Federal Register / Vol. 71, No. 189 / Friday, September 29, 2006 / Notices 57513 

Report Number of 

respondents 

Responses 

per 

respondent 

Average 

burden per 

response 

(in hours) 

Total burden 

(hours) 

Screening MDE Report .................................................................................... 15 2 16 480 

Intervention MDE Report ................................................................................. 15 2 8 240 

Cost Report ...................................................................................................... 15 2 16 480 

Quarterly Report .............................................................................................. 15 4 16 960 

Total .......................................................................................................... ........................ ........................ ........................ 2,160 

Dated: September 21, 2006. 

Joan F. Karr, 

Acting Reports Clearance Officer, Centers for 

Disease Control and Prevention. 

[FR Doc. E6–16048 Filed 9–28–06; 8:45 am] 

BILLING CODE 4163–18–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[Document Identifier: CMS–10109] 

Agency Information Collection 

Activities: Submission for OMB 

Review; Comment Request 

AGENCY: Centers for Medicare & 

Medicaid Services, HHS. 

In compliance with the requirement 

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

Paperwork Reduction Act of 1995, the 

Centers for Medicare & Medicaid 

Services (CMS), Department of Health 

and Human Services, is publishing the 

following summary of proposed 

collections for public comment. 

Interested persons are invited to send 

comments regarding this burden 

estimate or any other aspect of this 

collection of information, including any 

of the following subjects: (1) The 

necessity and utility of the proposed 

information collection for the proper 

performance of the Agency’s function; 

(2) the accuracy of the estimated 

burden; (3) ways to enhance the quality, 

utility, and clarity of the information to 

be collected; and (4) the use of 

automated collection techniques or 

other forms of information technology to 

minimize the information collection 

burden. 

1. Type of Information Collection 

Request: Revision of a currently 

approved collection; Title of 

Information Collection: Hospital 

Reporting Initiative—Hospital Quality 

Measures; Use: The recently enacted 

section 5001(a) of the Deficit Reduction 

Act (DRA) sets out new requirements for 

the Reporting Hospital Quality Data for 

Annual Payment Update (RHQDAPU) 

program. The RHQDAPU program was 

established to implement section 501(b) 

of the Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (MMA). The DRA builds on our 

ongoing voluntary Hospital Quality 

Initiative, which is intended to 

empower consumers with quality of 

care information to make more informed 

decisions about their health care, while 

also encouraging hospitals and 

clinicians to improve the quality of care 

provided to Medicare beneficiaries. The 

DRA revises the current hospital 

reporting initiative by stipulating new 

data collection requirements. The law 

provides a 2.0 percent reduction in 

points to the update percentage increase 

for any hospital that does not submit the 

quality data in the form, and manner, 

and at a time, specified by the Secretary. 

The Act also requires that we expand 

the ‘‘starter set’’ of 10 quality measures 

that we have used since 2003. To 

comply with these new requirements we 

must make changes to the Hospital 

Reporting Initiative. Form Number: 

CMS–10109 (OMB#: 0938–0918); 

Frequency: Recordkeeping, Third party 

disclosure, and Reporting—Quarterly; 

Affected Public: State, local or tribal 

Government; Number of Respondents: 

3,700; Total Annual Responses: 14,800; 

Total Annual Hours: 583,760. 

To obtain copies of the supporting 

statement and any related forms for the 

proposed paperwork collections 

referenced above, access CMS Web site 

address at http://www.cms.hhs.gov/ 

PaperworkReductionActof1995, or email your request, including your 

address, phone number, OMB number, 

and CMS document identifier, to 

Paperwork@cms.hhs.gov, or call the 

Reports Clearance Office on (410) 786–

1326. 

Written comments and 

recommendations for the proposed 

information collections must be mailed 

or faxed within 30 days of this notice 

directly to the OMB desk officer: OMB 

Human Resources and Housing Branch, 

Attention: Carolyn Lovett, New 

Executive Office Building, Room 10235, 

Washington, DC 20503, fax number: 

(202) 395–6974. 

Dated: September 25, 2006. 

Michelle Shortt, 

Director, Regulations Development Group, 

Office of Strategic Operations and Regulatory 

Affairs. 

[FR Doc. E6–15982 Filed 9–28–06; 8:45 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–1333–GNC] 

RIN: 0938–ZA94 

Medicare Program; Criteria and 

Standards for Evaluating Intermediary 

and Carrier Performance During Fiscal 

Year 2007 

AGENCY: Centers for Medicare and 

Medicaid Services (CMS), HHS. 

ACTION: General notice with comment 

period. 

SUMMARY: This general notice with 

comment period describes the criteria 

and standards to be used for evaluating 

the performance of fiscal intermediaries 

(FIs) and carriers in the administration 

of the Medicare program. 

The results of these evaluations are 

considered whenever we enter into, 

renew, or terminate an intermediary 

agreement, carrier contract, or take other 

contract actions, for example, assigning 

or reassigning providers or services to 

an intermediary or designating regional 

or national intermediaries. We are 

requesting public comment on these 

criteria and standards. 

DATES: Effective Date: The criteria and 

standards are effective on October 1, 

2006. 

Comment Date: To be assured 

consideration, comments must be 

received at one of the addresses 

provided below, no later than 5 p.m. on 

November 28, 2006. 

ADDRESSES: In commenting, please refer 

to file code CMS–1333–GNC. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (fax) 

transmission. 


jlentini on PROD1PC65 with NOTICES
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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–1333–

GNC, P.O. Box 8012, Baltimore, MD 

21244–8012. 

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–1333–GNC, Mail Stop C4–26–05, 

7500 Security Boulevard, Baltimore, MD 

21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments (one original 

and two copies) before the close of the 

comment period to one of the following 

addresses. If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786–

7195 in advance to schedule your 

arrival with one of our staff members. 

Room 445–G, Hubert H. Humphrey 

Building, 200 Independence Avenue, 

SW., Washington, DC 20201; or 7500 

Security Boulevard, Baltimore, MD 

21244–1850. 

(Because access to the interior of the 

HHH Building is not readily available to 

persons without Federal Government 

identification, commenters are 

encouraged to leave their comments in 

the CMS drop slots located in the main 

lobby of the building. A stamp-in clock 

is available for persons wishing to retain 

a proof of filing by stamping in and 

retaining an extra copy of the comments 

being filed.) 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: Lee 

Ann Crochunis, (410) 786–3363. 

SUPPLEMENTARY INFORMATION: 

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this notice to assist us in 

fully considering issues and developing 

policies. You can assist us by 

referencing the file code CMS–1333- 

GNC 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 

A. Medicare Part A—Hospital Insurance 

Under section 1816 of the Social 

Security Act (the Act), public or private 

organizations and agencies participate 

in the administration of Part A (Hospital 

Insurance) of the Medicare program 

under agreements with CMS. These 

agencies or organizations, known as 

fiscal intermediaries (FIs), determine 

whether medical services are covered 

under Medicare, determine correct 

payment amounts and then make 

payments to the health care providers 

(for example, hospitals, skilled nursing 

facilities (SNFs), and community mental 

health centers) on behalf of the 

beneficiaries. Section 1816(f) of the Act 

requires us to develop criteria, 

standards, and procedures to evaluate 

an FI’s performance of its functions 

under its agreement. 

Section 1816(e)(4) of the Act requires 

us to designate regional agencies or 

organizations, which are already 

Medicare FIs under section 1816 of the 

Act, to perform claim processing 

functions for freestanding home health 

agency (HHA) claims. We refer to these 

organizations as Regional Home Health 

Intermediaries (RHHIs) (See § 421.117 ). 

The evaluation of intermediary 

performance is part of our contract 

management process. These evaluations 

need not be limited to the current fiscal 

year (FY), other fixed term basis, or 

agreement term. 

B. Medicare Part B—Supplementary 

Medical Insurance 

Under section 1842 of the Act, we are 

authorized to enter into contracts with 

carriers to fulfill various functions in 

the administration of Part B, 

Supplementary Medical Insurance of 

the Medicare program. Beneficiaries, 

physicians, and suppliers of services 

submit claims to these carriers. The 

carriers determine whether the services 

are covered under Medicare and the 

amount payable for the services or 

supplies, and then make payment to the 

appropriate party. 

Under section 1842(b)(2) of the Act, 

we are required to develop criteria, 

standards, and procedures to evaluate a 

carrier’s performance of its functions 

under its contract. Evaluations of 

Medicare fee-for-service (FFS) 

contractor performance need not be 

limited to the current FFY, other fixed 

term basis, or contract term. The 

evaluation of carrier performance is part 

of our contract management process. 

C. Development and Publication of 

Criteria and Standards 

In addition to the statutory 

requirements, § 421.120, § 421.122 and 

§ 421.201 of the regulations, provide for 

publication of a Federal Register notice 

to announce criteria and standards for 

intermediaries and carriers before the 

beginning of each evaluation period. We 

published the current criteria and 

standards for intermediaries, carriers, 

and DMEPOS regional carriers in the 

general notice with comment on 

September 23, 2005 (70 FR 55887). 

To the extent possible, we make every 

effort to publish the criteria and 

standards before the beginning of the 

Federal Fiscal Year (FFY), which is 

October 1. If we do not publish a 

Federal Register notice before the new 

FFY begins, readers may presume that 

until and unless notified otherwise, the 

criteria and standards that were in effect 

for the previous FFY remain in effect. 

In those instances in which we are 

unable to meet our goal of publishing 

the subject Federal Register notice 

before the beginning of the FFY, we may 

publish the criteria and standards notice 

at any subsequent time during the year. 

If we publish a notice in this manner, 

the evaluation period for the criteria and 

standards that are the subject of the 

notice will be effective beginning on the 

first day of the first month following 


jlentini on PROD1PC65 with NOTICES
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publication of this notice in the Federal 

Register. Any revised criteria and 

standards will measure performance 

prospectively; that is, any new criteria 

and standards in the notice will be 

applied only to performance after the 

effective date listed on the notice. 

It is not our intention to revise the 

criteria and standards that will be used 

during the evaluation period once this 

information is published in a Federal 

Register notice. However, on occasion, 

either because of administrative action 

or statutory mandate, there may be a 

need for changes that have a direct 

impact on the criteria and standards 

previously published, or that require the 

addition of new criteria or standards, or 

that cause the deletion of previously 

published criteria and standards. If we 

must make these changes, we will 

publish an amended Federal Register 

notice before implementation of the 

changes. In all instances, necessary 

manual issuances will be published to 

ensure that the criteria and standards 

are applied uniformly and accurately. 

Also, as in previous years, this Federal 

Register notice will be republished and 

the effective date revised if changes are 

warranted as a result of the public 

comments received on the criteria and 

standards. 

The Medicare Prescription Drug, 

Improvement and Modernization Act of 

2003 (MMA) (Pub. L. 108–173) was 

enacted on December 8, 2003. Section 

911 of the MMA establishes the 

Medicare FFS Contracting Reform 

(MCR) initiative that will be 

implemented over the next several 

years. This provision requires that we 

use competitive procedures to replace 

our current FIs and carriers with 

Medicare Administrative Contractors 

(MACs). The MMA requires that we 

compete and transition all work to 

MACs by October 1, 2011. 

FIs and carriers will continue 

administering Medicare FFS work until 

the final competitively selected MAC is 

up and operating. We will continue to 

develop and publish standards and 

criteria for use in evaluating the 

performance of FIs and carriers as long 

as these types of contractors exist. 

II. Analysis of and Response to Public 

Comments Received on FY 2006 

Criteria and Standards 

We received two comments in 

response to the September 23, 2005 

Federal Register general notice with 

comment. All comments were reviewed, 

but none necessitated our reissuance of 

the FY 2006 Criteria and Standards. 

Comments submitted did not pertain 

specifically to the FY 2006 Criteria and 

Standards. 

III. Criteria and Standards—General 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘CRITERIA AND 

STANDARDS—GENERAL’’ at the 

beginning of your comments.] 

Basic principles of the Medicare 

program are to pay claims promptly and 

accurately, and to foster good 

beneficiary and provider relations. 

Contractors must administer the 

Medicare program efficiently and 

economically. The goal of performance 

evaluation is to ensure that contractors 

meet their contractual obligations. We 

measure contractor performance to 

ensure that contractors do what is 

required of them by statute, regulation, 

contract, and our directives. 

We have developed a contractor 

oversight program for FY 2007 that 

outlines the expectations of the 

contractor; measures the performance of 

the contractor; evaluates the contractor’s 

performance against those expectations; 

and provides for appropriate contract 

action based upon the evaluation of the 

contractor’s performance. 

As a means to monitor the accuracy 

of Medicare FFS payments, we have 

established the Comprehensive Error 

Rate Testing (CERT) program that 

measures and reports error rates for 

claims payment decisions made by 

carriers and FIs. Beginning in November 

2003, the CERT program measures and 

reports claims payment error rates for 

each individual carrier. FI-specific rates 

became available November 2004. These 

rates measure not only how well 

contractors are doing at implementing 

automated review edits and identifying 

which claims to subject to manual 

medical review, but they also measure 

the impact of the contractor’s provider 

outreach/education, as well as the 

effectiveness of the contractor’s provider 

call center(s). We will use these 

contractor-specific error rates as a 

means to evaluate a contractor’s 

performance. 

Several times throughout this notice, 

we refer to the appropriate reading level 

of letters, decisions, or correspondence 

that are mailed or otherwise transmitted 

to Medicare beneficiaries from 

intermediaries or carriers. In those 

instances, appropriate reading level is 

defined as whether the communication 

is below the eighth grade reading level 

unless it is obvious that an incoming 

request from the beneficiary contains 

language written at a higher level. In 

these cases, the appropriate reading 

level is tailored to the capacities and 

circumstances of the intended recipient. 

In addition to evaluating performance 

based upon our expectations for FY 

2007, we may also conduct follow-up 

evaluations throughout FY 2007 of areas 

in which contractor performance was 

out of compliance with statute, 

regulations, and our performance 

expectations during prior review years 

where contractors were required to 

submit a Performance Improvement 

Plan (PIP). 

We may also utilize Statement of 

Auditing Standards-70 (SAS–70) 

reviews as a means to evaluate 

contractors in some or all business 

functions. 

In FY 2001, we established the 

Contractor Rebuttal Process as a 

commitment to continual improvement 

of contractor performance evaluation 

(CPE). We will continue the use of this 

process in FY 2007. The Contractor 

Rebuttal Process provides the 

contractors an opportunity to submit a 

written rebuttal of CPE findings of fact. 

Whenever we conduct an evaluation of 

contractor operations, contractors have 

7 calendar days from the date of the CPE 

review exit conference to submit a 

written rebuttal. The CPE review team 

or, if appropriate, the individual 

reviewer considers the contents of the 

rebuttal before the issuance of the final 

CPE report to the contractor. 

The FY 2007 CPE for intermediaries 

and carriers is structured into five 

criteria designed to meet the stated 

objectives. The first criterion, claims 

processing, measures contractual 

performance against claims processing, 

accuracy and timeliness requirements, 

as well as activities in handling appeals. 

Within the claims processing criterion, 

we have identified those performance 

standards that are mandated by 

legislation, regulation, or judicial 

decision. These standards include 

claims processing timeliness, the 

accuracy of Medicare Summary Notices 

(MSNs), the timeliness of intermediary 

and carrier redeterminations, and the 

appropriateness of the reading level and 

content of intermediary and carrier 

redetermination letters. Further 

evaluation in the claims processing 

criterion may include, but is not limited 

to, the accuracy of claims processing, 

the percent of claims paid with interest, 

the accuracy of redeterminations, 

forwarding to and effectuation of 

Qualified Independent Contractor (QIC) 

decisions, and effectuation of 

administrative law judge (ALJ) 

decisions. 

The second criterion, customer 

service, assesses the adequacy of the 

service provided to customers by the 

contractor in its administration of the 

Medicare program. The mandated 

standard in the customer service 

criterion is the need to provide 


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beneficiaries with written replies that 

are responsive, that is, they provide in 

detail the reasons for a determination 

when a beneficiary requests this 

information, they have a customerfriendly tone and clarity, and they are 

at the appropriate reading level. Further 

evaluation of services under this 

criterion may include, but will not be 

limited to, the following: 

(1) Timeliness and accuracy of all 

correspondence both to beneficiaries 

and providers; (2) monitoring of the 

quality of replies provided by the 

contractor’s telephone customer service 

representatives (quality call 

monitoring); 

(3) beneficiary and provider 

education, training, and outreach 

activities; and (4) service provided by 

the contractor’s customer service 

representatives to beneficiaries and 

providers who come to the contractor’s 

facility (walk-in inquiry service). 

The third criterion, payment 

safeguards, evaluates whether the 

Medicare Trust Fund is safeguarded 

against inappropriate program 

expenditures. Intermediary and carrier 

performance may be evaluated in the 

areas of Medical Review (MR), Medicare 

Secondary Payer (MSP), Overpayments 

(OP), and Provider Enrollment (PE). In 

addition, intermediary performance may 

be evaluated in the area of Audit and 

Reimbursement (A&R). 

In FY 1996, the Congress enacted the 

Health Insurance Portability and 

Accountability Act (HIPAA), Medicare 

Integrity Program, giving us the 

authority to contract with entities other 

than, but not excluding, Medicare 

carriers and intermediaries to perform 

certain program safeguard functions. In 

situations where one or more program 

safeguard functions are contracted to 

another entity, we may evaluate the 

flow of communication and information 

between a Medicare FFS contractor and 

the payment safeguard contractor. All 

benefit integrity functions have been 

transitioned from the intermediaries and 

carriers to the program safeguard 

contractors. 

Mandated performance standards for 

intermediaries in the payment 

safeguards criterion include the 

accuracy of decisions on SNF demand 

bills and the timeliness of processing 

Tax Equity and Fiscal Responsibility 

Act (TEFRA) target rate adjustments, 

exceptions, and exemptions. There are 

no mandated performance standards for 

carriers in the payment safeguards 

criterion. Intermediaries and carriers 

may also be evaluated on any Medicare 

Integrity Program (MIP) activities if 

performed under their agreement or 

contract. 

The fourth criterion, fiscal 

responsibility, evaluates the contractor’s 

efforts to protect the Medicare program 

and the public interest. Contractors 

must effectively manage Federal funds 

for both the payment of benefits and the 

costs of administration under the 

Medicare program. Proper financial and 

budgetary controls, including internal 

controls, must be in place to ensure 

contractor compliance with its 

agreement with HHS and CMS. 

Additional functions reviewed under 

this criterion may include, but are not 

limited to, adherence to approved 

budget, compliance with the Budget and 

Performance Requirements (BPRs), and 

compliance with financial reporting 

requirements. 

The fifth and final criterion, 

administrative activities, measures a 

contractor’s administrative management 

of the Medicare program. A contractor 

must efficiently and effectively manage 

its operations. Proper systems security 

(general and application controls), 

Automated Data Processing (ADP) 

maintenance, and disaster recovery 

plans must be in place. A contractor’s 

evaluation under the administrative 

activities criterion may include, but is 

not limited to, establishment, 

application, documentation, and 

effectiveness of internal controls that are 

essential in all aspects of a contractor’s 

operation, as well as the degree to 

which the contractor cooperates with us 

in complying with the Federal 

Managers’ Financial Integrity Act of 

1982 (FMFIA). Administrative activities 

evaluations may also include reviews 

related to contractor implementation of 

our general instructions and data and 

reporting requirements. 

We have developed separate measures 

for RHHIs in order to evaluate the 

distinct RHHI functions. These 

functions include the processing of 

claims from freestanding HHAs, 

hospital-affiliated HHAs, and hospices. 

Through an evaluation using these 

criteria and standards, we may 

determine whether the RHHI is 

effectively and efficiently administering 

the program benefit or whether the 

functions should be moved from one 

intermediary to another in order to gain 

that assurance. 

In sections IV through VI of this 

notice, we list the criteria and standards 

to be used for evaluating the 

performance of intermediaries, RHHIs, 

and carriers. 

IV. Criteria and Standards for 

Intermediaries 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘CRITERIA AND STANDARDS 

FOR INTERMEDIARIES’’ at the 

beginning of your comments.] 

A. Claims Processing Criterion 

The claims processing criterion 

contains the following three mandated 

standards: 

Standard 1. Not less than 95.0 percent 

of clean electronically submitted nonPeriodic Interim Payment claims are 

paid within statutorily specified 

timeframes. Clean claims are defined as 

claims that do not require Medicare 

intermediaries to investigate or develop 

them outside of their Medicare 

operations on a prepayment basis. 

Specifically, the statute specifies that 

clean nonPeriodic Interim Payment 

electronic claims be paid no earlier than 

the 14th day after the date of receipt, 

and that interest is payable for any clean 

claims if payment is not issued by the 

31st day after the date of receipt. 

Standard 2. Redetermination letters 

prepared in response to beneficiary 

initiated appeal requests are written in 

a manner calculated to be understood by 

the beneficiary. Letters must contain the 

required elements as specified in 

§ 405.956. 

Standard 3. All redeterminations 

must be concluded and mailed within 

60 days of receipt of the request, unless 

the appellant submits documentation 

after the request, in which case the 

decision-making timeframe is extended 

for 14 calendar days for each 

submission. 

Because intermediaries process many 

claims for benefits under the Part B 

portion of the Medicare Program, we 

also may evaluate how well an 

intermediary follows the procedures for 

processing appeals of any claims for 

Part B benefits. 

Additional functions that may be 

evaluated under this criterion include, 

but are not limited to, the following: 

• Accuracy of claims processing. 

• Remittance advice transactions. 

• Establishment and maintenance of a 

relationship with Common Working File 

(CWF) Host. 

• Accuracy of redeterminations. 

• QIC case file requirements. 

• Accuracy and timeliness of 

processing appeals as set forth in part 

405, subpart I (§ 405.900 et seq.). 

B. Customer Service Criterion 

Functions that may be evaluated 

under this criterion include, but are not 

limited to, the following: 

• Maintaining a properly 

programmed interactive voice response 

system to assist with inquiries. 

• Performing quality call monitoring. 

• Training customer service 

representatives. 


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• Entering valid call center 

performance data in the customer 

service assessment and management 

system. 

• Providing timely and accurate 

written replies to beneficiaries and 

providers that address the concerns 

raised and are written with an 

appropriate customer-friendly tone and 

clarity; and those written to 

beneficiaries are at the appropriate 

reading level. 

• Maintaining walk-in inquiry service 

for beneficiaries and providers. 

• Conducting beneficiary and 

provider education, training, and 

outreach activities. 

• Effectively maintaining an Internet 

Web site dedicated to furnishing 

providers and physicians timely, 

accurate, and useful Medicare program 

information. 

• Ensuring written correspondence is 

evaluated for quality. 

C. Payment Safeguards Criterion 

The Payment Safeguard criterion 

contains the following two mandated 

standards: 

Standard 1. Decisions on SNF 

demand bills are accurate. 

Standard 2. TEFRA target rate 

adjustments, exceptions, and 

exemptions are processed within 

mandated timeframes. Specifically, 

applications must be processed to 

completion within 75 days after receipt 

by the contractor or returned to the 

hospitals as incomplete within 60 days 

of receipt. 

Intermediaries may also be evaluated 

on any MIP activities if performed 

under their Part A contractual 

agreement. These functions and 

activities include, but are not limited to, 

the following: 

• Audit and Reimbursement 

+ Performing the activities specified 

in our general instructions for 

conducting audit and settlement of 

Medicare cost reports. 

+ Establishing accurate interim 

payments. 

• Medical Review 

+ Increasing the effectiveness of 

medical review activities. 

+ Exercising accurate and defensible 

decision-making on medical reviews. 

+ Effectively educating and 

communicating with the provider 

community. 

+ Collaborating with other internal 

components and external entities to 

ensure the effectiveness of medical 

review activities. 

• Medicare Secondary Payer 

+ Accurately following MSP claim 

development and edit procedures. 

+ Auditing hospital files and claims 

to determine that claims are being filed 

to Medicare appropriately. 

+ Supporting the Coordination of 

Benefits Contractor’s efforts to identify 

responsible payers primary to Medicare. 

+ Supporting all the Medicare 

Secondary Payer Recovery functions. 

+ Accurately reporting MSP savings. 

• Overpayments 

+ Collecting and referring Medicare 

debts timely. 

+ Accurately reporting and collecting 

overpayments. 

+ Adhering to our instructions for 

management of Medicare Trust Fund 

debts. 

• Provider Enrollment 

+ Complying with assignment of staff 

to the provider enrollment function and 

training the staff in procedures and 

verification techniques. 

+ Complying with the operational 

standards relevant to the process for 

enrolling providers. 

D. Fiscal Responsibility Criterion 

We may review the intermediary’s 

efforts to establish and maintain 

appropriate financial and budgetary 

internal controls over benefit payments 

and administrative costs. Proper 

internal controls must be in place to 

ensure that contractors comply with 

their agreements with us. 

Additional functions that may be 

reviewed under the fiscal responsibility 

criterion include, but are not limited to, 

the following: 

• Adherence to approved program 

management and MIP budgets. 

• Compliance with the BPRs. 

• Compliance with financial 

reporting requirements. 

• Control of administrative cost and 

benefit payments. 

E. Administrative Activities Criterion 

We may measure an intermediary’s 

administrative ability to manage the 

Medicare program. We may evaluate the 

efficiency and effectiveness of its 

operations, its system of internal 

controls, and its compliance with our 

directives and initiatives. 

We may measure an intermediary’s 

efficiency and effectiveness in managing 

its operations. Proper systems security 

(general and application controls), ADP 

maintenance, and disaster recovery 

plans must be in place. An intermediary 

must also test system changes to ensure 

the accurate implementation of our 

instructions. 

Our evaluation of an intermediary 

under the administrative activities 

criterion may include, but is not limited 

to, reviews of the following: 

• Systems security. 

• ADP maintenance (configuration 

management, testing, change 

management, and security). 

• Implementation of the Electronic 

Data Interchange (EDI) standards 

adopted for use under HIPAA. 

• Disaster recovery plan and systems 

contingency plan. 

• Data and reporting requirements 

implementation. 

• Internal controls establishment and 

use, including the degree to which the 

contractor cooperates with the Secretary 

in complying with the FMFIA. 

• Implementation of our general 

instructions. 

V. Criteria and Standards for Regional 

Home Health Intermediaries (RHHIs) 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘CRITERIA AND STANDARDS 

FOR RHHIs’’ at the beginning of your 

comments.] 

The following three standards are 

mandated for the RHHI criterion: 

Standard 1. Not less than 95.0 percent 

of clean electronically submitted nonPeriodic Interim Payment home health 

and hospice claims are paid within 

statutorily specified timeframes. Clean 

claims are defined as claims that do not 

require Medicare intermediaries to 

investigate or develop them outside of 

their Medicare operations on a 

prepayment basis. Specifically, the 

statute specifies that clean non-Periodic 

Interim Payment electronic claims be 

paid no earlier than the 14th day after 

the date of receipt, and that interest is 

payable for any clean claims if payment 

is not issued by the 31st day after the 

date of receipt. 

Standard 2. Redetermination letters 

prepared in response to beneficiary 

initiated appeal requests are written in 

a manner calculated to be understood by 

the beneficiary. Letters must contain the 

required elements as specified in 

§ 405.956. 

Standard 3: All redeterminations 

must be concluded and mailed within 

60 days of receipt of the request, unless 

the appellant submits documentation 

after the request, in which case the 

decision-making timeframe is extended 

for 14 calendar days for each 

submission. 

We may use this criterion to review 

an RHHI’s performance for handling the 

HHA and hospice workload. This 

includes processing HHA and hospice 

claims timely and accurately, properly 

paying and settling HHA cost reports, 


jlentini on PROD1PC65 with NOTICES
57518 Federal Register / Vol. 71, No. 189 / Friday, September 29, 2006 / Notices 

and accurately processing 

redeterminations of initial 

determinations from beneficiaries, 

HHAs, and hospices. 

VI. Criteria and Standards for Carriers 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘CRITERIA AND STANDARDS 

FOR CARRIERS’’ at the beginning of 

your comments.] 

A. Claims Processing Criterion 

The claims processing criterion 

contains the following four mandated 

standards: 

Standard 1. Not less than 95.0 percent 

of clean electronically submitted claims 

are processed within statutorily 

specified timeframes. Clean claims are 

defined as claims that do not require 

Medicare carriers to investigate or 

develop them outside of their Medicare 

operations on a prepayment basis. 

Specifically, the statute specifies that 

clean non-Periodic Interim payment 

electronic claims be paid no earlier than 

the 14th day after the date of receipt, 

and that interest is payable for any clean 

claims if payment is not issued by the 

31st day after the date of receipt. 

Standard 2. Ninety-eight percent of 

MSNs are properly generated. Our 

expectation is that MSN messages are 

accurately reflecting the services 

provided. 

Standard 3. Redetermination letters 

prepared in response to beneficiary 

initiated appeal requests are written in 

a manner calculated to be understood by 

the beneficiary. Letters must contain the 

required elements as specified in 

§ 405.956. 

Standard 4. All redeterminations 

must be concluded and mailed within 

60 days of receipt of the request, unless 

the appellant submits documentation 

after the request, in which case the 

decision-making timeframe is extended 

for 14 calendar days for each 

submission. 

Additional functions that may be 

evaluated under this criterion include, 

but are not limited to, the following: 

• Accuracy of claims processing. 

• Remittance advice transactions. 

• Establishment and maintenance of 

relationship with Common Working File 

(CWF) Host. 

• Accuracy of redetermination 

decisions. 

• QIC case file requirements. 

• Accuracy and timeliness of 

processing appeals as set forth in part 

405, subpart I (§ 405.900 et seq.). 

B. Customer Service Criterion 

The customer service criterion 

contains the following mandated 

standard: Replies to beneficiary written 

correspondence are responsive to the 

beneficiary’s concerns; are written with 

an appropriate customer-friendly tone 

and clarity; and are written at the 

appropriate reading level. 

Contractors must meet our 

performance expectations that 

beneficiaries and providers are served 

by prompt and accurate administration 

of the program in accordance with all 

applicable laws, regulations, and our 

general instructions. 

Additional functions that may be 

evaluated under this criterion include, 

but are not limited to, the following: 

• Maintaining a properly 

programmed interactive voice response 

system to assist with inquiries. 

• Performing quality call monitoring. 

• Training customer service 

representatives. 

• Entering valid call center 

performance data in the customer 

service assessment and management 

system. 

• Providing timely and accurate 

written replies to beneficiaries and 

providers. 

• Maintaining walk-in inquiry service 

for beneficiaries and providers. 

• Conducting beneficiary and 

provider education, training, and 

outreach activities. 

• Effectively maintaining an Internet 

Web site dedicated to furnishing 

providers timely, accurate, and useful 

Medicare program information. 

• Ensuring written correspondence is 

evaluated for quality. 

C. Payment Safeguards Criterion 

Carriers may be evaluated on any MIP 

activities if performed under their 

contracts. In addition, other carrier 

functions and activities that may be 

reviewed under this criterion include, 

but are not limited to the following: 

• Medical Review 

+ Increasing the effectiveness of 

medical review activities. 

+ Exercising accurate and defensible 

decision-making on medical reviews. 

+ Effectively educating and 

communicating with the provider 

community. 

+ Collaborating with other internal 

components and external entities to 

ensure the effectiveness of medical 

review activities. 

• Medicare Secondary Payer 

+ Accurately following MSP claim 

development/edit procedures. 

+ Supporting the Coordination of 

Benefits Contractor’s efforts to identify 

responsible payers primary to Medicare. 

+ Supporting all the Medicare 

Secondary Payer Recovery functions. 

+ Accurately reporting MSP savings. 

• Overpayments 

+ Collecting and referring Medicare 

debts timely. 

+ Accurately reporting and collecting 

overpayments. 

+ Compliance with our instructions 

for management of Medicare Trust Fund 

debts. 

• Provider Enrollment 

+ Complying with assignment of staff 

to the provider enrollment function and 

training staff in procedures and 

verification techniques. 

+ Complying with the operational 

standards relevant to the process for 

enrolling suppliers. 

D. Fiscal Responsibility Criterion 

We may review the carrier’s efforts to 

establish and maintain appropriate 

financial and budgetary internal 

controls over benefit payments and 

administrative costs. Proper internal 

controls must be in place to ensure that 

contractors comply with their contracts. 

Additional functions that may be 

reviewed under the Fiscal 

Responsibility criterion include, but are 

not limited to, the following: 

• Adherence to approved program 

management and MIP budgets. 

• Compliance with the BPRs. 

• Compliance with financial 

reporting requirements. 

• Control of administrative cost and 

benefit payments. 

E. Administrative Activities Criterion 

We may measure a carrier’s 

administrative ability to manage the 

Medicare program. We may evaluate the 

efficiency and effectiveness of its 

operations, its system of internal 

controls, and its compliance with our 

directives and initiatives. 

We may measure a carrier’s efficiency 

and effectiveness in managing its 

operations. Proper systems security 

(general and application controls), ADP 

maintenance, and disaster recovery 

plans must be in place. Also, a carrier 

must test system changes to ensure 

accurate implementation of our 

instructions. 

Our evaluation of a carrier under this 

criterion may include, but is not limited 

to, reviews of the following: 

• Systems security. 

• ADP maintenance (configuration 

management, testing, change 

management, and security). 

• Disaster recovery plan/systems 

contingency plan. 

• Data and reporting requirements 

implementation. 

• Internal controls establishment and 

use, including the degree to which the 


jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 71, No. 189 / Friday, September 29, 2006 / Notices 57519 

contractor cooperates with the Secretary 

in complying with the FMFIA. 

• Implementation of the Electronic 

Data Interchange (EDI) standards 

adopted for use under the Health 

Insurance Portability and 

Accountability Act (HIPAA). 

• Implementation of our general 

instructions. 

VII. Action Based on Performance 

Evaluations 

[If you choose to comment on this 

section, please include the caption 

‘‘ACTION BASED ON PERFORMANCE 

EVALUATIONS’’ at the beginning of 

your comments.] 

We evaluate a contractor’s 

performance against applicable program 

requirements for each criterion. Each 

contractor must certify that all 

information submitted to us relating to 

the contract management process, 

including, without limitation, all files, 

records, documents and data, whether 

in written, electronic, or other form, is 

accurate and complete to the best of the 

contractor’s knowledge and belief. A 

contractor is required to certify that its 

files, records, documents, and data are 

not manipulated or falsified in an effort 

to receive a more favorable performance 

evaluation. A contractor must further 

certify that, to the best of its knowledge 

and belief, the contractor has submitted, 

without withholding any relevant 

information, all information required to 

be submitted for the contract 

management process under the 

authority of applicable law(s), 

regulation(s), contract(s), or our manual 

provision(s). Any contractor that makes 

a false, fictitious, or fraudulent 

certification may be subject to criminal 

or civil prosecution, as well as 

appropriate administrative action. This 

administrative action may include 

debarment or suspension of the 

contractor, as well as the termination or 

nonrenewal of a contract. 

If a contractor meets the level of 

performance required by operational 

instructions, it meets the requirements 

of that criterion. When we determine a 

contractor is not meeting performance 

requirements, we will use the terms 

‘‘major nonconformance’’ or ‘‘minor 

nonconformance’’ to classify our 

findings. A major nonconformance is a 

nonconformance that is likely to result 

in failure of the supplies or services, or 

to materially reduce the usability of the 

supplies or services for their intended 

purpose. A minor nonconformance is a 

nonconformance that is not likely to 

materially reduce the usability of the 

supplies or services for their intended 

purpose, or is a departure from 

established standards having little 

bearing on the effective use or operation 

of the supplies or services. The 

contractor will be required to develop 

and implement PIPs for findings 

determined to be either a major or minor 

nonconformance. The contractor will be 

monitored to ensure effective and 

efficient compliance with the PIP, and 

to ensure improved performance when 

requirements are not met. 

The results of performance 

evaluations and assessments under all 

criteria applying to intermediaries, 

carriers, and RHHIs will be used for 

contract management activities and will 

be published in the contractor’s annual 

Report of Contractor Performance (RCP). 

We may initiate administrative actions 

as a result of the evaluation of 

contractor performance based on these 

performance criteria. Under sections 

1816 and 1842 of the Act, we consider 

the results of the evaluation in our 

determinations when—

• Entering into, renewing, or 

terminating agreements or contracts 

with contractors, and 

• Deciding other contract actions for 

intermediaries and carriers (such as 

deletion of an automatic renewal 

clause). These decisions are made on a 

case-by-case basis and depend primarily 

on the nature and degree of 

performance. More specifically, these 

decisions depend on the following: 

+ Relative overall performance 

compared to other contractors. 

+ Number of criteria in which 

nonconformance occurs. 

+ Extent of each nonconformance. 

+ Relative significance of the 

requirement for which nonconformance 

occurs within the overall evaluation 

program. 

+ Efforts to improve program quality, 

service, and efficiency. 

+ Deciding the assignment or 

reassignment of providers and 

designation of regional or national 

intermediaries for classes of providers. 

We make individual contract action 

decisions after considering these factors 

in terms of their relative significance 

and impact on the effective and efficient 

administration of the Medicare program. 

In addition, if the cost incurred by the 

intermediary, RHHI, or carrier to meet 

its contractual requirements exceeds the 

amount that we find to be reasonable 

and adequate to meet the cost that must 

be incurred by an efficiently and 

economically operated intermediary or 

carrier, these high costs may also be 

grounds for adverse action. 

VIII. Collection of Information 

Requirements 

This document does not impose 

information collection and record 

keeping requirements. Consequently, 

the Office of Management and Budget 

need not review it under the authority 

of the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.). 

IX. Response to Comments 

Because of the large number of items 

of correspondence we normally receive 

on Federal Register documents 

published for comment, we are unable 

to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the ‘‘Comment Date’’

section of this notice, and, if we proceed 

with a subsequent document, we will 

respond to the comments in the section 

entitled as ‘‘Analysis of and Response to 

Public Comments Received on FY 2007 

Criteria and Standards’’ of that 

document. 

Authority: Sections 1816(f), 1834(a)(12), 

and 1842(b) of the Social Security Act (42 

U.S.C. 1395h(f), 1395m(a)(12), and 1395u(b)) 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance, and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: June 22, 2006. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services. 

[FR Doc. E6–15991 Filed 9–28–06; 8:45 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–1530–CN] 

RIN 0938–AM46 

Medicare Program; Prospective 

Payment System and Consolidated 

Billing for Skilled Nursing Facilities; 

Corrections 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Correction notice. 

SUMMARY: This document corrects 

technical errors that appeared in the 

July 31, 2006 Federal Register, entitled 

‘‘Medicare Program; Prospective 

Payment System and Consolidated 

Billing for Skilled Nursing Facilities—

Update—Notice.’’

Effective Date: This correction is 

effective October 1, 2006. 

FOR FURTHER INFORMATION CONTACT: Bill 

Ullman, (410) 786–5667. 

SUPPLEMENTARY INFORMATION: 


jlentini on PROD1PC65 with NOTICES