[Federal Register Volume 62, Number 231 (Tuesday, December 2, 1997)]
[Rules and Regulations]
[Pages 63669-63674]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-31710]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 417

[HCFA-1911-IFC]
RIN 0938-AI35


Medicare+Choice Program; Collection of User Fees From 
Medicare+Choice Plans and Risk-Sharing Contractors

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

ACTION: Interim final rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: This interim final rule with a request for comments 
establishes the methodology that will be employed to assess fees 
applicable to Medicare risk-sharing contractors for fiscal year (FY) 
1998. Under section 4002 of the Balanced Budget Act of 1997, these 
contractors must contribute their pro rata share of costs relating to 
beneficiary enrollment, dissemination of information, and certain 
counseling and assistance programs. The Medicare+Choice regulation to 
be published in June of 1998 will implement this requirement for 
Medicare+Choice plans.

DATES: Effective Date: These regulations are effective on January 1, 
1998.
    Comment Date: Comments will be considered if we receive them at the 
appropriate address, as provided below, no later than 5 p.m. on 
February 2, 1998.

ADDRESSES: Mail an original and 3 copies of written comments to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: HCFA-1911-IFC, P.O. Box 7517, 
Baltimore, MD 21207-5187.
    If you prefer, you may deliver an original and 3 copies of your 
written comments to one of the following addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., 
Washington, D.C. 20201, or
Room C5-09-26, 7500 Security Boulevard, Baltimore, Maryland 21244-1850.

    Comments may also be submitted electronically to the following e-
mail address: <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="98d0dbded9b5a9a1a9a9b5d1dedbd8f0fbfef9b6fff7eeb6">[email protected]</a> E-mail comments must include the 
full name and address of the sender, and must be submitted to the 
referenced address in order to be considered. All comments must be 
incorporated in the e-mail message because we may not be able to access 
attachments. Electronically submitted comments will be available for 
public inspection at the Independence Avenue address, below.
    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code HCFA-1911-IFC. Comments received timely will be available 
for public inspection as they are received, generally beginning 
approximately 3 weeks after publication of a document, in Room 309-G of 
the Department's offices at 200 Independence Avenue, SW., Washington, 
D.C., on Monday through Friday of each week from 8:30 a.m. to 5 p.m. 
(phone: (202) 690-7890).

FOR FURTHER INFORMATION CONTACT: Randy Ricktor, (410) 786-4632, Marty 
Abeln, (410) 786-1032.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 4001 of the Balanced Budget Act of 1997 (BBA) (Public Law 
105-33), added a new section 1857(e)(2) to the Social Security Act (the 
Act), that establishes a fee requirement that Medicare+Choice plans 
must contribute their pro rata share, as determined by the Secretary, 
of costs relating to enrollment and dissemination of information and 
certain counseling and assistance programs. Section 4002(b) of the BBA 
makes this requirement applicable to those managed care plans with risk 
sharing contracts under section 1876 of the Act. Any amounts collected 
are authorized to be appropriated only for the purpose of carrying out 
section 1851 of the Act (relating to enrollment and dissemination of 
information) and section 4360 of the Omnibus Budget Reconciliation Act 
of 1990 (Public Law 103-66, OBRA 1990), relating to the health 
insurance counseling and assistance program.
    For any Federal fiscal year (FY), the fees authorized under section 
1857(e)(2)(B) of the Act are contingent upon enactment in an 
appropriations act of a provision specifying the aggregate amount of 
fees the Secretary is directed to collect in that fiscal year. The BBA 
fees collected during any FY are to be credited as offsetting 
collections. Under section 1857(e)(2)(D), the fees authorized under 
section 1857(e)(2)(B) are not to be established at any amount greater 
than the lesser of the estimated costs to be incurred by the Secretary 
in the FY in carrying out the activities described in sections 1851 of 
the Act and 4360 of the OBRA 1990; or $200 million in Federal fiscal 
year 1998; $150 million in fiscal year 1999; and $100 million in fiscal 
year 2000 and

[[Page 63670]]

each subsequent fiscal year (or such amounts as may be specified in 
appropriations bills). The appropriations bill for FY 1998, permits the 
Secretary to collect no more than $95 million in FY 1998. We estimate 
that the costs to be incurred in carrying out the activities described 
in sections 1851 and 4360 will exceed the full limit of $95 million for 
FY 1998. Therefore, we will collect the full $95 million amount 
provided for in the FY 1998 appropriation bill.

II. Discussion of Possible Approaches to Collecting Medicare+Choice 
Fees

Risk Contracting Plans

    The BBA authorizes the collection of fees from both Medicare+Choice 
plans and existing managed care plans with risk sharing contracts under 
section 1876 of the Act. Under section 4002 of the BBA Medicare risk 
contracting plans may continue to contract with HCFA through December 
31, 1998. Effective, January 1, 1999, all risk contracting plans are 
required to contract with HCFA only as Medicare+Choice plans. We do not 
expect final regulations for the Medicare+Choice program to be 
effective before June 1998. Until the Medicare+Choice program 
regulations are published the only organizations subject to the BBA 
fees will be Medicare risk contracting plans. Regulations implementing 
the BBA fees for Medicare+Choice plans will be included as part of the 
larger Medicare+Choice regulation to be published in June of 1998. In 
the June regulation we will describe how we will continue to assess the 
BBA fees from Medicare risk contracting plans during FY 1998 and how 
Medicare+Choice plans will be included in the FY 1998 assessment of $95 
million. The June 1998 regulation will also describe the BBA assessment 
methodology for future fiscal years. It should be noted that any new 
Medicare risk contracts and Medicare+Choice plans (during the FY 1998 
assessment period) will be subject to the FY 1998 BBA fee assessment. 
Since we anticipate that Medicare risk contracting plans will 
necessarily be responsible for a substantial portion of the FY 1998 BBA 
fees the following background is provided regarding the size and scope 
of the Medicare risk contracting program.
    As of October 1, 1997, there were 279 active Medicare risk plans 
with each having an average enrollment of 28,000 Medicare 
beneficiaries. There is great range in the size of Medicare risk plans, 
with the smallest risk plans having less than 500 enrolled 
beneficiaries, up to the largest risk plan having almost 300,000 
enrolled beneficiaries. Enrollment in risk contracting plans is not 
evenly distributed, in fact, almost 50 percent of beneficiaries 
enrolled in Medicare risk contracting plans are concentrated in only 10 
percent of the risk plans. A Medicare risk contracting plan is paid a 
capitation payment (that varies depending on the geographic location of 
the plan) for each enrolled beneficiary in its plan, thus the range of 
total Medicare payments received by risk plans also varies greatly. The 
typical risk contracting plan is paid about $12 million each month. 
Medicare's monthly payments to all risk contracting plans exceed $2 
billion a month, with payments to some of the largest risk contracting 
plans averaging over $100 million a month.

Approaches to Assessing Fees

    A number of approaches were considered in selecting a methodology 
for assessing the BBA fees which would be consistent with the goals of 
the Medicare+Choice program and also equitable in terms of financial 
impact on current Medicare risk contracting plans as well as new 
Medicare+choice plans. In order to ensure that the selected fee 
assessment methodology meets the Medicare+Choice goals and is equitably 
applied to all eligible plans, we identified the specific criteria 
described below.
    The following criteria were used in selecting the BBA fee 
assessment methodology:
    <bullet> The fee assessment should serve to support the goal of 
promoting enrollment growth in Medicare+Choice plans. In particular, 
the fee assessment should not present a barrier to the entry of new or 
small plans (e.g., low enrollment plans in rural areas) into the 
Medicare+Choice program.
    <bullet> The fees should be equitably applied to all eligible plans 
on a basis which is balanced by their Medicare revenue from the Federal 
government.
    <bullet> The methodology for assessing the fees should be as simple 
as possible, and implemented in a manner that minimizes the financial 
impact on plans and the administrative costs to HCFA.
    We considered four general approaches which might be used in 
assessing the BBA fees:
    <bullet> The first and most direct approach considered was to 
divide the total annual BBA fee cost equally among all the eligible 
plans. While this approach would be simple to implement and administer 
it was rejected because it clearly imposes a disproportionate financial 
burden on small plans, as they would be paying the same amount of BBA 
fees as the largest plans. In addition, an equal fee assessment could 
serve as a prohibitive financial barrier restricting entry of new low 
enrollment plans into the Medicare+Choice program.
    <bullet> As a second general approach, we evaluated assessing the 
BBA fees based on the number of beneficiaries enrolled in a particular 
plan. Specifically, under this approach a fixed per capita rate would 
be assessed on a per member month basis. Thus, a fixed dollar amount 
would be deducted from the capitation payment of each beneficiary 
enrolled in the plan. For example, at a total enrollment level of 5 
million beneficiaries, the assessment of a $95 million BBA fee (over a 
nine month collection period) would result in a deduction of 
approximately $2.09 from the monthly capitation payment for each 
beneficiary enrolled in an eligible plan. Collecting fees under this 
approach would mean that each plan's assessment is directly related to 
the number of beneficiaries enrolled in the plan. Thus, this method 
equitably links the BBA fee assessment with the size of the plan as 
determined by beneficiary enrollment. However, this method does not 
adjust for the geographic variation in the monthly capitation payment 
paid to plans, which range from approximately $367 per member month in 
the lowest payment areas (typically rural) up to a maximum of $782 per 
member month in the highest capitation payment areas (typically urban).
    <bullet> A third approach considered was to assess the BBA fee as a 
fixed percentage of the total monthly payment to each plan. This 
approach is financially equitable since any plan's assessment is based 
specifically on the total capitation dollars an eligible plan receives 
from the Federal government. Thus, the more dollars a plan is paid the 
greater the BBA fee assessment. Generally, this approach would impose a 
slightly higher cost on eligible plans located in the higher capitation 
payment areas. Alternatively, this approach would not 
disproportionately effect those plans in the lowest payment areas which 
tend to be smaller plans in rural areas.
    <bullet> A fourth approach considered was establishing a flat base 
fee assessment (a percentage of the overall fee) that each eligible 
plan would pay, coupled with a variable assessment that would be 
determined by the size of the plan. We evaluated such an approach 
because of concern that assessing fees based solely on size (determined 
either by beneficiary enrollment or dollars paid to the plan), would 
mean that smaller and new plans with limited enrollment might not be 
contributing their fair share toward the annual BBA fee assessment. 
However, upon evaluating

[[Page 63671]]

various fixed dollar amounts as a base fee assessment we recognized 
that any fixed amount would have to be very small in order to not 
present an excessive financial burden for small plans or create an 
entry barrier for new low enrollment plans. For example, at the $95 
million national fee level, if all plans were assessed an annual fee of 
$15,000 combined with a variable cost, we estimated that for small 
plans (500 or fewer members) the $15,000 annual fee amount (combined 
with the variable assessment) would result in these plans being 
assessed from 1 to 5 percent of the total capitation payments small 
plans receive from the Medicare program. This result is in contrast to 
the other assessment approaches discussed above under which all plans 
would be assessed less than 1 percent of the payments they receive from 
the Medicare Program.

Conclusion

    Based on the selection criteria, we have chosen the third 
methodology (described above) which calls for the BBA fees to be 
assessed as a fixed percentage of the total monthly calculated Medicare 
payments eligible plans receive from Medicare. Assessing fees on this 
basis in FY 1998 will require the deduction of only a very small 
percentage of any plan's total annual Medicare payments (less than one-
half of one percent). Accordingly, we believe this approach best meets 
the goals of supporting the Medicare+Choice program as well as being 
equitable to current Medicare risk contracting plans and future 
Medicare+Choice plans.

III. Provisions of the Interim Final Rule

    In summary the provisions of this interim final rule are as 
follows:
    <bullet> Section 1857(e)(2) of the Act provides for the collection 
of fees from each eligible organization with a risk-sharing contract 
its share of the fees for administering section 1851 of the Act 
relating to enrollment and dissemination of information and section 
4360 of the OBRA 1990 relating to the health insurance counseling and 
assistance program in accordance with the specified requirements. 
(Sec. 417.472(h))
    <bullet> The aggregate amount of fees for a fiscal year are the 
lesser of the estimated costs to be incurred by HCFA in that fiscal 
year to carry out the activities described in section 1851 of the Act 
and section 4360 of the OBRA 1990, or, if less, the amount set forth in 
the DHHS appropriation for the fiscal year. (Sec. 417.472(h)(1)).
    <bullet> We establish a fee percentage rate and collect the fees 
over nine consecutive months beginning with January of the fiscal year 
or until the $95 million assessment limit has been reached. The 
aggregate amount of fees we are authorized to collect in FY 1998 is $95 
million. We will begin collecting the BBA fees for fiscal year 1998 
from eligible plans starting January 1, 1998. The three months from 
October thru December will be used by HCFA to make any necessary 
adjustments regarding the fees collected from plans in the previous 
assessment period.
    The percentage BBA fee assessment for FY 1998 is .428 percent. This 
percentage rate is based on the total estimated Medicare payment amount 
to all eligible plans on January 1, 1998. The percentage amount is 
calculated by multiplying the projected total January payment amount by 
nine (months in the assessment period) and then dividing this figure 
into the total FY 1997 BBA fee assessment of $95 million. We estimate 
that we will pay all risk contracting plans $2,464,524,000 in January 
of 1998. We then multiplied $2,464,524,000 times nine (the projected 
assessment period) which equals $22,180,716,000. A $95 million total 
BBA fee represents .428 percent of the $22,180,716,000 figure. 
Accordingly, during the nine month assessment period we will deduct 
.428 percent of each eligible plan's total calculated monthly payment 
as its portion of the BBA fee. Adjustments for retroactive enrollments 
and disenrollments to our enrollment system subsequent to November are 
not considered or factored into the calculation for the fee 
determination. (Sec. 417.472(h)(2))
    <bullet> An eligible organization with a risk contract's pro rata 
share of the annual fee is determined based upon the organization's 
monthly calculated Medicare payment amount during the preceding nine 
consecutive months beginning with January. We will calculate each 
monthly pro rata share for an eligible plan by multiplying the 
established BBA fee percentage by the total monthly calculated Medicare 
payment amount to plans as recorded in our payment system on the first 
day of the month. We recognize that retroactive changes to enrollment 
and disenrollment dates are normal business transactions and occur on a 
routine basis. However, we have determined that the overall dollar 
impact on plans of these enrollment and disenrollment changes do not 
represent a material amount to warrant an adjustment to the 
organization's pro rata share of the BBA fee assessment. 
(Sec. 417.472(h)(3))
    <bullet> We will collect the fees by offset against the 
organization's monthly Medicare payment. Beginning with the January 
payment, we will withhold the organization's share of fees and deduct 
the amount from the total payment made to the organization for that 
month. (Sec. 417.472(h)(4))
    <bullet> We will stop collecting the BBA fee from plans when the 
$95 million has been assessed. We will not collect more than the $95 
million FY 1998 assessment from eligible plans.
    <bullet> Should delays occur in determining the aggregate amount of 
fees for a fiscal year we may adjust the assessment time period and fee 
percentage amount if: (1) it becomes evident that the full aggregate 
amount of fees cannot be collected within the allotted assessment time 
period; or (2) for any other reason the assessment cannot be started in 
January. In addition, if the annual fee limit is reached in any month 
prior to the end of the assessment period, we will cease collecting 
fees. (Sec. 417.472(h)(5))
    Medicare demonstrations with a section 1876 risk sharing contract 
will also be subject to the annual fee assessment.

IV. Regulatory Impact Statement

A. Background

    We have examined the impact of this interim final rule as required 
by Executive Order 12866 and the Regulatory Flexibility Act (RFA) 
(Public Law 96-354). Executive Order 12866 directs agencies to assess 
all costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects; distributive impacts; and equity). The 
Regulatory Flexibility Act (RFA) requires agencies to analyze options 
for regulatory relief for small businesses, unless we certify that the 
regulation would not have a significant economic impact on a 
substantial number of small entities. Most Medicare risk contracting 
plans are not considered to be small entities within the meaning of the 
RFA.
    Section 1102(b) of the Act requires us to prepare a regulatory 
impact analysis if a final rule may have a significant impact on the 
operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside a Metropolitan 
Statistical Area and has fewer than 50

[[Page 63672]]

beds. We are not preparing an analysis for section 1102(b) of the Act 
because we have determined, and we certify, that this final rule will 
not have a significant impact on the operations of a substantial number 
of small rural hospitals.
    The Balanced Budget Act of 1997 directs HCFA to collect the BBA 
fees from Medicare risk contracting plans, and from Medicare+Choice 
plans, in order to finance an annual informational campaign for 
Medicare beneficiaries. These collections begin in fiscal year 1998, 
and are limited, in the aggregate, to amounts stipulated in the BBA and 
determined by the Congress in appropriations legislation. This interim 
final rule discusses the regulatory alternatives that HCFA considered 
in establishing user fee charges to these organizations.
    Although we view the anticipated results of this interim final 
regulation as beneficial to the Medicare program as well as to Medicare 
beneficiaries, we recognize that some of the provisions could be 
controversial and may be responded to unfavorably by some affected 
entities. We also recognize that not all of the potential effects of 
these provisions can be anticipated, and that it may be impossible to 
quantify meaningfully some of the potential effects, particularly the 
economic impact of the informational campaign on individual 
Medicare+Choice plans. It is clear that all existing Medicare risk 
contracting plans and future Medicare+Choice plans will be affected by 
these provisions to varying degrees. In selecting our regulatory 
options, we have attempted to identify a methodology that is consistent 
with the legislative intent of the BBA while being equitable to current 
Medicare risk contracting plans and new Medicare+Choice plans. For the 
aforementioned reasons, we have prepared the following voluntary 
analysis. This analysis, in combination with the rest of the preamble, 
is consistent with the standards of analysis set forth by the RFA.

B. Anticipated Effects

1. Effects on the Medicare Trust Funds
    The user fees outlined in this regulation to be collected by HCFA 
are established as a result of enactment of the BBA. We have determined 
that the estimated costs to be incurred in carrying out the activities 
described in section 1851 of the Act and section 4360 of the OBRA 1990 
will exceed the limit contained in the FY 1998 appropriations bill. 
Therefore, the maximum amount to be collected by HCFA will be the 
amount authorized in the appropriation bill.
    Under any regulatory approach to collect these user fees, we would 
collect the same aggregate amount of BBA fees. This is because we 
collect the lesser of the amount of estimated costs or the amount 
specified in appropriations legislation.
2. Effects on Risk-sharing Plans
    Assessing BBA fees based on the payment plans receive from the 
Medicare program distributes the impact of these fees in direct 
proportion to the amount of money the plan is receiving from the 
Federal government. It should also be noted that Medicare risk 
contracting plans and Medicare+Choice plans will benefit from the 
Secretary's enrollment and information activities, which will be 
financed through the BBA fee assessment. Accordingly, we believe that 
assessing the BBA fees as a fixed percentage of total Medicare payments 
to plans is the most equitable approach.
3. Effects on Medicare Beneficiaries
    Medicare beneficiaries are certain to benefit from the 
informational campaign financed by these user fee collections. They are 
not, however, directly affected by the regulatory approach to 
establishing BBA fee charges to risk contracting plans and are 
therefore not directly impacted by the provisions of this interim final 
rule.

C. Alternatives Considered

    We considered several alternatives in assessing BBA fees on 
Medicare risk contracting plans and discussed them elsewhere in this 
preamble.
    The first alternative was to simply equally divide the total annual 
user fee cost among all the eligible plans. With approximately 280 
plans currently subject to the fees, this approach would mean for 
example, that in FY 1998, with a total assessment of $95 million, each 
of the eligible plans would be assessed more than $339,000. The 
regulatory impact of this alternative, which we rejected, results in a 
disproportionate financial burden on smaller plans.
    As a second general approach, we evaluated assessing the BBA fees 
based on the number of beneficiaries enrolled in a particular plan. 
Specifically, under this approach a fixed per capita rate would be 
assessed on a per member month basis. Thus, a fixed dollar amount would 
be deducted from the capitation payment of each beneficiary enrolled in 
the plan. For example, given a constant enrollment level of 5 million 
beneficiaries, the assessment of a $95 million dollar BBA fee would 
result in a deduction of approximately $2.09 from the monthly 
capitation payment for each beneficiary enrolled in a risk contracting 
plan over a nine month assessment time frame. Collecting fees under 
this approach means that each plan's assessment is directly related to 
the number of beneficiaries enrolled in the plan. Thus, this approach 
can be considered equitable since it directly links the BBA fee 
assessment with the size of the plan. However, the method does not 
adjust for the wide geographic variation in the monthly capitation 
payment paid to plans, which ranges from approximately $367 per member 
month in the lowest payment areas up to a maximum of $782 per member 
month in the highest capitation payment area.
    A third alternative which we considered and accepted was to assess 
the BBA fee through a fixed percentage deduction from the plan's 
aggregate monthly capitation payments.
    A fourth alternative reviewed in assessing user fees is a 
combination of a flat annual fee with a variable component. That is, 
there would be a base fee assessment that each eligible plan would pay, 
plus an additional assessment based on a variable element such as plan 
enrollment or total plan payment. We rejected the regulatory approach 
of a base assessment with additional variable assessments as we have 
determined that a flat fee of more than a nominal amount (e.g., $15,000 
in FY 1998) will result in a disproportionate impact on smaller plans.
    As noted above we decided to impose fees based on a percentage of 
the total dollar amount of capitation payments a plan is receiving from 
the Medicare program. Collecting the BBA fees under this approach means 
that each plan's assessment will be directly related to the total 
dollars the plan is receiving from the Federal government. Thus, 
eligible plans which are receiving the largest payments (based on 
number of enrollees and monthly payment levels) from the Federal 
government will pay the largest share of the fees. Conversely, smaller 
plans will have an assessment directly related to their smaller size. 
We also found this approach met the criteria we had established for the 
selection of the BBA Fee assessment methodology. Specifically, we 
determined that an assessment based on percentage of plan payment is: 
consistent with the intent of the Medicare+Choice program in that it 
does not pose barriers to the participation of new plans and those with 
small enrollment levels; the approach is equitable for current Medicare 
risk contracting plans (large

[[Page 63673]]

and small) and finally; the approach is simple for eligible plans and 
for HCFA to administer.

D. Conclusion

    Since the number of plans over which the BBA fee collections will 
be spread is likely to continue to rise with increased participation in 
the Medicare+Choice program in future years, we believe the regulatory 
impact of any reasonable selected option for imposition of fees on 
Medicare risk contracting plans and ultimately Medicare+Choice plans 
will not be significant. In accordance with our stated objective of 
choosing the assessment methodology which best supports the goals of 
the Medicare+Choice program and is equitable to current risk 
contracting plans we have selected the option to impose fees based on 
total plan payment assessed on a monthly basis. Assessing fees based on 
the total Medicare dollars paid to plans over a nine month time frame 
will represent only a small percentage of any plan's total payment from 
the government. In subsequent fiscal years, BBA fees as a percentage of 
Medicare payments will likely represent an even smaller percentage of 
the Medicare payments as the number of eligible plans increase and the 
existing plans experience enrollment growth. In addition, it should 
also be noted that the information campaign (financed by the BBA fees) 
will be designed to reach all Medicare beneficiaries and it is likely 
that, to the extent that this encourages growth in the Medicare+Choice 
program, larger more experienced plans will be well positioned to take 
advantage of an expanding market. The economic impact of this 
regulatory option measured in terms of the BBA fees as a percentage of 
overall plan revenues from the Federal government is very small. The 
consequence of a fee assessment based on a percentage of total payment 
is a distribution of the BBA fee burden proportional to the size of the 
plan. We have concluded this is the most equitable approach for all 
eligible plans in assessing the BBA fees.
    In accordance with the provisions of Executive Order 12866, this 
final regulation was reviewed by the Office of Management and Budget.

V. Waiver of Notice of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite prior public comment on proposed rules. The 
notice of proposed rulemaking can be waived, however, if an agency 
finds good cause that a notice-and-comment procedure is impracticable, 
unnecessary, or contrary to the public interest and it incorporates a 
statement of the finding and its reasons in the rule issued. We find 
good cause to waive the notice-and-comment procedure with respect to 
this rule because it is impracticable to employ such a procedure in 
this instance, because it is unnecessary, and because the delay in 
promulgating this rule would be contrary to the public interest. Even 
if we did not find good cause for a waiver of prior notice and comment, 
section 1856(b)(1) of the Act expressly authorizes the Secretary to 
publish final rules without prior notice and comment implementing 
provisions in the new Part C of Title XVIII including the fees provided 
for in section 1857(e)(2) of the BBA.
    Issuing a proposed rule with a comment period before issuing a 
final rule would be impracticable because it would allow for less time 
for HCFA to collect the full $95 million amount allowed by Congress in 
the appropriations bill for FY 1998. An abbreviated assessment period 
would increase the financial impact on those plans subject to the BBA 
fees in FY 1998.
    For these reasons, we find good cause to waive publishing a 
proposed rule and to issue this final rule with comment period. We 
invite written comments on this final rule and will consider comments 
we receive by the date and time specified in the DATES section of this 
preamble. Although we cannot respond to comments individually, if we 
change this rule as a result of our consideration of timely comments, 
we will respond to such comments in the preamble of the amended rule.

VI. Response to Comments

    Because of the large number of items of correspondence we normally 
receive on Federal Register documents published for comment, 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.

List of Subjects in 42 CFR Part 417

    Administrative practice and procedure, Grant programs-health, 
Health care, Health facilities, Health insurance, Health maintenance 
organizations (HMO), Loan programs-health, Medicare, Reporting and 
record keeping requirements.

    42 CFR Part 417 is amended as set forth below:

PART 417--HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL 
PLANS, AND HEALTH CARE PREPAYMENT PLANS

    1. The authority citation for Part 417 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh), secs. 1301, 1306, and 1310 of the Public 
Health Service Act (42 U.S.C. 300e, 300e-5, and 300e-9); and 31 
U.S.C. 9701.

    2. In Sec. 417.470, paragraph (a) is revised to read as follows:


Sec. 417.470  Basis and Scope.

    (a) Basis. This subpart implements those portions of section 
1857(e)(2) of the Act pertaining to cost sharing in enrollment-related 
costs and section 1876(c), (g), (h), and (i) of the Act that pertain to 
the contract between HCFA and an HMO or CMP for participation in the 
Medicare program.
* * * * *
    3. Section 417.472 is amended by adding a new paragraph (h) to read 
as follows:


Sec. 417.472  Basic contract requirements.

* * * * *
    (h) Collection of fees from risk contracting plans. HCFA is 
authorized to charge and directed to collect from each eligible 
organization with a risk-sharing contract its share of fees for 
administering section 1851 of the Act relating to enrollment and 
dissemination of information and section 4360 of the Omnibus Budget 
Reconciliation Act of 1990 relating to the health insurance counseling 
and assistance program in accordance with the requirements of 
paragraphs (h)(1) through (5) of this section.
    (1) The aggregate amount of fees for a fiscal year are the lesser 
of the estimated costs to be incurred by HCFA in that fiscal year to 
carry out the activities described in section 1851 of the Act and 
section 4360 of the Omnibus Budget Reconciliation Act of 1990, or, if 
less, the amount set forth in the DHHS appropriation for the fiscal 
year.
    (2) HCFA establishes a fee percentage rate and collects the fees 
over nine consecutive months beginning with January of the fiscal year. 
The percentage rate is determined by multiplying the total of the 
estimated January 1998 payments to all eligible plans by nine (months 
in the assessment period) and dividing this figure into the total fee 
assessment as determined in paragraph (h)(1) of this section. 
Adjustments for retroactive enrollments and disenrollments to HCFA's 
enrollment system subsequent to November are not considered or

[[Page 63674]]

factored into the calculation for the fee determination.
    (3) An eligible organization with a risk contract's pro rata share 
of the annual fee is determined based upon the organization's monthly 
calculated Medicare payment amount during the preceding nine 
consecutive months beginning with January. HCFA calculates each monthly 
pro rata share for an organization by multiplying the established BBA 
fee percentage by the total monthly calculated Medicare payment amount 
to plans as recorded in HCFA's payment system on the first day of the 
month.
    (4) HCFA offsets the fees against the organization's monthly 
Medicare payment. Beginning with the January payment, HCFA withholds 
the organization's share of fees and deducts the amount from the total 
payment made by HCFA to the organization for that month. HCFA will stop 
collecting the FY 1998 BBA fee from eligible plans when $95 million has 
been assessed.
    (5) Should delays occur in determining the amount of fees specified 
in paragraph (h)(1) of this section or the fee percentage rate 
specified in paragraph (h)(2) HCFA may adjust the assessment time 
period and fee percentage amount.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: November 26, 1997.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.

    Approved: November 26, 1997.
Donna E. Shalala,
Secretary.
[FR Doc. 97-31710 Filed 12-1-97; 8:45 am]
BILLING CODE 4120-01-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>