Federal Register / Vol. 71, No. 227 / Monday, November 27, 2006 / Proposed Rules 68519 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 401 

[CMS–6032–P] 

RIN 0938–AO27 

Medicare Program; Use of Repayment 

Plans 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

modify Medicare regulations to 

implement a provision of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 pertaining to 

the use of repayment plans (also known 

as extended repayment schedules or 

‘‘ERS’’). Under this provision, we 

propose to grant a provider or a supplier 

an extended repayment schedule under 

certain terms and conditions as defined 

in the statute. The proposed rule would 

establish criteria and procedures to 

apply this requirement and to define the 

concepts of ‘‘hardship’’ and ‘‘extreme 

hardship.’’

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on January 26, 2007. 

ADDRESSES: In commenting, please refer 

to file code CMS–6032–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (no duplicates, please): 

1. Electronically. You may submit 

electronic comments on specific issues 

in this regulation to http:// 

www.cms.hhs.gov/eRulemaking. Click 

on the link ‘‘Submit electronic 

comments on CMS regulations with an 

open comment period.’’ (Attachments 

should be in Microsoft Word, 

WordPerfect, or Excel; however, we 

prefer Microsoft Word.) 

2. By regular mail. You may mail 

written comments (one original and two 

copies) to the following address ONLY: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: 

CMS–6032–P, P.O. Box 8020, Baltimore, 

MD 21244–8032. 

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–6032–P, Mail Stop C4–26–05, 

7500 Security Boulevard, Baltimore, MD 

21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments (one original 

and two copies) before the close of the 

comment period to one of the following 

addresses. If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786–

7195 in advance to schedule your 

arrival with one of our staff members. 

Room 445–G, Hubert H. Humphrey 

Building, 200 Independence Avenue, 

SW., Washington, DC 20201; or 7500 

Security Boulevard, Baltimore, MD 

21244–1850. (Because access to the 

interior of the HHH Building is not 

readily available to persons without 

Federal Government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: Tom 

Noplock, (410) 786–3378. 

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–6032–P, 

and the specific ‘‘issue identifier’’ that 

precedes the section on which you 

choose to comment. 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

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

eRulemaking. Click on the link 

‘‘Electronic Comments on CMS 

Regulations’’ on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

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

appointment to view public comments, 

phone 1–800–743–3951. 

I. Background 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘BACKGROUND’’ at the beginning of 

your comments.] 

A. Medicare Overpayment 

Medicare overpayments are Medicare 

funds an individual, provider, or 

supplier has received that exceed 

amounts due and payable under the 

Medicare statute and regulations (plus 

any applicable interest and penalties 

assessed on the overpayment). We note 

that Medicare regulations at 42 CFR 

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.’’

Generally, overpayments result when 

payment is made by Medicare for 

noncovered items or services that 

exceeds the amount allowed by 

Medicare for an item or service, or when 

payment is made for items or services 

that should have been paid by another 

insurer (Medicare secondary payer 

obligations). Once a determination and 

any necessary adjustments in the 

amount of the overpayment have been 

made, the remaining amount is a debt 

owed to the United States Government. 

Section 1870 of the Social Security 

Act (the Act) provides a framework 

within which liability for such Medicare 

overpayments is determined and 

recoupment of overpayments is 

pursued. This framework prescribes a 

decision making process that the agency 

follows when pursuing the recoupment 

of Medicare overpayments. 

The regulation governing the liability 

for Medicare overpayments is located at 

42 CFR part 401 (subpart F). 

B. Statutory Authority 

The Federal Claims Collection Act 

(FCCA) of 1966, Public Law 89–508, 80 

Stat. 308 (1966) (amended by the Debt 

Collection Improvement Act of 1966, 

Pub. L. 104–134 (1996) (codified at 31 

U.S.C. 3711) is the Federal government’s 

basic statutory authority for debt 

management practices. The Congress 

intended the FCCA to reduce the 

amount of litigation previously required 

to collect claims and to reduce the 

volume of private relief legislation in 


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68520 Federal Register / Vol. 71, No. 227 / Monday, November 27, 2006 / Proposed Rules 

the Congress. The FCCA is independent 

of the other authorities we use to collect 

debt and was intended by the Congress 

to add to, rather than to supplant, other 

authorities, including common law 

authority. 

The FCCA authorizes the head of an 

agency to collect claims in any amount. 

This statute also provides that the head 

of an agency may, under certain 

conditions, compromise a claim, or 

suspend or terminate collection action 

on a claim. Uncollectible claims in 

excess of $100,000, exclusive of interest, 

must be referred to the Department of 

Justice for compromise. 

On November 2, 1977, the Secretary 

of the Department of Health and Human 

Services published a rule in the Federal 

Register (42 FR 57351) to delegate 

authority to the Department Claims 

Officer generally, and the Administrator 

of the Centers for Medicare & Medicaid 

Services (formerly Health Care 

Financing Administration (HCFA)) for 

necessary claims collection actions 

under our programs. The authority 

delegated to the Administrator covers 

all of our activities in the Medicare 

program (title XVIII) and pertains to 

claims up to $20,000. (This amount has 

been increased to $100,000; see 31 

U.S.C. 3711.) 

On August 29, 1983, we published a 

final rule with comment period titled 

‘‘Federal Claims Collection Act; Claims 

Collection and Compromise’’ in the 

Federal Register (48 FR 39060) in 

accordance with the FCCA. In this final 

rule, the agency adopted the applicable 

debt collection tools made available to 

it under the FCCA including the ability 

to collect or compromise claims, or 

suspend or terminate collection action, 

as appropriate. The final rule also set 

forth the requirements we would use to 

evaluate debtors’ requests for extended 

repayment agreements specified in 

§ 401.607. 

As part of the Health Insurance 

Portability and Accountability Act of 

1996, the Congress added section 1893 

to the Act establishing the Medicare 

integrity program (MIP) to carry out 

Medicare program integrity activities 

that are funded from the Medicare Trust 

Fund. Section 1893 of the Act expands 

our contracting authority to allow us to 

contract with ‘‘eligible entities’’ to 

perform Medicare program integrity 

activities. These activities include 

review of provider and supplier 

activities, including medical, fraud, and 

utilization review; cost report audits; 

Medicare secondary payer 

determinations; education of providers, 

suppliers, beneficiaries, and other 

persons regarding payment integrity and 

benefit quality assurance issues; and 

developing and updating a list of 

durable medical equipment items that 

are subject to prior authorization (42 

U.S.C. 1395ddd). These MIP contractors 

assist us in the identification and 

collection of provider and supplier 

Medicare overpayments. 

Overview of Current Policy 

The current policy CMS and its 

contractors use for the evaluation of 

extended repayment schedules (ERSs) is 

based on the existing regulations at 

§ 401.607(c)(2) [which we are proposing 

to redesignate as § 401.607(c)(3)] and 

guidance in the Medicare Financial 

Management Manual, Pub. 100–6 

(Chapter 4, Section 50). Under our 

current policy, we determine the 

frequency and amount of the 

installment payments based on the 

factors set forth at § 401.607(c)(2) which 

include: (i) The amount of the claim; (ii) 

the debtor’s ability to pay; and (iii) the 

cost to CMS of administering an 

installment agreement. 

Under the current ERS review 

process, we primarily focus on the 

second factor, the debtor’s ability to 

repay the overpayment, by conducting a 

review of the debtor’s financial status, 

similar to how banks assess applicants 

for a loan. In almost all cases, we try to 

work with the provider or supplier to 

recover the overpayment. In general, it 

has been our experience that it is in 

both CMS and the debtor’s best interests 

to work out a reasonable repayment 

schedule to recoup an overpayment 

rather than demand immediate 

collection of the debt, which could 

place a provider or supplier at financial 

risk or force the provider or supplier 

into bankruptcy. 

Under our existing procedures we 

review financial documentation 

submitted by the provider or supplier to 

assess the provider’s or supplier’s 

ability to repay the Medicare 

overpayment. This documentation must 

include, at a minimum, a statement of 

financial position (for example, balance 

sheet), a statement of financial 

performance (for example, income 

statement), and a statement of future 

viability (for example, projected 

statement of cash flow). In addition, the 

provider must include a letter from a 

financial institution proving that it 

cannot obtain financing from an 

alternative source. 

C. Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 

1. Hardship Provision 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘HARDSHIP PROVISION’’ at the 

beginning of your comments.] 

On December 8, 2003, the Congress 

enacted the Medicare Prescription Drug, 

Improvement, and Modernization Act 

(MMA) of 2003 (Pub. L. 108–173). This 

new legislation contained provisions 

affecting the recovery of provider and 

supplier overpayments under the 

Medicare program. Section 935(a) of the 

MMA amended title XVIII of the Act by 

adding a new section 1893(f)(1) to the 

Act to require us to use certain statutory 

criteria in evaluating whether a provider 

or supplier should be granted a 

repayment schedule of at least 6 months 

and up to 5 years. Under section 

1893(f)(1) of the Act, we may grant a 

provider or a supplier upon request, a 

repayment schedule of at least 6 

months, if repaying an overpayment 

within 30 days would constitute a 

‘‘hardship’’ on the provider or supplier, 

provided that certain criteria are met. 

The new statute at section 

1893(f)(1)(B)(i) of the Act defines 

‘‘hardship’’ based on the relationship 

between the amount of the 

overpayment(s) not covered under an 

existing ERS owed by a provider or 

supplier and the total amount of 

Medicare payments made to that 

provider or supplier over the most 

recently submitted cost report or for the 

previous calendar year. 

Under section 1893(f)(1)(B) of the Act, 

a provider or supplier is deemed to be 

in ‘‘hardship’’ when the total amount of 

all outstanding overpayments not 

included in an approved, existing 

repayment schedule, is 10 percent or 

greater than the total Medicare 

payments made for the cost reporting 

period covered by the most recently 

submitted cost report (for a provider 

filing a cost report), or the previous 

calendar year (for a supplier or non costreport provider). We propose to 

interpret ‘‘outstanding overpayments’’

to include both principal and accrued 

interest. We read the newly added 

section 1893(f)(1)(B)(iii) of the Act to 

exclude overpayments already being 

repaid under an approved ERS. 

We propose to interpret the new 

‘‘hardship’’ test under section 935(a) of 

the MMA as not to supersede our 

extended repayment schedule 

regulations currently at § 401.607(c)(2), 

(which we are proposing to redesignate 

as § 401.607(c)(3) in this proposed rule). 

Since our existing regulations governing 

ERSs are promulgated under the FCCA, 

we do not plan to eliminate the criteria 

and procedures currently used to grant 

providers and suppliers ERSs. Instead, 

we propose adding an initial ‘‘hardship’’

test to existing regulations and 


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procedures for determining a debtor’s 

ERS. 

We are proposing that all requests for 

an ERS first be evaluated under the new 

‘‘hardship’’ test. Under this MMA 

provision, if ‘‘hardship’’ is determined 

and no statutory exception applies 

under § 401.607(c)(2)(iv), then the 

statute requires that the Secretary grant 

a provider or supplier a repayment 

period of at least 6 months but not 

longer than 3 years. 

Section 935(a) of the MMA requires 

that the Secretary establish rules for 

cases when a provider or a supplier was 

not paid during the previous year or 

paid for only a portion of that year. For 

these cases, we propose using the last 12 

months of Medicare payments made to 

the provider or supplier. In cases where 

there is less than a 12-month payment 

history, we propose that the number of 

months available be annualized to equal 

an approximate yearly Medicare 

payment level for the provider or 

supplier. 

Using the new ‘‘hardship’’ test 

provided in section 1893(f)(1) of the 

Act, the contractor would calculate 

‘‘hardship’’ as described in the 

following examples: 

If the debt is from a provider that files 

cost reports, then the contractor will—

Step 1: Determine cost reporting year 

covered by most recently filed cost 

report; 

Step 2: Determine total amount of 

Medicare dollars paid to provider for 

that cost report year; 

Step 3: Determine amount of all 

outstanding overpayments (principal 

and accrued interest) not under an 

existing ERS; and 

Step 4: Divide result in Step 3 by 

result in Step 2. 

If result in Step 4 is .10 or greater, 

then the provider meets the ‘‘hardship’’

test. 

We note that Medicare dollars paid 

for providers that file cost reports 

include all interim payments including 

tentative settlement amounts. 

Example: The provider submits cost report 

on 05/31/2004 for the cost report year from 

01/01/2003 through 12/31/2003. For the cost 

report year ending 12/31/2003, the provider 

was paid a total of $1,000,000. On 8/31/2004, 

a notice of program reimbursement is issued 

as a result of the final settlement for the cost 

report year ending 12/31/2002 showing an 

overpayment of $105,000. Therefore, the 

provider meets the ‘‘hardship’’ test: $105,000 

divided by $1,000,000 = .105. (Calculations 

should be carried out to three decimal 

points.) 

If the debt is from a provider or 

supplier that does not file cost reports, 

then the contractor will—

Divide amount of all outstanding 

overpayments (principal and accrued 

interest) not under an existing ERS by 

the Medicare dollars paid by the 

contractor to the provider or supplier for 

the previous calendar year. If result is 

.10 or greater, the provider or supplier 

meets the ‘‘hardship’’ test. 

Example: On 09/01/2004, the provider or 

supplier is issued a demand letter for 

overpayments resulting from Medical Review 

of Part A Claims that total $110,000. For 

calendar year 2003, the provider or supplier 

was paid $1,000,000 by Medicare. $110,000 

divided by $1,000,000 = 11. Based on this 

calculation, the provider or supplier meets 

the ‘‘hardship’’ test. 

If the provider or supplier does not 

qualify under the ‘‘hardship’’ test, we 

would then analyze the ERS request 

under the existing ERS procedures, 

found at newly redesignated 

§ 401.607(c)(3). 

2. Exceptions Under the ‘‘Hardship’’

Provision in Section 935(a) of the MMA 

As stated above, section 935(a) of the 

MMA sets out exceptions to granting a 

provider or supplier an extended 

repayment schedule even if the provider 

or supplier meets the ‘‘hardship’’ test. 

These exceptions are when there is 

reason to suspect the provider or 

supplier may file for bankruptcy, cease 

to do business, discontinue 

participation in the program, or when 

there is an indication of fraud or abuse 

committed against the program. We 

propose that contractors continue to use 

existing procedures and definitions 

applicable to bankruptcy and fraud or 

abuse. 

3. Extreme Hardship Provision 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘EXTREME HARDSHIP PROVISION’’ at 

the beginning of your comments.] 

Under section 935(a) of the MMA, the 

Secretary may grant a provider or a 

supplier a repayment schedule of 36 

months and up to 60 months if repaying 

an overpayment would constitute an 

‘‘extreme hardship’’ unless a statutory 

exception applies under 

§ 401.607(c)(2)(iv). Since the Congress 

left the definition of ‘‘extreme hardship’’

to our discretion, we are considering 

different approaches for defining 

‘‘extreme hardship’’ and seek public 

comment on this section. 

We considered proposing a new 

financial threshold to determine if a 

provider or supplier was in extreme 

financial hardship, such as using a 15 

percent threshold. We rejected this 

approach because it could result in 

discriminating against providers and 

suppliers who may be similarly 

financially situated but may attribute 

more of their total revenue to Medicare 

income. This could occur for example 

with a home health agency (HHA) 

which may attribute 100 percent of its 

revenue to Medicare business and a 

skilled nursing facility (SNF) which 

may only attribute 20 percent of its 

business to Medicare. The following 

example may help illustrate the 

inequitable results that may occur. If a 

HHA reporting $1 million in total 

revenue (100 percent of which was 

attributed to Medicare income), was 

subject to a 15 percent extreme hardship 

test, the HHA would need to owe an 

overpayment of 15 percent of $1 

million, or at least $150,000, to qualify 

as being in extreme hardship. However, 

if a SNF reporting $1 million in total 

revenue had only 20 percent of its 

income attributed to Medicare 

($200,000), this SNF would need to owe 

an overpayment of 15 percent of 

$200,000, or at least $30,000, in order to 

qualify as being in extreme hardship. 

This example illustrates the problems 

inherent with using a set threshold in 

defining ‘‘extreme hardship’’ for 

purposes of evaluating a provider’s or 

supplier’s ability to make payment on a 

Medicare debt. In fact, we believe that 

using any fixed financial variables in 

this type of evaluation poses limitations 

on CMS’s ability to maintain the 

regulatory flexibility needed to properly 

evaluate a Medicare provider or 

supplier’s request for an ERS. Using one 

fixed set of financial variables to 

determine the length of an ERS would 

be problematic and inefficient since the 

ERS evaluation is a multi-variable 

analysis. We need to review several 

variables contained in financial 

documents that include statements of a 

provider or supplier’s financial position, 

financial performance, and future 

viability in order to properly assess a 

provider or debtor’s ability to pay. 

Moreover, it is difficult for CMS to 

predict which financial variables will be 

the most useful in its analysis for each 

provider or supplier since this may vary 

on a case-by-case basis. 

We propose to define ‘‘extreme 

hardship’’ when a provider or supplier 

qualifies under the ‘‘hardship’’

provision defined above and the 

provider’s or supplier’s request for an 

ERS is approved under newly 

redesignated § 401.607(c)(3). If we 

determine the request meets the criteria 

in newly redesignated § 401.607(c)(3) 

and meets the CMS manual guidance set 

forth in the Medicare Financial 

Management Manual, Pub. 100–6, 

Chapter 4, Section 50, the provider or 

supplier may be granted an ERS 

between 36 and 60 months. We are also 

proposing that contractors apply the 


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statutory exceptions to ‘‘extreme 

hardship’’ cases in a similar manner as 

they do to ‘‘hardship’’ cases. We solicit 

comments on other alternative 

approaches to define ‘‘extreme 

hardship’’ that could distinguish 

between the most extreme cases 

requiring ERSs between 36 and 60 

months. 

4. Extended Repayment Schedules 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘EXTENDED REPAYMENT 

SCHEDULES’’ at the beginning of your 

comments.] 

We propose to initially handle ERS 

requests differently than we have under 

our current regulations. The proposed 

rule would allow providers or suppliers 

that meet the ‘‘hardship’’ test and 

request only a 6-month ERS period, the 

opportunity to pay back the Medicare 

debt in 6 months without having to 

submit financial documentation to the 

contractor in accordance with the 

existing instructions given in the 

Medicare Financial Management 

Manual, CMS, Pub. 100–6, Chapter 4, 

Section 50. Not requiring financial 

documentation, such as financial 

statements, a bank denial letter, etc., 

may provide a provider or supplier time 

to generate or secure the necessary 

capital to liquidate the debt without 

having to file extensive documentation 

in order to secure a repayment schedule. 

Under the proposed regulation, a 

provider or supplier that requests a 6- 

month repayment schedule, meets the 

‘‘hardship’’ test, does not fall within an 

exception, and elects not to submit 

financial documentation would be 

approved for a 6-month repayment 

schedule. Any provider or supplier 

qualifying for the 6-month ERS under 

the ‘‘hardship’’ provision has the choice 

to turn down the 6-month ERS and 

either pay off the debt within 30 days 

of the date of determination or request 

a longer than 6-month ERS. In addition, 

we would not prohibit any provider or 

supplier under the 6-month ‘‘hardship’’

provision ERS from applying for a 

longer ERS if it later desires to do so 

under § 401.607(c)(3). 

For all ERS requests, with the 

exception of those 6-month ERSs 

granted without a submission of 

financial documentation, we propose to 

rely on current regulations and 

procedures that require the provider or 

supplier to submit financial 

documentation in accordance with the 

Medicare Financial Management 

Manual, CMS Pub. 100–6, Chapter 4, 

Section 50. A provider or supplier must 

continue to submit a written request 

that refers to the specific overpayment 

for which an ERS is being requested, the 

number of months requested, and 

include the first payment with its 

request. The contractor would 

determine the duration of the ERS based 

on its review of the provider or 

supplier’s documentation in accordance 

with CMS manual guidance. 

While the statute permits us to 

immediately collect on an entire 

overpayment, if a provider or supplier 

misses one installment payment in any 

ERS granted under section 935(a) of the 

MMA, we are proposing to impose this 

penalty only on the automatic 6-month 

repayment schedules. With all other 

ERSs, we propose to continue to use the 

existing procedures that define a default 

of an ERS as missing two consecutive 

installment payments. 

II. Provisions of the Proposed 

Regulations 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘PROVISIONS OF THE 

PROPOSED REGULATIONS’’ at the 

beginning of your comments.] 

We are proposing to revise paragraph 

(a) in § 401.601, Basis and scope, to read 

as follows: ‘‘This subpart implements 

for CMS the Federal Claims Collection 

Act (FCCA) of 1966 (amended 1996) (31 

U.S.C. 3711), and conforms to the 

regulations (31 CFR parts 900–904) 

issued jointly by the Department of the 

Treasury and the Department of Justice 

that generally prescribe claims 

collection standards and procedures 

under the FCCA for the Federal 

government. This subpart also 

implements section 1893(f)(1) of the Act 

regarding the use of repayment plans.’’

In addition, we are proposing in 

§ 401.603 to add a definition for an 

‘‘Extended repayment schedule.’’

We are proposing to redesignate 

§ 401.607(c)(2), ‘‘CMS decision,’’ as 

§ 401.607(c)(3). In addition, we are 

proposing a new § 401.607(c)(2), 

‘‘Extended repayment schedule,’’ in 

accordance with 1893(f)(1) of the Act. 

The provisions of section 1893(f)(1) of 

the Act, as amended by section 935(a) 

of the MMA, would be implemented by 

new § 401.607(c)(2), ‘‘Extended 

repayment schedule.’’

III. Collection of Information 

Requirements 

This proposed rule does not impose 

any new information collection or 

recordkeeping requirements. The 

burden associated with the collection 

activities discussed in the preamble that 

pertain to the extension of repayment 

schedules is currently approved under 

Office of Management and Budget 

(OMB) control number 0938–0270, with 

an expiration date of September 30, 

2007. 

However, in addition to the 

requirements discussed in this proposed 

rule, we plan to submit a revised 

information collection request (ICR) to 

OMB for approval. As discussed in 

Section I.C.4. of the preamble, providers 

or suppliers that meet the ‘‘hardship’’

test and request only a 6-month ERS 

period, will have the opportunity to pay 

back the Medicare debt in 6 months 

without having to submit financial 

documentation to the contractor. This 

new requirement reduces the 

information collection burden placed on 

providers and suppliers. As part of the 

OMB approval process for the revised 

ICR, the revisions to 0938–0270 will be 

announced in Federal Register notices 

and made available to the public for 

comment. 

IV. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

V. Regulatory Impact Statement 

A. Overall Impact 

We have examined the impacts 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 (as amended 

by Executive Order 13258, which 

merely reassigns responsibility of 

duties) directs agencies to assess all 

costs and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). A regulatory impact analysis 

(RIA) must be prepared for major rules 

with economically significant effects 

($100 million or more in any 1 year). 

This rule would not reach the economic 

threshold and thus is not considered a 

major rule. There would be no 

additional costs or documented savings 

resulting from the implementation of 


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this rule. The RFA requires agencies to 

analyze options for regulatory relief of 

small businesses. For purposes of the 

RFA, small entities include small 

businesses, nonprofit organizations, and 

small governmental jurisdictions. Most 

hospitals and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of $6 million to $29 million in any 1 

year. For purposes of the RFA, 

approximately 95 percent of the health 

care industry is considered small 

businesses according to the Small 

Business Administration’s size 

standards with total revenues of $6 

million to $29 million or less in any 1 

year. Individuals and States are not 

included in the definition of a small 

entity. Because there are no additional 

costs or documented savings resulting 

from the implementation of this rule, 

this rule would not have a significant 

impact on small businesses. 

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. Because there are 

no additional costs or documented 

savings resulting from the 

implementation of this rule, this rule 

would not have a significant impact on 

small rural hospitals. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

That threshold level is currently 

approximately $120 million. This rule 

would not have an effect on the 

governments mentioned and the private 

sector costs would be less than $120 

million threshold. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

This rule would not have a substantial 

effect on State or local governments. 

B. Anticipated Effects 

1. Effects on Medicare Providers 

This rule could affect all Medicare 

provider types with a Medicare 

overpayment. This proposed rule would 

allow Medicare providers falling within 

these provisions a 6-month period to 

pay back debt owed to Medicare 

without being required to file extensive 

financial documentation. We believe 

that this short time period may permit 

a provider to generate or secure the 

necessary capital to liquidate the debt 

without filing the financial 

documentation required to secure a 

longer repayment schedule. 

2. Effects on Other Providers 

There would be no effect on other 

providers. 

3. Effects on the Medicare and Medicaid 

Programs 

There would be no additional costs or 

documented savings resulting from the 

implementation of this rule. There may 

be savings due to a possible reduction 

in paperwork. 

C. Alternatives Considered 

We considered adopting 

mathematically precise distinctions 

between ‘‘hardship’’ and ‘‘extreme 

hardship,’’ but rejected this approach. 

To select any type of numerical 

threshold, for example, defining 

‘‘extreme hardship’’ as 15 percent of 

total overpayments in an effort to 

distinguish it from the test for 

‘‘hardship,’’ would result in inequitable 

outcomes for different providers and 

suppliers as discussed in the ‘‘extreme 

hardship’’ section of the preamble. We 

believe the proposed approach will lead 

to more equitable solutions. 

In implementing section 935 of the 

MMA, we want to assure providers and 

suppliers that we will be looking closely 

at the financial picture each of them has 

that has prompted them to seek an ERS. 

Analyzing these financial profiles is a 

complex undertaking that does not lend 

itself to overly simplified numerical 

cutoffs that may qualify some for longer 

repayment periods but deny them to 

others that ought to be just as eligible. 

We seek comment on other alternative 

ways to distinguish between ‘‘hardship’’

and ‘‘extreme hardship’’ in an effort to 

establish a standardized approach to 

applying the two definitions. 

D. Executive Order 12866 Statement 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

List of Subjects in 42 CFR Part 401 

Claims, Freedom of information, 

Health facilities, Medicare, Privacy. 

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 401—GENERAL 

ADMINISTRATIVE REQUIREMENTS 

1. The authority citation for part 401 

continues to read as follows: 

Authority: Secs. 1102, 1871, and 1893 of 

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

1395hh, and 1395ddd). Subpart F is also 

issued under the authority of the Federal 

Claims Collection Act (amended 1996) (31 

U.S.C. 3711). 

2. In § 401.601, paragraph (a) is 

revised to read as follows: 

§ 401.601 Basis and scope. 

(a) Basis. This subpart implements for 

CMS the Federal Claims Collection Act 

(FCCA) of 1966 (amended 1996) (31 

U.S.C. 3711), and conforms to the 

regulations (31 CFR parts 900–904) 

issued jointly by the Department of the 

Treasury and the Department of Justice 

that generally prescribe claims 

collection standards and procedures 

under the FCCA for the Federal 

government. This subpart also 

implements section 1893(f)(1) of the Act 

regarding the use of repayment plans. 

* * * * * 

3. In § 401.603, add a new definition 

for ‘‘Extended repayment schedule’’ to 

read as follows: 

§ 401.603 Definitions. 

* * * * * 

Extended repayment schedule means 

installment payments to pay back a 

debt. 

§ 401.607 [Amended] 

4. In § 401.607—

A. Redesignate paragraph (c)(2) as 

paragraph (c)(3). 

B. Add a new paragraph (c)(2). 

The revisions read as follows: 

§ 401.607 Claims collection. 

* * * * * 

(c) * * * 

(2) Extended repayment schedule. 

(i) For purposes of this paragraph 

(c)(2), the following definitions apply: 

Hardship exists when the total 

amount of all outstanding overpayments 

(principal and interest) not included in 

an approved, existing repayment 

schedule is 10 percent or greater than 

the total Medicare payments made for 

the cost reporting period covered by the 

most recently submitted cost report for 

a provider filing a cost report, or for the 


hsrobinson on PROD1PC61 with PROPOSALS
68524 Federal Register / Vol. 71, No. 227 / Monday, November 27, 2006 / Proposed Rules 

previous calendar year for a supplier or 

non cost-report provider. 

Extreme hardship exists when a 

provider or supplier qualifies as being 

in ‘‘hardship’’ as defined in this 

paragraph and the provider’s or 

supplier’s request for an extended 

repayment schedule (ERS) is approved 

under paragraph (c)(3) of this section. 

(ii) CMS or its contractor reviews a 

provider’s or supplier’s request for an 

ERS. For a provider or a supplier not 

paid by Medicare during the previous 

year or paid only during a portion of 

that year, the contractor or CMS will use 

the last 12 months of Medicare 

payments. If less than a 12-month 

payment history exists, the number of 

months available is annualized to equal 

an approximate yearly Medicare 

payment level for the provider or 

supplier. 

(iii) For a provider or supplier 

requesting an ERS, CMS or its contractor 

evaluates the request based on the 

definitions and information submitted 

under this paragraph (c)(2). For a 

provider or supplier whose situation 

does not meet the definitions in 

paragraph (c)(2)(i) of this section, CMS 

or its contractor evaluates the ERS 

request using the information in 

paragraph (c)(3) of this section in 

deciding to grant an ERS. 

(iv) CMS or its contractor is not 

required to grant an ERS to a provider 

or supplier if there is reason to suspect 

the provider or supplier may file for 

bankruptcy, cease to do business, 

discontinue participation in the 

Medicare program, or there is an 

indication of fraud or abuse committed 

against the Medicare program. 

(v) CMS or its contractor may grant a 

provider or a supplier an ERS of at least 

6 months if repaying an overpayment 

within 30 days would constitute a 

‘‘hardship’’ as defined in paragraph 

(c)(2)(i) of this section. If a provider or 

supplier is granted an ERS for 6 months 

under paragraph (c)(2)(i) of this section, 

missing one installment payment 

constitutes a default and the total 

balance of the overpayment will be 

recovered immediately. 

(vi) CMS or its contractor may grant 

a provider or a supplier an ERS of 36 

months and up to 60 months if repaying 

an overpayment would constitute an 

‘‘extreme hardship’’ as defined in 

paragraph (c)(2)(i) of this section. 

* * * * * 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare-Hospital 

Insurance; and Program No. 93.774, 

Medicare-Supplementary Medical Insurance 

Program) 

Dated: April 5, 2006. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: May 17, 2006. 

Michael O. Leavitt, 

Secretary. 

Editorial Note: This document was 

received at the Office of the Federal Register 

on November 20, 2006. 

[FR Doc. E6–19960 Filed 11–24–06; 8:45 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

50 CFR Part 648 

RIN 0648–AT67 

[Docket No.061109296–6296–01; I.D. 

110606A] 

Fisheries of the Northeastern United 

States; Atlantic Bluefish Fisheries; 

2007 Atlantic Bluefish Specifications; 

2007 Research Set-Aside Project 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Proposed rule; request for 

comments. 

SUMMARY: NMFS proposes 2007 

specifications for the Atlantic bluefish 

fishery, including state-by-state 

commercial quotas, a recreational 

harvest limit, and recreational 

possession limits for Atlantic bluefish 

off the east coast of the United States. 

The intent of these specifications is to 

establish the allowable 2007 harvest 

levels and possession limits to attain the 

target fishing mortality rate (F), 

consistent with the stock rebuilding 

program in Amendment 1 to the 

Atlantic Bluefish Fishery Management 

Plan (FMP). 

DATES: Written comments must be 

received no later than 5 p.m. eastern 

standard time, on December 27, 2006. 

ADDRESSES: You may submit comments 

by any of the following methods: 

• E-mail: Bluespecs2007@noaa.gov. 

Include in the subject line the following 

identifier: ‘‘Comments on 2007 Bluefish 

Specifications.’’

• Federal e-Rulemaking portal: http:// 

www.regulations.gov. 

• Mail: Patricia A. Kurkul, Regional 

Administrator, NMFS, Northeast 

Regional Office, One Blackburn Drive, 

Gloucester, MA 01930. Mark the outside 

of the envelope: ‘‘Comments on 2007 

Bluefish Specifications.’’

• Fax: (978) 281–9135. 

Copies of the specifications 

document, including the Environmental 

Assessment and Initial Regulatory 

Flexibility Analysis (EA/IRFA) and 

other supporting documents for the 

specifications are available from Daniel 

Furlong, Executive Director, MidAtlantic Fishery Management Council, 

Room 2115, Federal Building, 300 South 

Street, Dover, DE 19901–6790. The 

specifications document is also 

accessible via the Internet at http:// 

www.nero.noaa.gov. 

The Northeast Fisheries Science 

Center (Center) 41st Stock Assessment 

Review Committee (SARC) Bluefish 

Assessment Report (updated for 2006) is 

available at: http://www.nefsc.noaa.gov/ 

nefsc/publications/crd/crd0514/. 

FOR FURTHER INFORMATION CONTACT: 

Allison Ferreira, Fishery Policy Analyst, 

(978) 281–9103, or Michael Pentony, 

Senior Fishery Policy Analyst, (978) 

281–9283. 

SUPPLEMENTARY INFORMATION: 

Background 

The regulations implementing the 

Atlantic Bluefish Fishery Management 

Plan (FMP) are prepared by the MidAtlantic Fishery Management Council 

(Council) and appear at 50 CFR part 

648, subparts A and J. Regulations 

requiring annual specifications are 

found at § 648.160. The management 

unit for bluefish (Pomatomus saltatrix) 

is U.S. waters of the western Atlantic 

Ocean. 

The FMP requires that the Council 

recommend, on an annual basis, total 

allowable landings (TAL) for the fishery, 

consisting of a commercial quota and 

recreational harvest limit (RHL). A 

research set aside (RSA) quota is 

deducted from the bluefish TAL (after 

any applicable transfer) in an amount 

proportional to the percentage of the 

overall TAL as allocated to the 

commercial and recreational sectors. 

The annual review process for bluefish 

requires that the Council’s Bluefish 

Monitoring Committee (Monitoring 

Committee) review and make 

recommendations based on the best 

available data including, but not limited 

to, commercial and recreational catch/ 

landing statistics, current estimates of 

fishing mortality, stock abundance, 

discards for the recreational fishery, and 

juvenile recruitment. Based on the 

recommendations of the Monitoring 

Committee, the Council makes a 

recommendation to the Northeast 

Regional Administrator (RA). This FMP 

is a joint plan with the Atlantic States 

Marine Fisheries Commission 

(Commission); therefore, the 


hsrobinson on PROD1PC61 with PROPOSALS