[Federal Register Volume 62, Number 19 (Wednesday, January 29, 1997)]
[Notices]
[Pages 4305-4311]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-2087]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES
[ORD-089-N]


Medicare and Medicaid Programs; Small Business Innovation 
Research Grants for Fiscal Year 1997

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Notice.

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SUMMARY: This notice announces the availability of HCFA funding, 
through grants, for small businesses under the Small Business 
Innovation Research (SBIR) Program. This notice contains information 
about the subject areas for grants that will be given priority, 
application requirements, review procedures, and other relevant 
information.

DATES: Grant applications must be submitted by April 29, 1997, in order 
to be considered under the fiscal year (FY) 1997 annual funding cycle.

ADDRESSES: Standard application forms and related instructions are 
available from and must be formally submitted to: HCFA Grants Officer, 
Office of Acquisition and Grants, Health Care Financing Administration, 
7500 Security Boulevard, C2-21-15, Baltimore, MD 21244-1856, (410) 786-
5701.

FOR FURTHER INFORMATION CONTACT: Carl Hackerman, (410) 786-6644. 
Internet: C<a href="/cdn-cgi/l/email-protection#1f777e7c747a6d727e715f777c797e31787069"><span class="__cf_email__" data-cfemail="e38b82808886918e828da38b808582cd848c95">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

I. Small Business Innovation Research Program

    The Small Business Innovation Development Act of 1982 (Public Law 
97-219, enacted on July 22, 1982), as amended by the Small Business 
Innovation Research Program Extension (Public Law 99-443, enacted on 
October 6, 1986), the Small Business Administration Reauthorization and 
Amendment Act of 1988 (Public Law 100-590, enacted on November 3, 
1988), the Small Business Research and Development Enhancement Act of 
1992 (Public Law 102-564, enacted on October 28, 1992), and the Small 
Business Administration Reauthorization Act of 1994 (Public Law 104-
403, enacted on October 2, 1994), (15 U.S.C. 638(e) through (m)), 
requires Federal agencies to reserve a specific amount of their 
extramural research and budgets for a Small Business Innovation 
Research (SBIR) Program. This SBIR Program is intended to--
    <bullet>  Stimulate technological innovation;
    <bullet>  Use small business to meet Federal research and 
demonstrations (``R & D'') needs;
    <bullet>  Increase private sector commercialization of innovations 
derived from Federal R & D; and
    <bullet>  Foster and encourage participation by minority and 
disadvantaged persons in technological innovation.
    The principal purpose of HCFA's SBIR Program is to provide 
assistance to creative applicants so that innovation can be encouraged 
that will result in better health care.

A. SBIR Program Phases, Award Amounts, and Period of Support

    The SBIR Program consists of the following three phases:
Phase I
    The objective of this phase is to establish the technical merit and 
feasibility of proposed research or Research and Demonstrations efforts 
and to determine the quality of performance of the small business 
awardee organization before furnishing further Federal support in Phase 
II. Phase I awards will be approximately $50,000 (for both direct and 
indirect costs) for a period not to exceed 12 months.
Phase II
    The objective of this phase is to continue the research or R & D 
efforts initiated in Phase I and to actually create the proposed 
product and test it before marketing. Funding is based on the results 
of Phase I and technical merit of the Phase II application, including 
its potential for commercialization. (Only Phase I awardees are 
eligible to apply for Phase II funding.) Phase I awardees are eligible 
to apply for Phase II funding only from the Federal agency that 
supported their Phase I project. Phase II awards will be approximately 
$100,000 to 150,000 (for both direct and indirect costs) for a period 
normally not to exceed 12 months.
Phase III
    The objective of this phase, if appropriate, is for the small 
business concern to pursue with non-Federal funds the commercialization 
of the results of the research or R & D in Phases I and II.
    The purpose of this notice is to invite Phase I and II grant 
applications from for-profit domestic small business concerns that have 
the expertise to develop or further develop innovative technology. This 
technology should be compatible with the general mission of HCFA and 
contribute to the health care field. HCFA is responsible for the 
Medicare program, Federal participation in the Medicaid program, and 
related health care quality assurance programs. HCFA's mission is to 
promote the timely delivery of appropriate quality health care to its 
Medicare beneficiaries and Medicaid recipients--over 70 million of the 
nation's aged, disabled, and poor. HCFA must also ensure that Medicare 
beneficiaries and Medicaid recipients are aware of the services for

[[Page 4306]]

which they are eligible. In addition, HCFA must ensure that those 
services are accessible and of high quality.
    In carrying out its mission, HCFA conducts studies and projects 
that examine and demonstrate payment, coverage, eligibility, and 
management alternatives to the present programs. HCFA also studies the 
impact of HCFA programs on health care costs, program expenditures, 
beneficiary and recipient access to services, health care providers, 
and the health care segment of the American economy.
    In addition, HCFA monitors national health care expenditures and 
prices and provides analyses of the costs of current programs, as well 
as the impact of possible legislative or administrative changes in the 
programs. HCFA's Office of Research and Demonstrations (ORD) is 
responsible for the technical aspects of the SBIR Program described in 
this section.
    This notice outlines the eligibility requirements for organizations 
wishing to participate in the HCFA SBIR Program and the research grant 
application and review processes. It also provides both general program 
information as well as specific research topics and subtopics that may 
be of interest to small business concerns.
    Although areas of special programmatic interest or priority are 
described in section VII. of this notice, we will consider grant 
applications in any area within the field of health care research and 
demonstrations unless otherwise specifically excluded. However, we are 
not generally interested in funding the biomedical or clinical projects 
that more appropriately fit the mission of the National Institutes of 
Health.

B. Eligibility

    Each organization submitting a grant application under our SBIR 
Program must qualify as a small business concern. ``Small business 
concern'' is defined in section II.F. of this notice. In determining 
whether an applicant is a small business concern, an assessment will be 
made of several factors, including whether it is organized for profit, 
whether it is independently owned and operated, and whether it meets 
the size requirement of 500 or fewer employees. Whether the size 
requirement is met may depend on whether the applicant organization is 
affiliated with another organization whose employees, when added to 
those of the applicant organization, exceed 500. In conducting this 
assessment, all appropriate factors will be considered, including 
common ownership, common management, and contractual relationships.
    Affiliation exists when one concern controls or has the power to 
control the other, or there is third party control, or an identity of 
interest between or among parties exists so that affiliation may be 
found. Control may be affirmative or negative, and it is immaterial 
whether it is exercised so long as the power to control exists. Indeed, 
control can arise from a variety of circumstances. One example of a 
circumstance that could lead to a finding that an organization is 
controlling, or has the power to control, another organization is the 
sharing of common office space, employees, or other facilities (for 
example, laboratory space). Although access to special facilities or 
equipment in another organization is permitted (as in cases in which 
the SBIR applicant has entered into a subcontractual agreement with 
another institution for a specific, limited portion of the research 
project), research space occupied by an SBIR applicant must be space 
that is not generally shared with another organization and over which 
the applicant has exclusive control. When there is an indication of 
sharing of common employees, a determination will be made on a case-by-
case basis of whether the sharing constitutes control or the power to 
control.
    Additionally, control or the power to control is generally 
considered to exist when ``key employees of one concern organize a new 
concern and serve as its officers, directors, principal stockholders, 
and/or key employees, and the one concern is furnishing or will furnish 
the other concern with subcontracting financial or technical 
assistance, bid or performance bond indemnification, and/or other 
facilities, whether for a fee or otherwise.'' Affiliation can also 
arise between or among two or more persons when an identity of interest 
exists, such as members of the same family or persons with common 
investments in more than one concern.
    All SBIR grant applications will be reviewed with the above 
considerations in mind. Organizations considering submitting an 
application are referred to the SBA's SBIR Program Policy Directive 
published in the Federal Register on January 26, 1993 (58 FR 6144) and 
to the regulations set forth at 13 CFR part 121 for further guidance 
regarding eligibility. In particular, to determine whether affiliation 
exists, the applicant should also refer to 13 CFR 121.401 for the 
definition of affiliation, which will be used as HCFA's guide on this 
matter. If it appears that an applicant organization does not meet 
eligibility requirements with respect to size, HCFA will request a size 
determination of the organization from the applicable Small Business 
Administration (SBA) regional office. The review of the application may 
be deferred until a definitive response is furnished by SBA.
    Of particular concern in considering grant awards is the position 
of principal investigator. We wish to ensure that support is furnished 
to a carefully directed working group led by an individual personally 
committed to the development of the innovation. Accordingly, we are 
adopting the ``principal investigator'' concept from 42 CFR part 52. 
These regulations define the term ``principal investigator'' to mean 
``a single individual designated by the grantee in the grant 
application * * * who is responsible for the scientific and technical 
direction of the project'' (42 CFR 52.2). In order to meet this 
standard, the principal investigator's primary employment must be with 
the grantee at the time of the award and remain so for the duration of 
the project. Primary employment means that more than one-half of the 
principal investigator's time is spent in the employment of the small 
business concern. Primary employment with a small business concern 
precludes full-time employment at another organization.
    In accordance with SBA's SBIR Program Policy Directive published in 
the Federal Register on January 26, 1993 (58 FR 6144), we have further 
restricted the definition of primary employment of the principal 
investigator to accurately reflect HCFA's needs. The applicant must 
declare the principal investigator's employment, whether paid or 
unpaid, at the time of application, and must declare all employment 
relationships, whether paid or unpaid, that the principal investigator 
is expected to have at the time the SBIR grant awards are expected to 
be made and for the duration of the proposed project. In the event 
that, at the time of application, the principal investigator (1) is, or 
expects to be, a less-than-full-time employee of the small business 
concern; (2) is, or expects to be, concurrently employed by another 
organization; or (3) gives, or expects that he or she may give, the 
appearance of being concurrently employed by another organization, 
whether for a paid or unpaid position, it is essential that 
documentation be submitted with the application to verify the 
applicant's eligibility at the time of the award. Thus, if the 
principal investigator is also employed or appears to be employed by an 
institution other

[[Page 4307]]

than the applicant organization (for example, a university, nonprofit 
research institute, or a company other than the applicant 
organization), a letter must be furnished by the nonapplicant 
organization confirming that the principal investigator, if awarded an 
SBIR grant, is, or will become, a less-than-half-time employee of the 
organization and will remain so for the duration of the SBIR project. 
If the principal investigator is employed by a university, the letter 
must be furnished by the dean of the school or the departmental 
chairperson. If the principal investigator is employed by another for-
profit organization, the letter must be signed by a corporate official. 
This documentation of the primary employment of the principal 
investigator is required for every application that is submitted, even 
one that is a revision of a previously submitted application. In the 
event that solicitation of this documentation would place the principal 
investigator's current employment in jeopardy should the grant award 
not be made, the applicant may delay submission of the documentation, 
provided the documentation is submitted no later than 30 days after 
receiving notice of a grant award, and provided that the applicant 
includes a statement with the grant application to the effect that 
solicitation of the documentation at this time would place the 
principal investigator's current employment in jeopardy, that the 
applicant will forward the documentation within 30 days of receiving 
notice of a grant award, and that the applicant understands that should 
it fail to provide the documentation, we may, at our discretion, 
immediately suspend or terminate the grant. If the principal 
investigator fails to furnish adequate documentation, the application 
may be returned without review. In the event a grantee is required to 
submit documentation of the principal investigator's employment, but 
fails to do so within 30 days of the date of the notice of grant award, 
we may immediately suspend or terminate the grant.
    For both Phase I and Phase II, the research or R & D must be 
performed in its entirety in the United States (U.S.), that is, the 
States, territories, and possessions of the U.S.; the Commonwealths of 
Puerto Rico and the Northern Mariana Islands; and the District of 
Columbia.

II. Definitions

    The words and phrases that appear on the SBIR application form, or 
are needed in the application narrative, are not readily defined. 
Therefore, for convenience and clarity, we have furnished the following 
definitions, which, except as noted, are taken from SBA's SBIR Program 
Policy Directive that implements this program and was published on 
January 26, 1993, in the Federal Register (58 FR 6144). This policy 
directive requires an agency to define in a separate section whatever 
terms it uses that are unique to either the SBIR Program, a specific 
SBIR solicitation, or a portion of the solicitation. The section must 
also include, at a minimum, specific terms as defined in the policy 
directive. Accordingly, in addition to the terms required by the policy 
directive, we are also defining the terms ``Contract'' and ``Grant'' 
and including the policy directive's definition of the term ``Research 
and Development.''

A. Contract

    A ``contract'' is an award instrument establishing a binding legal 
procurement relationship between a funding agency and the recipient, 
obligating the latter to furnish an end product or service and binding 
the agency to furnish payment for the product or service.

B. Grant

    A ``grant'' is a financial assistance mechanism whereby either 
money or direct assistance, or both, is furnished to carry out approved 
activities.

C. Socially and Economically Disadvantaged Individual

    In accordance with the Small Business Administrations definitions 
(13 CFR Part 124), a ``socially and economically disadvantaged 
individual'' is defined as a member of any of the following groups:
    <bullet> Asian-Pacific Americans
    <bullet> Black Americans
    <bullet> Hispanic Americans
    <bullet> Native Americans
    <bullet> Subcontinent Asian Americans

D. Socially and Economically Disadvantaged Small Business Concern

    A ``socially and economically disadvantaged'' small business 
concern is one--
    <bullet> In which at least 51 percent is owned by one or more 
socially and economically disadvantaged individuals or, in the case of 
any publicly owned business, at least 51 percent of the voting stock is 
owned by one or more socially and economically disadvantaged 
individuals; and
    <bullet> Whose management and daily business operations are 
controlled by one or more of the individuals.

E. Research and Development

    <bullet> Research and Development'' or Research and Demonstrations 
is defined as any activity that is--
    <bullet> A systematic, intensive study directed toward greater 
knowledge or understanding of the subject studies;
    <bullet> A systematic study directed specifically toward applying 
new knowledge to meet a recognized need; or
    <bullet> A systematic application of knowledge toward the 
production of useful materials, devices, and systems or methods, 
including design, development, and improvement of prototypes and new 
processes to meet specific requirements.

F. Small Business Concern

    At the time of award of Phase I and of Phase II, a ``small business 
concern'' is one that--
    <bullet> Is organized for profit, independently owned and operated, 
not dominant in the field of operation in which it is proposing, and 
has its principal place of business located in the U.S.;
    <bullet> Is at least 51 percent owned or, in the case of a publicly 
owned business, at least 51 percent of its voting stock is owned by 
U.S. citizens or lawfully admitted permanent resident aliens; and
    <bullet> Has, including its affiliates (``affiliation'' is defined 
in 13 CFR 121.401), a number of employees (as defined in 13 CFR 
121.407) not exceeding 500, and meets the other small business concern 
size regulation requirements found in 13 CFR 121. Business concerns, 
other than investment companies licensed, or State development 
companies qualifying, under the Small Business Investment Act of 1958 
(15 U.S.C. 661 et seq.), are affiliates of one another when either 
directly or indirectly (1) one concern controls or has the power to 
control the other, (2) a third party or parties controls or has the 
power to control both, or (3) an identity of interest between or among 
parties exists so that affiliation may be found. Control can be 
exercised through common ownership, common management, and contractual 
relationships. Business concerns include, but are not limited to, any 
individual, partnership, corporation, joint venture, association, or 
cooperative.

G. Subcontract

    A ``subcontract'' is any agreement, other than one involving an 
employer-employee relationship, entered into by a Federal government 
funding agreement awardee calling for supplies or services

[[Page 4308]]

required solely for the performance of the original funding agreement.

H. Women-Owned Small Business Concern

    A ``women-owned small business concern'' is a business that is at 
least 51 percent owned, controlled, and operated by a woman or women. 
``Control'' is defined as exercising the power to make policy 
decisions; ``operate'' is defined as being actively involved in the 
day-to-day management.

III. Preparation of Grant Applications

    The forms and instructions will be supplied to the applicant by the 
HCFA Grants Officer (see the ADDRESSES section of this notice) and are 
designed for use in applying for SBIR Phase I or Phase II research 
grants. The instructions contain the SBA policy directive's guidelines 
on proposal content and limitations.
    Potential applicants are encouraged to contact the SBIR Coordinator 
(see the FOR FURTHER INFORMATION CONTACT section of this notice) for 
preapplication technical assistance and for more specific information 
on the research topics described in section VII. of this notice.
    Health science research literature is available at academic and 
health science libraries and Regional Medical Libraries through a 
network supported by the National Library of Medicine. A list of 
Regional Medical Libraries and information about network services may 
be requested from the Public Information Office, National Library of 
Medicine, Bethesda, MD 20894, telephone (301) 496-6308.
    Other sources that provide technology search and document services 
include the organizations listed below. They should be contacted 
directly for service and cost information.

National Technical Information Service
    5285 Port Royal Road
    Springfield, VA 22161
    (703) 487-4600
NASA Industrial Applications Center
    University of Pittsburgh
    701 LIS Building
    Pittsburgh, PA 15280
    (412) 624-5211
North Carolina Science and Technology Research Center
    Post Office Box 12235
    Research Triangle Park, NC 27709
    (919) 549-0671
NASA/Florida State Technology Applications Center
    State University
    System of Florida, 500 Well Hall
    Gainesville, FL 32611
    (904) 392-6626
NASA/UK Technology
    University of Kentucky
    109 Kinkead Hall
    Lexington, KY 40506
    (606) 257-6322
Aerospace Research Applications Center
    611 N. Capitol Avenue
    Indianapolis, IN 46204
    (317) 262-5003
Kerr Industrial Applications Center
    Southeastern Oklahoma State
    University Durant, OK 74701
    (405) 924-6822

IV. Submission of Grant Applications

    Grant applications must be submitted to the HCFA Grants Officer 
(see the ADDRESSES section of this notice).
    Applications must be postmarked by April 29, 1997. Applications 
mailed through the U.S. Postal Service or a commercial delivery service 
will be ``on time'' if they are received or postmarked on or before 
April 29, 1997. Submissions by facsimile (fax) transmission will not be 
accepted. Applications that do not meet the above criteria will be 
considered late applications. Respondents are cautioned that if their 
application is late, it will be returned without review.

V. Method of Selection and Evaluation Criteria

    All Phase I and Phase II grant applications will be evaluated and 
judged on a competitive basis. Applications will be screened, and those 
found to be inadequate for review or programmatically unrelated to 
HCFA's mission will be returned to the applicant. Those passing the 
screening will be reviewed for technical merit. Each application will 
be judged individually, as described in this section. HCFA is under no 
obligation to fund any application or make any specific number of 
awards in a given topic area. It may also elect to fund no projects 
within a given topic area.

A. Review Process

    Grant applications are subject to a review process involving two 
sequential steps. The first step is performed by a technical review 
panel composed primarily of Federal and non-Federal professionals 
selected for their competence in particular fields. The task of the 
panel is to evaluate applications for technical merit. The reviewers 
furnish a number rating, make an overall recommendation, and, on 
occasion, make highly specific recommendations related to the scope, 
direction, and conduct of the proposed research. The second level of 
review is made by the senior management of HCFA's ORD. ORD management 
decisions are based on judgments about not only the technical merit of 
the proposed research, but also its relevance to our mission. 
Generally, HCFA may award a grant only if the corresponding application 
has been recommended for approval by the panel. However, applications 
recommended for approval are not automatically funded.

B. Review Criteria

    <bullet> In considering the technical merit of each application, 
the following criteria and weights will be used:
    <bullet> The soundness and technical merit of the proposed 
approach--35 percent.
    <bullet> The potential of the research for technological innovation 
including the potential for commercial application--30 percent.
    <bullet> The qualifications of the proposed principal investigator, 
support staff, and consultant--20 percent.
    <bullet> The appropriateness of the budget--10 percent.
    <bullet> The adequacy and suitability of the facilities and 
research environment--5 percent.

C. Funding Decisions

    When making funding decisions, ORD takes into consideration the 
following: (1) Ratings resulting from the technical evaluation process, 
(2) program relevance, and (3) applications.

D. Release of Grant Application Review Information

    Following decisions on grant applications, their summary statements 
are mailed with a disapproval letter to principal investigators whose 
proposals have not been accepted.

E. Submission of Similar Grant Applications by the Applicant 
Organization

    HCFA discourages the submission of more than one grant application 
submitted by the same applicant organization with essentially the same 
research focus: That is, a product or technology that, with 
nonsubstantive modifications, can be applied to a variety of purposes. 
In evaluating groupings of applications with a common focus or 
objective, technical review groups are in a position to easily identify 
multiple grant applications from the same organization for essentially 
the same project. In these cases, HCFA will give funding consideration 
to only one application.

VI. Considerations

    SBA's SBIR Program Policy Directive (58 FR 6144) specifies that we 
furnish the following information:

[[Page 4309]]

A. Awards

    <bullet> There will be approximately 10 to 15 Phase I and/or Phase 
II awards in FY '97.
    <bullet>  The SBA Program Policy Directive permits the payment of a 
reasonable fee or profit under the SBIR program.

B. Reports

    The grantee organization will be required to submit semi-annual 
progress reports, a complete draft final report, and a final report. 
Additionally, a financial status report (SF-269A) must be submitted to 
the HCFA Grants Officer annually. The award will specify the schedule 
for these reports and place of delivery.

C. Payment Schedule

    Once an SBIR grant is awarded, the grantee organization will 
receive information and forms regarding requests for cash, manner of 
payment, and associated reporting requirements. Payment may be made on 
a cost-reimbursement or advance basis. Cost reimbursements may be 
requested monthly, quarterly, or at other periodic intervals. Advance 
payments may be requested on a monthly basis only.

D. Limited Rights Information and Data

1. Proprietary Information
    Information contained in an unfunded grant application will remain 
the property of the applicant. HCFA may, however, retain copies of all 
applications.
    If proprietary information is provided by a proposer in a proposal 
that constitutes a trade secret, proprietary, commercial or financial 
information, confidential personal information or data affecting the 
national security, it will be treated in confidence, to the extent 
permitted by law, provided this information is clearly marked by the 
proposer with the term ``confidential proprietary information'' and 
provided the following legend appears on the title page of the 
proposal:

    For any purpose other than to evaluate the proposal, this data 
shall not be disclosed outside the government and shall not be 
duplicated, used, or disclosed in whole or in part, provided that if 
a funding agreement is awarded to this proposer as a result of or in 
connection with the submission of this data, the government shall 
have the right to duplicate, use, or disclose the data to the extent 
provided in the funding agreement. This restriction does not limit 
the government's right to use information contained in the data if 
it is obtained from another source without restriction. The data 
subject to this restriction are contained in pages ________ of this 
proposal.

    Any other legend may be unacceptable to the Federal government and 
may constitute grounds for removing the proposal from further 
consideration and without assuming any liability for inadvertent 
disclosure. The government will limit dissemination of the information 
to official channels only.
2. Title to Property
    Title to real property, equipment, and supplies acquired by a for-
profit recipient under a financial assistance award or subaward will 
vest, upon acquisition, in the Federal government. However, the title 
may be transferred to the awardee upon termination of the project if 
the transfer would be more cost-effective than our recovery of the 
property. It is recommended that applicants consider leasing 
arrangements whenever possible. HCFA will generally not fund projects 
that require the acquisition of real property, equipment, or supplies.
3. Rights in Data Developed Under the SBIR Grant
    Rights in data, including software developed under the terms of any 
grant resulting from an application submitted in response to this 
notice, will remain with the grantee, except that the Federal 
government will have the limited right to use the data for internal 
Federal government purposes. These data will not be released outside 
the Federal government without permission of the grantee for a period 
of 4 years from completion of the project from which the data were 
generated. However, at the end of this 4-year period a royalty-free 
license will exist for HCFA to use, and to authorize others to use on 
its behalf, these data for Federal government purposes. At this time, 
HCFA is also relieved of all disclosure prohibitions and assumes no 
liability for unauthorized use of these data by third parties. This 
notice will be affixed to any reproductions of these data, in whole or 
in part.
4. Copyrights
    With prior written permission of the Grants Officer, the awardee 
may normally copyright and publish (consistent with appropriate 
national security considerations, if any) material developed with 
HCFA's support. HCFA receives a royalty-free license for the Federal 
government and requires that each publication contain an appropriate 
acknowledgment of agency support and a disclaimer statement.
5. Patents
    Small business concerns may normally retain the principal worldwide 
patent rights to any invention developed with HCFA support. The Federal 
government receives a royalty-free license for Federal government use, 
reserves the right to require the patentholder to license others in 
certain circumstances, and requires that anyone exclusively licensed to 
sell the invention in the U.S. must normally manufacture it 
substantially in the U.S. To the extent authorized by 35 U.S.C. 205, 
the government will not make public any information disclosing a 
government-supported invention for a 4-year period to allow the awardee 
a reasonable time to pursue a patent.

E. Profit or Fee

    Absent a statutory prohibition, payment of a reasonable fee or 
profit will be made under the SBA's SBIR Program Policy Directive (58 
FR 6144). Because the regulations set forth at 45 CFR 74.705, which 
provide that no profit or fee will be furnished to for-profit 
organizations through grants, do not invoke a statutory prohibition on 
paying a fee or profit, the SBA's policy directive applies to these 
SBIR grants.

F. Joint Ventures and Limited Partnerships

    Joint ventures and limited partnerships are eligible provided the 
entity created qualifies as a small business concern in accordance with 
the definition included in this notice.

G. Performance of Research and Analytical Work by the Applicant 
Organization

    In Phase I, a minimum of two-thirds or 67 percent of the research 
or analytical effort must be carried out by the small business concern; 
that is, consultant fees and contracts to a third party for portions of 
the technical effort may not exceed 33 percent of the total proposed 
budget.
    In Phase II, a minimum of one-half or 50 percent of the research or 
analytical effort must be carried out by the small business concern; 
that is, consultant fees and contracts to a third party for portions of 
the technical effort may not exceed 50 percent of the total proposed 
budget.

H. Terms and Conditions of Awards

    Upon acceptance of a grant, the awardee must comply with the terms 
and conditions contained or referenced in the Notice of Grant Award 
document. These terms and conditions, constituting legal requirements 
imposed on a grantee by statute, regulations,

[[Page 4310]]

administrative policy, or the award document itself, comprise the 
following ``standard'' and ``special'' provisions:
    <bullet>  Standard Provisions--Terms and conditions required as 
part of each Notice of Grant Award.
    1. SBIR Grant program legislation: The Small Business Innovation 
Development Act of 1982 (Public Law 97-219); SBIR Program Extension 
(Public Law 99-443); the SBA Reauthorization and Amendment Act of 1988 
(Public Law 100-590); and the Small Business Research and Development 
Enhancement Act of 1992 (Public Law 102-564).
    2. The SBA's SBIR Program Policy Directive published in the Federal 
Register on January 26, 1993 (58 FR 6144).
    3. Regulations set forth at 13 CFR part 121.
    4. The inclusion of special terms and conditions, if any (see 
below).
    5. Regulations set forth at 45 CFR part 74 (Administration of 
Grants).
    <bullet> Special Provisions--Additional terms and conditions judged 
necessary to attain the objectives for which the grant is being made, 
to facilitate post-award administration of the grant, to conserve grant 
funds, or to otherwise protect the interests of the Federal government.
    1. Requirement for written progress reports and due dates.
    2. Requirement for a draft final report and due date.
    3. Grantees' responsibilities with respect to information contained 
in technical documents.
    4. HCFA's rights to suspend or terminate the grant.
    5. Protection of individually identifiable data.
    6. Grantees' responsibilities with respect to presentation of 
information.
    7. Key personnel.
    8. Submission of data to the Federal government.
    9. Submission of items developed to the Federal government.
    10. Other special terms and conditions that are appropriate to the 
circumstances of the individual award.
    The grant must be administered in accordance with the following 
regulations:

13 CFR Part 121--Small Business Size Regulations
42 CFR Part 52--Grants for Research Projects
45 CFR Part 46--Protection of Human Subjects
45 CFR Part 74--Administration of Grants
45 CFR Part 80--Nondiscrimination Under Programs Receiving Federal 
Assistance Through the DHHS Effectuation of Title VI of the Civil 
Rights Act of 1964
45 CFR Part 84--Nondiscrimination on the Basis of Handicap in Programs 
and Activities Receiving Federal Financial Assistance
45 CFR Part 91--Nondiscrimination on the Basis of Age in HHS Programs 
or Activities Receiving Federal Financial Assistance.

I. Cost Sharing

    Cost sharing is not required nor will it be an evaluation factor in 
consideration of the proposal. However, due to the special nature of 
the SBIR Program, the applicant may choose to share the costs of a 
project. This may be done through cash or in-kind contributions. Most 
frequently, we expect that the applicant will contribute more labor or 
use unreimbursed equipment as the applicant's share.

J. Additional Information

    This Federal Register notice is intended for informational purposes 
and reflects current planning. If there is any inconsistency between 
the information contained in this notice and the terms of any resulting 
SBIR grant, the terms of the grant are controlling.
    Before award of an SBIR grant, HCFA may request the applicant to 
submit certain organization, management, personnel, and financial 
information in order to ensure responsibility of the applicant.
    The Federal government is not responsible for any monies expended 
by the applicant before the award of any grant.
    This notice is not an offer by HCFA and does not obligate HCFA to 
make any specific number of awards.
    The SBIR Program is not a substitute for HCFA's existing 
unsolicited proposal mechanisms, and unsolicited proposals will not be 
accepted under either Phase I or Phase II of the SBIR Program.
    The applicant may be required to certify that he or she has not 
previously been paid, nor is currently being paid, for essentially 
equivalent work by an agency of the Federal government. If a grant is 
made under this notice for a project, some of whose elements are being 
supported, or will be supported, by another Federal agency, HCFA and 
the applicant will negotiate a budget that reflects the elimination of 
any overlapping support.
    This program is not covered by Executive Order 12372, 
``Intergovernment Review of Federal Programs.'' Executive Order 12372 
provides for a State clearinghouse in each State to review Federal 
programs. Research grants are exempt from this review.

VII. Research Topic Areas

    This notice invites SBIR Phase I applications in the following 
areas. The topics are defined in general terms. They are intended to 
indicate where we believe we can properly offer assistance in the 
development of innovative technology. ORD will consider any idea that 
is within the general subject of a topic. In addition, ORD will review 
any idea that is within the general purview of HCFA, as described in 
section I of this notice. Applicants are reminded that the overall 
intent of the HCFA SBIR Program is to provide assistance to the 
development of products and processes that have commercial potential 
and not to the acquisition of products for HCFA's own use.

A. High Quality and Effective Care

    HCFA invites ideas that would develop products to assist all 
participants in health care in assessing and monitoring the quality of 
care and level of care being furnished to patients. Projects should aim 
to develop tools for health care professionals, providers, and managers 
that permit them to examine patterns of services being delivered, and 
the health and social outcome of those services. Projects that would 
assist private organizations in developing patient guidelines and in 
conducting technology assessments are of interest. These tools should 
provide a way to monitor and measure the delivery of health care 
services and the outcomes of those services. They should also make 
possible a judgment about the quality of the care, the effectiveness of 
the care, or both. The technical efficiency with which care is 
delivered and the appropriateness of the overall outcome for the 
patient should be addressed.

B. Management of Ambulatory Services

    HCFA invites ideas that would develop tools to monitor, assess, and 
control overutilization and underutilization of ambulatory services and 
products at all levels of the health care system. Apart from the 
inflation in the cost of each service, a significant cause of the 
rising cost of health care services is excessive utilization. 
Traditionally, utilization review techniques have been applied to high 
cost, acute services, such as surgery and hospitalizations. We wish to 
focus on physician services and other ambulatory services and products, 
for example, drugs, medical equipment, and testing. HCFA invites 
applications related to services or products commonly

[[Page 4311]]

associated with Medicare beneficiaries and Medicaid recipients, who are 
primarily the aged, the poor, the disabled, and persons with end-stage 
renal disease. Techniques to be explored involve systems both for 
retrospective utilization pattern review and for managing prospective 
interventions in individual physician or beneficiary and recipient 
service or product use. This area also includes broader management 
tools, based on information derived from utilization review, that 
promote or ensure more efficient and effective service delivery.

C. Beneficiary Information and Assistance

    HCFA invites ideas that may make the Medicare and Medicaid programs 
understandable to beneficiaries and recipients and that provide 
assistance to these individuals in their attempts to deal with the 
programs. Potential program users (Medicare and Medicaid beneficiaries) 
need to understand when they are eligible, what services or products 
are covered, and what their rights and responsibilities are within each 
program. (It is important to understand that detailed information on 
Medicaid must be assembled on a state-by-state basis). An example would 
be an information project that would assist health care consumers, 
including Medicare and Medicaid beneficiaries, by providing aggregate 
data on provider performance and utilization trends, discrete price 
information, and information on related copayments, etc.; in a sense, a 
``Blue Book for Consumers.'' Another example is obtaining payment for 
claims, one of the most frequent problems encountered by Medicare 
beneficiaries. The process of dealing with Medicare's fiscal 
intermediaries and carriers is difficult for many beneficiaries. Tools 
that would ease this process would be welcome. Beneficiaries also need 
to be able to decide whether they should join, or exit from, a health 
maintenance organization, and the advantages and disadvantages of the 
decision. Beneficiaries need to understand what considerations to take 
into account when long term care is a possibility. Similarly, 
beneficiaries need to be assisted in the decision about the purchase of 
health insurance in addition to Medicare. HCFA invites ideas in 
beneficiary communication and assistance approaches that are tailored 
to special populations (such as significant demographic, sociocultural, 
or disease-related groups of beneficiaries), as well as approaches that 
could be used by supplemental health benefit program sponsors (for 
example, employers and unions) in assisting Medicare-eligible retirees. 
Applicants who are considering this topic should understand that the 
SBIR Program generally seeks to support the development of commercially 
viable products and that there is already a fair amount of existing 
commercial activity in this area.

D. Program Efficiencies and Improvement

    The existing systems for health care delivery and financing have 
undergone, and are continuing to undergo, changes due to new 
technology, legislation, regulation, and market forces. Major payers 
for health care are continually studying the feasibility of new 
approaches to improving the management of care, the delivery of care, 
and financing. Therefore, HCFA invites applications that focus on tools 
to assist in the goal of improved management of the Medicare and 
Medicaid programs. The term management is used in a broad sense. These 
could be tools that are directed toward providers who furnish services 
or products to Medicare beneficiaries or Medicaid recipients, 
organizations that handle the financing of care, organizations that 
oversee the quality of services and products, or the beneficiaries and 
recipients themselves, and State and local organizations that deal 
primarily with Medicare and Medicaid populations.
    HCFA will consider any innovative idea that appears to have the 
potential for improving the programs for any of the several parties 
involved, and that has a potential for sale in the normal or commercial 
market. An example of an innovative idea is the development of improved 
computer-based case management systems for community care services. 
Case management programs are commonly being used to coordinate 
community-based care for frail elderly and other populations under 
Medicaid and other programs. Automated systems use client eligibility 
and assessment information to assist case management agencies in 
preparing appropriate plans of care based on the client's condition and 
select service providers. These systems would also interface with 
service approval or financial or billing systems to improve the cost-
efficiency of case management programs. Proposed systems should 
complement or integrate existing mandated HCFA instruments 
(particularly functional assessment tools, minimum data sets, discharge 
planning, etc.). Redundant instruments will not be considered for 
funding.

E. Other Health Care Research and Demonstrations

    We encourage small business concerns to submit applications for 
proposed research in any area within the field of health care R & D.

VIII. Other Required Information

    In accordance with the provisions of Executive Order 12866, this 
notice was not reviewed by the Office of Management.

    Authority: Public Law 97-219, 96 Stat. 217-221; Public Law 99-
443, 100 Stat. 1120; Sec. 108, Public Law 100-590, 102 Stat. 2989, 
2994; Public Law 102-564, 106 Stat. 4249 (15 U.S.C. 638 (e) through 
(m)).
(Catalog of Federal Domestic Assistance Program No. 93.779, Health 
Care Financing Research, Demonstration and Experiments)

    Dated: December 17, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 97-2087 Filed 1-28-97; 8:45 am]
BILLING CODE 4120-01-P


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