29648 Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations

this action is not a ‘‘significant

regulatory action’’ subject to review by

the Office of Management and Budget

(OMB). In addition, this action does not

impose any enforceable duty or contain

any unfunded mandate as described in

the Unfunded Mandates Reform Act of

1995 (UMRA) (Pub. L. 104–4), or require

prior consultation with State officials as

also specified in Executive Order 12875,

entitled ‘‘Enhancing the

Intergovernmental Partnership’’ (58 FR

58093, October 28, 1993). Nor does it

involve special considerations of

environmental justice related issues as

required by Executive Order 12898,

entitled ‘‘Federal Actions to Address

Environmental Justice in Minority

Populations and Low-Income

Populations’’ (59 FR 7629, February 16,

1994), or additional OMB review in

accordance with Executive Order 13045,

entitled ‘‘Protection of Children from

Environmental Health Risks and Safety

Risks’’ (62 FR 19885, April 23, 1997).

According to the Paperwork

Reduction Act (PRA), 44 U.S.C. 3501 et

seq., an agency may not conduct or

sponsor, and a person is not required to

respond to a collection of information

that requires OMB approval under the

PRA, unless it has been approved by

OMB and displays a currently valid

OMB control number. The OMB control

numbers for EPA’s regulations, after

initial display in the preamble of the

final rules, are listed in 40 CFR part 9.

The information collection requirements

related to this action have already been

approved by OMB pursuant to the PRA

under OMB control number 2070–0012

(EPA ICR No. 574). This action does not

impose any burden requiring additional

OMB approval.

If an entity were to submit a

significant new use notice to the

Agency, the annual burden is estimated

to average between 30 and 170 hours

per response. This burden estimate

includes the time needed to review

instructions, search existing data

sources, gather and maintain the data

needed, and complete, review, and

submit the required significant new use

notice.

Send any comments about the

accuracy of the burden estimate and any

suggested methods for minimizing

respondent burden, including through

the use of automated collection

techniques, to the Director, OPPE

Regulatory Information Division, U.S.

Environmental Protection Agency (Mail

Code 2137), 401 M St., SW.,

Washington, DC 20460, with a copy to

the Office of Information and Regulatory

Affairs, Office of Management and

Budget, 725 17th St., NW., Washington,

DC 20503, marked ‘‘Attention: Desk

Officer for EPA.’’ Please remember to

include the OMB control number in any

correspondence, but do not submit any

completed forms to these addresses.

In addition, pursuant to section 605(b)

of the Regulatory Flexibility Act (RFA)

(5 U.S.C. 601 et seq.), the Agency has

previously certified, as a generic matter,

that the promulgation of a SNUR does

not have a significant adverse economic

impact on a substantial number of small

entities. The Agency’s generic

certification for promulgation of new

SNURs appears on June 2, 1997 (62 FR

29684) (FRL–5597–1) and was provided

to the Chief Counsel for Advocacy of the

Small Business Administration.

IX. Submission to Congress and the

General Accounting Office

Under 5 U.S.C. 801(a)(1)(A), as added

by the Small Business Regulatory

Enforcement Fairness Act of 1996, the

Agency has submitted a report

containing this rule and other required

information to the U.S. Senate, the U.S.

House of Representatives, and the

Comptroller General of the General

Accounting Office prior to publication

of this rule in today’s Federal Register.

This is not a major rule as defined by

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

List of Subjects in 40 CFR Part 721

Environmental protection, Chemicals,

Hazardous substances, Reporting and

recordkeeping requirements.

Dated: May 20, 1998.

Charles M. Auer,

Director, Chemical Control Division, Office

of Pollution Prevention and Toxics.

Therefore, 40 CFR part 721 is

amended as follows:

PART 721—[AMENDED]

1. The authority citation for part 721

continues to read as follows:

Authority: 15 U.S.C. 2604, 2607, and

2625(c).

2. By adding new § 721.9518 to

subpart E to read as follows:

§ 721.9518 Sinorhizobium meliloti strain

RMBPC-2.

(a) Microorganism and significant new

uses subject to reporting. (1) The

microorganism identified as

Sinorhizobium meliloti strain RMBPC-2

(PMN P–92–403) is subject to reporting

under this section for the significant

new uses described in paragraph (a)(2)

of this section.

(2) The significant new uses are:

(i) Commercial activities before

submitting a TSCA section 5(a) notice.

For any manufacturer or importer who

has not previously submitted a

premanufacture notice or significant

new use notice for this microorganism,

the significant new use is any use.

(ii) Commercial activities after

submitting a TSCA section 5(a) notice.

For any manufacturer or importer who

has previously submitted a

premanufacture notice or a significant

new use notice for this microorganism,

the significant new use is manufacture,

import, or processing greater than a

maximum production volume of

500,000 lbs in any consecutive 12-

month period.

(b) Specific requirements. The

provisions of subpart A of this part

apply to this section except as modified

by this paragraph.

(1) Persons who must report. Section

721.5 applies to this section except for

§ 721.5(a)(2). A person who intends to

manufacture or import this substance

for commercial purposes must have

submitted a premanufacture notice or

submit a significant new use notice.

(2) Recordkeeping. Recordkeeping

requirements as specified in § 721.125

(a) and (i) are applicable to

manufacturers and importers of this

substance.

(3) Limitations or revocation of

certain notification requirements. The

provisions of § 721.185 apply to this

section.

[FR Doc. 98–14439 Filed 5–29–98; 8:45 am]

BILLING CODE 6560–50–F

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 441 and 489

[HCFA–1152–1–F]

RIN 0938–AI86

Medicare and Medicaid Programs;

Surety Bond Requirements for Home

Health Agencies

AGENCY: Health Care Financing

Administration (HCFA), HHS.

ACTION: Final rule.

SUMMARY: This final rule revises several

provisions of an earlier final rule

concerning surety bond requirements

published in the Federal Register on

January 5, 1998 (63 FR 292). This rule

also establishes the surety bond

submission compliance date, as

described in a notice of intent and in a

final rule concerning surety bond

requirements published in the Federal

Register on March 4, 1998 (63 FR 10730

and 10732). The March 4 documents

advised the public that we intended to
Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations 29649

make technical revisions to the January

5, 1998 final rule and extend the

February 27, 1998 compliance date for

all home health agencies (HHAs) to

furnish a surety bond to HCFA and/or

the State Medicaid agency, or both, until

60 days after the date of publication of

this final rule. In this rule, for Medicareparticipating HHAs, we are establishing

a new compliance date to submit a

surety bond that is 60 days after the date

of publication of this final rule. For

Medicaid-participating HHAs, we are

establishing a new compliance date to

furnish a surety bond that is a date

established by the State Medicaid

agency up to 120 days after the date of

publication of this final rule. We are

also responding to comments we

received in response to the January 5,

1998 final rule that pertain to the

technical revisions we discussed in our

March 4, 1998 notice. It is our intention

to respond to all comments not

addressed herein in a future Federal

Register document. This final rule

revision does not change the beginning

date of the term the initial surety bond

is to cover, that is, January 1, 1998.

EFFECTIVE DATE: This final rule is

effective on July 1, 1998.

FOR FURTHER INFORMATION CONTACT:

Ralph Goldberg, (410) 786–4870

(Medicare Provisions). Mary Linda

Morgan, (410) 786–2011 (Medicaid

Provisions).

SUPPLEMENTARY INFORMATION:

I. Background

The Balanced Budget Act of 1997

(BBA ’97) requires each home health

agency (HHA) to secure a surety bond in

an amount of at least $50,000 in order

to participate in either the Medicare or

the Medicaid programs. This

requirement applies to all participating

HHAs and those that seek to participate

in the Medicare and Medicaid programs.

On January 5, 1998, we published in the

Federal Register a final rule with

comment period (63 FR 292) to

implement the surety bond

requirements of BBA ’97. The comment

period for that final rule ended on

March 6, 1998.

Generally, the rule requires each HHA

participating in Medicare to obtain from

an authorized Surety and then to

furnish to HCFA a surety bond in an

amount that is the greater of $50,000 or

15 percent of the annual amount paid to

the HHA by the Medicare program, as

such annual amount appears in the

HHA’s most recently accepted cost

report.

The rule also prohibits payment to a

State for home health services furnished

to Medicaid recipients unless the HHA

has furnished the Medicaid State agency

with a surety bond similar to one that

meets Medicare requirements. The

amount of the Medicaid surety bond

would be the greater of $50,000 or 15

percent of the annual amount paid to

the HHA by the Medicaid State agency

for home health services.

II. Provisions of the March 4 Notice and

Final Rule

As a result of technical issues

concerning potential Surety liability

raised by representatives of both the

Surety and HHA industries after the

publication of the January 5, 1998 final

rule, we published a notice in the

Federal Register on March 4, 1998 (63

FR 10732). That notice advised the

public that we intended to make

technical revisions to the January 5,

1998 final rule and would extend the

compliance date for submitting bonds.

In a final rule also published in the

March 4, 1998 Federal Register (63 FR

10730), we removed the February 27,

1998 compliance date, and announced

that we intended to establish the

compliance date as 60 days after the

date of publication of a subsequent (i.e.,

this) final rule.

Described below are our responses to

the comments we received concerning

our technical changes, a discussion of

their intended effect, and the changes

that we are making in this rulemaking.

In general, these changes address

concerns regarding the uncertainty of

the scope of a Surety’s liability under

the January 5, 1998 regulation, which

appears to have resulted in less than a

fully robust market for underwriting

bonds for HHAs in Medicare and

Medicaid.

III. Discussion of Public Comments

In response to the January 5, 1998

final rule, we received 344 timely items

of correspondence. A summary of the

comments that pertain to those issues

discussed in our March 4, 1998 notice

and our responses are set forth below.

We will respond to the remaining

comments on the January 5, 1998 final

rule in a subsequent Federal Register

document. The following sections

generally follow the order the topics

were discussed in the January 5, 1998

final rule.

Continuous Bond

Comment: Several Surety associations

suggested that we consider using a

continuous bond that, when necessary,

would be updated by the Surety. The

continuous bond would be an

alternative option to the annual bond.

Response: We understand that the use

of a continuous bond is common

practice in the surety industry. A

continuous bond is one that remains in

full force and effect unless it is canceled

or terminated. The use of a continuous

bond would significantly reduce the

paperwork burden and administrative

processes for the HHAs, Sureties, and

the Medicare and Medicaid programs.

Therefore, in 42 CFR 441.16(i)(2) and

489.67(b), we are providing that the

HHA—at its option—may submit an

annual bond each year or may submit a

continuous bond that remains in effect

from year to year. A continuous bond

would be updated by the Surety at the

start of a new year if the amount of the

required bond increases or decreases.

The updating of a continuous bond

would be accomplished by the Surety

issuing a ‘‘rider,’’ which is a notice

issued by a Surety that a change in the

bond has occurred or will occur. A

continuous bond should not be

misinterpreted as providing cumulative

liability. For example, this does not

mean that an initial bond in the amount

of $50,000 would increase to $100,000

in the second year, $150,000 in the third

year, etc. This change affects several

regulation sections and is more fully

discussed in section IV. of this

preamble.

Government Security

Comment: One commenter suggested

that we consider allowing HHAs to

furnish a Government security in lieu of

furnishing a surety bond, in that the

Department of Treasury regulations

authorize such substitution.

Response: We are exploring the

desirability of this option as well as the

various means by which this option may

be implemented. We will issue the

result of our decision in a subsequent

document.

Surety Liability

Comment: Several commenters had

concerns regarding the uncertainty of

the scope of a Surety’s liability under

the current regulation. The commenters

were specifically concerned that our

ability to reach back several years to

recover payments leaves the door open

for almost unlimited Surety liability.

Response: The uncertain scope of

potential liability for Sureties has made

it difficult for some apparently

reputable and well-run HHAs to obtain

an affordable surety bond. We are

addressing this concern by limiting the

Surety’s liability on the bond to the term

during which we determine that funds

owed have become unpaid, regardless of

when the overpayment or other events

causing such funds to be owed took

place. In the Medicare program, the

Surety is liable if the claim, civil money
29650 Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations

penalty, or assessment becomes unpaid,

as defined in § 489.60, and we make a

written demand for payment from the

Surety during the term of the bond. If

the HHA fails to furnish a bond that

meets our requirements for the year

following expiration of the term of the

bond, or if the HHA’s provider

agreement terminates prior to the end of

the fiscal year, the last bond in effect

has an additional 2-year discovery

period for unpaid claims, civil money

penalties, and assessments that we

impose on or assert against the HHA.

Likewise, in the Medicaid program,

the Surety is liable for uncollected

overpayments, as defined by paragraph

(a), provided such uncollected

overpayments are determined during

the term of the bond and regardless of

when the overpayments took place. In

addition, the Surety remains liable if the

HHA fails to furnish a subsequent

annual bond that meets the

requirements of this subpart or fails to

furnish a rider for a year for which a

rider is required to be submitted, or if

the HHA’s provider agreement

terminates and that the Surety’s liability

will be based on the last bond or rider

in effect for the HHA. The Surety’s

period of liability will remain in effect

for an additional 2 year period.

Appeals

Comment: Several commenters

recommended that the Surety be given

appeal rights.

Response: To address this concern,

we are making another technical

revision to the regulation. In the

Medicare program, we are giving Surety

bond companies the right to appeal

overpayments, civil money penalties,

and assessments. This change grants the

Surety standing to appeal any matter

that the HHA could appeal, provided

the Surety satisfies all jurisdictional and

procedural requirements that would

otherwise have applied to the HHA and

provided the HHA is not, itself, actively

pursuing its appeal rights, and provided

further that, with respect to unpaid

claims, the Surety has paid HCFA all

amounts owed to HCFA by the HHA on

such unpaid claims, up to the amount

of the bond. In order to ensure that

Sureties are furnished with proper

notice of matters on which an appeal

right may ripen, we are further

specifying that surety bonds must

include the Surety’s full name and

address to which we can send a written

notice of an overpayment, civil money

penalty, or assessment. In the Medicaid

program, we are directing the State

Medicaid agencies to grant Sureties

appeal rights. This change affects

several regulation sections and is more

fully discussed in section IV. of this

preamble.

Surety Reimbursement

Comment: A commenter

recommended that we provide for

reimbursing the Surety when HCFA

collects from both the HHA and the

Surety on the same overpayment, civil

money penalty, or assessment.

Response: We have provided for

reimbursement to the Surety in cases

where both the HHA and Surety have

repaid the Medicare or Medicaid

program on the same overpayment, civil

money penalty, or assessment. We are

adding a new subsection (m) to § 441.16

and a new § 489.73 to effectuate this

change.

HCFA Payment Demand

Comments: Several commenters

wanted to know the circumstances

under which we will demand payment

from a Surety.

Response: We will first seek

collection from the HHA, employing

available administrative collection

methods, e.g., offset of interim

payments, repayment schedule, etc.,

prior to seeking payment from the

Surety under the terms of the bond.

Computation of the 15 Percent of

Annual Payments

Comment: Commenters questioned

the application of the 15 percent

standard to the annual payments paid to

the HHA by the Medicare program as

reflected on the most recently accepted

cost report, in determining the bond

amount.

Response: Approximately half of the

current Medicare overpayments are

attributable to HHAs. In comparing

overpayments to revenues paid to the

HHAs for four previous years, we also

found that uncollected overpayments

have been rising significantly both in

absolute dollar amounts and as a

percentage of the original amount of

overpayment.

In developing our regulation, we

reviewed the Office of Inspector

General’s (OIG) July 1997 report Home

Health: Problem Providers and Their

Impact on Medicare (page 18), in which

the OIG recommended that each HHA

be required to obtain a surety bond

equal to the amount of anticipated

Medicare billings during the fiscal year.

We also consulted with industry

representatives.

We believe that a bond amount of 15

percent of payments will adequately

cover the overpayment amounts, if any,

for which the vast majority of HHAs

would be responsible and yet would not

be so high that it would prevent

reputable and well-run HHAs from

obtaining bonds at a reasonable cost.

The 15 percent standard was also

adopted in conjunction with other

provisions of this rule that afford us

more protection by permitting us to

apply the standard to more recent

payment history and by permitting us to

substitute the amount of prior

overpayments as the bond amount when

the overpayment amount exceeds 15

percent of payments. Thus, we believe

that the rules established in § 489.65 for

calculating the bond amount are a

reasonable starting point for

implementing the bond provision.

However, we will continue to monitor

payments to HHAs and will modify our

policy for future years if conditions

warrant. Any revisions would be

proposed in a Federal Register

document. Also, we are including a

provision that will sunset the 15 percent

bond amount provision on June 1, 2005.

Prior to that time, we will analyze

available data on the impact of the

surety bond requirement and the

prospective payment system for HHAs

to determine if the 15 percent

computation is appropriate. We will

publish a Federal Register document

addressing the 15 percent amount prior

to the sunset date. However, we may act

sooner if we believe circumstances

warrant.

IV. Provisions of the Final Rule

In this final rule, we are revising

certain sections of the January 5, 1998

final rule as a result of public comments

on that rule that pertain to the issues

discussed in our March 4, 1998 notice.

These changes are as follows:

A. Surety Bond Requirements Under

Medicare

In § 489.60 (‘‘Definitions.’’), we are

revising the definition of ‘‘Unpaid civil

money penalty or assessment’’ to add

the Surety as a potential party to the

administrative appeals process. We are

also adding a new definition for the

term ‘‘Rider’’ in this section.

In § 489.62 (‘‘Requirement waived for

Government-operated HHAs.’’), we are

making an editorial change by removing

the word ‘‘section’’ and replacing it with

the word ‘‘subpart’’.

In § 489.65(g) (‘‘Expiration of the 15

percent provision.’’), we provide that for

an annual surety bond, or for a rider on

a continuous surety bond, that is

required to be submitted on or after June

1, 2005, notwithstanding any reference

in this subpart to 15 percent as a basis

for determining the amount of the bond,

the amount of the bond or rider, as

applicable, must be $50,000 or such

amount as HCFA specifies in
Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations 29651

accordance with paragraph (f) of this

section, whichever amount is greater.

In § 489.66(b) (‘‘Additional

requirements of the surety bond.’’), we

specify that a Surety’s liability is based

on unpaid claims, unpaid civil money

penalties, and unpaid assessments that

are determined to have become unpaid

during the term of the bond, regardless

of when the payment, overpayment, or

other event giving rise to the unpaid

claim, civil money penalty, or

assessment occurred. Also, we specify

that if an HHA fails to furnish us with

a subsequent annual bond that meets

the requirements of this subpart, or fails

to furnish us with a rider for a year for

which a rider is required to be

submitted, or if the HHA’s provider

agreement terminates prior to the end of

the fiscal year, then the last bond or

rider in effect for such HHA remains in

effect and the Surety remains liable for

an additional 2-year period.

We revise § 489.66(c) to correct a

drafting error to clarify that the Surety’s

liability may be extinguished if the

Surety furnishes us with a notice of an

HHA’s action to terminate or limit the

scope of the bond not later than 10 days

after receiving notice from the HHA of

such action by the HHA, or not later

than 60 days before the effective date of

such action by the Surety or if the HHA

has submitted to HCFA a new bond that

meets our requirements.

In new § 489.66(e), we are making a

technical change to specify that surety

bonds must include the Surety’s full

name and address to which we can send

a written notice of an overpayment, civil

money penalty, or assessment.

In § 489.67(a) (‘‘Submission date and

term of the bond.’’), we have amended

this provision to specify that the initial

bond must be submitted to HCFA by 60

days from the date of publication of this

rule, for the term beginning January 1,

1998. An HHA that submitted an initial

surety bond under the provisions of the

January 5, 1998 final rule is not required

to, but may, submit a substitute surety

bond that conforms to the technical

revisions established by this final rule.

If an annual bond is submitted for the

initial term, it must be effective through

the ending date of the HHA’s current

fiscal year. For subsequent terms, an

HHA must submit to us either an annual

surety bond or where the HHA has

submitted a continuous bond, a rider

(showing the period for which the rider

is effective), not later than 30 days

before the beginning of the HHA’s fiscal

year. When an HHA has furnished a

continuous bond, no action is necessary

by the HHA to submit a rider as long as

the continuous bond remains in full

force and effect and there is no change

in the bond amount.

In § 489.67(b), we specify the type of

bond that an HHA must secure as either

an annual or continuous bond.

In § 489.71 (‘‘Surety’s standing to

appeal Medicare determinations.’’), we

specify that a Surety has standing to

appeal any matter that the HHA could

appeal, provided the Surety satisfies all

jurisdictional and procedural

requirements that would otherwise have

applied to the HHA and provided the

HHA, itself, is not pursuing its appeal

rights, and provided further that, with

respect to unpaid claims, the Surety has

paid HCFA all amounts owed to HCFA

by the HHA on such unpaid claims, up

to the amount of the bond.

In new § 489.73 (‘‘Effect of conditions

of payment’’), we specify that if the

Surety has paid an amount on the basis

of liability incurred under a bond

obtained by an HHA, and we

subsequently collect from the HHA on

the same indebtedness that gave rise to

the Surety’s liability, we will reimburse

the Surety the amount we collected

from the HHA up to the amount paid to

us by the Surety, provided the Surety

has no other liability to us under the

bond.

B. Surety Bond Requirements Under

Medicaid

In keeping with our intent and

practice of affording States flexibility in

implementing these surety bond

provisions, and in recognition that the

States’ administration of Medicaid may

differ significantly from the Medicare

model, we have not changed the

Medicaid requirements in § 441.16 to

conform to all of Medicare’s changes in

part 489, subpart F. We believe that

allowing States the discretion to decide,

for example, the means and mechanism

by which the Surety is notified of any

overpayment that is asserted against the

HHA is the best way to retain State

flexibility. Nevertheless, the Medicaid

changes in part 441 that are discussed

below were made generally in order to

conform with changes being made to

Medicare in part 489, subpart F.

In § 441.16(g)(7) (‘‘Expiration of the 15

percent provision’’), we provide that for

an annual surety bond, or for a rider on

a continuous surety bond, that is

required to be submitted on or after June

1, 2005, notwithstanding any reference

in this section to 15 percent as a basis

for determining the amount of the bond,

the amount of the bond or rider, as

applicable, must be $50,000 or such

amount as the Medicaid agency

specifies in accordance with

subparagraph (6) of this paragraph,

whichever amount is greater.

In § 441.16(h)(2) (‘‘Additional

requirements of the surety bond’’), we

state that the bond must provide that the

Surety is liable for uncollected

overpayments as defined in paragraph

(a), provided such uncollected

overpayments are determined during

the term of the bond and regardless of

when the overpayments took place.

In addition, we state that if an HHA

fails to furnish the Medicaid State

agency with a subsequent annual bond

that meets the requirements of this

subpart, or fails to furnish a rider for a

year for which a rider is required to be

submitted, or if the HHA’s agreement

with the State Medicaid agency

terminates, then the last bond or rider

in effect for such HHA remains in effect

for an additional 2-year period.

In § 441.16(h)(3)(i), we state that the

Surety’s potential liability under a bond

may be extinguished if the Surety

furnishes the Medicaid agency with

notice of an HHA’s action to terminate

or limit the scope of the bond not later

than 10 days after receiving notice from

the HHA of such action by the HHA or

not later than 60 days before the

effective date of such action by the

Surety, or if the HHA has submitted a

new bond to the Medicaid agency and

the bond meets all Federal and State

requirements.

In § 441.16(i)(1) (‘‘Submission date,

term, and type of the bond’’), we have

amended this provision to specify that

the initial bond must be submitted by a

date specified by the State Medicaid

agency up to 120 days following the

publication of this rule. (The term of the

initial bond is for a term beginning

January 1, 1998.) In the preamble to the

March 4, 1998 rule, we stated our

intention to establish a new surety bond

compliance date that would be 60 days

after the date of publication of this rule.

However, upon further consideration

and analysis, we concluded that 60 days

may not be sufficient time for all States

to furnish appropriate notice to

Medicaid-participating HHAs.

Therefore, we are providing for each

State to establish a compliance date for

the submission of a surety bond up to

120 days from the date of publication of

this rule.

We have also amended this provision

to specify that an HHA must submit a

‘‘rider’’ to the Medicaid agency for

subsequent terms in the event the HHA

has previously submitted a continuous

bond and the required amount of the

bond changes.

In § 441.16(i)(2), we specify that the

bond submitted by an HHA must be

either an annual bond (that is, a bond

that specifies an effective annual period

corresponding to an annual period
29652 Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations

specified by the Medicaid agency) or a

continuous bond (that is, a bond that

remains in full force and effect from

term to term unless it is terminated or

canceled as provided for in the bond or

as otherwise provided by law) and

which must be updated by the Surety,

for a particular annual period via the

issuance of a ‘‘rider,’’ when the bond

amount changes. We have defined a

‘‘rider’’ to mean a notice issued by a

Surety that a change in a bond has

occurred or will occur. In addition, we

state that if the HHA has submitted a

continuous bond and there is no

increase or decrease in the bond

amount, no action is necessary by the

HHA to submit a rider as long as the

continuous bond remains in full force

and effect.

In § 441.16(l) (‘‘Surety’s standing to

appeal Medicaid determinations’’), we

specify that the Medicaid agency must

establish procedures for granting appeal

rights to Sureties.

In new § 441.16(m) (‘‘Effect of

conditions of payment’’), we require

that in the event a Surety has paid the

Medicaid agency an amount on the basis

of liability incurred under a bond

obtained by an HHA under this section,

and the Medicaid agency subsequently

collects an amount on the overpayment

from the HHA, which overpayment gave

rise to the Surety’s liability, the

Medicaid agency must reimburse the

Surety the amount the agency collected

from the HHA up to the amount paid to

the agency by the Surety, provided the

Surety has no other liability under the

bond.

V. Regulatory Impact Statement

Consistent with the Regulatory

Flexibility Act (RFA) (5 U.S.C. 601

through 612), we prepare a regulatory

flexibility analysis unless we certify that

a rule will not have a significant

economic impact on a substantial

number of small entities. For purposes

of the RFA, we treat all providers and

suppliers as small entities. Individuals

and States are not included in the

definition of a small entity.

Also, 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. That analysis must conform to

the provisions of section 603 of the

RFA. For purposes of section 1102(b) of

the Act, we define a small rural hospital

as a hospital that is located outside of

a Metropolitan Statistical Area and has

fewer than 50 beds.

Publication of this rule generally

limits the Surety’s liability on the bond

to the term when it is determined that

funds owed to Medicare and Medicaid

have become ‘‘unpaid,’’ regardless of

when the payment, overpayment, or

other action causing such funds to be

owed took place; establishes that a

Surety remains liable on a bond for an

additional 2 years after the date an HHA

leaves the Medicare or Medicaid

program; gives a Surety the right to

appeal, under Medicare, any matter that

the HHA could appeal, provided the

Surety satisfies all jurisdictional and

procedural requirements that would

otherwise have applied to the HHA and

provided the HHA, itself, is not

pursuing its appeal rights and provided

the Surety has paid HCFA on amounts

relating to unpaid claims; directs State

Medicaid agencies to grant appeal rights

to Sureties; and establishes the use of a

continuous or annual bond.

While we cannot predict the effect

these revisions will have on the number

of HHAs having an agreement with us

and with the Medicaid agencies, we

believe these revisions will remove the

uncertainty of the scope of a Surety’s

liability. The removal of this

underwriting uncertainty, coupled with

the fact that Sureties are provided with

their own appeal rights, should result in

a more robust surety bond market,

thereby giving HHAs an increased

opportunity to obtain a bond.

Although we are unable to estimate

either savings or costs to the Medicare

Trust Funds, the savings that may result

from this regulation would be,

principally, from recovery of

overpayments that Medicare and

Medicaid may collect from the Sureties

and from the prevention of

overpayments that would have been

generated by HHAs that are unable to

obtain surety bonds. In the final rule

published on January 5, 1998, we

estimated Medicare savings at $10

million beginning in 2000 and $20

million each year thereafter. These

estimates were based on the assumption

that HHAs will not repeat their past

aberrant billing activities and that we

will experience a reduction in

unrecovered program overpayments as a

result of either having debts guaranteed

by a Surety company, or by high risk

businesses being unable to obtain surety

bonds and, thus, leaving the Medicare

and/or Medicaid program. While the

changes made by this rule may make it

possible for some of the HHAs that were

not able to obtain a surety bond that met

the requirements of the January 5, 1998

rule to now obtain a bond, we do not

believe that those HHAs will be the

high-risk business whose departure

from the program was a factor in making

our savings estimates.

For these reasons, we have

determined, and we certify, that this

regulation does not result in a

significant impact on a substantial

number of small entities and does not

have a significant effect on the

operations of a substantial number of

small rural hospitals. Therefore, we are

not preparing an analysis for either the

RFA or section 1102(b) of the Act

because we have determined, and we

certify, that this proposed rule would

not have a significant impact on a

substantial number of small entities or

a significant impact on the operations of

a substantial number of small rural

hospitals.

In accordance with the provisions of

Executive Order 12866, this regulation

was reviewed by the Office of

Management and Budget.

VI. Waiver of Proposed Rulemaking

We ordinarily publish a notice of

proposed rulemaking in the Federal

Register and invite prior public

comment on the proposed rule. The

notice of proposed rulemaking can be

waived, however, if an agency finds

good cause that notice-and-comment

procedures are impracticable,

unnecessary, or contrary to the public

interest and it incorporates a statement

of the finding and its reasons in the rule

issued.

In this final rule, we are addressing

matters on which we received public

comments to our January 5, 1998 final

rule with comment, as well as on

matters on which we received interim

comments from both the Surety and

HHA industries that concern the

technical issues discussed in our March

5, 1998 notice.

We find good cause to waive noticeand-comment procedures for this final

rule because it is impracticable to

employ notice-and-comment procedures

with respect to both the Medicare and

Medicaid regulations and establish new,

timely compliance dates for submission

of surety bonds. Because a fully viable

market for HHA surety bonds

apparently failed to develop following

the publication on January 5, 1998 of a

final rule establishing surety bond

requirements for HHAs, on March 4,

1998 we published a final rule to

remove from the January 5th rule the

date by which HHAs were required to

submit surety bonds. This measure was

taken in order to consider technical

revisions to the rule that might be

necessary in order to facilitate the

development of a fully viable surety

bond market for reputable and well-run

HHAs. This rule includes those

revisions and establishes new

submission compliance dates for both
Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations 29653

the Medicare and Medicaid bonds. We

believe that the new submission

compliance dates should not be so

remote in time from the effective date of

the initial bonds, i.e., January 1, 1998,

so as, possibly, to create another market

disincentive for surety bond companies

and possible access problems for

program beneficiaries. However,

employing notice and comment

procedures would substantially delay

establishing new, timely submission

compliance dates. Accordingly, we find

it impracticable both to employ notice

and comment procedures and to

establish new submission compliance

dates that are not temporally remote

from the effective date of the term of the

initial bonds.

We also find good cause to waive

notice-and-comment procedures

because employing such procedures for

this rule would be contrary to the public

interest. For the reasons just discussed,

this final rule must be published as soon

as possible so as to ensure a fully viable

surety bond market for reputable and

well-run HHAs and to establish new

bond submission compliance dates.

Employing notice-and-comment

procedures would, as a practical matter,

substantially delay the implementation

of the surety bond requirement and such

substantial delay would be contrary to

the public interest.

For these reasons, we find good cause

to waive notice-and-comment

procedures and to issue this final rule.

VII. Collection of Information

Requirements

Under the Paperwork Reduction Act

of 1995, agencies are required to provide

a 60-day notice in the Federal Register

and solicit public comment before a

collection of information requirement is

submitted to the Office of Management

and Budget (OMB) for review and

approval. In order to fairly evaluate

whether an information collection

should be approved by OMB, section

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

Reduction Act of 1995 (PRA) requires

that we solicit comment on the

following issues:

• Whether the information collection

is necessary and useful to carry out the

proper functions of the agency;

• The accuracy of the agency’s

estimate of the information collection

burden;

• The quality, utility, and clarity of

the information to be collected; and

• Recommendations to minimize the

information collection burden on the

affected public, including automated

collection techniques.

In compliance with section

3506(c)(2)(A) of the PRA, we are

submitting to the OMB the following

requirements for emergency review. We

are requesting an emergency review

because the collection of this

information is needed before the

expiration of the normal time limits

under OMB’s regulations at 5 CFR Part

1320, to ensure compliance with section

4312(b) and 4724(b) of BBA ’97, which

requires Medicare and Medicaidparticipating HHAs to secure a surety

bond, effective as of January 1, 1998, in

order to continue participation in the

Medicare and Medicaid programs. We

cannot reasonably comply with normal

clearance procedures because public

harm is likely to result if the agency

cannot enforce the surety bond

requirements of the BBA ’97 in order to

protect the Federal government

(especially the Medicare Trust Funds)

from losses due to uncollectible debts

incurred by HHAs.

Written comments and

recommendations will be accepted from

the public if received by the individuals

designated below within 10 workings

days from the date of this publication.

HCFA is requesting OMB review and

approval of this collection within 11

working days of this publication, with a

180-day approval period. During this

180-day period, we will publish a

separate Federal Register notice

announcing the initiation of an

extensive 60-day agency review and

public comment period on these

requirements. We will submit the

requirements for OMB review and an

extension of this emergency approval.

The information collection

requirements contained in the rule

published in the Federal Register on

January 5, 1998 have been approved by

OMB under approval number 0938–

0713, with an expiration date of May 31,

1998. Under the terms of OMB approval,

HCFA is required to submit this revised

final rule for emergency PRA clearance.

As such, we are requesting an

emergency review of the information

collections contained in this final rule

and re-approval of the information

collection requirements currently

approved under OMB approval number

0938–0713.

Type of Information Request: Revision

of a currently approved collection.

Title of Information Collection: Surety

Bond Requirements for Home Health

Agencies (HHA) and Supporting

Regulations in 42 CFR §§ 441.16,

489.66, and 489.67.

Form Number: HCFA–R–213.

OMB Approval Number: 0938–0713.

Use: In summary, these information

collection requirements ensure that

HHAs furnish the required surety bond

and continue to demonstrate that they

meet the applicable requirements set

forth in 42 CFR Parts 441 and 489, in

order to continue participation in the

Medicare and Medicaid programs.

Frequency: Other; As needed.

Affected Public: Business or other forprofit, Not-for-profit institutions.

Number of Respondents: 8,062.

Total Annual Responses: 7,001.

Total Annual Hours Requested:

18,071.

In addition to HCFA’s continued

solicitation of comments on the

currently approved information

collection requirements we are

particularly interested in obtaining

comment on each of the modifications

to the currently approved information

collections requirements, as referenced

in this regulation and summarized

below.

Section 441.16(h)(3)(i) requires that if

a Surety wants to avoid future liability

with respect to a particular bond, the

Surety must furnish the Medicaid

agency with notice of any action by the

HHA or the Surety to terminate or limit

the scope or term of the bond and that

such notice must be furnished not later

than 10 days after the date of notice of

such action by the HHA, or not later

than 60 days before the effective date of

the action by the Surety.

The burden associated with this

requirement is the time required for a

Surety to provide a State Medicaid

agency with a notice of an action by the

HHA or the Surety to terminate or limit

the scope or term of the bond. HCFA

met with surety bond industry

representatives to discuss the time and

effort associated with furnishing a

notice to terminate or limit the scope or

term of a bond. It is estimated that less

than 1 percent (80 entities) of all 8,062

participating HHAs will terminate or

limit the scope or term of a bond. It is

also estimated that it will take a surety

company 3 hours to generate and

furnish a notice of such action for a total

burden of 240 hours.

Section 441.16(i)(1)(ii) requires that,

for subsequent terms of a bond, by a

date as the Medicaid agency specifies,

the HHA must submit to the Medicaid

agency a surety bond or, if the HHA has

furnished a continuous bond and the

required amount of the bond has

changed, a rider, that is effective for an

annual period specified by the Medicaid

agency.

Previously, all HHAs were required to

submit, on an annual basis, a copy of an

annual surety bond. However, HHAs

now have the option to submit a

continuous surety bond. If an HHA

submits a continuous surety bond it

must thereafter submit a rider to the
29654 Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations

Medicaid agency when the amount of

the continuous surety bond changes.

Therefore, the burden associated with

this modified requirement is the time

required to submit either an annual

bond or, if necessary, a rider with a

continuous bond. Since we anticipate

that virtually all HHAs will obtain a

continuous surety bond, but only

approximately 1,100 HHAs will require

a bond in a different amount each year,

we estimate it will take 1 hour each for

1,100 HHAs to submit a rider on an

annual basis.

Section 489.66 (c)(1) provides that the

Surety’s liability on the bond is not

extinguished unless, in the event the

HHA or the Surety takes any action to

terminate or limit the scope or term of

the bond, the Surety furnishes us with

notice of such action not later than 10

days after receiving notice of such

action by the HHA, or not later than 60

days before the effective date of such

action by the Surety.

The burden associated with this

requirement is the time required for a

Surety to provide Medicare with a

notice of an action by the HHA or the

Surety to terminate or limit the scope or

term of the bond. It is estimated that less

than 1 percent (80 entities) of all 8,062

participating HHAs will terminate or

limit the scope or term of a bond. It is

also estimated that it will take a surety

company 3 hours to generate and

furnish a notice of such action for a total

burden of 240 hours.

Section 489.66(e) has been modified

to explicitly require that the bond

provide the Surety’s name, street

address or post office box number, city,

state, and zip code to which the HCFA

notice provided for in paragraph (a) of

this section is to be sent. Since this

requirement was inherent to the

previous surety bond submission

requirement, there is no additional

burden associated with this

requirement.

Section 489.67(a)(2) now requires that

not later than 30 days before the

beginning of the HHA’s fiscal year, a

surety bond or, if necessary, a rider,

effective for a term concurrent with the

HHAs fiscal year, be submitted to

HCFA.

Previously, all HHAs were required to

submit, on an annual basis, a copy of an

annual surety bond. However, HHAs

now have the option to submit a

continuous surety bond. If an HHA

submits a continuous surety bond, it

must thereafter submit a rider to HCFA

when the amount of the continuous

surety bond changes.

Therefore, the burden associated with

this modified requirement is the time

required to submit either an annual

bond or, if necessary, a rider reflecting

a change to a continuous bond. Since,

we anticipate that virtually all HHAs

will obtain a continuous surety bond,

but only approximately 1,100 HHAs

will require a bond in a different

amount each year, we estimate it will

take 1 hour each for 1,100 HHAs to

submit a rider on an annual basis.

We have submitted a copy of this final

rule and the revised PRA submission to

OMB for its review of the information

collection requirements. These revised

requirements are not effective until they

have been approved by OMB. A notice

will be published in the Federal

Register when approval is obtained.

To obtain copies of the supporting

statement and any related forms for the

proposed paperwork collections

referenced above, access HCFA’s Web

Site address at http://www.hcfa.gov/

regs/prdact95.htm, or E-mail your

request, including your address, phone

number, OMB number, and HCFA

document identifier, to

Paperwork@hcfa.gov, or call the Reports

Clearance Office on (410) 786–1326.

Interested persons are invited to send

comments regarding the burden or any

other aspect of these collections of

information requirements. However, as

noted above, comments on these

information collection and

recordkeeping requirements must be

mailed and/or faxed to the designees

referenced below, within 10 working

days of this publication:

Health Care Financing Administration,

Office of Information Services,

Information Technology Investment

Management Group, Division of

HCFA Enterprise Standards, Room

C2–26–17, 7500 Security Boulevard,

Baltimore, MD 21244–1850 ATTN:

John Burke HCFA–1152–1–F Fax

number: (410) 786–1415 and,

Office of Information and Regulatory

Affairs, Office of Management and

Budget Room 10235, New Executive

Office Building Washington, D.C.

20503 Attn.: Allison Herron Eydt,

HCFA Desk Officer Fax number: (202)

395–6974 or (202) 395–5167.

List of Subjects

42 CFR Part 441

Family planning, Grant programshealth, Infants and children, Medicaid,

Penalties, Reporting and record keeping

requirements.

42 CFR Part 489

Health facilities, Medicare, Reporting

and record keeping requirements.

42 CFR Chapter IV is amended as set

forth below:

PART 441—SERVICES:

REQUIREMENTS AND LIMITS

APPLICABLE TO SPECIFIC SERVICES

A. Part 441 is amended as follows:

1. The authority citation for part 441

continues to read as follows:

Authority: Sec. 1102 of the Social Security

Act (42 U.S.C. 1302).

2. Section 441.16 is amended by

adding paragraph (g)(7), republishing

the introductory text of paragraph (h),

revising paragraph (h)(2), republishing

the introductory text of paragraph (h)(3),

revising paragraph (h)(3)(i), revising the

title of paragraph (i), paragraphs (i)(1)(i)

and (ii), redesignating paragraphs (i)(2)

through (i)(5) as (i)(3) through (i)(6),

respectively and adding a new

paragraph (i)(2), revising paragraph (l),

and adding a new paragraph (m), to read

as follows:

§ 441.16 Home health agency

requirements for surety bonds; Prohibition

on FFP.

(g) Amount of the bond.

* * * * *

(7) Expiration of the 15 percent

provision. For an annual surety bond, or

for a rider on a continuous surety bond,

that is required to be submitted on or

after June 1, 2005, notwithstanding any

reference in this section to 15 percent as

a basis for determining the amount of

the bond, the amount of the bond or

rider, as applicable, must be $50,000 or

such amount as the Medicaid agency

specifies in accordance with paragraph

(g)(6) of this section, whichever amount

is greater.

(h) Additional requirements of the

surety bond. The surety bond that an

HHA obtains under this section must

meet the following additional

requirements:

* * * * *

(2) The bond must provide that the

Surety is liable for uncollected

overpayments, as defined in paragraph

(a), provided such uncollected

overpayments are determined during

the term of the bond and regardless of

when the overpayments took place.

Further, the bond must provide that the

Surety remains liable if the HHA fails to

furnish a subsequent annual bond that

meets the requirements of this subpart

or fails to furnish a rider for a year for

which a rider is required to be

submitted, or if the HHA’s provider

agreement terminates and that the

Surety’s liability shall be based on the

last bond or rider in effect for the HHA,

which shall then remain in effect for an

additional 2-year period.

(3) The bond must provide that,

except as provided in paragraph (h)(3)(i)
Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations 29655

of this section, the Surety’s liability to

the Medicaid agency is not extinguished

by any of the following:

(i) Any action by the HHA or the

Surety to terminate or limit the scope or

term of the bond. The Surety’s liability

may be extinguished, however, when—

(A) The Surety furnishes the Medicaid

agency with notice of such action not

later than 10 days after receiving notice

from the HHA of action by the HHA to

terminate or limit the scope of the bond,

or not later than 60 days before the

effective date of such action by the

Surety; or

(B) The HHA furnishes the Medicaid

agency with a new bond that meets the

requirements of both this section and

the Medicaid agency.

* * * * *

(i) Submission date, term, and type of

bond.

(1) Each participating HHA that is not

exempted by paragraph (d) of this

section must submit to the Medicaid

agency a surety bond for a term as

follows:

(i) Initial submission date and term.

By a date specified by the State

Medicaid agency up to September 29,

1998. The initial bond is for a term

beginning January 1, 1998. If an annual

bond is submitted for the initial term, it

must be effective for an annual period

specified by the State Medicaid agency.

(ii) Subsequent submission date and

term. By a date the Medicaid agency

specifies, effective for an annual period

specified by the Medicaid agency a

surety bond or rider as described in

subparagraph (e).

(2) Type of bond. The type of bond

required to be submitted by an HHA,

under this section, may be either—

(i) An annual bond (that is, a bond

that specifies an effective annual period

that corresponds to an annual period

specified by the Medicaid agency); or

(ii) A continuous bond (that is, a bond

that remains in full force and effect from

term to term unless it is terminated or

canceled as provided for in the bond or

as otherwise provided by law) that is

updated by the Surety for a particular

period, via the issuance of a ‘‘rider,’’

when the bond amount changes. For the

purposes of this section, ‘‘Rider’’ means

a notice issued by a Surety that a change

to a bond has occurred or will occur. If

the HHA has submitted a continuous

bond and there is no increase or

decrease in the bond amount, no action

is necessary by the HHA to submit a

rider as long as the continuous bond

remains in full force and effect.

* * * * *

(l) Surety’s standing to appeal

Medicaid determinations. The Medicaid

agency must establish procedures for

granting appeal rights to Sureties.

(m) Effect of conditions of payment. If

a Surety has paid the Medicaid agency

an amount on the basis of liability

incurred under a bond obtained by an

HHA under this section, and the

Medicaid agency subsequently collects

from the HHA, in whole or in part, on

such overpayment that was the basis for

the Surety’s liability, the Medicaid

agency must reimburse the Surety such

amount as the Medicaid agency

collected from the HHA, up to the

amount paid by the Surety to the

Medicaid agency, provided the Surety

has no other liability under the bond.

PART 489—PROVIDER AGREEMENTS

AND SUPPLIER APPROVAL

B. Part 489 is amended as follows:

1. The authority citation for part 489

continues to read as follows:

Authority: Secs. 1102 and 1871 of the

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

1395hh).

2. In section 489.60, the definition of

‘‘Unpaid civil money penalty or

assessment, the words ‘‘90 days after the

HHA’’ are removed, and the words

‘‘after the HHA or Surety’’ are added in

their place. Section 489.60 is further

amended by adding the definition of the

term ‘‘Rider’’, in alphabetical order, to

read as follows:

§ 489.60 Definitions.

Rider means a notice issued by a

Surety that a change in the bond has

occurred or will occur.

* * * * *

§ 489.62 [Amended]

3. In § 489.62 introductory text, the

word ‘‘section’’ is removed, and the

word ‘‘subpart’’ is added in its place.

4. In § 489.65, paragraph (g) is added

to read as follows:

§ 489.65 Amount of the bond.

* * * * *

(g) Expiration of the 15 percent

provision. For an annual surety bond, or

for a rider on a continuous surety bond,

that is required to be submitted on or

after June 1, 2005, notwithstanding any

reference in this subpart to 15 percent

as a basis for determining the amount of

the bond, the amount of the bond or

rider, as applicable, must be $50,000 or

such amount as HCFA specifies in

accordance with paragraph (f) of this

section, whichever amount is greater.

5. In § 489.66, paragraph (b) is

revised, paragraph (c) introductory text

is republished, paragraph (c)(1) is

revised, and new paragraph (e) is added,

to read as follows:

§ 489.66 Additional requirements of the

surety bond.

* * * * *

(b) The bond must provide the

following:

(1) The Surety is liable for unpaid

claims, unpaid civil money penalties,

and unpaid assessments that are

discovered when the surety bond is in

effect, regardless of when the payment,

overpayment, or other event giving rise

to the claim, civil money penalty, or

assessment occurred, provided HCFA

makes a written demand for payment

from the Surety during, or within 90

days after, the term of the bond.

(2) If the HHA fails to furnish a bond

meeting the requirements of this subpart

F for the year following expiration of the

term of an annual bond, or if the HHA

fails to submit a rider when a rider is

required to be submitted under this

subpart, or if the HHA’s provider

agreement is terminated, the last bond

or rider, as applicable, submitted by the

HHA to HCFA, which bond or

applicable rider meets the requirements

of this subpart, remains effective and

the Surety remains liable for unpaid

claims, civil money penalties, and

assessments that—

(i) HCFA determines or imposes on or

asserts against the HHA based on

overpayments or other events that took

place during or prior to the term of the

last bond or rider; and

(ii) Were determined or imposed

during the 2 years following the date the

HHA failed to submit a bond or required

rider or the date the HHA’s provider

agreement is terminated, whichever is

later.

(c) The bond must provide that,

except as provided in paragraph (c)(1) of

this section, the Surety’s liability to

HCFA under the bond is not

extinguished by any action of the HHA,

the Surety, or HCFA, including but not

necessarily limited to any of the

following actions:

(1) Action by the HHA or the Surety

to terminate or limit the scope or term

of the bond. The Surety’s liability may

be extinguished, however, when—

(i) The Surety furnishes HCFA with

notice of such action not later than 10

days after receiving notice from the

HHA of action by the HHA to terminate

or limit the scope of the bond, or not

later than 60 days before the effective

date of such action by the Surety; or

(ii) The HHA furnishes HCFA with a

new bond that meets the requirements

of this subpart.

* * * * *

(e) The bond must provide the

Surety’s name, street address or post

office box number, city, state, and
29656 Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 /Rules and Regulations

zipcode to which the HCFA notice

provided for in paragraph (a) of this

section is to be sent.

6. In § 489.67, paragraphs (b) through

(e) are redesignated as paragraphs (c)

through (f), respectively, paragraph (a) is

revised, and a new paragraph (b) is

added to read as follows:

§ 489.67 Submission date and term of the

bond.

(a) Each participating HHA that does

not meet the criteria for waiver under

§ 489.62 must submit to HCFA, in such

a form as HCFA may specify, a surety

bond as follows:

(1) Initial submission date and term:

By July 31, 1998. The term of the initial

bond is for a term beginning January 1,

1998. If an annual bond is submitted for

the initial term, it must be effective

through the end of the HHA’s current

fiscal year.

(2) Subsequent submission date and

term. Not later than 30 days before the

beginning of the HHA’s fiscal year, a

surety bond, or, if necessary, a rider,

effective for a term concurrent with the

HHA’s fiscal year.

(b) Type of bond. The type of bond

required to be submitted by an HHA

under this subpart may be either—

(1) An annual bond (that is, a bond

that specifies an effective annual period

corresponding to the HHA’s fiscal year);

or

(2) A continuous bond (that is, a bond

that remains in full force and effect from

term to term unless it is terminated or

canceled as provided for in the bond or

as otherwise provided by law) that is

updated by the Surety, via the issuance

of a rider, for a particular fiscal year for

which the bond amount has changed or

will change.

* * * * *

7. Section 489.71 is revised to read as

follows:

§ 489.71 Surety’s standing to appeal

Medicare determinations.

A Surety has standing to appeal any

matter that the HHA could appeal,

provided the Surety satisfies all

jurisdictional and procedural

requirements that would otherwise have

applied to the HHA, and provided the

HHA is not, itself, actively pursuing its

appeal rights under this chapter, and

provided further that, with respect to

unpaid claims, the Surety has paid

HCFA all amounts owed to HCFA by the

HHA on such unpaid claims, up to the

amount of the bond.

8. Section 489.73 is redesignated as

§ 489.74 in subpart F, and a new

§ 489.73 is added to read as follows:

§ 489.73 Effect of conditions of payment.

If a Surety has paid an amount to

HCFA on the basis of liability incurred

under a bond obtained by an HHA

under this subpart F, and HCFA

subsequently collects from the HHA, in

whole or in part, on such unpaid claim,

civil money penalty, or assessment that

was the basis for the Surety’s liability,

HCFA reimburses the Surety such

amount as HCFA collected from the

HHA, up to the amount paid by the

Surety to HCFA, provided the Surety

has no other liability to HCFA under the

bond.

(Authority: Secs. 1102 and 1871 of the Social

Security Act (42 U.S.C. 1302 and 1395hh)).

(Catalog of Federal Domestic Assistance

Program No. 93.774, Medicare—

Supplementary Medical Insurance Program,

and Program No. 93.778, Medical Assistance

Program)

Dated: April 8, 1998.

Nancy-Ann Min DeParle,

Administrator, Health Care Financing

Administration.

Dated: May 8, 1998.

Donna E. Shalala,

Secretary.

[FR Doc. 98–14309 Filed 5–26–98; 4:58 pm]

BILLING CODE 4120–01–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Parts 0, 1, and 80

[CI Docket No. 95–55, FCC 98–75]

Inspection of Radio Installations on

Large Cargo and Small Passenger

Ships

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: The Commission has adopted

a Report and Order (R & O) which

requires that large cargo vessels and

small passenger ships arrange for an

inspection of such ships by an FCClicensed technician. The Commission

adopted this R & O to incorporate

changes to the Communications Act

related to the inspection of ships and to

improve the Commission’s ship

inspection process. These rules should

increase the availability of competent,

private sector inspectors to conduct

inspections of cargo vessels and small

passenger vessels required to be

inspected by the Commission without

adversely affecting safety and, thus,

provide greater convenience for the

maritime industry.

EFFECTIVE DATE: July 1, 1998.

FOR FURTHER INFORMATION CONTACT:

George R. Dillon of the Compliance and

Information Bureau at (202) 418–1100.

SUPPLEMENTARY INFORMATION: This is a

summary of the Commission’s Report

and Order, CI Docket No. 95–55, FCC

98–75, adopted April 20, 1998, and

released, May 1, 1998. The full text of

this Report and Order is available for

inspection and copying during normal

business hours in the FCC Reference

Center (Room 239) 1919 M Street, NW,

Washington, DC. The complete text may

be purchased from the Commission’s

copy contractor, International

Transcription Services, 1231 20th St.

NW, Washington, DC 20036, telephone

(202) 857–3800.

Summary of Report and Order

The Commission proposed rules in a

Notice of Proposed Rule Making

(Notice), CI Docket 95–55, 61 FR 21151,

May 9, 1996, that changed the way in

which the Commission inspected large

cargo vessels and small passenger ships.

This Report and Order (R&O)

incorporates changes to the

Communications Act related to the

inspection of ships, improves the

Commission’s ship inspection process,

reduces administrative burdens on the

public and the Commission, and

provides continued Commission

oversight to ensure that vessel safety is

not adversely affected. Currently, the

Commission inspects the radio

installations of approximately 1,110

vessels each year subject to the

Communications Act or the Safety

Convention. The amended rules will

replace the requirement that the

Commission inspect such ships with a

requirement that ship owners or

operators arrange for an inspection by

an FCC-licensed technician.

2. Comments. We received 19

comments and 2 reply comments in

response to the Notice. Most

commenters supported the

Commission’s efforts to streamline the

inspections of ships and provide faster

service to the public. Two commenters

opposed the proposal citing concerns

about safety as reason not to permit

privatization. The Coast Guard

supported the Commission’s efforts to

streamline government regulation and

reduce the regulatory burden on the

maritime industry. The United States

Coast Guard (Coast Guard) states that it

fully supports the Commission’s efforts

to streamline government regulation and

reduce the regulatory burden on the

maritime industry wherever these

efforts are consistent with the

maintenance of a high level of safety.

The Coast Guard notes that it has