Federal Register / Vol. 71, No. 82 / Friday, April 28, 2006 / Rules and Regulations 25085 

10. Executive Order 12988 

As required by section 3 of Executive 

Order 12988 (61 FR 4729, February 7, 

1996), in issuing this rule, EPA has 

taken the necessary steps to eliminate 

drafting errors and ambiguity, minimize 

potential litigation, and provide a clear 

legal standard for affected conduct. 

11. Executive Order 12630: Evaluation 

of Risk and Avoidance of Unanticipated 

Takings 

EPA has complied with Executive 

Order 12630 (53 FR 8859, March 15, 

1988) by examining the takings 

implications of the rule in accordance 

with the Attorney General’s 

Supplemental Guidelines for the 

Evaluation of Risk and Avoidance of 

Unanticipated Takings issued under the 

Executive Order. 

12. Congressional Review Act 

EPA will submit a report containing 

this rule and other information required 

by the Congressional Review Act (5 

U.S.C. 801 et seq.) to the U.S. Senate, 

the U.S. House of Representatives, and 

the Comptroller General of the United 

States prior to publication in the 

Federal Register. A major rule cannot 

take effect until 60 days after it is 

published in the Federal Register. This 

action is not a ‘‘major rule’’ as defined 

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

List of Subjects in 40 CFR Part 271 

Environmental protection, 

Administrative practice and procedure, 

Confidential business information, 

Hazardous waste, Hazardous waste 

transportation, Indian lands, 

Intergovernmental relations, Penalties, 

Reporting and recordkeeping 

requirements. 

Authority: This action is issued under the 

authority of sections 2002(a), 3006 and 

7004(b) of the Solid Waste Disposal Act as 

amended 42 U.S.C. 6912(a), 6926, 6974(b). 

Dated: April 17, 2006. 

James B. Gulliford, 

Regional Administrator, Region 7. 

[FR Doc. 06–4025 Filed 4–27–06; 8:45 am] 

BILLING CODE 6560–50–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 433 

[CMS–2231–IFC] 

RIN 0938–AO31 

Medicaid Program; State Allotments 

for Payment of Medicare Part B 

Premiums for Qualifying Individuals: 

Federal Fiscal Year 2006 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Interim final rule with comment 

period. 

SUMMARY: This interim final rule with 

comment period sets forth the 

methodology and process used to 

compute and issue each State’s 

allotment for fiscal year (FY) 2006 and 

FY 2007 that is available to pay 

Medicare Part B premiums for 

qualifying individuals. It also provides 

the preliminary FY 2006 allotments 

determined under this methodology. 

DATES: Effective date: These regulations 

are effective October 1, 2005 for 

allotments for payment of Medicare Part 

B premiums from the allocations for FY 

2006 and FY 2007. 

Comment date: To be assured 

consideration, comments must be 

received at one of the addresses 

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

June 27, 2006. 

ADDRESSES: In commenting, please refer 

to file code CMS–2231–IFC. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (no duplicates, please): 

1. Electronically. You may submit 

electronic comments on specific issues 

in this regulation to http:// 

www.cms.hhs.gov/regulations/ 

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–2231–

IFC, P.O. Box 8011, Baltimore, MD 

21244–8011. 

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–2231–IFC, 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 FURTHER INFORMATION CONTACT: 

Richard Strauss, (410) 786–2019. 

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this rule to assist us in fully 

considering issues and developing 

policies. You can assist us by 

referencing the file code CMS–2231–IFC 

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/ 

regulations/eRulemaking. Click on the 

link ‘‘Electronic Comments on CMS 

Regulations’’ on that Web site to view 

public comments. 

Comments received timely will be 

available for public inspection as they 

are received, generally beginning 


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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. 

SUPPLEMENTARY INFORMATION: 

I. Background 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘BACKGROUND’’ at the 

beginning of your comments.] 

A. Allotments Prior to FY 2005 

Section 1902 of the Social Security 

Act (the Act) sets forth the requirements 

for State plans for medical assistance. 

Before August 5, 1997, section 

1902(a)(10)(E) of the Act specified that 

the State Medicaid plan must provide 

for some or all types of Medicare cost 

sharing for three eligibility groups of 

low-income Medicare beneficiaries. 

These three groups included qualified 

Medicare beneficiaries (QMBs), 

specified low-income Medicare 

beneficiaries (SLMBs), and qualified 

disabled and working individuals 

(QDWIs). 

A QMB is an individual entitled to 

Medicare Part A with income at or 

below the Federal poverty line (FPL) 

and resources below $4,000 for an 

individual and $6,000 for a couple. A 

SLMB is an individual who meets the 

QMB criteria, except that his or her 

income is above 100 percent of the FPL 

and does not exceed 120 percent of the 

FPL. A QDWI is a disabled individual 

who is entitled to enroll in Medicare 

Part A under section 1818A of the Act, 

whose income does not exceed 200 

percent of the FPL for a family of the 

size involved, whose resources do not 

exceed twice the amount allowed under 

the Supplementary Security Income 

(SSI) program, and who is not otherwise 

eligible for Medicaid. The definition of 

Medicare cost-sharing at section 

1905(p)(3) of the Act includes payment 

for premiums for Medicare Part B. 

Section 4732 of the Balanced Budget 

Act of 1997 (BBA), enacted on August 

5, 1997, amended section 1902(a)(10)(E) 

of the Act to require States to provide 

for Medicaid payment of the Medicare 

Part B premiums for two additional 

eligibility groups of low-income 

Medicare beneficiaries, referred to as 

qualifying individuals (QIs). 

Specifically, a new section 

1902(a)(10)(E)(iv)(I) of the Act was 

added, under which States must pay the 

full amount of the Medicare Part B 

premium for qualifying individuals who 

would be QMBs but for the fact that 

their income level is at least 120 percent 

of the FPL but less than 135 percent of 

the FPL for a family of the size involved. 

These individuals cannot otherwise be 

eligible for medical assistance under the 

approved State Medicaid plan. The 

second group of QIs added under 

section 1902(a)(10)(E)(iv)(II) of the Act 

includes Medicare beneficiaries who 

would be QMBs except that their 

income is at least 135 percent but less 

than 175 percent of the FPL for a family 

of the size involved, who are not 

otherwise eligible for Medicaid under 

the approved State plan. These QIs were 

eligible for only a portion of Medicare 

cost sharing consisting only of a 

percentage of the increase in the 

Medicare Part B premium attributable to 

the shift of Medicare home health 

coverage from Part A to Part B (as 

provided in section 4611 of the BBA). 

Coverage of the second group of QIs 

ended on December 31, 2002 and the 

2003 Welfare Reform Bill (Pub. L. 108–

89) eliminated reference to the QI–2 

benefit. In each of the years 2002 and 

2003, Continuing Resolutions extended 

the coverage of the first group of QIs 

(whose income is at least 120 percent 

but less than 135 percent of the Federal 

poverty line) through the next fiscal 

year, but maintained the annual funding 

at the FY 2002 level. 

In 2004, ‘‘A Bill to Amend Title XIX 

of the Social Security Act to Extend 

Medicare Cost-Sharing for the Medicare 

Part B Premium for Qualifying 

Individuals’’ (Pub. L. 108–448) 

continued coverage of this group 

through September 30, 2005, again with 

no change in funding. 

The BBA also added a new section 

1933 to the Act to provide for Medicaid 

payment of Medicare Part B premiums 

for QIs. (The previous section 1933 was 

re-designated as section 1934.) 

Section 1933(a) of the Act specifies 

that a State plan must provide, through 

a State plan amendment, for medical 

assistance to pay for the cost of 

Medicare cost-sharing on behalf of QIs 

who are selected to receive assistance. 

Section 1933(b) of the Act sets forth the 

rules that States must follow in selecting 

QIs and providing payment for 

Medicare Part B premiums. Specifically, 

the State must permit all qualifying 

individuals to apply for assistance and 

must select individuals on a first-come, 

first-served basis (that is, the State must 

select QIs in the order in which they 

apply). Under section 1933(b)(2)(B) of 

the Act, in selecting persons who will 

receive assistance in years after 1998, 

States must give preference to those 

individuals who received assistance as 

QIs, QMBs, SLMBs, or QDWIs in the last 

month of the previous year and who 

continue to be (or become) QIs. 

Under section 1933(b)(4) of the Act, 

persons selected to receive assistance in 

a calendar year are entitled to receive 

assistance for the remainder of the year, 

but not beyond, as long as they continue 

to qualify. The fact that an individual is 

selected to receive assistance at any 

time during the year does not entitle the 

individual to continued assistance for 

any succeeding year. Because the State’s 

allotment is limited by law, section 

1933(b)(3) of the Act provides that the 

State must limit the number of QIs so 

that the amount of assistance provided 

during the year is approximately equal 

to the allotment for that year. 

Section 1933(c) of the Act limits the 

total amount of Federal funds available 

for payment of Part B premiums for QIs 

each fiscal year and specifies the 

formula that is to be used to determine 

an allotment for each State from this 

total amount. For States that executed a 

State plan amendment in accordance 

with section 1933(a) of the Act, a total 

of $1.5 billion was allocated over 5 

years as follows: $200 million in FY 

1998; $250 million in FY 1999; $300 

million in FY 2000; $350 million in FY 

2001; and $400 million in FY 2002. In 

1999, the Department published a notice 

(64 FR 14931, March 29, 1999) to advise 

States of the methodology used to 

calculate allotments and each State’s 

specific allotment for that year. 

Following that notice, there was no 

change in methodology and States have 

been notified annually of their 

allotments. We did not include the 

methodology for computing the 

allocation in our regulations. Although 

the BBA originally provided coverage of 

QIs only through FY 2002, through 

several continuing resolutions, coverage 

has been continued through the current 

fiscal year, but without any increase in 

total allocation over the FY 2002 level. 

The Federal medical assistance 

percentage for Medicaid payment of 

Medicare Part B premiums for 

qualifying individuals is 100 percent for 

expenditures up to the amount of the 

State’s allotment. No Federal funds are 

available for expenditures in excess of 

the State allotment amount. The Federal 

matching rate for administrative 

expenses associated with the payment 

of Medicare Part B premiums for QIs 

remains at the 50 percent matching 

level. Federal financial participation in 

the administrative expenses is not 

counted against the State’s allotment. 

The amount available for each fiscal 

year is to be allocated among States 

according to the formula set forth in 

section 1933(c)(2) of the Act. The 

formula provides for an amount to each 


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State that is to be based on each State’s 

share of the Secretary’s estimate of the 

ratio of: (a) An amount equal to the total 

number of individuals in the State who 

meet all but the income requirements 

for QMBs, whose incomes are at least 

120 percent but less than 135 percent of 

the Federal poverty line, and who are 

not otherwise eligible for Medicaid, to 

(b) the sum of all those individuals for 

all eligible States. 

B. Allotments for FY 2005 

In FY 2005, some States exhausted 

their FY 2005 allotments before the end 

of the fiscal year, which caused them to 

deny benefits to eligible persons under 

section 1933(b)(3) of the Act, while 

other States projected a surplus in their 

allotments. We asked those States that 

exhausted or expected to exhaust their 

FY 2005 allotments before the end of the 

fiscal year to project the amount of 

funds that would be required to grant 

eligibility to all eligible persons in their 

State, that is, their need. We also asked 

those States that did not expect to use 

their full allotments in FY 2005 to 

project the difference between the 

amount they expected to spend and 

their allotment, that is, their surplus. 

After all States reported these figures, it 

was evident that the total surplus 

exceeded the total need. In spite of there 

being adequate overall funding for the 

QI benefit, some eligible individuals 

would have been denied benefits due to 

the allocation methodology initially 

used to determine the FY 2005 

allotments. 

We believed that it was the clear 

intent of the statute to provide benefits 

to eligible persons up to the full amount 

of funds made available for the program. 

We attributed the difference between 

the surplus in available QI allotments 

for some States and the need in other 

States in FY 2005 as due to the 

imprecision in the data that we used to 

provide States with their initial 

allocations under section 1933 of the 

Act. Therefore, on August 26, 2005 we 

published an interim final rule in the 

Federal Register (70 FR 50214) under 

which we compensated for this 

imprecision in order to enable States to 

enroll those QIs whom they would have 

been able to enroll had the data been 

more precise. 

The interim final rule amended 42 

CFR 433.10(c) to specify the formula 

and the data to be used to determine 

States’ allotments and to revise, under 

certain circumstances, individual State 

allotments for a Federal fiscal year for 

the Medicaid payment of Medicare Part 

B premiums for qualifying individuals 

identified under section 

1902(a)(10)(E)(iv) of the Act. 

The FY 2005 allotments were 

determined by applying the U.S. Census 

Bureau data to the formula set forth in 

section 1933(c)(2)of the Act. However, 

the statute requires that the allocation of 

the fiscal year allotment be based upon 

a ratio of the amount of ‘‘total number 

of individuals described in section 

1902(a)(10)(E)(iv) in the State’’ to the 

sum of these amounts for all States. 

Because this formula requires an 

estimate of an unknown number, that is, 

the number of individuals who could be 

QIs (rather than the number of 

individuals who were QIs in a previous 

period), our use of the Census Bureau 

data in the formula represented a rough 

proxy to attain the statutory number. 

Actual expenditure data, however, 

revealed that the Census Bureau data 

yielded an inappropriate distribution of 

the total appropriated fund as evidenced 

by the fact that several States projected 

significant shortfalls in their allotments, 

while many other States projected a 

significant surplus by the end of the 

fiscal year 2005. Census Bureau data 

were not accurate for the purpose of 

projecting States’ needs because the data 

could not take into consideration all 

variables that contribute to QI eligibility 

and enrollment, such as resource levels 

and the application process itself. 

While section 1933 of the Act requires 

the Secretary to estimate the allocation 

of the allotments among the States, it 

did not preclude a subsequent 

readjustment of that allocation, when it 

became clear that the data used for that 

estimate did not effectuate the statutory 

objective. The interim final rule 

published in the Federal Register on 

August 26, 2005 permitted in this 

specific circumstance a redistribution of 

surplus funds, as it was demonstrated 

that the States’ projections and 

estimates resulted in an inequitable 

initial allocation for FY 2005, such that 

some States were granted an allocation 

in excess of their total projected need, 

while the allocation granted to other 

States proved insufficient to meet their 

projected QI expenditures. 

In the August 26, 2005 interim final 

rule, we codified the methodology we 

have been using to approximate the 

statutory formula for determining State 

allotments. However, since certain 

States projected a deficit in their 

allotment before the end of fiscal year 

2005, the rule permitted fiscal year 2005 

funds to be reallocated from the surplus 

States to the need States. The regulation 

specified the methodology for 

computing the annual allotments, and 

for reallocating funds in this 

circumstance. The formula used to 

reallocate funds was intended to 

minimize the impact on surplus States, 

to equitably distribute the total needed 

amount among those surplus States, and 

to meet the immediate needs for those 

States projecting deficits. At the time of 

the publication of the interim final rule 

on August 26, 2005, the authorization 

for the QI benefit expired at the end of 

calendar year 2005, and no additional 

funds were appropriated for the QI 

benefit beyond September 30, 2005; 

therefore, the regulation specified a 

sunset at the end of calendar year 2005. 

Finally, we received only one 

comment with respect to the August 26, 

2005 interim final rule. The comment 

indicated that the Census Bureau data 

were inadequate for the purpose of 

appropriately allocating the funds 

available for the QI program; in that 

regard, they commended CMS for 

modifying the formula to more precisely 

address States’ needs under this 

program. The comment also asked for 

clarification on the source of the data 

used for modifying the allocation 

formula. Our response to that comment 

is that the data used are obtained 

directly from the States and, 

specifically, are the States’ estimates of 

the expenditures that would be incurred 

under this program. The August 26, 

2005 interim final rule indicated that. 

As indicated below, the methodology/ 

process for allocation of the QI 

allotments for FY 2006 and 2007 takes 

the same approach and uses the same 

data that were used to reallocate fiscal 

year 2005 funds. 

C. Allotments for FY 2006 and FY 2007 

On October 20, 2005 the ‘‘QI, TMA, 

and Abstinence Programs Extension and 

Hurricane Katrina Unemployment Relief 

Act of 2005’’ was enacted by Congress 

(Pub. L. 109–91). In particular, section 

101 of Pub. L. 109–91 extended the QI 

program through September 30, 2007 

with no change in funding; that is, 

under this legislation $400 million per 

fiscal year is appropriated for each of FY 

2006 and FY 2007. Under section 

101(c), the provisions of section 101 of 

Pub. L. 109–91 are effective as of 

September 30, 2005. 

We continue to believe that the clear 

intent of the statute is to provide 

benefits to eligible persons up to the full 

amount of funds made available for the 

program in each fiscal year. We 

recognize that because of the 

imprecision in data for computing the 

States’ QI allotments for a fiscal year, 

there is the potential for a surplus to 

occur with respect to available QI 

allotments for some States and a need to 

occur in other States for FY 2006 and 

FY 2007. We are publishing this interim 

final rule for the determination of 

States’ FY 2006 and FY 2007 QI 


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25088 Federal Register / Vol. 71, No. 82 / Friday, April 28, 2006 / Rules and Regulations 

allotments under which we attempt to 

compensate for the imprecision in data 

in order to enable States to enroll those 

QIs whom they would have been able to 

enroll if the data were more precise. 

II. Provisions of the Interim Final Rule 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘PROVISIONS’’ at the 

beginning of your comments.] 

This interim final rule amends 42 CFR 

433.10(c) to specify the formula, data, 

and process to be used for determining 

and issuing States’ QI allotments. This 

methodology and process provides for 

an adjustment in the amounts of the QI 

allotments preliminarily determined for 

the Medicaid payment of Medicare Part 

B premiums for qualifying individuals 

identified under section 

1902(a)(10)(E)(iv) of the Act. 

Under the methodology and process 

described in this interim final rule, 

‘‘initial’’ FY 2006 and FY 2007 

allotments will be derived by applying 

U.S. Census Bureau data to the formula 

set forth in section 1933(c)(2) of the Act. 

The statute requires that the allocation 

of the fiscal year allotment be based 

upon a ratio of the amount of ‘‘total 

number of individuals described in 

section 1902(a)(10)(E)(iv) in the State’’

to the sum of these amounts for all 

States. Because this formula requires an 

estimate of an unknown number, that is, 

the number of individuals who could be 

QIs (rather than the number of 

individuals who were QIs in a previous 

period), our use of the Census Bureau 

data in the formula represents a proxy 

to attain the statutory number. Use of 

the Census Bureau data may yield an 

inappropriate distribution of the total 

appropriated funds resulting in 

significant shortfalls in the projected 

allotments for some States and 

significant surpluses by the end of the 

fiscal year for other States. Census 

Bureau data may not be sufficiently 

accurate for the purpose of projecting 

States’ needs because the data cannot 

take into consideration all variables that 

contribute to QI eligibility and 

enrollment, such as resource levels and 

the application process itself. While 

section 1933 of the Act requires the 

Secretary to estimate the allocation of 

the allotments among the States, it does 

not preclude a subsequent readjustment 

of that allocation, when it becomes clear 

that the data used for that estimate did 

not effectuate the statutory objective. 

This interim final rule sets out a 

methodology and process for 

determining States’ QI allotments for FY 

2006 and FY 2007 that permits a 

redistribution of surplus funds to States 

whose allotments, determined based 

only on the formula in section 1933 of 

the Act, would be insufficient to meet 

their projected QI expenditures for the 

fiscal year. In this interim final rule, we 

are codifying the methodology and 

process we will use to approximate the 

statutory formula for determining State 

allotments and making adjustments in 

such allotment, as appropriate. 

In this interim final rule, we set forth 

a two step/two phase methodology/ 

process for determining States’ QI 

allotments for FY 2006 and FY 2007. 

Under the first step of phase one, an 

‘‘initial’’ allocation would be 

determined for each State under the 

formula specified in section 1933 of the 

Act and based only on the data obtained 

from the Census Bureau (the 3-year 

average of the number of Medicare 

beneficiaries in the State who are not 

enrolled in the Medicaid program but 

whose incomes are at least 120 percent 

of the Federal poverty level and less 

than 135 percent of the Federal poverty 

level). However, we would also obtain 

States’ projected QI expenditures for the 

fiscal year. We would then compare the 

initial allocations for the fiscal year to 

the States’ projected QI expenditures for 

the fiscal year to determine those States 

with a projected need (initial allocation 

is less than the projected expenditures) 

or a surplus (initial allocation is greater 

than the projected expenditures) for the 

fiscal year. Under the second step, we 

would adjust the States’ initial 

allocations by considering the States’

projected QI expenditures for the fiscal 

year. This would be done by reducing 

the States’ surpluses by the amount of 

the total States’ need. 

In this interim final rule, we will 

apply this methodology/process in two 

phases in each fiscal year. That is, at the 

beginning of each fiscal year, we would 

determine the initial allocations based 

on the Census Bureau data, obtain 

States’ projected QI expenditures for the 

fiscal year, and make any adjustments 

based on the projected surpluses/needs 

for the fiscal year. The amount of the 

States’ QI allotments determined under 

phase one at the beginning of the fiscal 

year would be considered the 

‘‘preliminary’’ QI allotments for the 

fiscal year. Then, under phase two of 

the process sometime during the fourth 

quarter of the fiscal year we would 

obtain States’ updated projected QI 

expenditures for the fiscal year. We 

would then establish the ‘‘final’’ QI 

allotments for the fiscal year based on 

these updated projections. 

The final QI allotments would be 

determined by comparing the initial QI 

allotments for the fiscal year (again 

which are calculated based on the 

Census Bureau data) to the States’

updated projections of QI expenditures 

for the fiscal year; this would 

established the States with a ‘‘final’’

projected need (initial allocation is less 

than the updated projected 

expenditures) or a surplus (initial 

allocation is greater than the updated 

projected expenditures) for the fiscal 

year. Using the updated projected QI 

expenditures, we would adjust the 

States’ initial allocations by reducing 

the surplus States’ initial allotments 

proportionately to meet the need States’

deficits. This is the same methodology 

used for determining the FY 2005 

allotments as published in the interim 

final rule published on August 26, 2005 

in the Federal Register; the only change 

is that in computing the FY 2006 and 

FY 2007 allotments, we will determine 

the preliminary allotments at the 

beginning of the fiscal year using States’

preliminary projected QI expenditures, 

and then we will determine the final QI 

allotments later in the fiscal year using 

States’ updated projected QI 

expenditures. 

The formula used to reallocate the 

available funds to need States is 

intended to minimize the impact on 

surplus States, to equitably distribute 

the total needed amount among those 

surplus States, and to meet the needs for 

those States projecting deficits. Since 

under Pub. L. 109–91 the authorization 

for the QI benefit expires at the end of 

calendar year 2007, and currently no 

funds have been appropriated for the QI 

benefit beyond September 30, 2007, this 

regulation will sunset at the end of 

calendar year 2007. Should the Congress 

authorize an extension of the QI benefit 

and appropriate additional funds for 

allocation among the States, we will 

amend the sunset date in this regulation 

to take into account any extension. 

The resulting initial allotments for FY 

2006 are shown by State in the table 

below. In this table each column 

contains data defined as follows: 

Chart—Preliminary FY 2006 Qualified 

Individuals Allotments 

Column A—State. Column A shows 

the name of each State. 

Columns B through D show the 

determination of the States’ Initial FY 

2006 QI Allotments, based only on 

Census Bureau data. 

Column B—Number of Individuals. 

Column B contains the estimated 

average number of Medicare 

beneficiaries for the years 2003 through 

2005 who are not covered by Medicaid 

whose family income is between 120 

and 135 percent of the poverty level for 

each State, in thousands, as obtained 

from the Census Bureau’s Annual Social 

and Economic Supplement to the 


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Current Population Survey through 

March of 2005. 

Column C—Percentage of Total. 

Column C provides the percentage of 

total number of individuals for each 

State, determined as the Number of 

Individuals for the State in Column B 

divided by the sum of the Number of 

Individuals for all States in Column B. 

Column D—Initial QI Allotment. 

Column D contains each State’s Initial 

FY 2006 QI allotment, calculated as the 

State’s Percentage of Total in Column C 

multiplied by $400,000,000, the total 

amount available for FY 2006 for all 

States. 

Columns E through J show the 

determination of the States’ Preliminary 

FY 2006 QI Allotments. 

Column E—FY 2006 Estimated QI 

Expenditures. Column E contains the 

States’ most recent estimates of their 

total QI expenditures for FY 2006. 

Column F—Need (Difference). 

Column F contains the additional 

amount of QI allotment needed for those 

States whose estimated expenditures in 

Column E exceed their Initial FY 2006 

QI allotments in Column D; for such 

States, Column E shows the amount in 

Column E minus the amount in Column 

D. For other States, Column F shows 

‘‘NA.’’

Column G—Reduction Pool for NonNeed States. Column G contains the 

amount of the pool of surplus FY 2006 

QI allotments for those States that 

project they will not need all of their FY 

2006 QI allotments (referred to as nonneed States). For States whose estimates 

of QI expenditures for FY 2006 in 

Column E are equal to or less than their 

Initial FY 2006 QI allotments in Column 

D, Column G shows the amount in 

Column D minus the amount in Column 

E. For the States with a need, Column 

G shows ‘‘Need.’’ The pool of excess QI 

allotments is equal to the sum of the 

amounts in Column G. 

Column H—Percent of Total NonNeed States. Column H shows the 

percentage of the total excess FY 2006 

allotments for each Non-Need State, 

determined as the amount for each NonNeed State in Column G divided by the 

sum of the amounts for all States in 

Column G. 

Column I—Reduction for Non-Need 

States. Column I shows the amount of 

reduction to Non-Need States’ Initial FY 

2006 QI allotments in Column D in 

order to provide for the total need 

shown in Column F. The amount in 

Column I is determined as the 

percentage in Column H for Non-Need 

States multiplied by the sum of the need 

for all States from Column F. 

Column J—Preliminary FY 2006 QI 

Allotment. Column J contains the 

Preliminary FY 2006 QI allotment for 

each State. For States that need 

additional amounts based on their FY 

2006 Estimated QI Expenditures in 

Column E, Column J is equal to the 

Initial FY 2006 QI Allotment in Column 

D plus the amount of Need Column F. 

For Non-Need States, Column J is equal 

to the Initial FY 2006 QI Allotment in 

Column D minus the amount in Column 

I. 

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BILLING CODE 4120–01–C 


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Federal Register / Vol. 71, No. 82 / Friday, April 28, 2006 / Rules and Regulations 25091 

III. Collection of Information 

Requirements 

This document does not impose 

information collection and 

recordkeeping requirements. 

Consequently, it need not be reviewed 

by the Office of Management and 

Budget under the authority of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 35). 

IV. Waiver of Notice With Comment 

and 30-Day Delay in Effective Date 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘WAIVER OF ADVANCE 

PUBLIC COMMENT’’ at the beginning 

of your comments.] 

We ordinarily publish an advance 

notice in the Federal Register for 

substantive rules to provide a period for 

public comment. However, we may 

waive that procedure if we find good 

cause that notice and comment are 

impractical, unnecessary, or contrary to 

the public interest. In addition, we also 

normally provide a delay of 30 days in 

the effective date. However, if 

adherence to this procedure would be 

impractical, unnecessary, or contrary to 

public interest, we may waive the delay 

in the effective date. 

We are publishing this rule as an 

interim final rule because of the need to 

notify individual States of the 

limitations on Federal funds for their 

Medicaid expenditures for payment of 

Medicare Part B premiums for 

qualifying individuals. Some States 

have experienced deficits in their 

current allotments that have caused 

them to deny benefits to eligible 

applicants, while other States project a 

surplus in their allotments. This rule 

permits redistribution of funds and will 

allow all eligible applicants to receive 

QI benefits during this calendar year. 

Because access to Medicare Part B 

coverage for QIs, who without this 

coverage would have difficulty paying 

for needed health care, is critically 

important, we believe that it is in the 

public interest to waive the usual notice 

and comment procedure which we 

undertake before making a rule final. 

Also, for the reasons discussed above, 

we find that good cause exists to 

dispense with the normal requirement 

that a regulation cannot become 

effective any earlier than 30 days after 

its publication. States that will have 

access to additional funds to enroll QIs 

need to know that these funds are 

available as soon as possible, so they 

can begin enrolling QIs. While we 

believe those States that will have 

diminished amounts available for this 

fiscal year will have sufficient funds for 

enrolling all potential QIs in their 

States, they also need to know as soon 

as possible that a certain amount of their 

unused allocation will no longer be 

available to them for this fiscal year. 

We are publishing this interim final 

rule with a 60-day period for public 

comment. However, if we decide that 

changes are necessary as a result of our 

consideration of timely comments, we 

will issue a final rule and respond to the 

comments in that rule. 

V. Regulatory Impact Statement 

We have examined the impact of this 

rule as required by Executive Order 

12866 (September 1993, Regulatory 

Planning and Review), the Regulatory 

Flexibility Act (RFA) (September 19, 

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

the Social Security Act, the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), and Executive Order 13132. 

Executive Order 12866 directs 

agencies to assess all costs and benefits 

of available regulatory alternatives and, 

if regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, distributive impacts, 

and equity). A regulatory impact 

analysis (RIA) must be prepared for 

major rules with economically 

significant effects ($100 million or more 

in any 1 year). This rule does not reach 

the economic threshold and thus is not 

considered a major rule. 

The RFA requires agencies to analyze 

options for regulatory relief for small 

businesses. For purposes of the RFA, 

small entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. Most 

hospitals and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of $6 million to $29 million in any 1 

year. Individuals and States are not 

included in the definition of a small 

entity. 

This interim final rule with comment 

period codifies our procedures for 

implementing provisions of the 

Balanced Budget Act of 1997 to allocate, 

among the States, Federal funds to 

provide Medicaid payment for Medicare 

Part B premiums for low-income 

Medicare beneficiaries. The total 

amount of Federal funds available 

during a Federal fiscal year and the 

formula for determining individual 

State allotments are specified in the law. 

We have applied the statutory formula 

for the State allotments. Because the 

data specified in the law were not 

initially available, we used comparable 

data from the U.S. Census Bureau on the 

number of possible qualifying 

individuals in the States. This rule also 

permits, in a specific circumstance, 

reallocation of funds to enable 

enrollment of all eligible individuals to 

the extent of the available funding. 

We believe that the statutory 

provisions implemented in this interim 

final rule with comment period will 

have a positive effect on States and 

individuals. Federal funding at the 100 

percent matching rate is available for 

Medicare cost-sharing for Medicare Part 

B premium payments for qualifying 

individuals and, with the reallocation of 

the State allotments, a greater number of 

low-income Medicare beneficiaries will 

be eligible to have their Medicare Part 

B premiums paid under Medicaid. In no 

States will the changes in allotments 

result in fewer individuals receiving the 

QI benefit. The FY 2006 and FY 2007 

costs for this provision have been 

included in the FY 2007 President’s 

Budget. 

Section 1102(b) of the Social Security 

Act requires us to prepare a regulatory 

impact analysis for any rule that may 

have a significant impact on the 

operations of a substantial number of 

small rural hospitals. The analysis must 

conform to the provisions of section 604 

of the RFA. For purposes of section 

1102(b) of the Act, we define a small 

rural hospital as a hospital that is 

located outside a Core-Based Statistical 

Area and has fewer than 100 beds. 

We are not preparing analyses for 

either the RFA or section 1102(b) of the 

Act because we have determined and 

certify that this interim final rule with 

comment period will not have a 

significant economic impact on a 

substantial number of small entities or 

a significant impact on the operations of 

a substantial number of small rural 

hospitals. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule that may result in expenditure in 

any 1 year by State, local, or tribal 

governments, in the aggregate, or by the 

private sector, of $110 million. This rule 

will have no consequential effect on the 

governments mentioned or on the 

private sector. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has federalism implications. 

Since this regulation does not impose 

any costs on State or local governments, 


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25092 Federal Register / Vol. 71, No. 82 / Friday, April 28, 2006 / Rules and Regulations 

the requirements of E.O. 13132 are not 

applicable. 

In accordance with the provisions of 

Executive Order 12866, this interim 

final rule with comment period was 

reviewed by the Office of Management 

and Budget. 

List of Subjects in 42 CFR Part 433 

Administrative practice and 

procedure, Child support, Claims, Grant 

programs health, Medicaid, Reporting 

and recordkeeping requirements. 

■ For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

Chapter IV as set forth below: 

PART 433—STATE FISCAL 

ADMINISTRATION 

■ 1. The authority citation for part 433 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

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

■ 2. Section 433.10 is amended by 

revising paragraph (c)(5) to read as 

follows: 

§ 433.10 Rates of FFP for program 

services. 

* * * * * 

(c) * * * 

(5)(i) Under section 1933(d) of the 

Act, the Federal share of State 

expenditures for Medicare Part B 

premiums described in section 

1905(p)(3)(A)(ii) of the Act on behalf of 

Qualifying Individuals described in 

section 1902(a)(10)(E)(iv) of the Act, is 

100 percent, to the extent that the 

assistance does not exceed the State’s 

allocation under paragraph (c)(5)(ii) of 

this section. To the extent that the 

assistance exceeds that allocation, the 

Federal share is 0 percent. 

(ii) Under section 1933(c)(2) of the 

Act and subject to paragraph (c)(5)(iii) of 

this section, the allocation to each State 

is equal to the total allocation specified 

in section 1933(c)(1) of the Act 

multiplied by the Secretary’s estimate of 

the ratio of the total number of 

individuals described in section 

1902(a)(10)(E)(iv) of the Act in the State 

to the total number of individuals 

described in section 1902(a)(10)(E)(iv) of 

the Act for all eligible States. In 

estimating that ratio, the Secretary will 

use data from the U.S. Census Bureau. 

(iii) If, based on projected 

expenditures for a fiscal year, the 

Secretary determines that the 

expenditures described in paragraph 

(c)(5)(i) of this section for one or more 

States are projected to exceed the 

allocation made to the State, the 

Secretary may adjust each State’s fiscal 

year 2005, 2006, or 2007 allocation, as 

follows: 

(A) The Secretary will compare each 

State’s projected total expenditures for 

the expenses described in paragraph 

(c)(5)(i) of this section to the State’s 

initial allocation determined under 

paragraph (c)(5)(ii) of this section, to 

determine the extent of each State’s 

projected surplus or deficit. 

(B) The surplus of each State with a 

projected surplus, as determined in 

accordance with paragraph (c)(5)(iii)(A) 

of this section will be added together to 

arrive at the Total Projected Surplus. 

(C) The deficit of each State with a 

projected deficit, as determined in 

accordance with paragraph (c)(5)(iii)(A) 

of this section will be added together to 

arrive at the Total Projected Deficit. 

(D) Each State with a projected deficit 

will receive an additional allocation 

equal to the amount of its projected 

deficit. The amount to be reallocated 

from each State with a projected surplus 

will be equal to A x B, where A equals 

the Total Projected Deficit and B equals 

the amount of the State’s projected 

surplus as a percentage of the Total 

Projected Surplus. 

(iv) CMS will notify States of any 

changes in allotments resulting from 

any reallocations. 

(v) The provisions of this paragraph 

(c)(5) will be in effect through the end 

of calendar year 2007. 

Authority: Sections 1902(a)(10), 1933 of 

the Social Security Act (42 U.S.C. 1396a), 

and Pub. L. 105–33.) 

(Catalog of Federal Domestic Assistance 

Program No. 93.778, Medical Assistance 

Program) 

Dated: January 20, 2006. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: February 14, 2006. 

Michael O. Leavitt, 

Secretary. 

[FR Doc. 06–3981 Filed 4–27–06; 8:45 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

45 CFR Part 146 

[CMS–4094–F4] 

RIN 0938–AN80 

Amendment to the Interim Final 

Regulation for Mental Health Parity 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), DHHS. 

ACTION: Amendment to interim final 

regulation. 

SUMMARY: This document amends the 

interim final regulation that implements 

the Mental Health Parity Act of 1996 

(MHPA) to conform the sunset date of 

the regulation to the sunset date of the 

statute under legislation passed on 

December 30, 2005. 

DATES: Effective date: The amendment 

to the regulation is effective May 30, 

2006. 

Applicability dates: Under the 

amendment, the requirements of the 

MHPA interim final regulation apply to 

group health plans and health insurance 

coverage offered in connection with a 

group health plan during the period 

commencing May 30, 2006 through 

December 31, 2006. 

FOR FURTHER INFORMATION CONTACT: 

Dave Mlawsky, Centers for Medicare & 

Medicaid Services (CMS), Department 

of Health and Human Services, at 1–

877–267–2323, ext. 61565. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Mental Health Parity Act of 1996 

(MHPA) was enacted on September 26, 

1996 (Pub. L. 104–204). MHPA 

amended the Public Health Service Act 

(PHS Act) and the Employee Retirement 

Income Security Act of 1974 (ERISA) to 

provide for parity in the application of 

annual and lifetime dollar limits on 

mental health benefits and the 

application of dollar limits on medical/ 

surgical benefits. Provisions 

implementing MHPA were later added 

to the Internal Revenue Code of 1986 

(Code) under the Taxpayer Relief Act of 

1997 (Pub. L. 105–34). 

The provisions of MHPA are set forth 

in Title XXVII of the PHS Act, Part 7 of 

Subtitle B of Title I of ERISA, and 

Chapter 100 of Subtitle K of the Code. 

The Secretaries of Health and Human 

Services, Labor, and the Treasury share 

jurisdiction over the MHPA provisions. 

These provisions are substantially 

similar, except for jurisdictional 

differences. See for example, the 

amendment to the interim final rule 

published July 22, 2005 (70 FR 42276). 

II. Overview of MHPA 

The MHPA provisions are set forth in 

section 2705 of the PHS Act, section 712 

of ERISA, and section 9812 of the Code. 

MHPA applies to a large group health 

plan (or health insurance coverage 

offered in connection with a large group 

health plan) that provides both medical/ 

surgical benefits and mental health 

benefits. MHPA’s original text included 

a sunset provision specifying that 

MHPA’s provisions would not apply to 


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