Federal Register / Vol. 73, No. 5 / Tuesday, January 8, 2008 / Proposed Rules 1301 

Four-year Private Institutions: Janet 

Dodson, Director of Financial Aid, 

Doane College. 

Scott Fleming, Government Relations, 

Georgetown University. 

Ellis Salim, Director of Financial Aid, 

Baker College. 

Alternates: Bernard Pekala, Director of 

Financial Strategies, Boston College. 

Thomas O’Neill, Jr., President, 

Association of Independent Colleges 

and Universities of Nebraska. 

Two-year Public Institutions: Patrick 

Moore, Director of Financial Aid, 

Delaware Technical and Community 

College. 

For-Profit Institutions: Marry Dorrell, 

Corporate Vice President of Student 

Finance, Career Education Corporation. 

Students: Carmen Berkeley, United 

States Students Association. 

Alternate: Cedric Lawson, United 

Council of University of Wisconsin 

Students. 

Associations: Terry Hartle, Senior 

Vice President, American Council of 

Education. 

Alternate: Cyndy Littlefield, 

Association of Jesuit Colleges and 

Universities. 

Department of Education: Gail 

McLarnon. 

We have scheduled a total of three 

negotiated rulemaking sessions, all of 

which will be held at our offices on 

1990 K Street, NW., Washington, DC 

20006. The following schedule is 

subject to change. We will announce 

any changes to this schedule on the 

Department’s Web site at http:// 

www.ed.gov/policy/highered/reg/ 

hearulemaking/2008/index2008.html. 

Session 1: January 8–January 10. 

Session 2: January 22–January 24. 

Session 3: February 6–February 8. 

For the first negotiating session, the 

TEACH Grant committee is scheduled to 

meet from 9 a.m. to 5 p.m. each day. 

For Session 2, the committee is 

scheduled to meet from 9 a.m. to 5 p.m. 

each day. 

For Session 3, the committee is 

scheduled to meet from 1 p.m. to 5 p.m. 

on February 6 and from 9 a.m. to 5 p.m. 

on February 7 and 8. 

Student Loan Committee Topics, 

Members, and Meeting Schedule 

The topics the Student Loan 

Committee is likely to address are: 

Income-based Repayment Plan (IBR). 

Conforming the Economic Hardship 

Deferment with IBR. 

Public Service Loan Forgiveness. 

Definition of Not-for-Profit Holder. 

Harmonizing HEROES Waivers with 

Other Benefits Provided to Returning 

and Active Duty Military. 

Federal Preemption of State Laws 

Related to improper inducements and 

arrangements between schools, lenders 

and other entities in the student loan 

programs. 

This list of topics is tentative. Topics 

may be added as the process continues. 

The members of the Student Loan 

Committee and the interests they are 

representing are: 

Students: Luke Swarthout, United 

States PIRG. 

Alternate: Rebecca Thompson, United 

States Student Association. 

Graduate and Professional Students: 

Carrie Steere-Salazar, American 

Association of Medical Colleges. 

Alternate: Radhika Miller, National 

Lawyers Guild Partnership for Civil 

Justice. 

Legal Aid: Deanne Loonin, National 

Consumer Law Center. 

Alternate: Lauren Saunders, National 

Consumer Law Center. 

Four-year Public Institutions: Allison 

Jones, California State University. 

Alternate: Anna Griswold, 

Pennsylvania State University. 

Four-year Private Institutions: Eileen 

O’Leary, Stonehill College. 

Alternate: Kathleen Koch, Seattle 

University School of Law. 

Two and Four-year Public 

Institutions: George Chin, City 

University of New York. 

For-profit Institutions: Mark Pelesh, 

Corinthian Colleges. 

Alternate: Tammy Halligan, Career 

College Association. 

Lenders—For-Profit: Tom 

Levandowski, Wachovia Corporation. 

Alternate: Walter Balmas, 

MyRichUncle. 

Lenders—Non-Profit: Scott Giles, 

Vermont Student Assistance 

Corporation. 

Alternate: Phil Van Horn, Wyoming 

Student Loan Corporation. 

Guaranty Agencies: Gene Hutchins, 

New Jersey Higher Education Student 

Assistance Authority. 

Alternate: Dick George, Great Lakes 

Higher Education Guaranty 

Cooperation. 

Servicers: Wanda Hall, EDFinancial 

Services. 

Alternate: Rob Sommers, Sallie Mae. 

Collection Agencies: Martin Darnian, 

Windham Professionals. 

Alternate: Carl Perry, Progressive 

Financial Services. 

Associations: Anne Gross, NACUBO. 

Department of Education: Dan 

Madzelan. 

We have scheduled a total of three 

negotiated rulemaking sessions, all of 

which will be held at our offices on 

1990 K Street, NW., Washington, DC 

20006. The following schedule is 

subject to change. We will announce 

any changes to this schedule on the 

Department’s Web site at http:// 

www.ed.gov/policy/highered/reg/ 

hearulemaking/2008/index2008.html. 

Session 1: January 14–January 16. 

Session 2: February 4–February 6. 

Session 3: March 4–March 6. 

For the first negotiating session, the 

Student Loan Committee is scheduled to 

meet from 9 a.m. to 5 p.m. each day. 

For Session 2, the committee is 

scheduled to meet from 9 a.m. to 5 p.m. 

on February 4th and 5th; and from 9 

a.m. to 12 noon on February 6th. 

For Session 3, the committee is 

scheduled to meet from 9 a.m. to 5 p.m. 

each day. 

Electronic Access to This Document 

You may view this document in text 

or Adobe Portable Document Format 

(PDF) on the Internet at the following 

site: http://www.ed.gov/news/ 

fedregister. 

To use PDF you must have Adobe 

Acrobat Reader, which is available free 

at this site. If you have questions about 

using PDF, call the U.S. Government 

Printing Office toll free at 1–888–293–

6498; or in the Washington, DC area at 

(202) 512–1530. 

Note: The official version of this document 

is the document published in the Federal 

Register. Free Internet access to the official 

edition of the Federal Register and the Code 

of Federal Regulations is available on GPO 

Access at: http://www.gpoaccess.gov/nara/ 

index.html. 

Program Authority: 20 U.S.C. 1098a. 

Dated: January 3, 2008. 

Diane Auer Jones, 

Assistant Secretary for Postsecondary 

Education. 

[FR Doc. E8–121 Filed 1–7–08; 8:45 am] 

BILLING CODE 4000–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 422 and 423 

[CMS–4133–P] 

RIN 0938–AP25 

Medicare Program; Option for 

Prescription Drug Plans To Lower 

Their Premiums for Low-Income 

Subsidy Beneficiaries 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

provide for an option for Medicare 


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1302 Federal Register / Vol. 73, No. 5 / Tuesday, January 8, 2008 / Proposed Rules 

Prescription Drug Plan (PDP) Sponsors 

to offer a separate prescription drug 

premium amount for low-income 

subsidy (LIS) individuals subject to 

certain conditions. We are proposing to 

allow PDP Sponsors to offer a reduced 

premium amount for LIS-eligible 

individuals to ensure that at least five 

PDP Sponsors in every PDP region 

would have a PDP with a premium at or 

below the premium subsidy amount. 

This provision will help to ensure there 

are a sufficient number of organizations 

offering zero-premium plans in each 

region and reduce the number of LIS 

beneficiary reassignments to other 

organizations. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on March 10, 2008. 

ADDRESSES: In commenting, please refer 

to file code CMS–4133–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–4133–

P, P.O. Box 8010, Baltimore, MD 21244–

8010. 

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–4133–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–

9994 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 FURTHER INFORMATION CONTACT: 

Deondra Moseley, (410) 786–4577. 

Meghan Elrington, (410) 786–8675. 

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–4133–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.] 

The beneficiary premiums for 

Prescription Drug Plans (PDP) are based 

on an annual bidding process. Each year 

the beneficiary premium for a Part D 

plan can change as a result of this 

bidding process. In addition, each year, 

as required by statute, CMS recalculates 

the Federal Part D premium subsidy 

available to low-income beneficiaries 

based on the new premiums for plans in 

each region. As a result of these 

premium and subsidy changes, the 

premium for a Part D plan can be fully 

covered by the low-income subsidy 

(LIS) in one year and not the following 

year. 

The amount of the premium subsidy 

available to LIS-eligible individuals 

cannot be calculated until after bids are 

submitted for the calendar year in 

question, because the subsidy amount is 

based on the bids that are submitted. 

Therefore, a PDP sponsor whose 

premium for LIS-eligible enrollees is 

currently zero does not know at the time 

its bid is submitted whether the 

premium that would result from its bid 

will be higher or lower than the 

premium subsidy amount. 

LIS-eligible individuals enrolled in a 

PDP that does not charge them a 

premium are faced with the possibility 

that the plan they are enrolled in will 

impose a premium during the next 

calendar year that would require them 

to make monthly payments. Section 

1860D–1(b)(1)(C) of the Social Security 

Act (the Act) mandates the initial 

enrollment of full-benefit dual eligible 

individuals not choosing a plan into a 

PDP where they would not pay a 

premium. It does not, however, require 

that individuals be reassigned to a plan 

that would not charge them a premium, 

if they would be required to pay a 

premium in their plan the following 

calendar year. Using our authority 

under Section 1860D–1(b)(1)(A) of the 

Act to, ‘‘establish a process for the 

enrollment, disenrollment, termination, 

and change of enrollment of Part D 

eligible individuals in prescription drug 

plans,’’ we have specified that LISeligible individuals facing the above 

situation may ‘‘elect’’ a PDP with no 

premium (to which they would be 

randomly assigned) by taking no action. 

We have referred to this process as our 

reassignment process. Beneficiaries 

eligible for the full low-income 

premium subsidy, including 

beneficiaries dually eligible for benefits 

under Titles XVIII and XIX of the Social 

Security Act, are subject to 

reassignment. Beneficiaries eligible for a 

partial premium subsidy are not subject 

to reassignment. 

For 2008, the number of beneficiaries 

reassigned to a different organization 

under this process varied widely by 

region, ranging from as few as 17 


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beneficiaries to approximately 402,322 

beneficiaries. The average number of 

beneficiaries reassigned to an 

organization other than the one with 

which they were enrolled was 34,044 

per region. 

Alternatively, LIS beneficiaries can 

affirmatively elect to stay in their plan 

and begin paying a premium, or choose 

another plan with or without a 

premium. While this policy prevents an 

LIS-eligible individual who did not 

choose to elect a plan from being 

charged a premium, it disrupts 

continuity and stability in coverage. 

Currently, under the demonstration 

project entitled, ‘‘Medicare 

Demonstration to Transition Enrollment 

of Low-Income Subsidy Beneficiaries’’

(established in 2007 and extended to 

2008), if the premium amount for a LISeligible individual in the above 

situation is lower than a specified de 

minimis amount, the individual would 

not be charged this de minimis amount, 

and could remain in his or her current 

plan without paying a premium. This 

demonstration also transitions the 

calculation of the low-income 

benchmark premium amount for a 

region from a method that weights the 

standardized Part D bids for PDPs 

equally to the statutory method, which 

calculates the benchmarks by weighting 

the bids for PDPs and MA–PD plans in 

that region based on plan enrollment. 

While the evaluation for this 

demonstration project is still underway, 

we believe the de minimis policy has 

demonstrated the advantages of the 

continuity of care and stability that 

result from permitting LIS-eligible 

individuals effectively to be charged a 

lower total premium than the total 

premium amount charged in the case of 

non-LIS-eligible individuals. 

Accordingly, we believe that PDP 

Sponsors should have this option on an 

ongoing basis under regular program 

rules, subject to limitations that ensure 

the integrity of the bid process, and 

retain incentives to submit competitive 

bids. 

We believe that the statute could 

reasonably be interpreted to permit, 

consistent with limitations that would 

be set forth in regulations, PDP 

Sponsors to establish a separate 

premium for LIS-eligible individuals in 

the amount of the low-income premium 

subsidy. Section 1860D–13(a)(1)(F) of 

the Act ordinarily requires that a 

prescription drug premium be uniform. 

This rule applies, however, ‘‘except as 

provided in subparagraphs (D) (which 

provides for the late enrollment penalty) 

and (E) (which governs LIS-eligible 

individuals) * * *’’. In addition 1860D–

13(a)(1)(E) of the Act provides that in 

the case of an LIS-eligible individual, 

the premium ‘‘is subject to decrease 

***’’. While we initially interpreted 

this language to refer only to the 

decrease in the amount paid by the LISeligible individual in the amount of the 

low-income premium subsidy, we 

believe that the statutory language 

would also permit an interpretation that 

would allow PDP Sponsors to charge a 

decreased premium amount in the case 

of such individuals. When subject to the 

limitations as proposed here, this 

reasonable interpretation of the statute 

supports our goal of ensuring continuity 

of care and stability, while ensuring the 

integrity of the bid process and retaining 

incentives for organizations to submit 

competitive bids. We believe that our 

earlier interpretation of the statute did 

not take into account the flexibility 

afforded by section 1860D–13(a)(1)(E) of 

the statute, which is broadly worded to 

provide that for a LIS eligible 

individual, ‘‘[t]he monthly beneficiary 

premium is subject to decrease[.]’’

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 make revisions to 

the regulations in order to implement an 

option for PDP Sponsors to reduce PDP 

beneficiary premiums for LIS-eligible 

individuals. This option would not be 

made available to plans that offer 

enhanced alternative coverage. 

Specifically, we are proposing to revise 

§ 422.262 and § 423.286(e), to provide 

for an exception to the general rule for 

uniformity of premiums. We are also 

proposing to revise § 423.286(e), to state 

that the monthly beneficiary premium 

paid by the beneficiary may be 

eliminated as provided in § 423.780. 

We are proposing to amend 

§ 423.34(d), to clarify that PDPs that 

have a separate premium for LIS-eligible 

individuals under our proposed option 

would not be eligible to receive ‘‘autoenrollees’’ under section 1860D–

1(b)(1)(C) of the Act. However, PDP 

Sponsors that have separate premiums 

for LIS enrollees in their PDPs would 

keep their existing LIS enrollees. An 

auto-enrollment would continue to be 

available only to PDPs with a standard 

prescription drug premium that is equal 

to, or below, the LIS amount. 

In addition, we are proposing to 

revise § 423.780, to permit a PDP 

sponsor, subject to the conditions 

discussed below, to establish a separate 

premium for LIS-eligible individuals in 

the amount of the low-income premium 

subsidy amount when the premium that 

would otherwise apply would exceed 

this amount. 

Several options were considered as 

we developed this proposed rule. We 

considered allowing all PDP Sponsors to 

make a business judgment, after the LIS 

amount was established, whether to 

reduce their premium to the subsidy 

amount for LIS-eligible individuals 

without regard to the amount by which 

their premium would otherwise exceed 

the amount of the subsidy. We did not 

choose this approach for two reasons. 

First, if the difference between the two 

amounts were too great, this would 

produce a significant disparity between 

the revenue needs assumed in the bid, 

and the revenue that would be received 

under the reduced premium, and 

undermine the integrity of the bid 

process. More importantly, if a PDP 

sponsor knew that it could be assured 

of reducing its premium for LIS-eligible 

individuals to the LIS amount no matter 

how much the premium produced by its 

bid exceeded this amount, this would 

greatly reduce existing incentives to bid 

as low as possible. 

Second, we considered changing our 

approach to re-assignment from 

allowing LIS-eligible individuals to be 

re-assigned if they take no action to an 

approach that would allow LIS-eligible 

individuals to be informed of zeropremium PDP options, but would 

remain in their current plan if they take 

no action. We consulted with 

beneficiary advocate groups about this 

approach, and many expressed concerns 

about LIS-eligible individuals being 

subjected to premium costs without 

them electing to pay them. We further 

considered only reassigning LIS 

individuals if the premium they would 

have to pay were above a certain level, 

on the assumption that a relatively low 

premium amount may not present a 

financial hardship. However, this would 

raise complicated issues regarding 

collection of these premium amounts. 

We are proposing to retain the current 

reassignment policy and permit certain 

PDP Sponsors to reduce premiums for 

LIS-eligible individuals to the subsidy 

amount, while limiting the amount the 

premium produced by bids could be 

reduced to reach the LIS amount. We 

considered proposing a fixed dollar 

amount, as is employed under the 

current de minimis demonstration, and 

would be employed under the change in 

reassignment policy discussed above. 

However, we again were concerned 

about an approach that permanently 

would employ a fixed dollar figure, and 

decided that a methodology under 

which the number is not known in 


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1304 Federal Register / Vol. 73, No. 5 / Tuesday, January 8, 2008 / Proposed Rules 

advance would better preserve 

incentives to submit a low bid. 

We are proposing to apply this rule to 

PDPs only, as current auto-assignment 

rules do not apply to beneficiaries 

enrolled in MA-PDs. For this same 

reason, we do not plan to apply this rule 

to partial subsidy eligible enrollees. 

Furthermore, partial subsidy eligible 

enrollees already pay a premium, as 

their subsidy is only a percentage of the 

subsidy amount. A change from the 

subsidy amount to a higher premium 

does not have the same impact on them 

that it does on a full-subsidy eligible 

beneficiary, who would go from a zeropremium to paying one. 

We accordingly propose to set the 

amount at a region-specific level that 

would ensure LIS-eligible individuals in 

each region a robust choice among zeropremium PDPs. Specifically, we are 

proposing that the limit on the amount 

by which premiums could be reduced 

for LIS-eligible individuals be an 

amount that ensures that at least five 

PDP Sponsors (i.e., organizations 

offering PDPs) in every PDP region 

would have a PDP with a premium at or 

below the premium subsidy amount. We 

chose the minimum number of five PDP 

Sponsors per region because this 

represents the mid-range number of PDP 

Sponsors in key regions that qualified 

for assignment of low-income subsidyeligible beneficiaries in 2008. 

Specifically, in 2008 the number of PDP 

Sponsors with zero-premium plans for 

LIS individuals ranges from a low of 

two to a high of eight organizations in 

key regions with significant MA 

enrollment. The option of five 

organizations as a minimum threshold 

was selected to maintain the average 

2008 level of competitiveness. This 

proposed rule would not affect regions 

in which there would be at least five 

PDP Sponsors offering zero-premium 

plans without this rule in place. In order 

to achieve the goal of stability for 

beneficiaries and plans, and offer 

multiple provider options, this test will 

be applied at the organizational level 

(PDP sponsor), rather than the plan 

(PDP) level. We believe that capping the 

number of premium differential 

organizations at a number that would 

produce zero-premium plans from at 

least five PDP Sponsors would maintain 

or possibly improve upon the current 

competitiveness of bids. We invite 

public comments on our choice of the 

minimum number five as the minimum 

number of Sponsors offering zeropremium plans, as well as on the other 

options discussed above that we 

considered, and any additional options 

that we are not proposing in this 

proposed rule. 

PDP Sponsors will be required to elect 

this option in their bids. CMS will add 

a checkbox to the current Bid Pricing 

Tool submitted by PDP Sponsors in June 

of each year for each PDP to be offered. 

Sponsors will use this checkbox to 

indicate that the PDP will have two 

premiums—one for enrollees not 

eligible for the full LIS subsidy and 

another for LIS-eligible enrollees if they 

qualify under this rule. This rule will 

not increase the amount of the lowincome premium subsidy paid to plans 

to account for the difference between 

the low-income premium subsidy and 

the premium produced by the plan’s 

bid. 

We note that PDP Sponsors that elect 

this option would be obligated, under 

our proposed regulations, to charge all 

LIS-eligible enrollees in affected plans a 

premium amount that would be the 

premium subsidy amount if the 

prescription drug premium produced by 

their bid did not exceed the amount 

established to ensure at least five PDP 

Sponsors offer zero-premium plans in 

each region. This premium would be 

part of the benefit package they would 

be obligated under their contract to 

cover. 

III. Collection of Information 

Requirements 

The information collection 

requirements contained in 

§ 423.780(f)(i) of this proposed rule are 

subject to the Paperwork Reduction Act 

(PRA). However, the burden associated 

with the requirement for the PDP 

sponsor to elect the option of providing 

for a separate prescription drug 

premium amount for LIS individuals is 

included in the burden estimate 

associated with the Bid Pricing Tool for 

Prescription Drug Plans which is 

currently approved under OMB 

approval number 0938–0944. 

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 impact of this 

rule as required by Executive Order 

12866 (September 1993, Regulatory 

Planning and Review), the Regulatory 

Flexibility Act (RFA) (September 19, 

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

the Social Security Act, the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), Executive Order 13132 on 

Federalism, and the Congressional 

Review Act (5 U.S.C. 804(2)). 

Executive Order 12866 directs 

agencies to assess all costs and benefits 

of available regulatory alternatives and, 

if regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, distributive impacts, 

and equity). A regulatory impact 

analysis (RIA) must be prepared for 

major rules with economically 

significant effects ($100 million or more 

in any 1 year). This rule permits 

Prescription Drug Plan (PDP) Sponsors, 

subject to conditions, to lower their 

premiums for low-income subsidy 

beneficiaries to ensure there are a 

sufficient number of organizations 

offering zero-premium plans in each 

region and reduce the number of 

reassignments compared to the current 

regulatory framework. We believe this 

proposed rule would lead to Federal 

savings of approximately $20 million 

per year. This assumes full enrollment 

weighting for the calculations of the 

low-income benchmark premium 

amounts. The estimate was developed 

by applying this rule against the 2008 

bids and this impact was projected 

throughout the forecast period. The 

estimate does not anticipate any change 

in bidding strategies or outcomes. All 

organizations with existing LIS 

beneficiaries that could be assigned out 

of the organization are assumed to elect 

the option to retain their beneficiaries 

including receiving reduced premiums 

for such LIS members. LIS beneficiaries 

that are assigned out of organizations 

are assumed to be randomly assigned to 

organizations that have premiums below 

the low income premium subsidy 

benchmark. We invite public comment 

on the assumptions included in this 

assessment. 

We also evaluated the potential for 

non-Federal costs and savings 

associated with this rule. A small 

number of Part D sponsors would forego 

revenue associated with the reduction 

in their beneficiary premium for low 

income beneficiaries. In addition, we 

anticipate a reduction in administrative 

costs for these sponsors, as well as for 

sponsors to which the beneficiaries 

would have been reassigned in the 

absence of this rule. However, we 

believe that these costs and savings 

would be relatively small. We invite 

public comment on this assessment of 

non-Federal costs and savings. This rule 


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does not reach the economic threshold 

and thus is not considered a major 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 $6.5 million to $31.5 million in any 

1 year. Individuals and States are not 

included in the definition of a small 

entity. We are not preparing an analysis 

for the RFA because we have 

determined, and the Secretary certifies, 

that this regulation will not have a 

significant economic impact on a 

substantial number of small entities. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 603 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area for 

Medicare payment regulations and has 

fewer than 100 beds. We are not 

preparing an analysis for section 1102(b) 

of the Act because we have determined, 

and the Secretary certifies, that this 

regulation will not have a significant 

impact on the operations of a substantial 

number of 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 $127 million. This rule 

will have no consequential effect on 

State, local, or tribal governments in the 

aggregate, or by the private sector. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

Since this regulation does not impose 

any costs on State or local governments, 

the requirements of E.O. 13132 are not 

applicable. 

B. Anticipated Effects 

The number of PDP Sponsors offering 

PDPs that had low enough premiums to 

qualify for low-income assignments for 

2008 ranged from two to eight 

organizations per region in key regions 

that had a relatively high proportion of 

beneficiaries enrolled in MA plans. Five 

is the average number of PDP Sponsors 

offering plans that qualified for lowincome assignments in these regions; we 

selected the five PDP Sponsor option to 

maintain the 2008 level of 

competitiveness in the bidding process. 

The 5 plan requirement is an attempt to 

balance the two goals of introducing 

beneficiary stability, particularly in 

regions with very low LIS premium 

subsidy benchmarks, together with 

maintaining the incentives in the 

competitive bidding process. There may 

be negative consequences if the 5 

organizational requirement is too high 

and the plans bid less competitively or 

if the 5 organizational requirement is 

too low and there are an even greater 

number of low-income beneficiary 

reassignments. In addition, based on 

analysis of the 2008 bids, and assuming 

no de minimis demonstration is in 

place, CMS anticipates that seven 

regions would be affected by having a 

minimum of five plans. CMS estimates 

that a three Sponsor minimum would 

have affected five regions, while a seven 

Sponsor minimum would have affected 

ten regions. Therefore, we anticipate 

that this regulation will increase the 

number of PDP Sponsors offering zeropremium PDPs that would be available 

to full low-income subsidy-eligible 

beneficiaries. This proposed regulation 

would also decrease the number of 

reassignments of LIS-eligible 

beneficiaries to other PDPs, compared to 

the level of reassignment under the 

current regulation absent a de minimis 

policy. This decrease in beneficiary 

movement across plans would boost 

program stability for both beneficiaries 

and plans. Based on an analysis of 2008 

bids, the five-organization minimum 

requirement results in 0.2 million fewer 

beneficiary assignments as compared to 

the current regulatory framework. The 

five-organization minimum requirement 

results in 0.5 million more beneficiary 

reassignments than would occur under 

the de minimis policy. 

Lastly, CMS expects the improved 

program continuity and stability that 

would be produced by this rule would 

help prevent an increase in costs and 

risks imposed on PDP Sponsors. The 

higher the threshold for the number of 

PDP Sponsors per region offering zeropremium PDPs, the greater the negative 

impact on competitive bidding. We are 

seeking to strike a balance between 

minimizing LIS reassignments and 

preserving the integrity of the 

competitive bidding process. The results 

of competitive bidding in 2008 

generated an average of five PDP 

Sponsors per region eligible for 

reassignments in certain key regions 

with relatively high MA enrollment. 

Selecting five as the minimum 

organization threshold under this 

proposed rule is intended to achieve 

this balance. 

This approach maintains a strong 

incentive to bid low to keep and 

possibly add LIS beneficiaries. Absent 

the rule, there may be a ‘‘winner take 

all’’ outcome in certain regions with one 

organization acquiring all of the LIS 

beneficiaries in the region. It is difficult 

to predict what would happen in the 

absence of this rule, but we would 

expect some organizations would be 

induced to bid even lower while other 

organizations would give up on this 

population and bid higher. From a cost 

perspective these factors may offset 

relative to the proposed rule, but the 

volatility issue would remain. 

C. Alternatives Considered 

As stated in the Background section of 

this proposed rule, we considered 

allowing PDP Sponsors to reduce their 

premium to the subsidy amount after it 

was established for LIS-eligible 

individuals without regard to the 

amount of their premium. We also 

considered allowing plans with 

premiums under a fixed dollar amount 

to reduce their low-income premiums to 

the premium subsidy amount. We 

determined, however, that these options 

would undermine the integrity and 

competitiveness of the bidding process. 

We also considered changing our 

approach to reassignment to an 

approach that would allow LIS-eligible 

individuals to be informed of zeropremium PDP options, but would 

remain in their current plan, regardless 

of the premium, if they take no action. 

Beneficiary advocacy groups were 

concerned about beneficiaries being 

charged a premium without electing to 

pay it. We further considered only 

reassigning LIS individuals if the 

premium they would have to pay were 

above a certain relatively low premium 

amount; however, this would raise 

complicated issues regarding collection 

of these premium amounts. 

We chose to propose to retain the 

current reassignment policy and, in 

regions that would not otherwise have 

at least five zero-premium plans for LIS 

enrollees, permit a sufficient number of 

PDPs to reduce their premiums for LIS 

individuals so that the region includes 

five zero-premium plans. We believe 

this option would both maintain or 

possibly improve upon the current 

competitiveness of bids and reduce 

reassignments for beneficiaries. 


rmajette on PROD1PC64 with PROPOSALS
1306 Federal Register / Vol. 73, No. 5 / Tuesday, January 8, 2008 / Proposed Rules 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

List of Subjects 

42 CFR Part 422 

Administrative practice and 

procedure, Grant programs—health, 

Health care, Health insurance, Health 

maintenance organizations (HMO), Loan 

programs—Health, Medicare, Reporting 

and recordkeeping requirements. 

42 CFR Part 423 

Administrative practice and 

procedure, Emergency medical services, 

Health facilities, Health maintenance 

organizations (HMO), Medicare, 

Penalties, Privacy, Reporting and 

recordkeeping. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services proposes to amend 

42 CFR chapter IV as set forth below: 

PART 422—MEDICARE ADVANTAGE 

PROGRAM 

1. The authority citation for part 422 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

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

1395hh). 

Subpart F—Submission of Bids, 

Premiums, and Related Information 

and Plan Approval 

2. Amend § 422.262 to revise 

paragraph (c)(1) to read as follows: 

§ 422.262 Beneficiary premiums. 

(c) * * * 

(1) General rule. Except as permitted 

for supplemental premiums pursuant to 

§ 422.106(d), for MA contracts with 

employers and labor organizations, the 

MA monthly bid amount submitted 

under § 422.254, the MA monthly basic 

beneficiary premium, the MA monthly 

supplemental beneficiary premium, the 

MA monthly prescription drug premium 

(except as provided in § 423.780), and 

the monthly MSA premium of an MA 

organization may not vary among 

individuals enrolled in an MA plan (or 

segment of the plan as provided for 

local MA plans under paragraph (c)(2) 

of this section). In addition, the MA 

organization cannot vary the level of 

cost-sharing charged for basic benefits 

or supplemental benefits (if any) among 

individuals enrolled in an MA plan (or 

segment of the plan). 

* * * * * 

PART 423—VOLUNTARY MEDICARE 

PRESCRIPTION DRUG BENEFIT 

3. The authority citation for part 423 

continues to read as follows: 

Authority: Secs 1102, 1860D–1 through 

1860D–42, and 1871 of the Social Security 

Act (42 U.S.C. 1302, 1395w–101 through 

1395w–152, and 1395hh). 

Subpart B—Eligibility and Enrollment. 

4. Amend § 423.34 by—

A. Revising paragraph (d)(1). 

B. Adding a new paragraph (d)(3). 

The revisions and additions read as 

follows: 

§ 423.34 Enrollment of full-benefit dual 

eligible individuals. 

* * * * * 

(d) * * * 

(1) General rule. Except as provided 

in paragraph (d)(3) of this section, CMS 

must automatically enroll full-benefit 

dual eligible individuals who fail to 

enroll in a Part D plan into a PDP 

offering basic prescription drug 

coverage in the area where the 

individual resides that has a monthly 

beneficiary premium that does not 

exceed the low-income premium 

subsidy amount (as defined in 

§ 423.780(b)). In the event that there is 

more than one PDP in an area with a 

monthly beneficiary premium at or 

below the low-income premium subsidy 

amount, individuals must be enrolled in 

such PDPs on a random basis. 

(2) * * * 

(3) PDPs whose premiums were 

reduced for LIS beneficiaries under 

§ 423.780(f) would not be entitled to 

automatic enrollment under paragraph 

(d)(1) of this section. 

* * * * * 

Subpart F—Submission of Bids and 

Monthly Beneficiary Premiums; Plan 

Approval 

5. Amend § 423.286 by revising 

paragraph (e) to read as follows: 

§ 423.286 Rules regarding premiums. 

* * * * * 

(e) Decrease in monthly beneficiary 

premium for low-income assistance. The 

monthly beneficiary premium paid by 

the beneficiary may be eliminated as 

provided in § 423.780. 

* * * * * 

Subpart P—Premiums and CostSharing Subsidies for Low-Income 

Individuals 

6. Amend § 423.780 by adding a new 

paragraph (f) to read as follows: 

§ 423.780 Premium subsidy. 

* * * * * 

(f) Option for a reduced premium 

amount for full subsidy eligible 

individuals. PDP sponsors have the 

option of providing for a separate 

prescription drug premium amount for 

full subsidy eligible individuals for 

prescription drugs plans under 

§ 423.104(d) or (e) subject to the 

following conditions—

(1) The PDP sponsor must elect this 

option at the time its bid is submitted, 

and agree to set its prescription drug 

premium for all full subsidy eligible 

individuals at the premium subsidy 

amount under paragraph (b) of this 

section for the entire coverage year if 

(i) The PDP sponsor puts forward no 

other PDP in the PDP region that is 

offering a premium below the premium 

subsidy amount or closer to the 

premium subsidy amount; and 

(ii) Its premium amount would 

otherwise equal or be below the amount 

established under paragraph (f)(ii) of 

this section. 

(2) Following the establishment of the 

premium subsidy amount, CMS will 

review the bids of PDP sponsors that 

have elected the option under paragraph 

(f)(i) of this section, and determine an 

amount that, when added to the 

premium subsidy amount, would 

produce a premium amount that is no 

greater than the amount that would 

equal or exceed the prescription drug 

premium amount produced by bids for 

at least five PDP sponsors in every PDP 

region. 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: December 13, 2007. 

Kerry Weems, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: December 28, 2007. 

Michael O. Leavitt, 

Secretary. 

[FR Doc. 08–15 Filed 1–3–08; 10:12 am] 

BILLING CODE 4120–01–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Parts 61 and 69 

[WC Docket No. 07–135; DA 07–5082] 

Establishing Just and Reasonable 

Rates for Local Exchange Carriers 

AGENCY: Federal Communications 

Commission. 

ACTION: Proposed rule; extension of 

comment period. 


rmajette on PROD1PC64 with PROPOSALS