Federal Register / Vol. 72, No. 41 / Friday, March 2, 2007 / Proposed Rules 9479 

analysis and documentation under that 

section. 

Under figure 2–1, paragraph (34)(h), 

of the Instruction, an ‘‘Environmental 

Analysis Check List’’ and a ‘‘Categorical 

Exclusion Determination’’ are not 

required for this rule. Comments on this 

section will be considered before we 

make the final decision on whether to 

categorically exclude this rule from 

further environmental review. 

List of Subjects in 33 CFR Part 100 

Marine safety, Navigation (water), 

Reporting and recordkeeping 

requirements, Waterways. 

For the reasons discussed in the 

preamble, the Coast Guard proposes to 

temporarily amend 33 CFR Part 100 as 

follows: 

PART 100—SAFETY OF LIFE ON 

NAVIGABLE WATERS 

1. The authority citation for Part 100 

continues to read as follows: 

Authority: 33 U.S.C. 1233; Department of 

Homeland Security Delegation No. 0170.1. 

2. In § 100.525, from 8 a.m. to 6 p.m. 

on April 21 and 22, 2007, temporarily 

suspend paragraph (c). 

3. In § 100.525, from 8 a.m. to 6 p.m. 

on April 21 and 22, 2007, temporarily 

add a new paragraph (d) to read as 

follows: 

§ 100.525 Western Branch, Elizabeth River, 

Portsmouth, Virginia. 

* * * * * 

(d) Enforcement period. This section 

will be enforced from 8 a.m. to 6 p.m. 

on April 21 and 22, 2007. A notice of 

enforcement of this section will be 

disseminated through the Fifth Coast 

Guard District Local Notice to Mariners 

announcing the specific event date and 

times. Notice will also be made via 

marine Safety Radio Broadcast on VHF–

FM marine band radio channel 22 

(157.1 MHz). 

Dated: February 15, 2007. 

Larry L. Hereth, 

Rear Admiral, U.S. Coast Guard, Commander, 

Fifth Coast Guard District. 

[FR Doc. E7–3638 Filed 3–1–07; 8:45 am] 

BILLING CODE 4910–15–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 405, 424, and 498 

[CMS–6003–P2] 

RIN 0938–AI49 

Medicare Program; Appeals of CMS or 

Contractor Determinations When a 

Provider or Supplier Fails To Meet the 

Requirements for Medicare Billing 

Privileges 

AGENCY: Centers for Medicare and 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

establish an appeals process for 

providers and suppliers whose 

applications for enrollment or renewal 

of enrollment were denied. It would 

also grant providers and suppliers the 

right to a hearing by an Administrative 

Law Judge (ALJ) within the Department 

of Health and Human Services after an 

adverse decision at the reconsideration 

level when a provider or supplier’s 

Medicare enrollment application is 

denied to those situations in which the 

provider or supplier’s Medicare billing 

privileges are revoked. In addition, this 

proposed rule would grant providers 

and suppliers the right to Departmental 

Appeals Board review of an adverse ALJ 

decision. 

It would also establish timeframes for 

deciding enrollment appeals by an ALJ 

or the DAB. This proposed rule would 

also establish the use of electronic funds 

transfer (EFT) be used for all Federal 

payments to providers and suppliers. 

Finally, this proposed rule would 

implement section 936(b)(1) of the 

Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (MMA), which specifies the 

timeframes in which contractors must 

process all provider and supplier 

enrollment actions (initial enrollments, 

change of information actions, 

revalidations, etc.). 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on May 1, 2007. 

ADDRESSES: In commenting, please refer 

to file code CMS–6003-P2. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (no duplicates, please): 

1. Electronically. You may submit 

electronic comments on specific issues 

in this regulation to http:// 

www.cms.hhs.gov/eRulemaking. Click 

on the link ‘‘Submit electronic 

comments on CMS regulations with an 

open comment period.’’ (Attachments 

should be in Microsoft Word, 

WordPerfect, or Excel; however, we 

prefer Microsoft Word.) 

2. By regular mail. You may mail 

written comments (one original and two 

copies) to the following address ONLY: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS–6003–

P2, P.O. Box 8017, Baltimore, MD 

21244–1850. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments (one 

original and two copies) to the following 

address ONLY: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS–6003–

P2, Mail Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments (one original 

and two copies) before the close of the 

comment period to one of the following 

addresses. If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410)786–

7195 in advance to schedule your 

arrival with one of our staff members. 

Room 445–G, Hubert H. Humphrey 

Building, 200 Independence Avenue, 

SW., Washington, DC 20201; or 7500 

Security Boulevard, Baltimore, MD 

21244–1850. 

(Because access to the interior of the 

HHH Building is not readily available to 

persons without Federal Government 

identification, commenters are 

encouraged to leave their comments in 

the CMS drop slots located in the main 

lobby of the building. A stamp-in clock 

is available for persons wishing to retain 

a proof of filing by stamping in and 

retaining an extra copy of the comments 

being filed.) 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

Submission of comments on 

paperwork requirements. You may 

submit comments on this document’s 

paperwork requirements by mailing 

your comments to the addresses 

provided 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. 


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FOR FURTHER INFORMATION CONTACT: 

August Nemec, (410) 786–0612. 

SUPPLEMENTARY INFORMATION: 

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this rule to assist us in fully 

considering issues and developing 

policies. You can assist us by 

referencing the file code CMS–6003–P2. 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

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

eRulemaking. Click on the link 

‘‘Electronic Comments on CMS 

Regulations’’ on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

I. Background 

A Medicare beneficiary may obtain 

covered Medicare items or services from 

any person, or institution that is 

enrolled in the Medicare program and is 

qualified to furnish those services. 

Various provisions of the statute and 

regulations establish conditions of 

participation or standards that a 

healthcare provider or supplier must 

meet in order to receive Medicare 

payment. These standards differ 

depending on the type of provider or 

supplier involved and whether the 

services are furnished under Parts A, B, 

or C of the Medicare statute. There are 

also differences in qualifications 

between providers and suppliers of 

services, and differences among the 

various types of suppliers, in how they 

are enrolled in the Medicare program. 

For some classifications of providers 

and suppliers, an on-site survey is 

required. For other individuals or 

entities, a determination can be made 

based largely on the information 

provided by the applicant. 

The Medicare regulations in part 498 

provide appeal rights for providers and 

suppliers that have been found to not 

meet certain conditions of participation 

or established standards. For the 

purposes of part 498, these suppliers 

include independent laboratories; 

suppliers of portable x-ray services; 

rural health clinics; federally qualified 

health centers; ambulatory surgical 

centers; end-stage renal disease 

treatment facilities; and chiropractors 

and physical therapists in private 

practice. For the purposes of Part 498, 

the term ‘‘provider’’ refers to a hospital, 

critical access hospital, skilled nursing 

facility, comprehensive outpatient 

rehabilitation facility (CORF), home 

health agency or hospice, that has in 

effect an agreement to participate in 

Medicare; or a clinic, rehabilitation 

agency, or pubic health agency that has 

in effect a similar agreement but only to 

furnish outpatient physical therapy or 

speech pathology services; or 

community mental health center that 

has in effect a similar agreement but 

only to furnish partial hospitalization 

services. 

In addition, our regulations at 

§ 405.874 provide an appeals process for 

suppliers of Durable Medical 

Equipment, Prosthetics and Orthotics 

and Supplies (DMEPOS) that wish to 

contest a denial of an application for a 

billing number or the revocation of an 

existing billing number. The § 405.874 

appeals process affords DMEPOS 

suppliers the right to a carrier hearing 

before a carrier official who was not 

involved in the original determination, 

and the right to seek a review before a 

CMS official designated by the CMS 

Administrator. 

In December 1998, we issued CMS 

Ruling 98–1, regarding the appeals 

process Medicare carriers must provide 

to physicians, nonphysician 

practitioners, and to certain entities that 

receive reassigned benefits from 

physicians and nonphysician 

practitioners. CMS Rulings are decisions 

of the Administrator that serve as 

precedent final opinions and orders and 

statements of policy and interpretation. 

They provide clarification and 

interpretation of complex or ambiguous 

provisions of statute or regulations 

relating to Medicare, Medicaid, 

Utilization and Quality Control Peer 

Review, private health insurance, and 

related matters. CMS Rulings are 

binding on all our components, 

Medicare contractors, the Provider 

Reimbursement Review Board, the 

Medicare Geographic Classification 

Review Board, and ALJs who hear 

Medicare appeals. These Rulings 

promote consistency in interpretation of 

policy and adjudication of disputes. 

This proposed rule is different from the 

clarification of appeals procedures 

found in CMS Ruling 98–1, because it 

adds provisions in order to comply with 

the MMA. Whereas the ruling followed 

the procedures in § 405.874, this 

proposed rule would grant suppliers the 

right, after denial or revocation of a 

supplier’s Medicare billing privileges, to 

a hearing by an ALJ after an adverse 

decision at the reconsideration level as 

well as judicial review. 

II. Provisions of the Proposed Rule 

Published on October 25, 1999 

In the October 25, 1999 Federal 

Register (64 FR 57431), we published a 

proposed rule that set forth proposed 

revisions to § 405.874 (Appeals of 

carrier decisions that supplier standards 

are not met) to extend appeal rights to 

all suppliers whose enrollment 

applications for Medicare billing 

privileges are revoked, except for those 

suppliers covered under the appeals 

provisions of part 498. The proposed 

rule stated that these administrative 

appeal rights would apply to suppliers 

of durable medical equipment, 

prosthetics, orthotics, and supplies; 

ambulance service providers; 

independent diagnostic testing facilities; 

physicians; and other suppliers such as 

physician assistants. We also proposed 

revisions to the existing procedures in 

§ 405.874. 

Since section 902 of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA) 

prohibits the Secretary from finalizing a 

proposed rule that was published more 

than 3 years earlier except under 

exceptional circumstances, we are not 

seeking comment on our earlier 

proposed rule. In addition, we have 

revised the October 25, 1999 proposed 

rule in order to comply with section 936 

of the MMA. However, we are including 

a summary discussion of the significant 

provisions stated in the October 25, 

1999 proposed rule in order to provide 

historical background regarding the 

development of this proposed rule. The 

following is a summary of the 

procedural changes found in the 

October 25, 1999 proposed rule. 

In our October 1999 proposed rule we 

proposed to: 

• Set forth the procedures to be 

followed by carriers concerning 

notifying a supplier of the denial of an 

enrollment application for supplier 

billing privileges. 

• Clarify that a revocation of a 

supplier billing number that is based on 

a Federal exclusion or debarment is 

effective with the effective date of the 

exclusion or debarment, regardless of 

the date of the notice from the carrier 

that the billing number is revoked. 

• Change the language in current 

§ 405.874(c) that requires a carrier 


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hearing officer to schedule a hearing to 

be held within 1 week. 

• Clarify that we would not pay for 

services furnished by suppliers during a 

period in which the supplier’s billing 

privileges have been denied or revoked. 

• Clarify that the supplier must be in 

compliance with all requirements in 

order to have its billing number 

reinstated, and that we must be satisfied 

that the supplier is in compliance and 

will remain in compliance. 

• Permit the carrier, carrier hearing 

officer, or CMS (then HCFA) official to 

reopen and revise its initial 

determination 

• Restrict DMEPOS suppliers from 

billing for services prior to the date that 

their billing number was issued. 

• Describe the procedure for 

submitting claims after a reversal of a 

supplier enrollment application denial 

or billing number revocation, or after a 

billing number reinstatement. 

III. Analysis of and Responses to Public 

Comments Received From the Proposed 

Rule Published on October 25, 1999 

The following is a summary of our 

comments and responses to the October 

25, 1999 proposed rule. 

Notwithstanding the presentation of 

these comments and responses, we are 

only soliciting comments on this 

proposed rule. 

Comment: One commenter suggested 

that we simplify the enrollment 

application (Form CMS 855) instead of 

removing the requirement that a carrier 

must accept or reject an entity’s 

enrollment application for a billing 

number or request additional 

information within 15 days of the 

receipt of the enrollment application. 

Response: Since the publication of 

our October 25, 1999 proposed rule we 

have published several notices 

requesting public comment on the 

enrollment applications in the Federal 

Register including one on February 2, 

2001, (66 FR 8807). The final approval 

notice was granted on September 25, 

2001. Most recently, we sought public 

comments on our revised provider 

enrollment application on July 8, 2005. 

In the April 25, 2003 Federal Register 

(68 FR 22064), we published a proposed 

rule concerning our provider enrollment 

procedures entitled ‘‘Requirements for 

Establishing and Maintaining Medicare 

Billing Privileges,’’ that includes 

proposed revisions to the CMS 855 

enrollment applications. In addition, to 

be consistent with the nomenclature in 

this proposed rule and existing manual 

instructions, we are changing the term 

‘‘disallowance’’ to the term ‘‘denial’’

throughout this proposed rule. 

Comment: Two commenters suggested 

that carriers be given a timeframe for 

processing these applications, such as 

30 or 45 days. Many commenters 

recommended that we maintain and 

enforce a time limit for the carrier to 

process enrollment applications and 

expressed concern about delays in 

billing or the inability to bill for 

Medicare items and services. 

Response We do maintain and enforce 

provider enrollment processing 

standards for carriers. Currently, the 

time limit for the carrier to process an 

initial determination, can be found in 

Program Integrity Manual, Chapter 10- 

Healthcare Provider/Supplier 

Enrollment. Carriers are evaluated 

against this standard in the Contractor 

Performance Evaluation process. 

In addition, section 936(a) of the 

MMA adds a new section 1866(j)(1)(B) 

to the Act, requiring the Secretary to 

‘‘* * * establish by regulation 

procedures under which there are 

deadlines for actions on applications for 

enrollment (and, if applicable, renewal 

of enrollment). The Secretary shall 

monitor the performance of Medicare 

Administrative Contractors in meeting 

the deadlines * * *’’ In this proposed 

rule, we would establish deadlines for 

processing all provider and supplier 

enrollment actions as discussed in 

greater detail in section IV. of the 

preamble of this proposed rule. 

Comment: Several commenters 

suggested that we should provide 

temporary provider numbers during the 

enrollment process to permit suppliers 

to submit claims for their provision of 

items and services prior to receiving a 

permanent supplier billing number. 

Response: Since the publication of the 

October 25, 1999 proposed rule, we 

published the Requirements for 

Providers and Suppliers to Establish 

and Maintain Medicare enrollment final 

rule(71 FR 20754), where we required 

that providers and suppliers obtain 

billing numbers before enrolling in the 

Medicare program. The purpose of the 

enrollment process is to ensure that we 

enroll qualified, eligible individuals and 

entities as providers and suppliers of 

Medicare services. Allowing providers 

and suppliers to submit claims prior to 

enrollment in the Medicare program 

would undermine this process. 

Comment: Two commenters suggested 

that a supplier should not have to prove 

compliance with all enrollment 

qualifications because this allows the 

carrier to raise new objections without 

warning and shifts the burden of proof 

to the supplier. 

Response: Since the publication of the 

October 25, 1999 proposed rule, we 

published the Requirements for 

Providers and Suppliers to Establish 

and Maintain Medicare enrollment final 

rule (April 21, 2006, 71 FR 20754). In 

this final rule, we require providers and 

supplier to meet and maintain all 

Federal and State requirements to be 

issued and retain Medicare billing 

privileges. When suppliers enroll in the 

Medicare program, they are required to 

sign a certification statement that they 

are in compliance with all Medicare 

enrollment requirements. This appeals 

proposed rule would not alter the 

burden of proof already placed on the 

supplier in the initial application 

process. 

Comment: Two commenters suggested 

that we should propose a separate 

enrollment process for those suppliers 

whose enrollment applications have 

been denied, who have lost their appeal, 

and who decide to submit a new 

enrollment application to the carrier. 

Response: We maintain that if a 

supplier’s enrollment application has 

been denied and the denial was upheld 

by the appeals process, then that 

supplier would still be eligible to 

reapply for a Medicare supplier number. 

If the supplier still wanted to enroll, we 

assume that the supplier would correct 

the reasons for the denial. The supplier 

would be required to submit the 

enrollment application as an initial 

enrollment. Therefore, a separate 

enrollment process for applicants who 

were denied enrollment would not be 

practical. 

Comment: A commenter stated that 

we had established the effective date for 

purposed for billing Medicare for 

DMEPOS services in a change of 

ownership (CHOW) situation to be ‘‘the 

date of the actual change in ownership, 

rather than the date of assignment of the 

National Supplier Clearinghouse.’’

Response: We agree with the 

commenter. This is the current policy as 

long as at the time of the CHOW, all 

CMS Medicare DMEPOS supplier 

standards specified in § 424.57 are met. 

Comment: Three commenters stated 

that physicians should not be 

characterized as suppliers. 

Response: For purposes of Medicare 

terminology, it has been a longstanding 

practice for physicians to be considered 

as suppliers. Our regulations at 

§ 400.202 define a supplier as a 

physician or other practitioner, or an 

entity other than a provider that 

furnishes health care services under 

Medicare. In addition, section 901(b) of 

the MMA amended section 1861 of the 

Act by adding paragraph (d), which 

defines a supplier to include a 

physician. Therefore, we are retaining 

the current definition for the purpose of 

this proposed rule. 


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Comment: A commenter stated that it 

is unclear whether this regulation 

applies to physicians. 

Response: This proposed rule would 

apply to physicians, as physicians are 

considered suppliers in accordance with 

the definitions specified in § 400.202. 

Comment: One commenter stated that 

this regulation should have been 

incorporated into a rule that established 

requirements for obtaining and 

maintaining Medicare billing privileges. 

Response: As stated previously, we 

finalized CMS–6002-F, Requirements 

for Provider and Suppliers to Establish 

and Maintain Medicare Enrollment, on 

April 21, 2006 (71 FR 20754). 

Accordingly, we are not able to adopt 

this suggestion. 

Comment: A commenter suggested 

that we add an exception to this rule for 

time periods during which a supplier is 

unaware of the debarment or exclusion 

of another entity with which it is doing 

business. 

Response: While we understand this 

comment, we believe that information 

on excluded or debarred entities is 

readily available to the public. For 

example, the Office of Inspector 

General’s (OIG’s) Web site pages which 

include the following: 

• OIG’s ‘‘List of Excluded Individuals 

and Entities.’’ This list is commonly 

referred to as the ‘‘OIG Sanction List’’

for those parties excluded by the OIG 

from participation in the Medicare, 

Medicaid, and all Federal health care 

programs (as defined in section 1128B(f) 

of the Act); 

• ‘‘List of Parties Excluded from 

Federal Procurement and Nonprocurement Programs,’’ known as the 

‘‘GSA Debarment List’’, for those parties 

debarred, suspended or otherwise 

excluded by other Federal agencies from 

participation in Federal procurement 

and nonprocurement programs and 

activities. 

The aforementioned lists are in 

accordance with the Federal Acquisition 

and Streamlining Act of 1994, and with 

the HHS Common Rule at 45 CFR part 

76. The Web site for the OIG exclusion 

list can be found at http:// 

www.oig.hhs.gov and the Web site for 

the debarment list can be found at 

http://www.epls.arnet.gov. 

Comment: Two commenters suggested 

that we should more clearly distinguish 

between those suppliers whose initial 

enrollment applications had been 

denied and those whose enrollment had 

been revoked. 

Response: With the publication of 

Requirements for Provider and 

Suppliers to Establish and Maintain 

Medicare Enrollment final rule (April 

21, 2006, 71 FR 20754), we believe we 

have clarified the differences between a 

denial of billing privileges and 

revocation of billing privileges. In 

addition, we believe that only one 

appeals process is necessary to resolve 

adverse administrative enrollment 

decisions. 

Comment: One commenter stated that 

the appeal rights of a supplier that has 

been excluded by the OIG are more 

expansive than the appeal rights 

contained in this regulation for a 

supplier whose billing number has been 

revoked, since an excluded supplier 

may request an Administrative Law 

Judge (‘‘ALJ’’) hearing. 

Response: This proposed rule reflects 

the requirements of section 936(a) of the 

MMA to grant the right to an ALJ 

hearing, judicial review, and DAB 

review to a revoked supplier. Therefore, 

an excluded supplier would no longer 

have more expansive appeal rights. 

Comment: Several commenters noted 

that § 405.874(a) should clearly state 

that the carrier should fully inform the 

supplier in detail as to why it has 

denied the supplier’s enrollment 

application or revoked the supplier’s 

enrollment. 

Response: We agree with the 

commenters. In this proposed rule, we 

are proposing in § 405.874(a) and (b) 

that the carrier provide the reason why 

a supplier’s enrollment application was 

denied or why its billing number was 

revoked. 

Comment: Several commenters were 

opposed to reducing the timeframe to 

file an appeal of a denial of an 

enrollment application or the revocation 

of a Medicare billing number from 90 to 

60 days. 

Response: We are proposing to follow 

the longstanding processes of part 498, 

which allow 60 days for filing an 

appeal. 

Comment: A few commenters 

contended that we should accept a 

postmark as the reliable date to 

determine when suppliers have learned 

of a carrier decision to deny an 

application or revoke Medicare billing 

privileges. 

Response: We agree with the 

commenters. We believe that 

§ 498.22(b)(3), § 498.22(d), and § 498.40 

clearly address when we must accept a 

postmark as the reliable date to 

determine when suppliers have learned 

of a carrier decision to deny an 

application or revoke Medicare billing 

privileges. 

Comment: One commenter stated that 

it is confusing to base the revocation of 

a billing number on the effective date of 

the Federal action (exclusion or 

debarment), regardless of the date of 

notice from the carrier. 

Response: The OIG sends an 

exclusion notice to the supplier and the 

carrier at the same time explaining that 

the supplier is being excluded from 

Medicare, Medicaid, and other Federal 

health care programs. The effective date 

of the exclusion is 20 days after the date 

the notice is sent to the supplier and the 

carrier (see § 1001.2002(b)). The carrier 

does not establish the date for the 

exclusion nor can the carrier alter the 

effective date of OIG exclusion. 

Comment: One commenter stated that 

the carrier should not have the 

discretion to implement a carrier 

hearing officer’s decision to deny or 

revoke a supplier billing number 

pending a possible appeal. This 

commenter suggested that carriers be 

required to decide within 15 days 

whether to appeal a hearing officer’s 

reversal decision, and if the carrier 

chooses not to appeal, then it must 

immediately implement the decision. 

Response: In accordance with section 

936(1)(b)(1) of the MMA, we propose to 

follow the process of part 498. These 

procedures have specific timeframes. 

Comment: Several commenters stated 

that an ALJ, rather than a CMS official, 

should conduct the appeal that follows 

the carrier hearing. 

Response: Section 936(l)(b)(1) of the 

MMA provides for an ALJ hearing. 

Therefore, we are proposing to modify 

our regulations to address this concern. 

Comment: One commenter stated that 

when a revocation of a supplier billing 

number is reversed upon appeal, the 

supplier billing number should be 

reinstated to the date upon which the 

revocation became effective. 

Response: We agree. In this proposed 

rule, we would revise § 405.874(d), to 

provide that in the case of a reversal of 

a revocation on appeal, a supplier 

billing number is reinstated back to the 

date that the revocation became 

effective. 

Comment: One commenter suggested 

that we should establish clear 

guidelines as to when and why a carrier 

or a carrier hearing officer can reopen an 

existing decision or determination, and 

another commenter suggested that 

reopening of decisions should be 

limited to situations where good cause 

has been established and new and 

material evidence has been uncovered. 

Response: While we considered 

establishing a reopening process, we 

believe that the appeals process that 

would be established in this proposed 

rule affords providers and suppliers 

with sufficient protections. We would 

appreciate receiving additional public 

comments regarding the benefits 

associated with expanding on the 


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reopening process established in 

§ 498.30. 

Comment: One commenter stated that 

the provisions relating to the rejection of 

claims fails to distinguish between 

suppliers whose billing numbers have 

been revoked and those whose 

enrollment applications are pending. 

The commenter also was concerned that 

payments will be rejected only when a 

supplier’s enrollment has been revoked 

because a carrier’s rejection of claims 

affords no appeal rights. 

Response: It is true that the provision 

that claims be rejected does not in fact, 

distinguish between those suppliers 

whose billing numbers are revoked and 

those whose enrollment applications are 

pending. Claims are rejected when the 

supplier does not have valid billing 

privileges at the time that claims were 

submitted. When a supplier’s 

application is approved and it is 

assigned a billing number, these claims 

may be resubmitted and paid 

retroactively, except for DMEPOS 

suppliers, who do not have retroactive 

billing privileges. In addition, we 

maintain that claims are rejected for 

those suppliers whose billing privileges 

are revoked so the contractor does not 

have to hold the claims in its system 

indefinitely. 

Comment: Two commenters stated 

that we should ensure that all decisions 

are reached and implemented prior to 

the claims expiration date, or the agency 

should allow exceptions in 

circumstances when the timeframe to 

pay allowable claims has expired. 

Response: The timely filing 

requirements for claims submission, as 

specified in § 424.44, are not affected by 

an enrollment application pending 

processing or by the appeal of the 

Agency’s enrollment decision. As 

specified in § 405.874(i), if a supplier is 

successful in overturning its denial or 

revocation, it has up to 1 year after the 

reversal decision to file any claims for 

items furnished during the overturned 

period. 

IV. Provisions of This Proposed Rule 

After consideration of the comments 

reviewed, analysis of specific issues, 

and the provisions of section 936(l)(b)(1) 

of the MMA we are modifying the 

October 25, 1999 proposed rule by 

making clarifying and editorial changes, 

and revising the sections affected by 

936(l)(b)(1) of the MMA. 

With the implementation of the 

National Provider Identifier (NPI) 

(which is a standard unique identifier 

for health care providers) scheduled for 

May 23, 2007, we believe that it is 

appropriate to propose use of the term 

‘‘Medicare billing privileges’’ in lieu of 

the term ‘‘Medicare billing number.’’

(See the January 23, 2004 final rule (69 

FR 3469) for more detailed information 

regarding the NPI.) After 

implementation of the NPI, providers or 

suppliers will have to obtain an NPI 

before initiating enrollment in the 

Medicare program. Medicare will use 

the NPI as the billing number. However, 

providers and suppliers must still enroll 

with a fee-for-service contractor in order 

to bill the Medicare program. Thus, the 

fee-for-service contractor will convey 

billing privileges. 

We propose to maintain § 405.874, 

which specifies provisions that would 

apply to certain suppliers as defined in 

§ 405.802. 

In § 405.802, we propose to define 

prospective supplier and suppliers by 

specifying the provisions of § 405.874 

that would apply. These suppliers 

include an independent laboratory; 

supplier of durable medical equipment, 

prosthetics, orthotics, or supplies 

(DMEPOS); ambulance service provider; 

independent diagnostic testing facility; 

physician, other practitioner such as 

physician assistant; physical therapist 

in independent practice; clinical 

laboratories; supplier of portable x-ray 

services; rural health clinic (RHC); 

Federally qualified health center 

(FQHC); ambulatory surgical center 

(ASC); an entity approved by CMS to 

furnish outpatient diabetes selfmanagement training, or end-stage renal 

disease (ESRD) treatment facility that is 

approved by CMS as meeting the 

conditions for coverage of its services, 

and prospective supplier means any of 

the listed entities that seek to be 

approved for coverage of its services 

under Medicare. 

In new § 405.874(a), Denial of a 

supplier enrollment application, we 

propose that if a carrier denies a 

supplier’s enrollment application, the 

carrier must notify the supplier by 

certified mail. The notice must include 

the following: (1) The reason for denial 

in sufficient detail to allow the supplier 

to understand the nature of its 

deficiencies; (2) the right to appeal in 

accordance with part 498; and (3) the 

address to which the written appeal 

must be mailed. 

We propose these changes to comply 

with section 936(a)(2) of the MMA. Part 

498 of these regulations includes the 

right of a supplier to a reconsideration 

of a determination that it does not 

qualify for Medicare billing privileges. 

This reconsideration would be 

performed by a carrier hearing officer 

not involved in the original 

determination. Part 498 also grants 

suppliers the right to a hearing by an 

ALJ, DAB review and judicial review. 

These various levels of appeal would 

also apply to revocations of Medicare 

billing privileges. 

In proposed § 405.874(b)(1), Notice of 

revocation, we would clarify that if a 

carrier revokes a supplier’s Medicare 

billing privileges that the carrier must 

notify the supplier by certified mail and 

that the notice must include—(1) the 

reason for the revocation in sufficient 

detail for the supplier to understand the 

nature of its deficiencies; (2) the right to 

appeal in accordance with part 498 of 

this chapter; (3) the address to which 

the written appeal must be mailed. 

In proposed § 405.874(b)(2), 

Revocation of a supplier’s billing 

privileges, we would separate the 

procedures in existing § 405.874(a) and 

§ 405.874(b) because we believe the 

language in the October 29, 1999 

proposed rule was not sufficiently clear. 

In proposed § 405.874(b)(2), we clarify 

that a revocation of a supplier’s billing 

privileges that is based on a Federal 

exclusion or debarment is effective with 

the effective date of the exclusion or 

debarment, regardless of the date of the 

notice from the carrier that the billing 

number is revoked. Moreover, if CMS, 

or one of its designated contractors 

revokes Medicare billing privileges, we 

would not revoke an individual or 

organization’s NPI. 

In proposed § 405.874(b)(3), Payment, 

we would revise this section to clarify 

that suppliers are not paid for items or 

services furnished during a period in 

which a supplier does not have billing 

privileges or its billing privileges have 

been revoked. Concerning DMEPOS 

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

states that, with the exception of 

medical equipment and supplies 

furnished incident to a physician’s 

service, no payment may be made by 

Medicare for items and supplies unless 

the supplier has active Medicare billing 

privileges. We further propose that 

claims submitted to carriers for items or 

services furnished during a period of 

supplier ineligibility are to be rejected 

by the carrier, not denied. 

In § 405.874(c)(1) Appeal rights, we 

propose that a supplier’s appeal rights 

would follow the processes detailed in 

part 498. 

We are proposing to revise 

§ 405.874(d), Impact of reversal of 

carrier determination on claims 

processing, to reflect that claims for 

services furnished to Medicare 

beneficiaries during a period in which 

the supplier’s billing privileges were not 

effective are rejected and not denied. If 

a provider or supplier is determined not 

to have qualified for billing privileges in 

one period but qualified in another, 

contractors process claims for services 


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furnished to beneficiaries during the 

period for which the provider or 

supplier was Medicare-qualified. 

Subpart C of this part sets forth the 

requirements for recovery of 

overpayments. The appeals process for 

denied claims should not apply if a 

provider or supplier does not have 

billing privileges. 

In § 405.874(d)(3), we propose that if 

a revocation of a provider’s or supplier’s 

billing privileges are reversed upon 

appeal, the provider’s or supplier’s 

billing privileges are reinstated back to 

the date that the revocation became 

effective. 

Section 405.874(d)(4) would specify 

that if a denial of a provider’s or 

supplier’s billing privileges is reversed 

upon appeal, then the appeal decision 

establishes the date that the provider’s 

or supplier’s billing privileges will 

become effective. 

We propose revising § 405.874(e), 

Reinstatement of provider’s or 

supplier’s billing privileges following 

corrective action, to state that if a 

provider or supplier completes a 

corrective action plan and provides 

sufficient evidence to the carrier that it 

has complied fully with the Medicare 

requirements, the carrier may reinstate 

the supplier’s billing privileges. The 

carrier may pay for services furnished 

on or after the effective date of the 

reinstatement. The effective date of the 

reinstatement will be based on the date 

the provider or supplier is in full 

compliance with all Medicare 

requirements. However, a carrier’s 

refusal to reinstate billing privileges 

based on the submission of a corrective 

action plan is not an initial 

determination and may not be appealed. 

We believe that allowing suppliers to 

appeal an adverse corrective action plan 

would establish two separate appeal 

processes and result in an 

administratively inefficient appeals 

process. Any supplier seeking to appeal 

a carrier’s determination to deny or 

revoked billing privileges must submit 

an appeal within the timely filing 

period established for reconsideration, 

regardless of the submission of a 

corrective action plan. 

In § 405.874(f) we propose to revise 

the effective date for DMEPOS 

supplier’s billing privileges. If a carrier, 

carrier hearing officer, or ALJ 

determines that a DMEPOS supplier’s 

denied enrollment application meets the 

standards in § 424.57 of this chapter and 

any other requirements that may apply 

(for example, reinstatement after an OIG 

exclusion), the determination 

establishes the effective date of the 

billing number as not earlier than the 

date the carrier made the determination 

to deny the supplier’s enrollment 

application. Claims are rejected for 

services furnished before that effective 

date. 

In § 405.874(g), Submission of claims, 

we propose that a provider or supplier 

succeeding in having its enrollment 

application denial or billing number 

revocation reversed, or in having its 

billing number reinstated, may submit 

claims to the carrier for services 

furnished during periods of Medicare 

qualification, subject to the limitations 

in § 424.44 of this chapter, regarding the 

timely filing of claims. If the claims 

previously were filed timely but were 

rejected, they would be considered filed 

timely upon resubmission. Previously 

denied claims for items or services 

rendered during a period of denial or 

revocation may be resubmitted to CMS 

within 1 year after the date of 

reinstatement or reversal. 

In § 424.510(d)(2)(iv) Submittal of 

electronic funds transfer (EFT) 

authorization form, we propose that at 

the time of enrollment, an enrollment 

change request or revalidation, 

providers and suppliers shall submit the 

CMS–588 form to receive payments via 

electronic funds transfer. 

Consistent with the authority found at 

31 U.S.C. 3332(f)(1), all Federal 

payments, including Medicare 

payments to providers and suppliers, 

shall be made by electronic funds 

transfer (EFT). Further, under 31 U.S.C. 

3332(g), each recipient of Federal 

payments required to be made by 

electronic funds transfer shall designate 

1 or more financial institutions or other 

authorized agents to which the 

payments shall be made and provide the 

information to CMS. While the statutory 

provisions at 31 CFR part 208 govern 

the Department of Treasury, they apply 

to all Federal government agencies. 

Consequently, we want to clarify that 

the EFT requirement applies to 

providers and suppliers enrolling in the 

Medicare program or making changes to 

enrollment. We are proposing to require 

the EFT payments for—(1) providers 

and suppliers initially enrolling in the 

Medicare program; and (2) providers 

and suppliers submitting a CMS–855 

change request who are not currently 

receiving payments via EFT. Note if a 

provider or supplier is not enrolled in 

the Medicare program or is not 

submitting a change in their enrollment 

information, no action is necessary. We 

will continue to encourage all providers 

and suppliers to switch to EFT 

payments voluntarily. 

We believe that this change will 

reduce the paperwork burden for the 

public and reduce our administrative 

costs. Moreover, we believe that the 

transition to EFT will help ensure that 

payments are made to the provider or 

supplier of services. Finally, in the 

event of a national disaster, such as 

Hurricane Katrina, providers and 

suppliers utilizing EFT would be 

ensured a continuity of payment. We are 

proposing to revise § 424.545(a), 

provider and supplier appeal rights, 

which was part of the April 21, 2006 

final rule (71 FR 20754), regarding the 

Requirements for Providers and 

Suppliers To Establish and Maintain 

Medicare Enrollment. The existing 

provision states that a revocation of 

billing privileges also results in the 

termination of a corresponding provider 

agreement. Therefore, we are proposing 

to revise § 424.545(a) by—

• Redesignating the first sentence of 

current paragraph(a) as the introductory 

text and revising that text to remove the 

reference to part 405 subpart H. 

• Redesignating the second sentence 

of current paragraph (a) as paragraph 

(a)(1)(i). 

• Adding paragraph (a)(1)(ii) to 

clarify that if a provider appeals both of 

these sanctions, then both matters will 

be resolved using a single appeals 

process. 

• Redesignating the last sentence of 

current paragraph (a) as paragraph 

(a)(2). 

We believe that our proposal (the 

addition of paragraph (a)(1)(ii) is not a 

change from the current regulatory 

provision. In fact, the current provision 

in § 424.545(a) provides that a final 

decision would apply both to the 

revocation and the termination. 

However, this proposal is an effort to 

clarify that a provider will be able to 

appeal both sanctions using one appeals 

process. We also are proposing that this 

process would follow the appeals 

procedures established for revocations. 

We believe that a single appeals process 

would result in less administrative 

burden for both the agency and any 

affected provider. 

We are proposing to add § 405.874(h) 

to establish deadlines for the 

adjudication of provider enrollment 

actions. We are proposing that 

contractors adjudicate initial 

determinations and revalidations within 

180 days of receipt and that carriers 

adjudicate change-of-information and 

reassignment of payment request within 

90 days of receipt. 

To assist the reader in understanding 

the provider enrollment appeals process 

discussed in this proposed rule, the 

chart below provides first the 

established timeframes in which a 

provider or supplier must file an appeal 

to an adverse determination (that is, 

denial of billing privileges or revocation 


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of billing privileges), and second our 

proposed adjudication timeframes. 

Additional information regarding the 

appeals process is described in the 

following preamble. 

Medicare provider enrollment determination 

Timeframe to 

file an appeal 

(days) 

Proposed 

maximum 

adjudication 

timeframe 

(days) 

Initial ......................................................................................................................................................................... 60 180 

Reconsideration ....................................................................................................................................................... 60 60 

Administrative Law Judge Review ........................................................................................................................... 60 180 

Departmental Appeals Board Review ..................................................................................................................... 60 180 

Federal District Court ............................................................................................................................................... N/A N/A 

We are proposing to update 

§ 424.525(a)(1) and § 424.525(a)(2) for 

reasons for rejecting enrollment 

applications by reducing the amount of 

time that a provider or supplier must 

furnish complete information requested 

by a contractor from 60 to 30 days. 

Additionally, we are proposing a 

reduction from 60 to 30 days for the 

period allowed to furnish all supporting 

documentation for submitting their 

enrollment application. 

We are proposing to reject an 

application that is submitted by a 

provider or supplier if it is incomplete 

or if it fails to include all required 

supporting documentation on the 

enrollment application within 30 days 

of receipt. We are proposing this change 

because approximately 70 percent of the 

submitted applications are incomplete 

or lack the supporting documents for 

enrollment. This change will help 

facilitate the enrollment process and 

reduce the administrative burden 

associated with processing these 

applications. 

We are also proposing to expand 

revocations by the addition of a 

revocation for the abuse of billing 

privileges to § 424.535. In the new 

§ 424.535(a)(8) we are proposing to 

allow Medicare fee-for-service (FFS) 

contractors to revoke Medicare billing 

privileges when a provider or supplier 

submits a claim or claims for services 

that could not have been furnished to a 

beneficiary. Specifically, we believe that 

it is both appropriate and necessary that 

CMS’ FFS contractors be given the 

ability to revoke billing privileges when 

services could not have been furnished 

by a provider or supplier. We have 

found numerous examples of situations 

where a physician or other practitioner 

has billed for services furnished to 

beneficiaries that are undeliverable, 

including but not limited to situations 

where the beneficiary was deceased, the 

directing physician or beneficiary was 

not in the State or country when 

services were furnished, or when the 

beneficiary was in another setting where 

these services could not be 

administered, or the equipment 

necessary for testing was not present 

where the testing is said to have 

occurred. 

We do not believe the determination 

made by the CMS FFS contractors 

constitutes a determination of fraud. In 

addition we believe that this new 

revocation authority is in line with 

other revocations already used by CMS 

and its FFS contractors. Further, 

providers and suppliers may appeal a 

contractor revocation using the process 

outlined in part 498. 

We believe that this type of provision 

is essential to the efficient operation of 

the Medicare program because it would 

enable us to take an important step in 

protecting the expenditure of public 

monies with respect to service providers 

whose motives and billing practices are 

questionable, at best, and, at worst, of a 

sort that might prompt an aggressive 

response from the law enforcement 

community. The Medicare program 

ought not be forced to rely solely on its 

authority to deny claims on a piecemeal 

basis while having to devote extensive 

resources to maintaining the kind of 

close scrutiny of each of these providers 

and suppliers that would be required to 

minimize the program’s exposure to the 

payment of claims that, by anyone’s 

definition, ought not be tolerated. For 

this reason, we are proposing this 

provision in accordance with our broad 

rulemaking authorities in sections 1871 

and 1102 of the Act. 

We should note that providers or 

suppliers that expressly flag claims that 

they believe might be perceived by us as 

being in this category would not face 

prosecution under the False Claims Act. 

In the new § 424.535(c), we are 

proposing a timeframe to wait for 

reapplication to the Medicare program 

when a provider or supplier is revoked. 

We are proposing that when a provider 

or supplier, including all authorized 

officials, delegating officials and 

practitioners, is revoked for any of the 

reasons listed at § 424.535 that the 

provider, supplier, delegated official or 

authorizing official be prohibited from 

enrolling for 3 years. We believe that 

revocations are serious matters and 

must be treated as such to maintain the 

integrity of the program. We invite 

public comment on whether we should 

consider different (that is, shorter or 

longer) timeframes for prohibiting a 

provider or supplier from re-enrolling in 

the Medicare program after a revocation 

has been issued. 

Under the Medicare regulations, we 

know from experience that it is often the 

case that providers, and particularly 

some suppliers, simply react to a 

termination from the program by 

turning around and immediately 

seeking reentry into the program, 

oftentimes in another location or with a 

different name. Such practices make a 

sham of the enforcement process leaving 

us with the obligation to constantly 

monitor suspect providers and 

suppliers, forcing the agency to stand by 

while the same offenders engage in the 

same noncompliant billing practices 

that led to their expulsion in the first 

place. We do not believe it is consistent 

with our mandate to administer an 

efficient program or to protect the 

expenditure of public monies by being 

compelled to take such a passive 

approach to what are clearly 

substandard practices. By having a 

regulatory provision that would keep 

such entities out of the program for 3 

years, we believe we would be 

establishing a credible deterrent to these 

substandard billing practices where 

providers and suppliers would know 

that there are real consequences to their 

actions. The Medicare program ought 

not have to choose to do business with 

all entities simply because they express 

their willingness to accept Federal 

payment for services that they have 

demonstrated are too often suspicious or 

so poorly presented that they cause the 

program to devote too many resources to 

determine their accuracy. 

We are proposing to revise in 

§ 498.1(g) in accordance with section 


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936(a)(2) of the MMA to provide an ALJ 

hearing, and judicial review for any 

provider or supplier whose application 

for enrollment or reenrollment in 

Medicare has been denied. 

In § 498.2, we are proposing to revise 

the definition of a ‘‘supplier’’ to—(1) 

include a supplier of durable medical 

equipment, prosthetics, orthotics, or 

supplies (DMEPOS); ambulance service 

provider; independent diagnostic testing 

facility; physician; and other 

practitioner such as physician assistant; 

and (2) remove the reference to 

‘‘prospective supplier.’’ In § 498.2, we 

are also proposing to add a separate 

definition of ‘‘prospective supplier.’’ We 

are removing the definition of the 

‘‘Office of Hearings and Appeals 

(OHA)’’ because the function of this 

office has been moved from the Social 

Security Administration to the 

Department of Health and Human 

Services. We are also proposing to 

revise the definition of ‘‘affected party’’

to specify that it includes CMS or a CMS 

contractor. 

We are proposing to revise § 498.5 by 

adding a new paragraph (l) to clarify the 

administrative process that a 

prospective provider, existing provider, 

prospective supplier or existing supplier 

dissatisfied with an initial 

determination or revised initial 

determination related to the denial or 

revocation of Medicare billing privileges 

would use. 

We are proposing to revise 

§ 498.5(f)(2) to be consistent with the 

change in § 498.1(g). This would 

implement the mandate of section 

936(a)(2) of the MMA regarding judicial 

review. We are proposing these 

standards because the FFS contractors 

need sufficient time to adjudicate the 

facts and make a reasoned decision. 

Moreover, while we are establishing an 

outside limit for processing these 

applications, the vast majority of these 

decisions are made within 120 days. We 

are requesting comment on this existing 

standard. 

We are proposing to revise § 498.22(a) 

to add that we have delegated authority 

to our contractors to reconsider an 

initial determination. We are also 

proposing to revise § 498.22(b)(1) to 

state that a reconsideration request is to 

be filed with CMS or with the State 

survey agency, or, in the case of 

prospective suppliers, the entity 

specified in the notice of initial 

determination. We are proposing to 

revise § 498.44 to remove the term 

Associate Commissioner for Hearings 

and Appeals, and we are replacing it 

with the Secretary, because this 

function is no longer under the Social 

Security Administration; it is now 

under the Department of Health and 

Human Services. 

With the proposed revision to 

§ 405.874(c)(2), we want to clarify that 

a provider or supplier is required to 

prove that it is in compliance with all 

Medicare requirements for billing 

privileges, and that the Medicare FFS 

contractor incorrectly denied or revoked 

the supplier’s billing number. 

Accordingly, we believe that the burden 

of proof is on the provider or supplier 

to show that it met all requirements 

upon application, or at the time of 

revocation. In § 498.56, we are 

proposing to add a new paragraph (e) 

that specifies the ‘‘good cause’’

exception to the admission of new 

evidence at the ALJ and DAB appeal 

levels. 

Accordingly, we propose to revise 

§ 498.56 and § 498.86 to prohibit 

providers and suppliers from submitting 

new provider enrollment issues or 

evidence at the ALJ and DAB levels of 

review. We believe that the efficiency 

and accuracy of the appeals process is 

enhanced when the provider or supplier 

submits all necessary documentation 

with their appeal request to prove that 

they are in compliance with all 

Medicare requirements for enrollment. 

If supporting evidence is not submitted 

with the request for a reconsideration, 

the contractor will contact the supplier 

to try to obtain the missing evidence. 

The contractor must make a decision 

based on the information in the case 

file. 

The contractor may accept any 

additional documentation, even if it is 

not specified in the appeal notice. If the 

provider/supplier fails to submit 

evidence before the reviewing official 

issues its decision, the provider/ 

supplier would be precluded from 

introducing the evidence at higher 

levels of the appeals process. It is 

presumed that the Medicare FFS 

contractor made a reasonable 

determination in its denial or revocation 

of a supplier’s billing privileges based 

on information it had at the time of the 

decision. The provider/supplier would 

be required to furnish the evidence that 

clearly shows the determination was in 

error at the time it was made. 

We are proposing to revise § 498.78(a) 

to delete the provision that an affected 

party concur in writing or on the record 

with a CMS or Office of Inspector 

General (OIG) request for remand. We 

believe that the appeals process can be 

enhanced by allowing an ALJ to remand 

a provider enrollment case to the 

Medicare FFS contractor when CMS 

requests a remand. Further, we believe 

that a remand request could result in 

either a favorable decision to the 

appellant or an administrative record 

that is complete. 

In § 498.79, we are proposing that 

when a request for an ALJ hearing is 

filed after CMS or a FFS contractor has 

denied an enrollment application, that 

an ALJ must issue a decision, dismissal 

order or remand to CMS, as appropriate, 

no later than 180 days after the initial 

request for a hearing. 

Finally, in § 498.88(g), we are 

proposing that when a request for a 

Board review is filed after an ALJ has 

issued a decision or dismissal order, 

that the Board must issue a decision, 

dismissal order or remand to the ALJ, as 

appropriate, no later than 180 days after 

the appeal was received by the Board. 

V. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995 (PRA), agencies are required to 

provide a 60-day notice in the Federal 

Register and solicit public comment 

before a collection of information 

requirement is submitted to the Office of 

Management and Budget (OMB) for 

review and approval. In order to fairly 

evaluate whether an information 

collection should be approved by OMB, 

section 3506(c)(2)(A) of the PRA 

requires that we solicit comments on the 

following issues: 

• Whether the information collection 

is necessary and useful to carry out the 

proper functions of the agency; 

• The accuracy of the agency’s 

estimate of the information collection 

burden; 

• The quality, utility, and clarity of 

the information to be collected; and 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. However, we 

believe the information collection 

activities referenced in § 405.874 are 

exempt under the terms of the PRA for 

the following reasons: 

• As defined in 5 CFR 1320.4(a)(2), 

information collections conducted or 

sponsored during the conduct of 

criminal or civil action, or during the 

conduct of an administrative action, 

investigation, or audit involving an 

agency against specific individuals or 

entities are exempt from the PRA. 

• As described in 5 CFR 1320.3(h)(9), 

facts or opinions obtained or solicited 

through nonstandardized follow-up 

questions designed to clarify responses 

to approved collections, are exempt 

from the PRA; and 

• Nonstandardized information 

collections directed to less than 10 

persons do not constitute information 

collections as outlined in 5 CFR 

1320.3(c). 


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We believe that the collection 

requirements are part of the 

administrative process, and collected in 

a nonstandardized manner. Since each 

case will be different, based on the 

reasons for denial or revocation, and 

evidence presented, they fall under 

these exceptions. 

If you comment on any of these 

information collection and 

recordkeeping requirements, please mail 

copies directly to the following: 

Centers for Medicare and Medicaid 

Services, Office of Strategic Operations 

and Regulatory Affairs, Regulations 

Development Group, Attn.: William 

Parham, CMS–6003–P2, Room C4–26–

05, 7500 Security Boulevard, Baltimore, 

MD 21244–1850; and Office of 

Information and Regulatory Affairs, 

Office of Management and Budget, 

Room 10235, New Executive Office 

Building, Washington, DC 20503. Attn.: 

Carolyn Lovett, CMS Desk Officer, 

CMS–6003–P2, 

carolyn_lovett@omb.eop.gov. Fax (202) 

395–6974. 

VI. 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. 

VII. Regulatory Impact Statement 

We have examined the impact of this 

rule as required by Executive Order 

12866 (September 1993, Regulatory 

Planning and Review), the Regulatory 

Flexibility Act (RFA) (September 19, 

1980, Pub. L. 96–354), section 1102(b) of 

the Social Security Act, the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4, and Executive Order 13132). 

Executive Order 12866 directs 

agencies to assess all costs and benefits 

of available regulatory alternatives and, 

if regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, distributive impacts; 

and equity). A regulatory impact 

analysis (RIA) must be prepared for 

major rules with economically 

significant effects ($100 million or more 

in any 1 year). This rule does not reach 

the economic threshold and thus is not 

considered a major rule. 

The RFA requires agencies to analyze 

options for regulatory relief for small 

businesses. For purposes of the RFA, 

small entities include small businesses, 

nonprofit organizations, and 

government agencies. Most hospitals 

and most other providers and suppliers 

are small entities, either by nonprofit 

status or by having revenues of $6 to 

$29 million in any one year. Individuals 

and States are not included in the 

definition of a small entity. We are not 

preparing an analysis for the RFA 

because we have determined that this 

rule will not have a significant 

economic impact on a substantial 

number of small entities. 

We maintain that this proposed rule 

would not have an adverse impact on 

small entities; in fact, it would afford 

small suppliers a measure of protection 

against adverse actions by us, and 

extend protection to a larger group of 

suppliers beyond the DMEPOS 

suppliers currently covered under 

§ 405.874. Because this proposed rule 

would merely clarify, expand, and 

update our current policy and 

administrative appeal rights, we 

anticipate slight, if any, economic 

impact on small entities. 

According to data submitted to us by 

carriers in calendar year 2003, 

approximately 166,500 enrollment 

applications were submitted to the 

Medicare carriers by suppliers seeking 

to receive billing privileges. We believe 

that a vast majority of these applicants 

were small businesses. Of those 

applications, approximately 2,000 were 

denied, and approximately 200 

applicants requested a reconsideration. 

Because we have already granted appeal 

rights to the affected suppliers via 

instructions to carriers, we estimate that 

this regulation would have minimal 

impact on carrier workloads. 

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. We are not 

preparing an analysis for section 1102(b) 

of the Act because we have determined, 

and we determined, that this proposed 

rule will not have a significant impact 

on the operations of a substantial 

number of small rural hospitals. There 

is no negative impact on the program or 

on small businesses. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule that may result in expenditure in 

any 1 year by State, local, or tribal 

governments, in the aggregate, or by the 

private sector, of $120 million. This rule 

does not mandate expenditures by 

either the governments mentioned or 

the private sector, therefore no analysis 

is required. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

Since this regulation does not impose 

any costs on State or local governments, 

the requirements of E.O 13132 are not 

applicable. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

Lists of Subjects 

42 CFR Part 405 

Administrative practice and 

procedure, Health facilities, Health 

professions, Kidney diseases, Medical 

devices, Medicare, Reporting and 

recordkeeping requirements, Rural 

areas, X-rays. 

42 CFR Part 424 

Emergency medical services, Health 

facilities, Health professions, Medicare, 

Reporting and recordkeeping 

requirements. 

42 CFR Part 498 

Administrative practice and 

procedure, Health facilities, Health 

professions, Medicare, Reporting and 

recordkeeping requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services would amend 42 CFR 

chapter IV as set forth below: 

PART 405—FEDERAL HEALTH 

INSURANCE FOR THE AGED AND 

DISABLED 

1. The authority citation for Part 405, 

subpart H, continues to read as follows: 

Authority: Secs. 1102, 1842(b)(3)(C), 

1869(b), and 1871 of the Social Security Act 

(42 U.S.C. 1302, 1395u(b)(3)(C), 1395ff(b) and 

1395hh). 

Subpart H—Appeals Under the 

Medicare Part B Program 

2. Section 405.802 is revised by 

adding the definitions of ‘‘prospective 

supplier’’ and ‘‘supplier’’ in 

alphabetical order to read as follows: 

§ 405.802 Definitions. 

* * * * * 


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Prospective supplier means any of the 

listed entities specified in the definition 

of supplier that seeks to be approved for 

coverage of its services under Medicare. 

* * * * * 

Supplier means an independent 

laboratory; supplier of durable medical 

equipment, prosthetics, orthotics, or 

supplies (DMEPOS); ambulance service 

provider; independent diagnostic testing 

facility; physician or other practitioner 

such as physician assistant; physical 

therapist in independent practice; 

clinical laboratories; supplier of 

portable X-ray services; rural health 

clinic (RHC); Federally qualified health 

center (FQHC); ambulatory surgical 

center (ASC); an entity approved by 

CMS to furnish outpatient diabetes selfmanagement training; or end-stage renal 

disease (ESRD) treatment facility that is 

approved by CMS as meeting the 

conditions for coverage of its services. 

* * * * * 

3. Section 405.874 is revised to read 

as follows: 

§ 405.874 Appeals of carrier 

determinations that a supplier fails to meet 

the requirements for Medicare billing 

privileges. 

(a) Denial of a supplier enrollment 

application. If a carrier denies a 

supplier’s enrollment application, the 

carrier must notify the supplier by 

certified mail. The notice must include 

the following: 

(1) The reason for the denial in 

sufficient detail to allow the supplier to 

understand the nature of its 

deficiencies. 

(2) The right to appeal in accordance 

with part 498 of this chapter. 

(3) The address to which the written 

appeal must be mailed. 

(b) Revocation of Medicare billing 

privileges. (1) Notice of revocation. If a 

carrier revokes a supplier’s Medicare 

billing privileges, the carrier must notify 

the supplier by certified mail. The 

notice must include the following: 

(i) The reason for the revocation in 

sufficient detail for the supplier to 

understand the nature of its 

deficiencies. 

(ii) The right to appeal in accordance 

with part 498 of this chapter. 

(iii) The address to which the written 

appeal must be mailed. 

(2) Revocation of a supplier’s billing 

privileges. The revocation of a supplier’s 

billing privileges is effective 15 days 

after the carrier mails the notice of its 

determination to the supplier. A 

revocation based on a Federal exclusion 

or debarment is effective with the date 

of the exclusion or debarment. 

(3) Payment. (i) Medicare does not 

pay for any items or services furnished 

by a supplier during a period in which 

a supplier does not have billing 

privileges or its billing privileges are 

revoked. 

(ii) Carriers do not pay for services 

furnished by the supplier beginning 

with the effective date of a revocation. 

(iii) Medicare does not pay for items 

and supplies unless the supplier has a 

valid, active Medicare billing number. 

(iv) Claims for items or services 

furnished to Medicare beneficiaries after 

the effective date of the revocation are 

rejected. Rejections of claims because a 

supplier does not have a valid billing 

number may not be appealed by the 

supplier. Claims submitted to carriers 

for items or services furnished during a 

period of supplier ineligibility are 

rejected by the carrier, and not denied 

by the carrier. 

(c) Appeal rights. (1) A provider or 

supplier may appeal the initial 

determination to deny a provider or 

supplier’s enrollment application, or if 

applicable, to revoke a current billing 

number by following the procedures 

specified in part 498 of this chapter. 

(2) The reconsideration of a 

determination to deny or revoke a 

provider or supplier’s Medicare billing 

privileges may be handled by a carrier 

hearing officer not involved in the 

initial determination. 

(3) Providers and suppliers have the 

opportunity to submit evidence related 

to the enrollment action. Providers and 

suppliers must, at the time of their 

request, submit all evidence that they 

want to be considered. 

(4) If supporting evidence is not 

submitted with the appeal request, the 

contractor contacts the provider or 

supplier to try to obtain the evidence. 

(5) If the provider or supplier fails to 

submit this evidence before the 

contractor issues its decision, the 

provider or supplier is precluded from 

introducing new evidence at higher 

levels of the appeals process. 

(d) Impact of reversal of carrier 

determination on claims processing. 

(1) Claims for services furnished to 

Medicare beneficiaries during a period 

in which the supplier billing privileges 

was not effective are rejected. 

(2) If a supplier is determined not to 

have qualified for a billing privileges in 

one period but qualified in another, 

carriers process claims for services 

furnished to beneficiaries during the 

period for which the supplier was 

Medicare-qualified. Subpart C of this 

part sets forth the requirements for 

recovery of overpayments. 

(3) If a revocation of a supplier’s 

billing privilege is reversed upon 

appeal, the supplier’s billing privileges 

are reinstated back to the date that the 

revocation became effective. 

(4) If denial of a supplier’s billing 

privileges is reversed upon appeal and 

becomes binding, then the appeal 

decision establishes the date that the 

supplier’s billing privileges becomes 

effective. 

(e) Reinstatement of supplier billing 

privilege following corrective action. If a 

supplier completes a corrective action 

and provides sufficient evidence to the 

carrier that it has complied fully with 

the Medicare requirements, the carrier 

may reinstate the supplier’s billing 

privileges. The carrier may pay for 

services furnished on or after the 

effective date of the reinstatement. The 

effective date is based on the date the 

supplier is in compliance with all 

Medicare requirements. A carrier’s 

refusal to reinstate a supplier’s billing 

privileges based on a corrective action is 

not an initial determination under part 

498 of this chapter. 

(f) Effective date for DMEPOS 

supplier’s billing privileges. If a carrier, 

carrier hearing officer, or ALJ 

determines that a DMEPOS supplier’s 

denied enrollment application meets the 

standards in § 424.57 of this chapter and 

any other requirements that may apply, 

the determination establishes the 

effective date of the billing privileges as 

not earlier than the date the carrier 

made the determination to deny the 

DMEPOS supplier’s enrollment 

application. Claims are rejected for 

services furnished before that effective 

date. 

(g) Submission of claims. A supplier 

succeeding in having its enrollment 

application denial or billing privileges 

revocation reversed in a binding 

decision, or in having its billing 

privileges reinstated, may submit claims 

to the carrier for services furnished 

during periods of Medicare 

qualification, subject to the limitations 

in § 424.44 of this chapter, regarding the 

timely filing of claims. If the claims 

previously were filed timely but were 

rejected, they are considered filed 

timely upon resubmission. Previously 

denied claims for items or services 

rendered during a period of denial or 

revocation may be resubmitted to CMS 

within 1 year after the date of 

reinstatement or reversal. 

(h) Deadline for processing provider 

enrollment initial determinations. 

Contractors approve or deny complete 

provider enrollment applications to 

approval or denial within the following 

timeframes: 

(1) Initial enrollments. Contractors 

process new enrollment applications 

within 180 days of receipt. 


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(2) Revalidation of existing 

enrollments. Contractors process 

revalidations within 180 days of receipt. 

(3) Change-of-information and 

reassignment of payment request. 

Contractors process change-ofinformation and reassignment of 

payment requests within 90 days of 

receipt. 

PART 424—CONDITIONS FOR 

MEDICARE PAYMENT 

4. The authority citation for part 424 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

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

1395hh). 

5. Section 424.510 is amended by 

adding a new paragraphs (d)(2)(iv) and 

(e) to read as follows: 

§ 424.510 Requirements for enrolling in 

the Medicare program. 

* * * * * 

(d) 

(2) * * * 

(iv) The revisions read as follows: 

At the time of enrollment, an 

enrollment change request or 

revalidation, providers and suppliers 

must agree to receive Medicare 

payments via EFT. In order to receive 

Medicare payments via EFT, providers 

and suppliers must submit the CMS–588 

form. 

* * * * * 

(e) Providers and suppliers must—(1) 

Agree to receive Medicare payment via 

electronic funds transfer (EFT) at the 

time of enrollment, revalidation or 

submission of an enrollment change 

request; and 

(2) Submit the CMS–588 form to 

receive Medicare payment via electronic 

funds transfer. 

6. Section 424.525 is amended by—

A. Republishing paragraph (a) 

introductory text. 

B. Revising paragraphs (a)(1) and 

(a)(2). 

The revisions read as follows: 

§ 424.525 Rejection of a provider or 

supplier’s enrollment application for 

Medicare enrollment. 

(a) Reasons for rejection. CMS may 

reject a provider or supplier’s 

enrollment application for the following 

reasons: 

(1) The provider or supplier fails to 

furnish complete information on the 

provider/supplier enrollment 

application within 30 calendar days 

from the date of the contractor request 

for the missing information. 

(2) The provider or supplier fails to 

furnish all required supporting 

documentation within 30 calendar days 

of submitting the enrollment 

application. 

* * * * * 

7. Section 424.535 is amended by—

A. Adding a new paragraph (a)(8). 

B. Redesignating paragraphs (c) 

through (f) as paragraphs (d) through (g). 

C. Adding a new paragraph (c). 

The addition and revision read as 

follows: 

§ 424.535 Revocation of enrollment and 

billing privileges from the Medicare 

program. 

* * * * * 

(a) * * *. 

(8) Abuse of billing privileges. The 

provider or supplier submits a claim or 

claims for services that could not have 

been furnished to a specific individual 

on the date of service. These instances 

include but are not limited to situations 

where the beneficiary is deceased, the 

directing physician or beneficiary is not 

in the State or country when services 

were furnished, or when the equipment 

necessary for testing is not present 

where the testing is said to have 

occurred. 

* * * * * 

(c) Reapplying after revocation. After 

a provider, supplier, delegated official 

or authorizing official has had their 

billing privileges revoked, they must 

wait 3 years from the date of revocation 

before they can reapply to participate in 

the Medicare program. 

* * * * * 

8. Section 424.545 is amended by 

revising paragraph (a) to read as follows: 

§ 424.545 Provider and supplier appeal 

rights. 

(a) General. A provider or supplier 

that is denied enrollment in the 

Medicare program, or whose Medicare 

enrollment has been revoked may 

appeal CMS’ decision in accordance 

with part 498, subpart A of this chapter. 

(1) Appeals resulting in the 

termination of a provider agreement. (i) 

When revocation of billing privileges 

also results in the termination of a 

corresponding provider agreement, the 

provider may appeal CMS’ decision in 

accordance with part 498 of this chapter 

with the final decision of the appeal 

applying to both the billing privileges 

and the provider agreement. 

(ii) When a provider appeals the 

revocation of billing privileges and the 

termination of its provider agreement, 

there will be one appeals process which 

will address both matters. The appeal 

procedures for revocation of Medicare 

billing privileges will apply. 

(2) Payment of unpaid claims. 

Payment is not made during the appeals 

process. If the provider or supplier is 

successful in overturning a denial or 

revocation, unpaid claims for services 

furnished during the overturned period 

may be resubmitted. 

* * * * * 

PART 498—APPEALS PROCEDURES 

FOR DETERMINATIONS THAT AFFECT 

PARTICIPATION IN THE MEDICARE 

PROGRAM AND FOR 

DETERMINATIONS THAT AFFECT THE 

PARTICIPATION OF ICFs/MR AND 

CERTAIN NFs IN THE MEDICAID 

PROGRAM 

9. The authority citation for part 498 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

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

1395hh). 

Subpart A—General Provisions 

10. Section 498.1 is amended by 

revising paragraph (g) to read as follows: 

§ 498.1 Statutory basis. 

* * * * * 

(g) Section 1866(j) of the Act provides 

for a hearing and judicial review for any 

provider or supplier whose application 

for enrollment or reenrollment in 

Medicare is denied or whose billing 

privileges are revoked. 

* * * * * 

11. Section 498.2 is amended by—

A. Revising the definition of ‘‘affected 

party’’. 

B. Removing the definition of ‘‘OHA’’. 

C. Adding in alphabetical order the 

definition of ‘‘prospective supplier’’. 

D. Revising the definition of 

‘‘supplier’’. 

The addition and revisions read as 

follows: 

§ 498.2 Definitions. 

* * * * * 

Affected party means a provider, 

prospective provider, supplier, 

prospective supplier, or practitioner that 

is affected by an initial determination or 

by any subsequent determination or 

decision issued under this part, and 

‘‘party’’ means the affected party or 

CMS, as appropriate. For provider or 

supplier enrollment appeals, an affected 

party includes CMS or a CMS 

contractor. 

* * * * * 

Prospective supplier means any of the 

listed entities specified in the definition 

of supplier that seek to be approved for 

coverage of its services under Medicare. 

* * * * * 

Supplier means an independent 

laboratory; supplier of portable X-ray 

services, rural health clinic (RHC); 

Federally qualified health center 


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(FQHC); ambulatory surgical center 

(ASC); a supplier of durable medical 

equipment, prosthetics, orthotics, or 

supplies (DMEPOS); ambulance service 

provider; independent diagnostic testing 

facility; physician or other practitioner 

such as physician assistant, physical 

therapist in independent practice, 

clinical laboratories, an entity approved 

by CMS to furnish outpatient diabetes 

self-management training, or end-stage 

renal disease (ESRD) treatment facility 

that is approved by CMS as meeting the 

conditions for coverage of its services. 

12. Section 498.5 is amended by—

A. Revising paragraph (f)(2). 

B. Adding a new paragraph (l). 

The revision and addition read as 

follows: 

§ 498.5 Appeal rights. 

* * * * * 

(f) * * * 

(2) A supplier or prospective supplier 

dissatisfied with an ALJ decision may 

request Board review, and has a right to 

seek judicial review of the Board’s 

decision. 

* * * * * 

(l) Appeal rights related to provider 

enrollment. 

(1) Any prospective provider, an 

existing provider, prospective supplier 

or existing supplier dissatisfied with an 

initial determination or revised initial 

determination related to the denial or 

revocation of Medicare billing privileges 

may request reconsideration in 

accordance with § 498.22(a). 

(2) CMS, a CMS contractor, any 

prospective provider, an existing 

provider, prospective supplier or 

existing supplier dissatisfied with a 

reconsidered determination under 

paragraph (l)(1) of this section, or a 

revised reconsidered determination 

under § 498.30, is entitled to a hearing 

before an ALJ. 

(3) CMS, a CMS contractor, any 

prospective provider, an existing 

provider, prospective supplier or 

existing supplier dissatisfied with a 

hearing decision may request Board 

review, and any prospective provider, 

an existing provider, prospective 

supplier, or existing supplier has a right 

to seek judicial review of the Board’s 

decision. 

Subpart B—Initial, Reconsidered, and 

Revised Determinations 

13. Section 498.22 is amended by 

revising paragraphs (a) and (b)(1) to read 

as follows: 

§ 498.22 Reconsideration. 

(a) Right to reconsideration. CMS or 

one of its contractors reconsiders an 

initial determination that affects a 

prospective provider or supplier, or a 

hospital seeking to qualify to claim 

payment for all emergency hospital 

services furnished in a calendar year, if 

the affected party files a written request 

in accordance with paragraphs (b) and 

(c) of this section. For denial or 

revocation of enrollment, prospective 

providers and suppliers and providers 

and suppliers have a right to 

reconsideration. 

(b) * * * 

(1) With CMS or with the State survey 

agency, or in the case of prospective 

supplier the entity specified in the 

notice of initial determination; 

* * * * * 

Subpart D—Hearings 

14. Section 498.40 is amended by 

revising paragraph (a)(1) to read as 

follows: 

§ 498.40 Request for hearing. 

(a) * * * (1) An affected party 

entitled to a hearing under § 498.5 may 

file a request for a hearing with the ALJ 

office identified in the determination 

letter. 

* * * * * 

15. Section 498.44 is revised to read 

as follows: 

§ 498.44 Designation of hearing official. 

(a) The Secretary or his or her 

delegate designates an ALJ or a member 

or members of the Board to conduct 

hearings. 

(b) If appropriate, the Secretary or the 

delegate may designate another ALJ or 

another member or other members of 

the Board to conduct the hearing. 

(c) As used in this part, ‘‘ALJ’’

includes any ALJ of the Department of 

Health and Human Services or members 

of the Board who are designated to 

conduct a hearing. 

16. Section 498.56 is amended by—

A. Revising paragraph (a)(2). 

B. Adding a new paragraph (e). 

The revision and addition read as 

follows: 

§ 498.56 Hearing on new issues. 

* * * * * 

(a) * * * 

(2) Except for provider or supplier 

enrollment appeals which are addressed 

in § 498.56(e), the ALJ may consider 

new issues even if CMS or the OIG has 

not made initial or reconsidered 

determinations on them, and even if 

they arose after the request for hearing 

was filed or after the prehearing 

conference. 

* * * * * 

(e) Provider and supplier enrollment 

appeals: Good cause requirement. (1) 

Examination of any new documentary 

evidence. After a hearing is requested 

but before it is held, the ALJ will 

examine any new documentary 

evidence submitted to the ALJ by a 

provider or supplier to determine 

whether the provider or supplier has 

good cause for submitting the evidence 

for the first time at the ALJ level. 

(2) Determining if good cause exists. 

An ALJ finds good cause, for example, 

when the new evidence is material to an 

issue addressed in the reconsideration 

and that issue was not identified as a 

material issue before the 

reconsideration. 

(3) If good cause does not exist. If the 

ALJ determines that there was not good 

cause for submitting the evidence for 

the first time at the ALJ level, the ALJ 

must exclude the evidence from the 

proceeding and may not consider it in 

reaching a decision. 

(4) Notification to all parties. As soon 

as possible, but no later than the start of 

the hearing, the ALJ must notify all 

parties of any evidence that is excluded 

from the hearing. 

17. Section 498.78 is amended by 

revising paragraph (a) to read as follows: 

§ 498.78 Remand by the Administrative 

Law Judge. 

(a) If CMS requests remand, the ALJ 

may remand any case properly before 

him or her to CMS. 

* * * * * 

18. A new § 498.79 is added to 

subpart D to read as follows: 

§ 498.79 Timeframes for deciding an 

enrollment appeal before an ALJ. 

When a request for an ALJ hearing is 

filed after CMS or a FFS contractor has 

denied an enrollment application, the 

ALJ must issue a decision, dismissal 

order or remand to CMS, as appropriate, 

no later than the end of the 180-day 

period beginning from the date the 

appeal was filed with an ALJ. 

Subpart E—Departmental Appeals 

Board Review 

19. Section 498.86 is amended by 

revising paragraph (a) to read as follows: 

§ 498.86 Evidence admissible on review. 

(a) Except for provider or supplier 

enrollment appeals which are addressed 

in § 498.56(e), the Board may admit 

evidence into the record in addition to 

the evidence introduced at the ALJ 

hearing (or the documents considered 

by the ALJ if the hearing was waived) 

if the Board considers that the 

additional evidence is relevant and 

material to an issue before it. 

* * * * * 


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20. Section 498.88 is amended by 

adding a new paragraph (g) to read as 

follows: 

§ 498.88 Decision or remand by the 

Departmental Appeals Board. 

* * * * * 

(g) When a request for Board review 

is filed after an ALJ has issued a 

decision or dismissal order, the Board 

must issue a decision, dismissal order or 

remand to the ALJ, as appropriate, no 

later than 180 days after the appeal was 

received by the Board. 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance Program; and No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program.) 

Dated: August 30, 2005. 

Mark B. McClellan, 

Administrator, Centers for Medicare and 

Medicaid Services. 

Dated: November 8, 2006. 

Micheal O. Leavitt, 

Secretary. 

[FR Doc. 07–870 Filed 2–23–07; 8:45 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Administration for Children and 

Families 

45 CFR Part 98 

RIN 0970–AC29 

Child Care and Development Fund 

Error Rate Reporting 

AGENCY: Administration for Children 

and Families (ACF), HHS. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This proposed rule revises the 

Child Care and Development Fund 

(CCDF) regulations to provide for the 

reporting of error rates in the 

expenditure of CCDF grant funds by the 

fifty States, the District of Columbia and 

Puerto Rico. The error rate reports will 

serve to implement provisions of the 

Improper Payments Information Act of 

2002 (IPIA) and the President’s 

Management Agenda (PMA)’s goal of 

‘‘Eliminating Improper Payments.’’ For 

reasons that will be explained in the 

preamble to the rule, the initial 

information collection under this 

proposed rule will require States, the 

District of Columbia, and Puerto Rico to 

review and report on a random sample 

of cases estimated to achieve the 

calculation of annual improper 

authorizations for payment (rather than 

improper payments made) with a 90 

percent confidence interval of +/-5.0 

percent. 

DATES: Comment Period: You may 

submit comments through May 1, 2007. 

We will not consider comments 

received after this date. 

ADDRESSES: You may mail comments to 

the Administration for Children and 

Families, Child Care Bureau, 1250 

Maryland Ave. SW., 8th Floor, 

Washington, DC 20024. Attention: 

Christine Calpin, Associate Director. 

Commenters also may provide 

comments on the ACF website. To 

transmit comments electronically, or to 

download an electronic version of the 

proposed rule, please go to http:// 

regulations.acf.hhs.gov. We will have 

comments available for public 

inspection Monday through Friday, 8:30 

a.m. to 5 p.m. at the above address. The 

information collection related to this 

regulation can be found at http:// 

www.acf.hhs.gov/programs/ccb/ccdf/ 

ipi/ipi.htm. 

FOR FURTHER INFORMATION CONTACT: Jeff 

Polich, Child Care Program Specialist, 

Child Care Bureau, at (202) 205–8696, or 

by email at jpolich@acf.hhs.gov. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Background 

A. Child Care and Development Fund 

B. Improper Payments 

C. Statutory and Administrative Directives 

To Measure Improper Payments and 

Calculate Error Rates 

D. Error Rate Methodology Pilots 

E. Operationalizing the Error Rate 

Methodology 

II. Statutory Authority 

III. Provisions of Proposed Rule 

A. Summary of the Existing Regulations 

B. Consultation with States, Territories and 

Other Organizations 

C. Changes Made in This Proposed Rule 

D. Relation to Existing Regulations 

IV. Regulatory Impact Analyses 

A. Executive Order 12866 

B. Regulatory Flexibility Analysis 

C. Assessment of the Impact on Family 

Well-Being 

D. Paperwork Reduction Act 

E. Unfunded Mandates Reform Act of 1995 

F. Congressional Review 

G. Executive Order 13132 

I. Background 

This proposed rule adds a new 

subpart to the Child Care and 

Development Fund (CCDF) regulations 

that would require States, the District of 

Columbia and Puerto Rico to employ a 

case review process in calculating CCDF 

error rates in accordance with an error 

rate methodology established by the 

Secretary of Health and Human Services 

(the Secretary). The proposed rule 

would require States, the District of 

Columbia and Puerto Rico to report 

specified information regarding errors to 

the Department of Health and Human 

Services. The basic components of this 

error rate methodology, and how it was 

developed and pilot tested, are 

described in this proposed rule. The 

specifics of this methodology and how 

it will be implemented are detailed in 

the information collection forms and 

instructions associated with this rule, 

copies of which may be downloaded or 

requested as detailed in the section 

discussing the Paperwork Reduction Act 

below. 

A. Child Care and Development Fund 

(CCDF) 

CCDF provides Federal funds to 

States, Territories, Indian Tribes and 

tribal organizations for the purpose of 

assisting low-income families, including 

families receiving or transitioning from 

the Temporary Assistance for Needy 

Families program (TANF), in the 

purchase of child care services, thereby 

allowing parents to work or attend job 

training or an educational program. 

States and Territories must spend a 

portion of their CCDF allotment on 

expenditures to improve the quality and 

availability of child care. A principle 

goal of CCDF set forth in Section 658A 

of the Child Care and Development 

Block Grant (CCDBG) Act of 1990, as 

amended (42 U.S.C. 9858, et seq.), is to 

‘‘Allow each State maximum flexibility 

in developing child care programs and 

policies that best suit the needs of 

children and parents within such 

State.’’ CCDF is provided only to States, 

Territories and Tribes—there is no 

provision for direct funding to 

individual families or providers. 

Federal law establishes eligibility 

criteria for families receiving CCDF 

assistance; however, States and 

Territories administering CCDF funds 

may impose more restrictive eligibility 

standards. Regulations governing CCDF 

are codified in 45 CFR Parts 98 and 99, 

and the Federal definition of a child’s 

eligibility for child care services is set 

forth in 45 CFR 98.20. This description 

includes eligibility requirements related 

to a child’s age, a child’s special needs 

or protective services status, family 

income and parent’s work, training or 

educational activity. Lead Agencies of 

the CCDF Program—which are the State, 

territorial or tribal entities to which 

CCDF block grants are awarded and that 

are accountable for the use of the funds 

provided—have established policies and 

procedures that vary considerably 

across and even within jurisdictions, 

including, but not limited to, stricter 

income limits, special eligibility or 

priority for families receiving TANF and 


jlentini on PROD1PC65 with PROPOSAL