................................................................................................... 16.75 23.03 

Minnesota ................................................................................................................................................ 14.69 21.22 

Mississippi ................................................................................................................................................ 13.92 19.79 

Missouri .................................................................................................................................................... 15.07 21.53 

Montana ................................................................................................................................................... 14.13 21.32 

Nebraska .................................................................................................................................................. 13.58 19.82 

Nevada ..................................................................................................................................................... 16.13 22.57 

New Hampshire ....................................................................................................................................... 14.51 22.02 

New Jersey .............................................................................................................................................. 16.34 24.23 

New Mexico ............................................................................................................................................. 14.28 20.80 

New York ................................................................................................................................................. 17.85 25.10 

North Carolina .......................................................................................................................................... 13.71 20.45 

North Dakota ............................................................................................................................................ 13.90 20.99 

Ohio ......................................................................................................................................................... 14.67 21.25 

Oklahoma ................................................................................................................................................. 13.89 19.58 

Oregon ..................................................................................................................................................... 15.19 21.96 

Pennsylvania ............................................................................................................................................ 15.76 23.14 

Puerto Rico .............................................................................................................................................. 12.24 16.80 

Rhode Island ............................................................................................................................................ 14.93 22.69 

South Carolina ......................................................................................................................................... 13.62 20.16 

South Dakota ........................................................................................................................................... 13.56 20.73 

Tennessee ............................................................................................................................................... 13.70 20.00 

Texas ....................................................................................................................................................... 14.85 22.06 

Utah ......................................................................................................................................................... 14.52 20.72 

Vermont ................................................................................................................................................... 13.86 21.22 

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27682 Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 

TABLE 2—REGIONAL MAXIMUM ADMINISTRATION FEE BY STATE—Continued 

State Current regional 

maximum fee 

Updated regional 

maximum fee 

Virginia ..................................................................................................................................................... 14.71 21.24 

Virgin Islands ........................................................................................................................................... 15.09 21.81 

Washington .............................................................................................................................................. 15.60 23.44 

West Virginia ............................................................................................................................................ 14.49 19.85 

Wisconsin ................................................................................................................................................. 15.02 20.83 

Wyoming .................................................................................................................................................. 14.31 21.72 

As noted in the October 1994 VFC 

notice, these fees are intended as 

guidance for Universal Purchase States 

(that is, where the vaccines are 

purchased by the State for all children 

in the State). These States may use the 

maximum charges listed or develop 

their own maximum fees. 

In addition, as stated in the October 

1994 VFC notice, State Medicaid 

agencies would not be obligated to set 

the Medicaid payment for vaccine 

administration at the level of the 

maximum fees set forth in this proposed 

rule. Therefore, if these proposed 

maximum fees were to go into effect, the 

amount that a State pays a provider 

under the Medicaid program would not 

increase unless a State were to submit 

a SPA to CMS that increases the rate. In 

accordance with sections 1902(a)(30) 

and 1928(c)(2)(C)(ii) of the Act, States 

have the flexibility to set their payment 

rates at a lower level than the State’s 

regional maximum fee. State Medicaid 

agencies typically take a variety of 

factors into consideration when setting 

payment rates, including the need to 

assure adequate participation by 

providers. 

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. 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. 

To derive average costs, we used data 

from the U.S. Bureau of Labor Statistics 

for all salary estimates. The salary 

estimates include the cost of fringe 

benefits, calculated at approximately 35 

percent of salary, which is based on the 

June 2011 Employer Costs for Employee 

Compensation report by the Bureau. 

We are soliciting public comment on 

each of the section 3506(c)(2)(A)- 

required issues for the following 

information collection requirements 

(ICRs): 

A. ICR’s Regarding Contract 

Requirements (§ 438.6) 

In § 438.6(c)(3)(v) and (c)(5)(vi), States 

would be required to implement 

managed care contracts for payment to 

a MCO, PIPH or PAHP to comply with 

the requirements at section 1202 of the 

HCERA. There is a one-time burden to 

the State for amending such contracts 

for the following provisions: (1) To 

assure that the level of payment is 

consistent with part 447, subpart G; (2) 

to assure that the specified physicians 

(whether directly or through a capitated 

arrangement) receive an amount at least 

equal to the amount set for and required 

under part 447; and (3) to assure that the 

State receive documentation regarding 

those payments. 

The burden associated with the 

requirements under § 438.6(c)(3)(v) and 

(c)(5)(vi) is the time and effort it would 

take each of the 35 State Medicaid 

programs with managed care plan 

payments and the District of Columbia 

(36 total respondents) to amend an 

average of three managed care contracts. 

We estimate it will take three hours to 

complete this task per contract at an 

estimated cost of $441.63 per 

respondent ($49.07/hr × 3 hr × 3 

contracts) or $15,898.68 total ($441.63 

per respondent × 36 respondents). In 

deriving this figure, we used a labor rate 

of $49.07/hr for a State’s management, 

professional and related staff to amend 

each contract. 

B. ICR’s Regarding Provider Agreements 

(§ 441.505(b)) 

This requirement is exempt from 

OMB review and approval since we 

expect to receive fewer than 10 

submissions (annually) from providers, 

if any. The requirement that providers 

must have provider agreements in place 

in order to participate in the VFC 

program has been in effect since the 

program was implemented in 1994. The 

provision in this regulation is merely 

codifying the requirement and no 

further action is necessary in regard to 

providers who are currently 

participating in the VFC program. 

C. ICR’s Regarding State Plan 

Amendments for the Vaccines for 

Children Program (§§ 441.510 and 

441.515(d)) 

This requirement is exempt from the 

OMB review process as we expect to 

receive fewer than 10 submissions from 

States. The requirement that a State 

submit a State plan was a requirement 

when the VFC program was first 

established in 1994, and all States 

submitted State Plans at that time. A 

State now only submits a State plan 

amendment related to the VFC program 

when it makes a change to the State’s 

administration fee. In 2011, only two 

States submitted State plans that made 

changes to the State’s administration fee 

under the VFC program. Even with the 

publication of the updated fee schedule, 

we do not anticipate that many States 

will make changes to their State’s 

administration fee. 

D. ICR’s Regarding Eligible Services 

(§ 447.400(a)) 

In § 447.400(a), States would be 

required to ensure that physicians 

identify their specialty to the Medicaid 

agency before an increased payment is 

made. Initial identification may be made 

by self-attestation, but for program 

integrity purposes the State will be 

required to verify the physician’s 

claimed specialty status by reviewing 

the Board certification status of the 

physician, or reviewing the physician’s 

practice characteristics, before paying 

for services at the Medicare rate. 

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The burden associated with the 

requirements under § 447.400(a) is the 

time and effort it would take each of the 

50 Medicaid Programs and the District 

of Columbia (51 total respondents) to 

establish that a physician is qualified, 

either through Board certification or a 

supporting history of codes billed, to 

receive payment under section 1202 of 

the HCERA. We estimate that it will take 

0.5 hours to determine whether a 

physician may receive payment under 

section 1202 of the HCERA. We used 

data from the Medicaid Statistical 

Information System (MSIS) to identify 

the number of physicians claiming for 

the E&M codes specified in this 

regulation during the fourth quarter of 

FY 2008 and FY 2009 (the most recent 

data available). Based on that data, there 

is an average of 2,245 physicians per 

State who currently bill, but whose 

eligibility for increased payment will 

need to be verified by the Medicaid 

agency. We increased this number by 

10 percent to account for participation 

by new physicians for a total of 2,470 

physicians. 

We used the following hourly labor 

rates and estimated the time to complete 

each task: 0.5 hours for a State’s 

Medicaid office and support staff 

working in the medical billing area to 

retrieve and assess claims for an 

individual physician; or 0.5 hours for 

administrative staff to review the Board 

certification status of a physician. Costs 

associated with these staff are reported 

at a cost of $14.12 for each half-hour 

derived from $28.24/hr each and 2,470 

physicians for an estimated cost of 

$14.12 per response or $34,876.40 

(total). 

E. ICR’s Regarding State Plan 

Requirements (§ 447.410) 

In § 447.410, States would be required 

to submit a SPA to reflect the fee 

schedule rate increases for eligible 

primary care physicians under section 

1902(a)(13)(C) of the Act. The purpose 

of this proposed requirement is to 

assure that when States make the 

increased reimbursement to providers, 

they have State Plan authority to do so 

and they have notified providers of the 

change in reimbursement as required by 

Federal regulations. 

The burden associated with the onetime requirement under § 447.410 is the 

time and effort it would take each of the 

50 State Medicaid Programs and the 

District of Columbia (51 total 

respondents) to modify the Medicaid 

State plan to reflect payment consistent 

with the requirements in section 

1902(a)(13)(C) of the Act. This will 

require the preparation and submission 

of a SPA. We estimate that it will take 

State staff working 4 hours to complete 

all of the tasks associated with the 

preparation of an SPA. The estimated 

cost is $107.13 ($35.71/hr × 3 hr) per 

State or $5,463.63 total ($107.13 * 51) 

for tasks completed by non-management 

staff working on SPA preparation. We 

estimate that this task will also require 

1 hour for State-employed legal staff at 

$49.07/hr or $49.07 (per response) for a 

total of $2,502.57 ($49.07 × 51). The 

combined total for cost associated with 

SPA preparation, including non-legal 

and legal staff employed by the State, is 

$7,966.20 ($5,463.63 + $2,502.57). 

F. ICR’s Regarding Additional 

Requirements (Methodology To Identify 

Rate Differential) for FFP for Managed 

Care Payments (§ 438.804(a)(2) and (3)) 

In § 438.804(a)(3), States would be 

required to submit the methodology 

they intend to use to identify the rate 

differential for managed care payments 

to CMS for approval 6 months prior to 

the beginning of CY 2013. Further, we 

propose that, absent approval from 

CMS, States would not be able to claim 

the enhanced Federal match for 

managed care payments. 

The burden associated with the 

requirements under § 438.804(a)(2) and 

(3) is the time and effort it would take 

each of the 35 State Medicaid Programs 

with managed care plan payments and 

the District of Columbia (36 total 

respondents) to develop a methodology 

for the identification of payment made 

for primary care services through 

managed care contracts eligible for 100 

percent Federal matching funds. This 

task will involve a one-time effort on the 

part of financial, legal and information 

technology staff. We estimate that it will 

take 14 hours per respondent at a cost 

of $637.42 to develop the identification 

methodology at a total cost of 

$22,947.12 (36 × $637.42). In deriving 

these figures, we used the following 

hourly labor rates and estimated the 

time to complete this task: $49.07/hr 

and 2 hours for legal staff to review the 

methodology for compliance with the 

statute ($98.14); $48.09/hr and 8 hours 

for managerial staff to assess the 

feasibility of implementing the 

methodology ($384.72); and $38.64/hr 

and 4 hours for information technology/ 

public administration staff to assess the 

feasibility of the methodology ($154.56). 

TABLE 3—PROPOSED ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS

Regulation section(s) Respondents Responses 

Burden per 

response 

(hours) 

Total annual 

burden 

(hours) 

Labor cost of 

reporting 

($) 

Total cost 

($) 

§ 438.6(c)(3)(v) and (c)(5)(vi) ....................... 36 108 3 324 15,898.68 15,898.68 

§ 447.400(a) ................................................. 51 2,470 .50 1,235 34,876.40 34,876.40 

§ 447.410 ...................................................... 51 51 4 204 7,966.20 7,966.20 

§ 438.804(a)(2) and (3) ................................ 36 36 14 504 22,947.12 22,947.12 

Total ...................................................... ........................ ........................ .................... 2,267 81,688.40 81,688.40 

Note 1: All of the proposed collections are new. Therefore, OMB control numbers have not been assigned and the control number column has 

been omitted from the table. 

Note 2: There are no capital or maintenance costs incurred by any of the proposed collections. Therefore, the capitol cost column has been 

omitted from the table. 

We have submitted a copy of this 

proposed rule to OMB for its review of 

the rule’s information collection and 

recordkeeping requirements. These 

requirements are not effective until they 

have been approved by the OMB. 

To obtain copies of the supporting 

statement and any related forms for the 

proposed paperwork collections 

referenced above, access our Web site at 

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

Paperwork@cms.hhs.gov, or call the 

Reports Clearance Office at 410–786– 

1326. 

We invite public comments on these 

potential information collection 

requirements. If you comment on these 

information collection and 

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27684 Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 

recordkeeping requirements, please do 

either of the following: 

1. Submit your comments 

electronically as specified in the 

ADDRESSES section of this proposed rule; 

or 

2. Submit your comments to the 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Attention: CMS Desk Officer, 

(CMS–2370–P) Fax: (202) 395–6974; or 

Email: OIRA_submission@omb.eop.gov. 

IV. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

V. Regulatory Impact Statement 

A. Introduction 

We have examined the impacts of this 

proposed rule as required by Executive 

Order 12866 (September 30, 1993, 

Regulatory Planning and Review), 

Executive Order 13563 on Improving 

Regulation and Regulatory Review 

(January 18, 2011), the Regulatory 

Flexibility Act (September 19, 1980; 

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

of the Social Security Act, section 202 

of the Unfunded Mandates Reform Act 

of 1995 (March 22, 1995; Pub. L. 

104–4), Executive Order 13132 on 

Federalism (August 4, 1999), and the 

Congressional Review Act (5 U.S.C. 

804(2)). 

Executive Orders 12866 and 13563 

direct 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). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This rule 

has been designated an ‘‘economically’’ 

significant rule, under section 3(f)(1) of 

Executive Order 12866. Accordingly, we 

have prepared a Regulatory Impact 

Analysis (RIA) that, to the best of our 

ability, presents the costs and benefits of 

the rulemaking. We solicit comment on 

the RIA analysis provided. In 

accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any 1 year of $100 

million in 1995 dollars, updated 

annually for inflation. In 2012, that 

threshold is approximately $139 

million. This rule does not contain 

mandates that will impose spending 

costs on State governments in the 

aggregate of $139 million. The cost for 

increasing payment for primary care 

services in CYs 2013 and 2014 will be 

borne by the Federal government, which 

will provide 100 percent matching 

funds equal to the difference between 

the Medicaid State plan rate in effect 

July 1, 2009 and the Medicare rate 

implemented in CY 2013 and 2014, or 

the rate using the CY 2009 CF, if higher. 

Section 1202 of the HCERA requires 

higher payment to physicians for 

primary care services but does not 

impose increased costs on States. For 

the provisions associated with the 

charges for vaccine administration 

under the VFC program, the proposals 

will have no consequential effect on 

State, local, or tribal governments or on 

the private sector. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

As indicated, this proposed rule will not 

have a substantial effect on State and 

local governments. 

B. Statement of Need 

This proposed rule implements 

section 1202 of the HCERA requiring 

payment by State Medicaid agencies of 

at least the Medicare rates in effect in 

CYs 2013 and 2014 or, if higher, the rate 

using the CY 2009 CF for primary care 

services furnished by a physician with 

a specialty designation of family 

medicine, general internal medicine, or 

pediatric medicine. Also, this proposed 

rule implements the statutory payment 

provisions uniformly across all States, 

defines, for purposes of enhanced 

Federal match, eligible primary care 

physicians, identifies eligible primary 

care services, and specifies how the 

increased payment should be 

calculated. Finally, this proposed rule 

provides general guidelines for 

implementing the increased payment for 

primary care services delivered by 

managed care plans. 

C. Overall Impact 

The aggregate economic impact of this 

proposed rule is an estimated $5.52 

billion in CY 2013 and $5.66 billion in 

CY 2014. In CY 2013, the Federal cost 

is approximately $5.74 billion with 

$225 million in State savings. In CY 

2014, the Federal cost is approximately 

$5.96 billion with $300 million in State 

savings. The State savings are derived 

from the projected increases in 

reimbursement rates expected to occur 

prior to passage of this legislation 

between years 2009 and 2013 through 

2014, which will now be paid for by the 

Federal government. Absent the 

legislation, the projected increases in 

the reimbursement rates would be split 

between the Federal government and 

States. This aggregate economic impact 

estimate includes the requirement that 

States reimburse specified physicians 

for vaccine administration at the lesser 

of the Medicare rate or the VFC regional 

maximum during CYs 2013 and 2014, 

which is estimated at $970 million in 

Federal costs. The Federal costs for 

funding that increase, in State payments 

during CYs 2013 and 2014, are 

estimated at $490 million and $480 

million, respectively. 

Overall, the estimated economic 

impacts are a result of this proposed 

rule providing States the ability to 

increase payment for primary care 

services without incurring additional 

costs. We anticipate higher payment 

will result in greater participation by 

primary care physicians, including 

primary care subspecialists, in Medicaid 

thereby helping to promote overall 

access to care. At this time it is not 

known whether States will be willing or 

have the ability to sustain this level of 

payment to providers beyond CY 2014. 

For managed care plans, this proposed 

rule would require documentation of 

the primary care services that are 

provided in order for States to claim 100 

percent FFP. Currently, many States do 

not receive complete data on individual 

services provided by managed care 

plans. We believe, as result of this 

proposed rule, there will be improved 

documentation and reporting of primary 

care services provided by managed care 

plans. This, in turn, may serve to inform 

future managed care rate setting. 

D. Detailed Economic Analysis 

1. Anticipated Effects on Medicaid 

Recipients 

We anticipate this proposed rule will 

have a positive effect on Medicaid 

recipients by increasing the availability 

of services through financial incentives 

to primary care physicians. The exact 

number of beneficiaries that will benefit 

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is not known, however, we believe it 

will be substantial because this rule 

directly affects payment for a type of 

service which is a key component of the 

Medicaid program. Additionally, we 

believe primary care physicians will be 

encouraged to accept more Medicaid 

beneficiaries into their practices as a 

result of increased payment. 

We believe that this regulation will 

positively affect the availability of 

vaccination services as well. Currently, 

only 5 States reimburse the regional 

maximum for vaccine administration set 

by the VFC program. This proposed rule 

would require States to reimburse 

specified physicians for vaccine 

administration at the lesser of the 

Medicare rate or the VFC regional 

maximum during CYs 2013 and 2014. 

Finally, this rule will positively affect 

patients who are dually eligible for 

benefits under the Medicare and 

Medicaid programs by increasing 

payment to physicians who serve this 

population. Specifically, Medicaid will 

pay higher amounts to providers. We 

anticipate that increased payment will 

promote greater access to primary care 

services for dually eligible beneficiaries. 

2. Anticipated Effects on Other 

Providers 

We anticipate this proposed rule 

would increase physician participation 

in Medicaid as most States reimburse 

physicians at well below the Medicare 

rates. Recently, as States have 

experienced budgetary constraints, they 

have sought to address this by reducing 

payments to providers, including 

physicians. This proposed rule would 

ensure that in CYs 2013 and 2014, 

physicians receive the higher Medicare 

rate for the specified primary care 

services. 

In addition, this proposed rule would 

impact States and providers who 

provide immunizations under the 

Medicaid program because it will 

require that such providers be 

reimbursed at the lesser of the 2013 or 

2014 Medicare rate or the Regional 

Maximum VFC Administration Fee in 

CYs 2013 and 2014. This rule also raises 

the maximum rate that States could pay 

providers for the administration of 

vaccines under the VFC program in 

subsequent years. The proposed 

updated Regional Maximum 

Administration Fees included in this 

proposed rule are the maximum 

amounts that a State could choose to 

reimburse a provider for the 

administration of a vaccine under the 

VFC program after the provisions of the 

primary care payment increase expire at 

the end of CY 2014. States have the 

flexibility to set the rate that they will 

reimburse providers, and can therefore 

choose to set it at the State’s regional 

maximum fee or at any other amount 

below the regional maximum amount. It 

is not expected that all States will 

choose to implement the increase. 

The impact of this proposed rule on 

the Federal Government is therefore 

connected to States decisions as to 

whether to increase the amount that 

they pay providers for the 

administration of vaccines after CY 

2014. That is, if no States choose to 

increase the administration fee for 

providers, there would be no additional 

costs incurred by the Federal 

Government. 

The same is true for States. There 

would be no impact of this proposed 

rule on a State unless the State chooses 

to increase the amount that it 

reimburses providers for the 

administration of vaccines under the 

VFC program. 

Children enrolled in the VFC program 

who are Medicaid eligible would not 

incur any additional costs as a result of 

this proposed rule as there are no outof-pocket expenses related to the VFC 

program for Medicaid eligible children. 

Families of children who are enrolled 

in the VFC program because they are 

either uninsured or do not have 

insurance that covers vaccines would be 

impacted by this proposed regulation. 

The Affordable Care Act does not make 

any changes to the VFC program and 

therefore uninsured and underinsured 

individuals receiving vaccines through 

the VFC program will continue to pay 

a single administration fee for any 

vaccine provided. The provider will 

also receive a single administration fee 

for any vaccine provided, regardless of 

the number of vaccine/toxoid 

components, and will not receive the 

Medicare administration rate for those 

services. Providers can bill the families 

of those children at the State’s regional 

maximum rate for the administration of 

a vaccine. As a result, if the proposed 

updated rates were to become effective, 

those families could be billed at the 

published rate for that State. However, 

section 1928(c)(2)(B)(iii) of the Social 

Security Act says that ‘‘[t]he provider 

will not deny administration of a 

qualified pediatric vaccine to a vaccineeligible child due to the inability of the 

child’s parent to pay an administration 

fee.’’ 

Therefore, providers could benefit 

from the proposed regulation as they 

could charge and receive the State’s 

regional maximum rate for their patients 

who are enrolled in the VFC program 

because they are either uninsured or do 

not have insurance that covers 

immunizations. A provider would not 

receive an increased administration fee 

for Medicaid-eligible children unless a 

State chose to increase the amount that 

it pays providers under the Medicaid 

program. 

3. Anticipated Effects on the Medicaid 

Program Expenditures 

Table 4 provides estimates of the 

anticipated Medicaid program 

expenditures associated with increasing 

payment for primary care services. CMS’ 

Office of the Actuary (OACT) developed 

estimates for the impact of this section 

of the Affordable Care Act, which were 

initially published in April 2010, 

(https://www.cms.gov/ActuarialStudies/ 

downloads/PPACA_2010-04-22.pdf). 

Initially, projections of Medicaid 

spending on primary care physician 

services by FFS Medicaid and Medicaid 

managed care plans were created. For 

this, OACT developed assumptions of 

(1) what share of Medicaid physician 

spending was for primary care and (2) 

what share of managed care spending 

was for physician services, relying on 

several studies on physician service 

utilization and expenditures. OACT 

then projected spending for 2013 and 

2014 based on the projections of 

Medicaid physician spending in the 

President’s Fiscal Year 2010 Budget 

Mid-Session Review. To determine the 

impact of using Medicare physician 

payment rates for Medicaid payments, 

OACT compared the ratio of Medicaid 

rates to Medicare rates, based on a study 

of Medicare and Medicaid physician 

payment rates across all States. Finally, 

OACT projected growth in Medicaid 

physician payments and the rates 

prescribed by section 1202 of the 

HCERA, based on Medicare payment 

rates; these estimates were revised to 

incorporate the actual CY 2011 CF, (75 

FR 73169). OACT assumed that 

physician services covered by Medicaid 

would increase over 2013 and 2014 as 

a result of higher payments and 

expected increases in physician 

participation in Medicaid. Additionally, 

these changes were estimated to result 

in a slight decrease to projected State 

spending as future projected Medicaid 

payment rate increases would be 

covered by increased Federal matching 

funds in 2013 and 2014. The studies 

and data sources used for developing 

these estimates included: S. Zuckerman, 

‘‘Trends in Medicaid Physician Fees, 

2003–2008,’’ Health Affairs, 28 April 

2009; the American Medical 

Association; the Medical Group 

Management Association; and the 

Bureau of Labor Statistics. 

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TABLE 4—FEDERAL AND STATE MEDICAID IMPACTS FOR PAYMENT INCREASES TO PRIMARY CARE PROVIDERS DURING CALENDAR YEARS

2013 THROUGH 2014 

[Millions of 2012 dollars] 

CY 2013 CY 2014 

Federal Share * ............. $5,740 $5,960 

State Share ................... ¥225 ¥300 

Total ....................... 5,515 5,660 

* Federal cost estimates reflect the additional $490 million and $480 million in CYs 

2013 and 2014, respectively, as a result of 

States reimbursing specified physicians for 

vaccine administration at the lesser of the 

Medicare rate or the VFC regional maximum. 

The Medicare payment rates used in 

this estimate were the actual 2009 MPFS 

and the current statute projections of the 

CYs 2013 and 2014 MPFS. 

In addition, it should be noted that 

these estimates are based on the current 

statute which includes a significant 

projected reduction to payment rates in 

the CY 2013 MPFS under the 

Sustainable Growth Rate (SGR) formula. 

Every year since 2003, the Congress has 

passed legislation overriding projected 

cuts that otherwise would have resulted 

from the SGR formula. Furthermore, it 

is possible that the Congress may enact 

legislation that averts the currently 

projected reduction in MPFS rates for 

2013 which would affect the CYs 2013, 

and 2014 rates that are being used to 

estimate the payment impacts in this 

rule. Consequently, if the Congress 

enacts legislation resulting in increased 

payment rates to replace the payment 

rate reduction called for under the SGR 

formula in CYs 2013, and 2014, and in 

turn the CYs 2013 or 2014 rates exceed 

the rates calculated using the CY 2009 

CF, then this would result in higher 

costs for the CYs 2013 and 2014 

Medicaid physician payments presented 

in this rule. Additionally, other changes 

to the CF in these years may also affect 

the costs of this section. Therefore, 

currently it is not possible to accurately 

estimate the impact of these potential 

future changes, since definitive action, 

if any, by the Congress regarding the 

MPFS CF is unknown. 

4. Anticipated Effects on States 

The Federal government would 

provide 100 percent matching funds for 

the difference between the Medicaid 

State plan rate in effect July 1, 2009 and 

the Medicare rate in CYs 2013 and 2014 

or the rate using the CY 2009 Medicare 

CF, if higher. Therefore, we believe this 

proposed rule would result in a positive 

effect on States, since it reduces their 

expenditures for primary care services. 

State savings are estimated at $225 

million and $300 million in CYs 2013 

and 2014, respectively. However, for 

Medicaid State plan rates below the 

2009 level, States would be required to 

reimburse the non-Federal share of that 

portion, so as to return to the 2009 level 

of payment. We are unable to accurately 

quantify the impact of this effect on 

States, since there is not a precise 

relationship between any of the 

Medicaid State plan rates and the 

Medicare rates. 

5. Anticipated Effects on Small Entities 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities, if a rule has a significant impact 

on a substantial number of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organization, and small 

governmental jurisdictions. The great 

majority of hospitals and most other 

health care providers and suppliers are 

small entities, either by being nonprofit 

organizations or by meeting the SBA 

definition of a small business and 

having revenues of less than $7.0 

million to $34.5 million in any 1 year. 

(For details, see the Small Business 

Administration’s Table of Size 

Standards at http://www.sba.gov/sites/ 

default/files/Size_Standards_Table.pdf.) 

For purposes of the RFA, approximately 

95 percent of physicians are considered 

to be small entities. Individuals and 

States are not included in the definition 

of a small entity. 

We anticipate that this regulation 

would primarily impact individual 

physicians and State Medicaid agencies. 

This proposed rule requires States to 

increase payment for primary care 

services without incurring additional 

State cost. As previously noted, we 

anticipate that this higher payment 

would impact physicians by 

encouraging greater participation by 

primary care physicians, including 

primary care subspecialists, in 

Medicaid, thereby helping to promote 

overall access to care. Therefore, the 

Secretary has determined that this 

proposed rule would not have a 

significant 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. This rule would 

not have a significant impact on small 

rural hospitals because it only affects 

physicians. We are not preparing an 

analysis for section 1102(b) of the Act 

because the Secretary has determined 

that none of the provisions in this 

proposed rule would have a significant 

impact on the operations of a substantial 

number of small rural hospitals. 

E. Alternatives Considered 

This section provides an overview of 

the issues addressed in the proposed 

rule and the regulatory alternatives 

considered. In identifying the issues and 

developing alternatives, we consulted 

with States and other interested 

stakeholders such as primary care 

specialists and policy makers. We solicit 

comment on the assumptions and 

analyses presented in the Alternatives 

Considered section. 

1. Eligible Providers 

The statute specifies that increased 

payment may be made for primary care 

services furnished by a physician with 

a primary specialty designation of 

family medicine, general internal 

medicine or pediatric medicine. 

Because States have varying methods of 

identifying a physician’s specialty this 

poses a challenge to the uniform 

implementation of the increased 

payment. Currently, there are no Federal 

requirements surrounding how States 

must enroll Medicaid providers. In this 

rule, we propose to use Board 

certification and a supporting history of 

codes billed in the absence of Board 

certification as a means of identifying 

eligible primary care physicians but 

seek comment on the time period from 

which claimed codes would be drawn. 

We considered permitting physicians to 

qualify for payment based solely on self 

attestation in the absence of Board 

certification but were concerned that 

without an objective measure, such as a 

supporting history of codes billed, 

certain physicians could be unfairly 

advantaged or disadvantaged in 

receiving the increased payment. We 

also believe that an objective measure is 

more supportive of program integrity. 

This proposed rule clarifies that 

subspecialists related to the specialty 

designations identified in the statute 

would be eligible for payment. We 

considered extending eligibility for 

increased payment to only those 

physicians with a primary care specialty 

designation of family medicine, general 

internal medicine or pediatric medicine 

and not to subspecialists within those 

categories. However, through our 

engagement with the provider 

community we learned that pediatric 

subspecialists routinely deliver primary 

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care services. Therefore, we propose to 

make all subspecialists within the 

primary care specialties designated in 

the statute eligible for the enhanced 

payment. Due to the limited data 

available, including the lack of discrete 

data on physician specialty or 

subspecialty, we are unable to 

accurately estimate the impacts 

representing the exclusion of 

subspecialties relative to this proposed 

regulation. The analysis is further 

complicated by the observation that 

some types of subspecialists may 

provide a significant amount of primary 

care services, while other types of 

subspecialists may provide very little 

primary care services, thereby limiting 

any sound assumptions presented 

including the entailed impact modeling. 

2. Payment Made Under the Physician 

Benefit as a Physician Service 

This rule clarifies physician services 

to mean any service delivered under the 

physicians’ services benefit at 

1905(a)(5)(A) of the Act. First, we 

considered whether the statute limited 

increased payment to services provided 

only by physicians. In the Medicaid 

program, a significant proportion of 

primary care services are actually 

rendered by advance practice nurses, 

and other types of independently 

practicing non-physicians. We recognize 

the importance of these non-physician 

practitioners in the provision of primary 

care services in many States. However, 

section 1902(a)(13)(c) of the Act limits 

eligibility for higher payment to services 

provided by physicians. Next we 

considered whether the statute limited 

increased payment to services provided 

directly by physicians. Medicaid 

regulations at 42 CFR 440.50 define 

‘‘physician services’’ as services 

provided by or under the personal 

supervision of a physician. Therefore, 

we concluded that, in light of the 

important role of these practitioners in 

delivering primary care to Medicaid 

beneficiaries and the regulatory 

definition of a ‘‘physician service,’’ 

those services delivered under the 

personal supervision of a specified 

primary care physician could qualify for 

the increased payment. This means that 

specified primary care services rendered 

by non physicians such as advanced 

practice nurses and other mid-level 

professionals qualify for payment when 

billed under the Medicaid enrollment 

number of any designated primary care 

specialist or subspecialist. 

Due to the limited data available, we 

are unable to accurately estimate the 

impacts representing the inclusion of 

services provided by practitioners under 

the supervision of a physician. All such 

services are billed under the supervising 

physician’s billing number and are 

reported as physician services to CMS 

making it impossible to determine the 

impact of this proposal. 

We also considered whether services 

provided by physicians in settings such 

as FQHCs, RHCs, or clinics would be 

eligible for increased payment. In 

Medicaid ‘‘physician services’’ is a 

distinct benefit from other benefits such 

as the FQHC, RHC or clinic benefits. We 

believe that the statute limits payment 

to physicians who, if Medicare 

providers, would be reimbursed using 

the MPFS. The MPFS is not used to 

reimburse physicians in settings such as 

FQHCs and RHCs and we believe that 

enhanced payment should not be 

extended to physicians under other 

Medicaid benefit categories. 

Furthermore, the Medicaid statute 

already requires that FQHCs and RHCs 

be reimbursed at cost. 

We estimate that the inclusion of 

services provided by physicians in 

settings such as FQHCs, RHCs, or clinics 

for increased payment would result in 

an aggregate Federal cost of 

approximately $820 million for CYs 

2013 and 2014. The limitations of this 

impact estimate to more accurately 

reflect clinic participation include, (1) 

determining whether the services 

provided in the various clinic types are 

in fact performed by a qualifying 

physician, and (2) determining the 

direct link between Medicaid clinic 

payment rates, as they vary substantially 

across codes and states, and Medicaid 

physician rates. 

3. Eligible E&M Services 

The statute requires enhanced 

payment for E&M services/codes. The 

proposed rule specifies the E&M Codes 

eligible for the increased payment. They 

include all primary care E&M codes, 

including some codes not recognized for 

payment by Medicare. Because the 

statute requires payment at the 

Medicare rate, we considered not 

extending the requirement for increased 

payment to codes not reimbursed by 

Medicare. However, many of those 

codes represent services provided to 

children. While Medicare covers 

relatively few children, payments for 

services provided to children constitute 

a larger proportion of Medicaid 

expenditures. We therefore include 

these additional codes because they 

represent core primary care services that 

are important to the Medicaid program. 

We estimate that approximately 6 to 

7 percent of all expenditures on services 

eligible for the increased payment rates 

are for services not covered by 

Medicare. Furthermore, we believe that 

a corresponding amount of the Federal 

costs associated with this proposed 

regulation would be related to these 

services, reflecting an impact range of 

$670 million to $780 million over the 

two CYs 2013 and 2014. 

The eligible codes are listed in the 

regulatory text. We propose to set rates 

for codes not covered by Medicare based 

on a calculation of the CF and RVUs 

that are published by CMS. We establish 

RVUs based on recommendations from 

the AMA RUC and clinical review by 

Medicare. We considered setting rates 

for these codes by looking at rates paid 

by Medicare for comparable services. 

However, each code is designed to 

represent a distinct service and we 

could not find codes that we were 

comfortable substituting on a one for 

one basis for purposes of rate setting. 

We seek comment on the proposed rate 

setting methodology for codes not 

reimbursed by Medicare. 

4. Eligible Vaccine Administration 

Services 

The statute specifies payment at the 

CY 2013 and 2014 Medicare rate for 

certain vaccine administration billing 

codes or their successor codes. A State 

may receive 100 percent FMAP for the 

difference between the Medicaid rate as 

of July 1, 2009 and the Medicare rates 

in CYs 2013 and 2014 or the rate using 

the CY 2009 CF, if higher. In 2011, the 

coding structure for vaccine 

administration changed such that two 

codes replaced four of the specified 

codes. Moreover, the four deleted codes 

represented vaccine administrations by 

various routes (e.g., intranasal vs. 

injectable) to children under 8. 

However, new code 90460 represents 

the initial vaccine/toxoid administered 

through all routes to children under 18 

while code 90461 represents payment 

for additional vaccines/toxoids 

administered. This rule proposes a 

method for imputing a vaccine 

administration rate in 2009 for code 

90460. The proposed 2009 would equal 

the average payment amount weighted 

by volume of the four codes used in 

2009. The 2009 value for code 90461 

would be $0, since there was no 

payment for additional vaccines/toxoids 

prior to 2011. We seek comment from 

States and other stakeholders on this 

proposed methodology. 

In 2009, approximately 20 States used 

a bundled rate to reimburse vaccines 

and vaccine administration, 

complicating the identification of the 

rate differential. This rule clarifies that, 

for any bundled rate payments such as 

this, States must correctly identify the 

rate differential for the included 

primary care service only (in this case, 

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vaccine administration). We added this 

provision in the interest of promoting 

program payment integrity but defer to 

the States to develop a methodology. 

In this rule, we propose that providers 

administering vaccines under the VFC 

program be reimbursed the lesser of the 

Medicare rates in 2013 or 2014 or the 

Regional Maximum Administration Fee 

per vaccine, with no payment for 

additional vaccine/toxoid components. 

We considered proposing that States be 

required to pay VFC physicians for 

vaccine administration associated with 

the VFC program the amounts required 

by sections 1902(a)(13)(c) and 1932(f) of 

the Act, notwithstanding limitations on 

provider billing for vaccine 

administration under the VFC program. 

Free vaccine is made available through 

the VFC program to ‘‘program registered 

providers’’ who have entered into a VFC 

provider agreement. Under section 

1928(c)(2)(C)(ii) of the Act, one of the 

requirements of that agreement is that 

program registered providers limit 

administration fees to an amount that 

‘‘does not exceed the costs of such 

administration (as determined by the 

Secretary based on actual regional costs 

for such administration).’’ 

This rule would not have changed the 

statutory requirement in section 

1928(c)(2)(C) of the Act that a qualified 

physician administering a vaccine 

obtained from the VFC program is 

limited under the VFC provider 

agreement to charging an amount for 

vaccine administration that is no more 

than the VFC maximum allowable 

charge. However, we considered 

proposing that States comply with the 

requirements of sections 1902(a)(13)(c) 

and 1932(f) of the Act and pay the 

designated Medicare amount despite the 

fact that this amount might have been 

higher than the amount that was billed 

by the provider. To meet this 

requirement we considered proposing 

that States re-price vaccine 

administration billing codes, resulting 

in payment equal to the applicable 

Medicare-based rate. 

We considered this alternative to fully 

reflect the requirement in section 1202 

of the HCERA that Medicaid payment 

for primary care services be not less 

than the MPFS payment rate. While 

Medicare provider payment is limited to 

the lesser of provider charges or the fee 

schedule amount, we considered that 

allowing provider payment to exceed 

provider charges in this instance could 

be allowable in order to achieve the 

objectives of sections 1902(a)(13)(c) and 

1932(f) of the Act. We also considered 

proposing that VFC providers account 

for the payment in excess of the billed 

amount as a Medicaid receipt for 

vaccine administration and that they 

ensure that it was not considered as an 

increase in the billed amount, or as a 

credit toward either the beneficiary 

account or toward payment for other 

services. 

The primary benefit of this alternative 

is higher reimbursement for vaccine 

administration fees associated with the 

VFC program. Although the VFC 

ceilings have not been modified since 

1994, the majority of States have paid 

for vaccine administrations at rates well 

below the ceilings. For example, 

California’s maximum rate was $17.55, 

but the State paid $9.00. Approximately 

five States reimbursed vaccine 

administration fees within close 

proximity to the ceiling. Medicare’s 

2011 reimbursement rate for the first 

vaccine was $23.10 and for subsequent 

vaccines was $11.55. Therefore, we 

believe that requiring VFC 

administrations be reimbursed at the 

Medicare rate will help to ensure 

adequate compensation for VFC 

providers. However, we were concerned 

about the potential Federal budget 

impact of this proposal, with initial 

estimates indicating a potential cost 

impact of approximately $970 million 

over CYs 2013 and 2014, and the 

administrative burden it would place on 

States to reprice claims for these 

services. 

We also considered whether the 

requirements of the VFC statute 

preclude application of sections 

1902(a)(13)(c) and 1932(f) of the Act to 

vaccine administration under the VFC 

program. However, this would mean 

that participating providers would be 

limited to the State-specific VFC rates in 

the Medicaid State plan as well as to 

payment per vaccine administered. 

Another alternative was to require 

payment at the DHHS VFC regional 

maximum fee schedule amount but to 

also require reimbursement for each 

vaccine/toxoid administered. This 

would comply with VFC requirements 

that providers charge no more than the 

regional maximum amount, but would 

permit providers to benefit from the 

coding change that requires payment 

per vaccine/toxoid administered. 

We recognize the complexity of the 

issues surrounding the interplay of the 

VFC statutory requirements and the 

requirements of the Affordable Care Act 

and specifically request comment on 

these proposals. 

5. Method of Payment 

Section 1902(a)(13)(C) of the Act 

requires payment in CYs 2013 and 2014 

of the current Medicare rate, unless the 

rate set using the CY 2009 CF was 

higher. Historically, Medicare has 

issued multiple updates to its MPFS 

within a single year. 

Based on input from States, and to 

assure the feasibility of implementation, 

we propose to permit States the option 

to either adopt the MPFS in effect at the 

beginning of CYs 2013 and 2014 or the 

rate using the CY 2009 CF, if higher or 

a methodology to update rates to reflect 

changes made my Medicare during the 

year. If the State chooses to reflect 

changes made by Medicare, the 

methodology for those updates must be 

specified. States would be required to 

use the MPFS applicable to the place of 

service and geographic location. We 

considered requiring States to make 

changes throughout the year, as 

Medicare changed its MPFS. However, 

our proposal to permit States to use a 

single version of the MPFS reflects 

extensive comment received from States 

concerned about balancing the need for 

administrative ease with meeting the 

requirements to make this payment. 

We also propose that payment not be 

made inclusive of Medicare’s incentive 

payment as authorized under section 

5501(a) of the Affordable Care Act. We 

considered defining the Medicare ‘‘rate’’ 

as being inclusive of the incentive 

payments. However, the Medicare 

incentive payments are supplements 

made to specific providers based on 

total Medicare allowed charges and do 

not represent increases to the MPFS 

rates for specific CPT codes. Moreover, 

even if the same providers qualified for 

both the Medicare incentive payment 

and this Medicaid payment, it would be 

administratively difficult for State 

Medicaid agencies to determine the 

Medicare ‘‘rate’’ for purposes of the 

increased Medicaid payment since 

States do not have access to Medicare 

payment data. 

For the purpose of identifying the 

differential between the Medicaid rate 

and the Medicare rate, this proposed 

rule would define the Medicaid ‘‘rate’’ 

under the approved Medicaid State plan 

as the final rate paid to a provider 

inclusive of all supplemental or 

enhanced payments made to that 

provider. For example, many States 

reimburse physicians affiliated with 

academic medical centers the Medicaid 

State plan rate plus a supplemental 

amount that together equal the average 

amount paid by commercial third party 

payers. Therefore, in calculating the rate 

differential, these States would 

determine the CY 2009 Medicaid rate 

inclusive of this type of supplemental 

payment. We considered not defining 

‘‘rate’’ but, recognizing the wide variety 

of ways in which States characterize 

their payments, we chose to make this 

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clarification to promote uniform and fair 

implementation of this payment. 

6. VFC Administration Fee Increase 

We considered a number of options 

when determining to update the average 

national administration charge portion 

of the formula used to calculate the VFC 

administration fee. These options 

included using the Medicare Economic 

Index (MEI), Consumer Price Index 

(CPI) or the Gross Domestic Product 

Deflator. We have determined the best 

option is to utilize the MEI, which is a 

price index used by CMS to update 

Medicare physician payments. The MEI 

reflects input price inflation 

experienced by physicians inclusive of 

the time period when the national 

average was established in 1994. 

Therefore, we believe that input prices 

associated with this specific type of 

physician-provided service are 

consistent with overall input prices. 

The overall economic impact, as a 

result of this proposed rule announcing 

updates to the regional maximum 

charges for the VFC program for use on 

an interim basis, is estimated at $75 

million per year. The Federal cost of 

this total is approximately $45 million 

per year. These estimates assume that 

every State would increase its 

reimbursement rate to the new VFC 

maximum fee. 

F. Accounting Statement and Table 

As required by OMB’s Circular A–4 

(available at http:// 

www.whitehouse.gov/omb// 

circulars_a004_a-4/), in Table 5 we have 

prepared an accounting statement 

illustrating the classification of the 

Federal and State expenditures 

associated with this proposed rule. 

TABLE 5—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES FOR PAYMENT INCREASES TO

PRIMARY CARE PROVIDERS DURING CALENDAR YEARS 2013 THROUGH 2014 

[Millions of 2012 dollars] 

Category Transfers 

Annualized monetized transfers 

Discount rate 

Period covered 

7% 3% 

Primary Estimate .......................................................................................................... $5,846 $5,848 CYs 2013–2014 

From/To ........................................................................................................................ Federal Government to Medicaid Providers. 

Primary Estimate .......................................................................................................... ¥$261 ¥$262 CYs 2013–2014 

From/To ........................................................................................................................ State Governments to Medicaid Providers. 

List of Subjects 

42 CFR Part 438 

Grant programs—health, Medicaid, 

Reporting and recordkeeping 

requirements. 

42 CFR Part 441 

Aged, Family planning, Grant 

programs—health, Infants and children, 

Medicaid, Penalties, Reporting and 

recordkeeping requirements. 

42 CFR Part 447 

Accounting, Administrative practice 

and procedure, Drugs, Grant programs— 

health, Health facilities, Health 

professions, Medicaid, Reporting and 

recordkeeping requirements, Rural 

areas. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services proposes to amend 

42 CFR chapter IV as set forth below: 

PART 438—MANAGED CARE 

1. The authority citation for part 438 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

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

2. Section 438.6 is amended by 

adding new paragraphs (c)(3)(v) and 

(c)(5)(vi) to read as follows: 

§ 438.6 Contract requirements. 

* * * * * 

(c) * * * 

(3) * * * 

(v) For rates covering CYs 2013 and 

2014, complying with minimum 

payment for physician services under 

paragraph (c)(5)(vi) of this section, and 

part 447, subpart G, of this chapter. 

* * * * * 

(5) * * * 

(vi) For CYs 2013 and 2014, and 

payments to an MCO, PIHP or PAHP for 

primary care services furnished to 

enrollees under part 447, subpart G, of 

this chapter, the contract must require 

that the MCO, PIHP or PAHP meet the 

following requirements: 

(A) Make payments to those specified 

physicians (whether directly or through 

a capitated arrangement) at least equal 

to the amounts set forth and required 

under part 447, subpart G, of this 

chapter. 

(B) Provide sufficient documentation 

to the State, as determined by the State, 

regarding the amount provider 

payments increase as a result of meeting 

the requirement of paragraph 

(c)(5)(vi)(A) of this section. 

* * * * * 

3. Section 438.804 is added to read as 

follows: 

§ 438.804 Primary care provider payment 

increases. 

(a) For MCO, PIHP or PAHP contracts 

that cover calendar years 2013 and 

2014, FFP is available at an enhanced 

rate of 100 percent for the portion of the 

expenditures for capitation payments 

made under those contracts to comply 

with the contractual requirement under 

§ 438.6(c)(5)(vi) only if the following 

requirements are met: 

(1) The State makes a reasonable 

estimate of the increased amounts paid 

for specified primary care services 

provided by eligible primary care 

physicians resulting from the 

contractual requirement under 

§ 438.6(c)(5)(vi), based on information 

received from the managed care 

provider for services furnished as of July 

1, 2009. 

(2) The State develops a methodology 

for identifying the differential in 

payment between the provider 

payments that would have been made 

by the managed care provider on July 1, 

2009 and the amount needed to comply 

with the contractual requirement under 

§ 438.6(c)(5)(vi). 

(3) The State must submit the 

methodology in paragraph (a)(2) of this 

section to CMS for approval before the 

beginning of CY 2013. 

(b) [Reserved] 

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27690 Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 

PART 441—SERVICES: 

REQUIREMENTS AND LIMITS 

APPLICABLE TO SPECIFIC SERVICES 

4. The authority citation of part 441 

is revised to read as follows: 

Authority: Secs. 1102, 1902, and 1928 of 

the Social Security Act (42 U.S.C. 1302). 

5. Subpart K is added to read as 

follows: 

Subpart K—Vaccines for Children 

Program 

Sec. 

441.500 Basis and purpose. 

441.505 General requirements. 

441.510 State plan requirements. 

441.515 Administration fee requirements. 

Subpart K—Vaccines for Children 

Program 

§ 441.500 Basis and purpose. 

This subpart implements sections 

1902(a)(62) and 1928 of the Act by 

requiring States to provide for a program 

for the purchase and distribution of 

pediatric vaccines to program-registered 

providers for the immunization of 

vaccine-eligible children. 

§ 441.505 General requirements. 

(a) Federally-purchased vaccines 

under the VFC Program are made 

available to children who are 18 years 

of age or younger and who are any of 

the following: 

(1) Eligible for Medicaid. 

(2) Not insured. 

(3) Not insured with respect to the 

vaccine and who are administered 

pediatric vaccines by a federally 

qualified health center (FQHC) or rural 

health clinic. 

(4) An Indian, as defined in section 4 

of the Indian Health Care Improvement 

Act. 

(b) Under the VFC program, vaccines 

must be administered by programregistered providers. Section 1928(c) of 

the Act defines a program-registered 

provider as any health care provider 

that meets the following requirements: 

(1) Is licensed or authorized to 

administer pediatric vaccines under the 

law of the State in which the 

administration occurs without regard to 

whether or not the provider is a 

Medicaid-participating provider. 

(2) Submits to the State an executed 

provider agreement in the form and 

manner specified by the Secretary. 

(3) Has not been found, by the 

Secretary or the State to have violated 

the provider agreement or other 

applicable requirements established by 

the Secretary or the State. 

§ 441.510 State plan requirements. 

A State plan must provide that the 

Medicaid agency meets the 

requirements of this subpart. 

§ 441.515 Administration fee requirements. 

(a) Under the VFC Program, a 

provider who administers a qualified 

pediatric vaccine to a federally vaccineeligible child, may not impose a charge 

for the cost of the vaccine. 

(1) A provider can impose a fee for the 

administration of a qualified pediatric 

vaccine as long as the fee does not 

exceed the costs of the administration 

(as determined by the Secretary based 

on actual regional costs for the 

administration). 

(2) A provider may not deny 

administration of a qualified pediatric 

vaccine to a vaccine-eligible child due 

to the inability of the child’s parents or 

legal guardian to pay the administration 

fee. 

(b) The Secretary must publish each 

State’s regional maximum charge for the 

VFC program, which represents the 

maximum amount that a provider in a 

State could charge for the 

administration of qualified pediatric 

vaccines to federally vaccine-eligible 

children under the VFC program. 

(c) An interim formula has been 

established for the calculation of a 

State’s regional maximum 

administration fee. That formula is as 

follows: National charge data x updated 

geographic adjustment factors (GAFs) = 

maximum VFC fee. 

(d) The Medicaid Agency must submit 

a State plan amendment that identifies 

the amount that the State will pay 

providers for the administration of a 

qualified pediatric vaccine to a 

Medicaid-eligible child under the VFC 

program. The amount identified by the 

State cannot exceed the State’s regional 

maximum administration fee. 

(e) Physicians participating in the 

VFC program can charge federally 

vaccine-eligible children who are not 

enrolled in Medicaid the maximum 

administration fee (if that fee reflects the 

provider’s cost of administration) 

regardless of whether the State has 

established a lower administration fee 

under the Medicaid program. However, 

there would be no Federal Medicaid 

matching funds available for the 

administration since these children are 

not eligible for Medicaid. 

PART 447—PAYMENTS FOR 

SERVICES 

6. The authority citation for part 447 

continues to read as follows: 

Authority: Section 1102 of the Social 

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

7. Subpart G is added to read as 

follows: 

Subpart G—Payments for Primary Care 

Services Furnished by Physicians 

Sec. 

447.400 Primary care services furnished by 

physicians with a specified specialty or 

subspecialty. 

447.405 Amount of required minimum 

payments. 

447.410 State plan requirements. 

447.415 Availability of Federal financial 

participation (FFP). 

Subpart G—Payments for Primary Care 

Services Furnished by Physicians 

§ 447.400 Primary care services furnished 

by physicians with a specified specialty or 

subspecialty. 

(a) States pay for services furnished 

by a physician as defined in § 440.50 of 

this chapter, or under the personal 

supervision of a physician who selfattests to a specialty designation of 

family medicine, general internal 

medicine or pediatric medicine or a 

subspecialty recognized by the 

American Board of Medical Specialties 

and is verified by the Medicaid agency 

as meeting one of the following 

requirements: 

(1) Is Board certified with such a 

specialty or subspecialty. 

(2) Has furnished evaluation and 

management services and vaccine 

administration services under codes 

described in paragraph (b) of this 

section that equal at least 60 percent of 

the Medicaid codes billed during the 

most recently completed CY. 

(3) For physicians who do not have 12 

months of paid Medicaid claims history, 

data on codes billed must be reviewed 

from the date of enrollment through the 

end of the enrollment CY. 

(b) Primary care services designated 

in the Healthcare Common Procedure 

Coding System (HCPCS) are as follows: 

(1) Evaluation and Management 

(E&M) codes 99201 through 99499. 

(2) Current Procedural Terminology 

(CPT) vaccine administration codes 

90460, 90461, 90471, 90472, 90473 and 

90474, or their successor codes. 

§ 447.405 Amount of required minimum 

payments. 

(a) For CYs 2013 and 2014, a State 

must pay for physician services 

described in § 447.400 based on the 

lesser of: 

(1) The Medicare Part B fee schedule 

rate that is applicable to the site of 

service and geographic location of the 

service of, if there is no applicable rate 

the rate specified in a fee schedule 

established and announced by CMS 

(that is, the product of multiplying the 

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Federal Register / Vol. 77, No. 92 / Friday, May 11, 2012 / Proposed Rules 27691 

Medicare CF in effect at the beginning 

of CYs 2013 or 2014 (or the CY 2009 CF, 

if higher) and the CY 2013 and 2014 

relative value units (RVUs). 

(2) The provider’s actual billed charge 

for the service. 

(b) For vaccines provided under the 

Vaccines for Children Program in CYs 

2013 and 2014, a State must pay the 

lesser of: 

(1) The Regional Maximum 

Administration Fee; or, 

(2) The Medicare fee schedule rate in 

CY 2013 or 2014 (or, if higher, the rate 

using the 2009 conversion factor and the 

2013 and 2014 RVUs) for code 90460. 

§ 447.410 State plan requirements. 

The State must amend its plan to 

reflect the increase in fee schedule 

payments in CYs 2013 and 2014 unless, 

for each of the billing codes eligible for 

payment, the State currently reimburses 

at least as much as the higher of the CY 

2013 and CY 2014 Medicare rate or the 

rate that would be derived using the CY 

2009 conversion factor and the CY 2013 

and 2014 Medicare relative value units 

(RVUs). 

§ 447.415 Availability of Federal financial 

participation (FFP) 

(a) For primary care services 

furnished by physicians specified in 

§ 447.400, FFP will be available at the 

rate of 100 percent for the amount by 

which the payment required to comply 

with § 447.405 exceeds the Medicaid 

payment that would have been made 

under the approved State plan in effect 

on July 1, 2009. 

(b) For purposes of calculating the 

payment that would have been made 

under the approved State plan in effect 

on July 1, 2009, the State must consider 

all supplemental and increased 

payments made for the individually 

billed codes, including any incentive 

payments and other supplemental 

payment in effect at that time. 

(c) For vaccine administration, the 

State must impute the payment that 

would have been made under the 

approved Medicaid State plan in effect 

on July 1, 2009 by calculating the 

average payment for codes 90465, 

90466, 90467 and 90468 weighted by 

volume. 

(d) For any payment made under a 

bundled rate methodology, including 

bundled rates for vaccines and vaccine 

administration, the amount directly 

attributable to the applicable primary 

care service must be isolated for 

purposes of determining the availability 

of the 100 percent FFP rate. 

Authority: (Catalog of Federal Domestic 

Assistance Program No. 93.778, Medical 

Assistance Program.) 

Dated: April 17, 2012. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: April 18, 2012. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2012–11421 Filed 5–9–12; 11:15 a.m.] 

BILLING CODE 4120–01–P 

DEPARTMENT OF THE INTERIOR 

Bureau of Land Management 

43 CFR Part 3160 

[WO–300–L13100000.FJ0000] 

RIN 1004–AE26 

Oil and Gas; Well Stimulation, 

Including Hydraulic Fracturing, on 

Federal and Indian Lands 

AGENCY: Bureau of Land Management, 

Interior. 

ACTION: Proposed rule. 

SUMMARY: The Bureau of Land 

Management (BLM) is proposing a rule 

to regulate hydraulic fracturing on 

public land and Indian land. The rule 

would provide disclosure to the public 

of chemicals used in hydraulic 

fracturing on public land and Indian 

land, strengthen regulations related to 

well-bore integrity, and address issues 

related to flowback water. This rule is 

necessary to provide useful information 

to the public and to assure that 

hydraulic fracturing is conducted in a 

way that adequately protects the 

environment. 

DATES: Send your comments on this 

proposed rule to the BLM on or before 

July 10, 2012. The BLM need not 

consider, or include in the 

administrative record for the final rule, 

comments that the BLM receives after 

the close of the comment period or 

comments delivered to an address other 

than those listed below (see ADDRESSES). 

If you wish to comment on the 

information collection requirements in 

this proposed rule, please note that the 

Office of Management and Budget 

(OMB) is required to make a decision 

concerning the collection of information 

contained in this proposed rule between 

30 to 60 days after publication of this 

document in the Federal Register. 

Therefore, a comment to OMB is best 

assured of having its full effect if OMB 

receives it by June 11, 2012. 

ADDRESSES: Mail: U.S. Department of 

the Interior, Director (630), Bureau of 

Land Management, Mail Stop 2134 LM, 

1849 C St. NW., Washington, DC 20240, 

Attention: 1004–AE26. Personal or 

messenger delivery: Bureau of Land 

Management, 20 M Street SE., Room 

2134 LM, Attention: Regulatory Affairs, 

Washington, DC 20003. Federal 

eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions at this Web site. 

Comments on the information 

collection requirement: Fax: Office of 

Management and Budget (OMB), Office 

of Information and Regulatory Affairs, 

Desk Officer for the Department of the 

Interior, fax 202–395–5806. Electronic 

mail: oira_docket@omb.eop.gov. Please 

indicate ‘‘Attention: OMB Control 

Number 1004–XXXX,’’ regardless of the 

method used to submit comments on 

the information collection burdens. If 

you submit comments on the 

information collection burdens, please 

provide the BLM with a copy of your 

comments, at one of the addresses 

shown above. 

FOR FURTHER INFORMATION CONTACT: 

Steven Wells, Division Chief, Fluid 

Minerals Division, 202–912–7143 for 

information regarding the substance of 

the rule or information about the BLM’s 

Fluid Minerals Program. Persons who 

use a telecommunications device for the 

deaf (TDD) may call the Federal 

Information Relay Service (FIRS) at 1– 

800–877–8339 to contact the above 

individual during normal business 

hours. FIRS is available 24 hours a day, 

7 days a week to leave a message or 

question with the above individual. You 

will receive a reply during normal 

business hours. 

SUPPLEMENTARY INFORMATION: 

Executive Summary 

‘‘Hydraulic fracturing,’’ a process 

used to stimulate production from oil 

and gas wells, has been a growing 

practice in recent years. Public 

awareness of fracturing has grown as 

new horizontal drilling technology has 

allowed increased access to shale oil 

and gas resources across the country, 

sometimes in areas that have not 

previously experienced significant oil 

and gas development. The extension of 

the practice has caused public concern 

about whether fracturing can allow or 

cause the contamination of underground 

water sources, whether the chemicals 

used in fracturing should be disclosed 

to the public, and whether there is 

adequate management of well integrity 

and the ‘‘flowback’’ fluids that return to 

the surface during and after fracturing 

operations. 

The Bureau of Land Management 

(BLM) oversees approximately 700 

million subsurface acres of Federal 

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