Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Rules and Regulations 2873 

seq., nor does it require any special 

considerations under Executive Order 

12898, entitled Federal Actions to 

Address Environmental Justice in 

Minority Populations and Low-Income 

Populations (59 FR 7629, February 16, 

1994). 

Since tolerances and exemptions that 

are established on the basis of a petition 

under section 408(d) of FFDCA, such as 

the tolerance in this final rule, do not 

require the issuance of a proposed rule, 

the requirements of the Regulatory 

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

seq.) do not apply. 

This final rule directly regulates 

growers, food processors, food handlers, 

and food retailers, not States or tribes, 

nor does this action alter the 

relationships or distribution of power 

and responsibilities established by 

Congress in the preemption provisions 

of section 408(n)(4) of FFDCA. As such, 

the Agency has determined that this 

action will not have a substantial direct 

effect on States or tribal governments, 

on the relationship between the national 

government and the States or tribal 

governments, or on the distribution of 

power and responsibilities among the 

various levels of government or between 

the Federal Government and Indian 

tribes. Thus, the Agency has determined 

that Executive Order 13132, entitled 

Federalism (64 FR 43255, August 10, 

1999) and Executive Order 13175, 

entitled Consultation and Coordination 

with Indian Tribal Governments (65 FR 

67249, November 9, 2000) do not apply 

to this final rule. In addition, this final 

rule does not impose any enforceable 

duty or contain any unfunded mandate 

as described under Title II of the 

Unfunded Mandates Reform Act of 1995 

(UMRA) (Public Law 104–4). 

This action does not involve any 

technical standards that would require 

Agency consideration of voluntary 

consensus standards pursuant to section 

12(d) of the National Technology 

Transfer and Advancement Act of 1995 

(NTTAA), Public Law 104–113, section 

12(d) (15 U.S.C. 272 note). 

VII. Congressional Review Act 

The Congressional Review Act, 5 

U.S.C. 801 et seq., generally provides 

that before a rule may take effect, the 

agency promulgating the rule must 

submit a rule report to each House of 

the Congress and to the Comptroller 

General of the United States. EPA will 

submit 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 United States prior to 

publication of this final rule in the 

Federal Register. This final rule is not 

a ‘‘major rule’’ as defined by 5 U.S.C. 

804(2). 

List of Subjects in 40 CFR Part 180 

Environmental protection, 

Administrative practice and procedure, 

Agricultural commodities, Pesticides 

and pests, Reporting and recordkeeping 

requirements. 

Dated: January 6, 2009. 

Lois Rossi, 

Director, Registration Division, Office of 

Pesticide Programs. 

■ Therefore, 40 CFR chapter I is 

amended as follows: 

PART 180—[AMENDED] 

■ 1. The authority citation for part 180 

continues to read as follows: 

Authority: 21 U.S.C. 321(q), 346a and 371. 

■ 2. Section § 180.505 is amended by 

alphabetically adding the following 

commodities to the tables in paragraphs 

(a)(1) and (2) to read as follows: 

§ 180.505 Emamectin; tolerances for 

residues. 

(a) * * * (1) * * * 

Commodity Parts per 

million 

Almond, hulls ............................ 0.20 

*****

Nut, tree, group 14 ................... 0.02 

Pistachio ................................... 0.02 

*****

* * * * * 

(2) * * * 

Commodity Parts per 

million 

*****

Hog, fat ..................................... 0.003 

Hog, liver .................................. 0.020 

Hog, meat ................................. 0.002 

Hog, meat byproducts (except 

liver) ...................................... 0.005 

*****

* * * * * 

[FR Doc. E9–625 Filed 1–15–09; 8:45 am] 

BILLING CODE 6560–50–S 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 414 

[CMS–1561–IFC] 

RIN 0938–AP59 

Medicare Program; Changes to the 

Competitive Acquisition of Certain 

Durable Medical Equipment, 

Prosthetics, Orthotics and Supplies 

(DMEPOS) by Certain Provisions of the 

Medicare Improvements for Patients 

and Providers Act of 2008 (MIPPA) 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Interim final rule with comment 

period. 

SUMMARY: This interim final rule with 

comment period implements certain 

provisions of section 154 of the 

Medicare Improvements for Patients and 

Providers Act of 2008 (MIPPA) related 

to the durable medical equipment, 

prosthetics, orthotics, and supplies 

(DMEPOS) Competitive Acquisition 

Program. Specifically, this rule: 

Implements certain MIPPA provisions 

that delay implementation of Round 1 of 

the program; requires CMS to conduct a 

second Round 1 competition (the 

‘‘Round 1 rebid’’) in 2009; and mandates 

certain changes for both the Round 1 

rebid and subsequent rounds of the 

program, including a process for 

providing feedback to suppliers 

regarding missing financial 

documentation and requiring 

contractors to disclose to CMS 

information regarding subcontracting 

relationships. 

DATES: Effective date: These regulations 

are effective on February 17, 2009. 

Comment date: To be assured 

consideration, comments must be 

received at one of the addresses 

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

March 17, 2009. 

ADDRESSES: In commenting, please refer 

to file code CMS–1561–IFC. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on specific issues 

in this regulation to http:// 

www.regulations.gov. Follow the 

instructions for ‘‘Comment or 

Submission’’ and enter the filecode to 

find the document accepting comments. 


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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–1561– 

IFC, P.O. Box 8020, Baltimore, MD 

21244–8020. 

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–1561–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 either of the 

following addresses: 

a. Room 445–G, Hubert H. Humphrey 

Building, 200 Independence Avenue, 

SW., Washington, DC 20201; 

(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.) 

b. 7500 Security Boulevard, 

Baltimore, MD 21244–1850. 

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. 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

Submission of comments on 

paperwork requirements. You may 

submit comments on this document’s 

paperwork requirements by following 

the instructions at the end of the 

‘‘Collection of Information 

Requirements’’ section in this 

document. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Sabrina Teferi, (410) 786–6884. Barry 

Brook, (410) 786–5889. 

SUPPLEMENTARY INFORMATION: 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://regulations.gov. 

Follow the search instructions on that 

Web site to view public comments. 

Comments received timely will be 

also available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

I. Background 

A. Legislative and Regulatory History of 

the DMEPOS Competitive Bidding 

Program 

Medicare pays for most DMEPOS 

furnished after January 1, 1989 pursuant 

to fee schedule methodologies set forth 

in section 1834 of the Social Security 

Act (the Act), as added by section 4062 

of the Omnibus Budget Reconciliation 

Act of 1987 (OBRA ’87) (Pub. L. 100– 

203). Specifically, sections 1834(a)(1)(A) 

and (B), and 1834 (h)(1)(A) of the Act 

provide that Medicare payment for these 

items is equal to 80 percent of the lesser 

of the actual charge for the item or the 

fee schedule amount for the item. We 

implemented this payment methodology 

at 42 CFR Part 414, Subpart D of our 

regulations. Sections 1834(a)(2) through 

(a)(5) and 1834(a)(7) of the Act, and 

implementing regulations at § 414.200 

through § 414.232 (with the exception of 

§ 414.228), set forth separate payment 

categories of durable medical equipment 

(DME) and describe how the fee 

schedule for each of the following 

categories is established: 

• Inexpensive or other routinely 

purchased items (section 1834(a)(2) of 

the Act and § 414.220 of the 

regulations); 

• Items requiring frequent and 

substantial servicing (sections 1834(a)(3) 

of the Act and § 414.222 of the 

regulations); 

• Customized items (section 

1834(a)(4) of the Act and § 414.224 of 

the regulations); 

• Oxygen and oxygen equipment 

(section 1834(a)(5) of the Act and 

§ 414.226 of the regulations); 

• Other items of DME (section 

1834(a)(7) of the Act and § 414.229 of 

the regulations). 

For a detailed discussion of payment 

for DMEPOS under fee schedules, see 

the final rule published in the April 10, 

2007 Federal Register (72 FR 17992). 

Section 1847 of the Act, as amended 

by section 302(b)(1) of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA) (Pub. 

L. 108–173), requires the Secretary to 

establish and implement a Medicare 

DMEPOS Competitive Bidding Program 

(‘‘Competitive Bidding Program’’ or 

‘‘program’’). Under the Competitive 

Bidding Program, Medicare sets 

payment amounts for selected DMEPOS 

items and services furnished to 

beneficiaries in competitive bidding 

areas (CBAs) based on bids submitted by 

qualified suppliers and accepted by 

Medicare. For competitively bid items, 

these new payment amounts, referred to 

as ‘‘single payment amounts,’’ replace 

the fee schedule payment methodology. 

Section 1847(b)(5) of the Act provides 

that Medicare payment for these 

competitively bid items and services is 

made on an assignment-related basis 

equal to 80 percent of the applicable 

single payment amount, less any unmet 

Part B deductible described in section 

1833(b) of the Act. Section 

1847(b)(2)(A)(iii) of the Act prohibits 

the awarding of contracts to any entity 

unless the total amounts to be paid to 

contractors in a CBA are expected to be 

less than the total amounts that would 

otherwise be paid under the fee 

schedule methodologies set forth in 

section 1834(a) of the Act. This 

requirement guarantees savings to both 

the Medicare program and beneficiaries 

under the program. The fee schedule 

methodologies will continue to set 

payment amounts for noncompetitively 

bid DMEPOS items and services. The 

program also includes provisions to 

ensure beneficiary access to quality 

DMEPOS items and services: section 

1847 of the Act limits participation in 

the program to suppliers who have met 

applicable quality and financial 

standards and requires the Secretary to 

maintain beneficiary access to multiple 

suppliers. 

When first enacted by the Congress, 

section 1847(a)(1)(B) of the Act required 

the Secretary to phase in the 

Competitive Bidding Program in a 

manner so that the competition under 

the program occurred in 10 of the largest 

metropolitan statistical areas (MSAs) in 

2007. The program was to be expanded 

into 70 additional MSAs in 2009, and 

then into additional areas after 2009. 

In the May 1, 2006 Federal Register 

(72 FR 25654), we issued a proposed 


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Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Rules and Regulations 2875 

rule that would implement the 

Competitive Bidding Program for certain 

DMEPOS items and services and 

solicited public comment on our 

proposals. In the April 10, 2007 Federal 

Register (72 FR 17992), we issued a 

final rule addressing the comments on 

the proposed rule and establishing the 

regulatory framework for the Medicare 

DMEPOS Competitive Bidding Program 

in accordance with section 1847 of the 

Act. 

Consistent with the requirements of 

section 1847 of the Act and the 

competitive bidding regulations, we 

began implementing the program by 

conducting the first round of 

competition in 10 of the largest MSAs 

in 2007. We limited competition during 

this first round of the program to 

DMEPOS items and services included in 

10 selected product categories. The 

bidding window opened on May 15, 

2007 and was extended to allow bidders 

adequate time to prepare and submit 

their bids. We then evaluated each 

submission and awarded contracts 

consistent with the requirements of 

section 1847(b)(2) of the Act and 

§ 414.414. Following the bid evaluation 

process, we awarded over 329 contracts 

to qualified suppliers. 

We implemented the Competitive 

Bidding Program on July 1, 2008. 

Beginning on that date, Medicare 

coverage for competitively bid DMEPOS 

items and services furnished in the first 

10 competitive bidding areas (CBAs) 

was limited to items and services 

furnished by contract and grandfathered 

suppliers, and payment to these 

suppliers was based on the single 

payment amount, as determined under 

the competitive bidding regulations. 

This program was projected to result in 

a savings of approximately 26 percent 

annually to the Medicare program and 

Medicare beneficiaries. We calculated 

these projections by subtracting the 

lower single payment amount from the 

applicable fee schedule amount per 

CBA per item and then multiplying this 

amount by the weighted national 

utilization data. For further discussion 

of the Competitive Bidding Program and 

the bid evaluation process, see the final 

rule published in the April 10, 2007 

Federal Register (72 FR 17992). 

B. The MIPPA and the Medicare 

DMEPOS Competitive Bidding Program 

On July 15, 2008, the Medicare 

Improvements for Patients and 

Providers Act (MIPPA) was enacted. 

Section 154 of the MIPPA amended 

section 1847 of the Act to make certain 

limited changes to the Medicare 

DMEPOS Competitive Bidding Program. 

Section 154(a) of the MIPPA delays 

competition under the program and 

amends section 1847(a)(1)(D)(i) of the 

Act to terminate the competitive 

bidding contracts effective June 30, 2008 

and prohibit payment based on the 

contracts. This action effectively 

reinstates as payment for competitively 

bid items and services the Medicare fee 

schedule amounts, as set forth in section 

1834 of the Act and 42 CFR part 414, 

subpart D of our regulations. In light of 

the amendments, items that had been 

included in the first round of the 

Competitive Bidding Program could 

once again be furnished by any enrolled 

DMEPOS supplier in accordance with 

existing Medicare rules. Payments for 

these items would no longer be made 

pursuant to competitive bidding 

contracts at the single payment amount, 

but instead would be based on the 

applicable Medicare fee schedule 

(includes 9.5 percent reduction) 

amount(s) based on the date of service. 

Section 154(a) of the MIPPA requires 

the Secretary to conduct a second 

competition to select suppliers for 

Round 1 in 2009 (‘‘Round 1 rebid’’). The 

Round 1 rebid includes the ‘‘same items 

and services’’ and is to be conducted in 

the ‘‘same areas’’ as the 2007 Round 1 

competition, with certain limited 

exceptions. Specifically, the Round 1 

rebid must exclude negative pressure 

wound therapy (NPWT) items and 

services and exclude Puerto Rico. In 

addition, section 154(a) of the MIPPA 

permanently excludes group 3 complex 

rehabilitative wheelchairs from the 

Competitive Bidding Program by 

amending the definition of ‘‘items and 

services’’ in section 1847(a)(2) of the 

Act. Suppliers, including suppliers that 

previously were awarded a competitive 

bidding contract, will need to submit 

bids to be considered for a contract 

under the Round 1 rebid. 

Section 154(a) of the MIPPA also 

delays competition for Round 2 of the 

competitive bidding program from 2009 

to 2011 and subsequent competition 

under the program from 2009 until after 

2011. A competition for a national mail 

order competitive bidding program may 

occur after 2010. 

The MIPPA mandates certain changes 

to the bidding process, starting with the 

Round 1 rebid. Section 154(a) of the 

MIPPA adds a new paragraph (F) to 

section 1847(a)(1) of the Act, which sets 

forth a process for supplier feedback on 

missing financial documents. Pursuant 

to this requirement, we will notify 

suppliers who submit their bids within 

a specific time period if their bid 

submission is missing any of the 

required financial documents. We will 

allow suppliers to submit missing 

financial documents within 10 business 

days after this notice. 

Section 154(b) of the MIPPA amends 

section 1847(b)(3) of the Act to require 

contract suppliers to notify us of 

subcontracting relationships they have 

entered into for the purpose of 

furnishing items and services under the 

competitive bidding program. Contract 

suppliers must also inform CMS 

whether each such subcontractor meets 

the accreditation requirement set forth 

in section 1834(a)(20)(F)(i) of the Act, if 

applicable to such subcontractor. 

Section 154(d) of the MIPPA excludes 

from the competitive bidding program 

certain DME furnished by a hospital to 

the hospital’s patients during an 

admission or on the date of discharge. 

In addition to the changes outlined 

above that we are implementing through 

this interim final rule with comment 

period, section 154 of the MIPPA made 

other changes to the competitive 

bidding program which include: 

• Exclusions of certain areas in 

subsequent rounds that are not already 

selected under Rounds 1 and 2; 

• Extension of the Program Advisory 

and Oversight Committee; 

• Exemption for Off-the-Shelf 

Orthotics from Competitive Bidding 

when provided by Certain Provided; 

and 

• Evaluation of certain Healthcare 

Common Procedure Coding System 

(HCPCS) codes. 

These provisions are not addressed in 

this rule, but may be addressed through 

future rulemaking or subregulatory 

guidance, as appropriate. 

As the following are administrative 

requirements, they are not addressed in 

this rule and will be handled by the 

appropriate agencies: 

• A post-award audit by the Office of 

Inspector General; 

• Establishment of a Competitive 

Acquisition Ombudsman; 

• A Government Accountability 

Office report on the results of the 

competitive bidding program; 

As discussed below, we believe that 

the changes specifically mandated for 

the Round 1 rebid are largely selfimplementing. The MIPPA delayed the 

Competitive Bidding Program and 

requires certain changes in subsequent 

competitions under the program, but it 

did not alter the fundamental 

requirements contained in the 

competitive bidding program statute 

and regulations, or revise the 

methodologies used by us in calculating 

payment amounts and selecting 

suppliers under the program. We have 

therefore chosen to continue to apply 

the same methodologies to calculate 

payment and select suppliers, and, 


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2876 Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Rules and Regulations 

except as discussed below, the current 

competitive bidding regulations 

published on April 10, 2007 will 

continue to provide the framework 

under which we implement the 

program. 

We will implement other changes 

regarding subsequent rounds of 

competition through future rulemaking 

or subregulatory guidance, as 

appropriate. As noted in the regulatory 

impact analysis of this rule, the MIPPA 

mandated a nationwide 9.5 percent 

reduction in payment for all items and 

services that were competitively bid 

during the prior round of competition 

regardless of any exclusion such as 

group 3 complex rehabilitative 

wheelchairs. The 9.5 percent reduction 

in payment was completed through the 

standard process for covered item 

updates rather than through this rule. 

II. Provisions of the Interim Final Rule 

In this interim final rule, we are 

revising current provisions at 42 CFR 

Part 414, Subpart F, to incorporate 

certain self-implementing MIPPA 

provisions. To the extent this interim 

final rule with comment period does not 

specifically modify regulatory language, 

the current regulations, as set forth in 

the April 10, 2007 final rule, remain 

unchanged and will govern the Round 

1 rebid. 

The interim final rule addresses the 

following changes made by the MIPPA: 

General Changes to the DMEPOS 

Competitive Bidding Program 

• Temporary Delay of the Medicare 

DMEPOS Competitive Bidding Program 

• Supplier Feedback on Missing 

Covered Documents 

• Disclosure of Subcontractors and 

their Accreditation Status under the 

Competitive Bidding Program 

• Exemption from Competitive 

Bidding for Certain DMEPOS 

• Exclusion of Group 3 Complex 

Rehabilitative Wheelchairs 

Round 1 Changes of the Competitive 

Bidding Program 

• Rebidding of the ‘‘same areas’’ as 

the previous Round 1, unless otherwise 

specified. 

• Rebidding of the ‘‘same items and 

services’’ as the previous Round 1, 

unless otherwise specified. 

A. General Changes to the DMEPOS 

Competitive Bidding Program 

1. Temporary Delay of the Medicare 

DMEPOS Competitive Bidding Program 

Section 154(a) of the MIPPA amends 

section 1847(a)(1) of the Act to delay 

competition under Rounds 1 and 2 of 

the Competitive Bidding Program from 

2007 and 2009 to 2009 and 2011, 

respectively. It also delays competition 

for a national mail order program until 

after 2010 and competition in additional 

areas, other than mail order, until after 

2011. 

We are amending § 414.410(a)(1) and 

(2) to indicate that competition under 

Round 1 of the competitive bidding 

program will occur in 2009 and 

competition under Round 2 of the 

program will occur in 2011. In addition, 

we are revising § 414.410(a)(3) to 

indicate that competition in additional 

MSAs will occur after 2011 (or, in the 

case of national mail order for items and 

services, after 2010) . 

2. Supplier Feedback on Missing 

Covered Documents 

Section 1847(b)(2)(A) of the Act 

prohibits the Secretary from awarding a 

contract under the program to a supplier 

unless the supplier meets applicable 

financial standards specified by the 

Secretary, taking into account the needs 

of small providers. We have 

implemented this requirement at 

§ 414.414(d) of the competitive bidding 

regulations, which requires suppliers to 

submit, as part of their bids, financial 

documents specified in the request for 

bids (RFB). 

The RFB issued for the Round 1 rebid 

will require suppliers to submit the 

same categories of financial documents 

as we requested for the previous Round 

1 competition. In the previous round of 

competition, we required suppliers to 

submit financial documents from the 

most recent three years. As stated in 42 

CFR 414.414(d), the required financial 

documents will be specified in the RFB. 

Based on experience from the previous 

round of competition, we are modifying 

the required financial documents to 

lessen the burden on suppliers; instead 

of 3 years of documentation, we will 

require only 1 year. We believe that we 

can determine whether a supplier 

demonstrates financial soundness by 

reviewing one year of documentation. 

Section 154(a) of the MIPPA adds a 

new paragraph (F) to section 1847(a)(1) 

of the Act, which establishes a detailed 

process by which we must notify 

suppliers of missing ‘‘covered 

documents’’—defined by MIPPA as 

financial, tax or other documents 

required to be submitted by a bidder as 

part of an original bid submission in 

order to meet required financial 

standards—if such documents are 

submitted within a specified time 

period. The MIPPA details the specific 

steps of this process and provides a 

timeline for each stage of this covered 

document submission review. We are 

implementing this provision of the 

MIPPA consistent with its detailed 

requirements. 

Consistent with section 1847(a)(1)(F) 

of the Act, in the case of a bid in which 

one or more covered documents in 

connection with such a bid has been 

submitted not later than the covered 

document review date, we will notify 

suppliers of each covered document that 

is missing from the bidder’s submission 

as of the covered document review date. 

As set out in the Act the ‘‘covered 

document review date’’ is the later of— 

(1) the date that is 30 days before the 

final date specified by the Secretary for 

submission of bids; or (2) the date that 

is 30 days after the first date specified 

by the Secretary for submission of bids. 

For example, if a bid window opens on 

January 1st and closes on April 30th, the 

‘‘covered document review date’’ would 

be the later of: (1) March 31st (30 days 

before the final date specified by the 

Secretary); or (2) January 31st (30 days 

after the first date specified by the 

Secretary). Therefore, in this case, the 

‘‘covered document review date’’ will be 

March 31st. Suppliers that submit their 

financial documents after the covered 

document review date will not receive 

notice of any missing financial 

documents. 

Section 1847(a)(1)(F)(i) of the Act 

requires that we notify bidders of any 

missing covered documents within 45 

days after the covered document review 

date for the Round 1 rebid. In 

subsequent rounds of competition, we 

have 90 days after the covered 

document review date to provide such 

notice. For all rounds of competition, 

bidders that are notified of the missing 

covered document(s) have 10 business 

days after the date of notice to submit 

the missing covered document(s). If a 

supplier submits the missing covered 

document(s) within this time period, we 

may not reject the supplier’s bid on the 

basis that any covered document is 

missing or has not been submitted on a 

timely basis. 

Section 1847(a)(1)(F)(iii) of the Act 

places certain limitations on the covered 

document review process. First, the 

covered document review process 

applies only to the timely submission 

(prior to the covered document review 

date) of covered documents. Second, the 

process does not apply to any 

determination as to the accuracy or 

completeness of the covered documents 

submitted or whether such documents 

meet applicable financial requirements. 

Third, the process does not prevent us 

from rejecting a bid for reasons other 

than those not described in section 

1847(a)(1)(F)(i)(II) of the Act. Fourth, the 

covered document review process shall 

not be construed as permitting a bidder 


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to change bidding amounts or to make 

other changes in a bid submission. 

We are revising § 414.414(d) by 

adding paragraphs (2)(i) through (iii) to 

set forth the required covered document 

review process. These paragraphs 

identify the timeframes established by 

the MIPPA for— 

• Suppliers to submit covered 

documents in order to be eligible to 

receive notice of any missing covered 

documents; 

• For CMS to review the submitted 

covered documents and notify bidders 

of any missing covered documents; and 

• For suppliers to submit the missing 

covered documents. 

We are also adding a definition for 

‘‘covered document’’ and ‘‘covered 

document review date’’ to § 414.402. 

3. Disclosure of Subcontractors and 

Their Accreditation Status Under the 

Competitive Bidding Program 

Section 154(b)(2) of the MIPPA adds 

a new paragraph (C) to section 

1847(b)(3) of the Act. This new 

paragraph requires contract suppliers to 

disclose information on: (1) Each 

subcontracting arrangement the supplier 

has in furnishing items and services 

under the contract; and (2) whether each 

such subcontractor meets the 

accreditation requirement of section 

1834(a)(20)(F)(i) of the Act, if applicable 

to such subcontractor. The contract 

supplier must make this disclosure not 

later than 10 days after the date a 

supplier enters into a contract with 

CMS. If the contract supplier 

subsequently enters into a 

subcontracting relationship, the 

supplier must disclose this information 

to CMS no later than 10 days after 

entering into the subcontracting 

relationship. We will issue 

subregulatory guidance regarding the 

need to keep CMS current on all 

subcontracting relationships. 

Section 154(b) of the MIPPA added 

section 1834(a)(20)(F)(i) to the Act, 

which mandates that the Secretary 

require suppliers furnishing items and 

services under a competitive bidding 

program on or after October 1, 2009, 

directly or as a subcontractor for another 

entity, to submit evidence of 

accreditation by a CMS-designated 

accreditation organization. Both 

contract suppliers and their 

subcontractors that furnish items and 

services under the competitive bidding 

program must do so in accordance with 

the applicable supplier standards found 

in Part 424, subpart D and other Federal 

regulations. 

We are amending § 414.414(c), 

redesignating § 414.422(f) as 

§ 414.422(g) and adding a new 

§ 414.422(f) to set forth these 

requirements for disclosing 

subcontracting arrangements. We expect 

to further address subcontracting 

relationships and the method for 

disclosure of the subcontracting 

relationships in subregulatory guidance. 

4. Exemption From Competitive Bidding 

For Certain DMEPOS 

Section 414.404(b) currently exempts 

from competitive bidding certain DME 

items when furnished by a physician or 

treating practitioner to his or her own 

patients as part of his or her 

professional services. This exception is 

limited to crutches, canes, walkers, 

folding manual wheelchairs, blood 

glucose monitors, and infusion pumps 

that are DME. Section 154(d) of the 

MIPPA amended section 1847(a) of the 

Act to exclude from the competitive 

bidding program these same items when 

they are furnished by hospitals to the 

hospital’s own patients during an 

admission or on the date of discharge. 

We are interpreting this exclusion to 

include only DMEPOS paid for under 

Part B of the Medicare program because 

section 1847 does not apply to items 

that are paid for under Part A. As 

discussed in the April 10, 2007 final 

rule, in accordance with § 414.404(b)(3) 

payment for items furnished under the 

exceptions in § 414.404(b) will be made 

in accordance with § 414.408(a). 

We are amending § 414.402 to include 

a definition for hospitals. We have also 

amended § 414.404(b)(1) to incorporate 

the added exemption for hospitals that 

furnish certain types of competitively 

bid DME to their own patients during an 

admission or on the date of discharge 

from the competitive bidding program. 

In addition, we amended subparagraph 

(b)(1)(iii) to address the billing 

requirements for hospitals under this 

exemption. 

5. Exclusion of Group 3 Complex 

Rehabilitative Power Wheelchairs 

Section 1847(a)(2) of the Act defines 

the items and services subject to 

competitive bidding. Section 

1847(a)(2)(A) of the Act includes 

durable medical equipment and 

supplies as items and services subject to 

competitive bidding. Section 154(a) of 

the MIPPA amended this definition to 

exempt group 3 complex rehabilitative 

power wheelchairs (and related 

accessories when furnished in 

connection with such wheelchairs) from 

competitive bidding. For Medicare 

coding, coverage, and payment 

purposes, power wheelchairs are 

classified under several groups based on 

performance and durability test results, 

patient weight capacity, and equipment 

handling capabilities. For a description 

of the components, performance 

requirements and coding guidelines for 

group 3 power wheelchairs, see 

https://www.dmepdac.com/resources/ 

articles/2006/08_14_06.pdf. Group 2 

complex rehabilitative power 

wheelchairs will be included in the 

competitive bidding program because 

they were not excluded by the MIPPA 

and thus will continue to be included in 

the Round 1 competitive bidding 

program. 

We are amending § 414.402 to revise 

the definition of ‘‘item’’ to exclude 

group 3 complex rehabilitative 

wheelchairs from the competitive 

bidding program. 

B. Round 1 Changes of the Competitive 

Bidding Program 

1. Rebidding of the ‘‘same areas’’ as 

the previous Round 1, unless otherwise 

specified. 

Section 1847(a)(1)(D)(i)(II) of the Act, 

as amended by section 154(a) of the 

MIPPA, requires us to conduct a Round 

1 rebid in 2009. Pursuant to section 

1847(a)(1)(D)(i)(II) of the Act, we shall 

conduct the competition for the Round 

1 rebid in a manner ‘‘so that it occurs 

in 2009 with respect to the same items 

and services and the same areas’’ as the 

first Round 1 competition, except as 

provided by section 1847(a)(1)(D)(i)(III) 

and (IV) of the Act. Under section 

1847(a)(1)(D)(i)(III), as amended by the 

MIPPA, we must exclude Puerto Rico so 

that the Round 1 rebid of the 

competitive bidding program occurs in 

9 of the largest MSAs. Therefore, the 

Round 1 rebid will occur in the 

following MSAs: 

• Cincinnati—Middletown (Ohio, 

Kentucky and Indiana) 

• Cleveland—Elyria—Mentor (Ohio) 

• Charlotte—Gastonia—Concord 

(North Carolina and South Carolina) 

• Dallas—Fort Worth—Arlington 

(Texas) 

• Kansas City (Missouri and Kansas) 

• Miami—Fort Lauderdale—Miami 

Beach (Florida) 

• Orlando (Florida) 

• Pittsburgh (Pennsylvania) 

• Riverside—San Bernardino— 

Ontario (California) 

Section 154(a) of MIPPA mandated 

that we conduct the round 1 ‘‘re-bid’’ in 

the ‘‘same areas’’—except for Puerto 

Rico—as the previous competition. As 

stated in the final rule, we identified 

CBAs in the first round of competition 

by counties and zip codes to clearly 

identify the boundaries of a CBA. 

Therefore, we believe it is reasonable to 

implement the ‘‘same areas’’ mandate by 

conducting the round 1 re-bid in those 

same zip codes. It is possible that 


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certain zip codes may have changed 

since the first competition. We will 

therefore review zip code changes made 

since 2007 and incorporate applicable 

updates to these zip codes. For example, 

if a particular zip code has been split 

into two new zip codes, we will include 

the new zip codes in the CBA. We will 

not add any new zip codes that would 

expand the geographic area of the CBAs. 

Accordingly, we are amending 

§ 414.410(a)(1) to reflect the areas for 

competition set forth in section 

1847(a)(1) of the Act, as amended by the 

MIPPA. 

2. Rebidding of the ‘‘same items and 

services’’ as the previous Round 1, 

unless otherwise specified. 

Section 1847(a)(1)(D)(i)(II) of the Act, 

as amended by the MIPPA, requires that 

we conduct the Round 1 rebid 

competitive bidding program with 

respect to the ‘‘same items and services’’ 

as were previously bid in Round 1 

except as provided in section 

1847(a)(1)(D)(i)(IV) of the Act, which 

excludes negative pressure wound 

therapy. The Round 1 rebid will also 

exclude group 3 complex rehabilitative 

power wheelchairs as noted previously. 

Therefore, the Round 1 rebid will 

include the following categories of items 

and services: 

• Oxygen Supplies and Equipment 

• Standard Power Wheelchairs, 

Scooters, and Related Accessories 

• Complex Rehabilitative Power 

Wheelchairs and Related Accessories 

(Group 2) 

• Mail-Order Diabetic Supplies 

• Enteral Nutrients, Equipment and 

Supplies 

• Continuous Positive Airway 

Pressure (CPAP), Respiratory Assist 

Devices (RADs), and Related Supplies 

and Accessories 

• Hospital Beds and Related 

Accessories 

• Walkers and Related Accessories 

• Support Surfaces (Group 2 

mattresses and overlays) in Miami. 

In the April 10, 2007 final rule we 

define an item, in part, as a product 

included in a competitive bidding 

program that is identified by a HCPCS 

code. 

Therefore, consistent with our 

understanding of the MIPPA and the 

mandate that bidding in the Round 1 

rebid occur with respect to the ‘‘same 

items and services’’ as the previous 

round of competition, we will conduct 

the competition for the Round 1 rebid 

for essentially the same codes for which 

we bid in 2007. We have made certain 

adjustments to reflect changes in the 

HCPCS codes consistent with § 414.426. 

We have made additional exceptions for 

obsolete codes and codes which, in light 

of the MIPPA amendments, are no 

longer separately payable. For example, 

under the MIPPA, the transfer of title 

provision was deleted, thus oxygen 

accessories are no longer separately 

payable because the supplier maintains 

ownership of the equipment. The final 

list of HCPCS codes will be published 

on the Competitive Bidding 

Implementation Contractor (CBIC) Web 

site at http:// 

www.dmecompetitivebid.com prior to 

opening of the bid window. 

III. Considerations for Future 

Rulemaking Under the Competitive 

Bidding Program 

We are considering alternatives for 

the competition of diabetic supplies. 

This competition will potentially take 

place sometime after the Round 1 rebid, 

and will be the subject of a future notice 

and comment rulemaking. We believe it 

is consistent with the section 1847(a) of 

the Act to employ competitive bidding 

for diabetic supplies in both the mail 

order and traditional retail markets, in 

part due to concerns raised about the 

bifurcation of the method of delivery of 

diabetic supplies and the difficulty in 

defining what constitutes ‘‘mail order.’’ 

We welcome public comment on the 

competition of diabetic supplies. 

IV. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

V. Waiver of Proposed Rulemaking 

We ordinarily publish a notice of 

proposed rulemaking in the Federal 

Register to provide for public comment 

before the provisions of a rule take effect 

in accordance with section 553(b) of the 

Administrative Procedure Act (APA) 

and section 1871 of the Act. This 

process may be waived, however, if an 

agency finds good cause that a notice 

and comment procedure is 

impracticable, unnecessary, or contrary 

to the public interest. In such cases, the 

agency must incorporate a statement of 

this finding and its reasons in the rule 

issued, or explain that the agency is 

promulgating interpretive rules, general 

statements of policy, or rules of agency 

procedure or practice outside the scope 

of notice and comment rulemaking. 

We do not believe that we need to 

delay publication of this rule until a 

notice and comment period is 

completed. We are conforming the 

competitive bidding regulations to 

specific statutory requirements 

contained in section 154 of MIPPA and 

informing the public of the procedures 

and practices the agency will follow to 

ensure compliance with those statutory 

provisions. However, to the extent that 

notice and comment rulemaking would 

otherwise apply, we find good cause to 

waive such requirements. 

We find it unnecessary to undertake 

notice and comment rulemaking in this 

instance in light of the statutory 

language. We are applying statutory 

language that is highly detailed and 

proscriptive, and we believe it is 

redundant to, in effect, propose a rule to 

incorporate the words of a provision 

already contained in the statute. We 

would not be able to revise the changes 

to this regulation in response to public 

comment because this regulation 

reiterates the statutory language found 

in MIPPA and because the statute 

requires implementation to occur in 

2009. We are also describing a 

procedure to ensure compliance with 

the relevant provisions of the statute. 

This description is exempt from notice 

and comment rulemaking as an 

interpretive rule, general statement of 

policy, and/or rule of agency procedure 

or practice. Therefore, under 5 U.S.C. 

553(b), we find good cause to waive 

notice and comment rulemaking 

procedures for this revision, if such 

procedures are required at all. 

VI. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are requesting emergency 

approval of the information collection 

requirements contained in this interim 

final rule with comment period. Please 

provide comments on these information 

collection requirements by February 2, 

2009. 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 

requires that we solicit comment on the 

following issues: 

The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

These requirements are not effective 

until approved by OMB. We are 

soliciting public comment on the 


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following information collection 

requirements (ICRs): 

A. ICRs Regarding Round 1 Rebid 

We previously estimated that the 

burden associated with Round 1 would 

be 1,086,164 hours. Our estimate was 

that on average it would take a supplier 

68 hours to complete and submit a bid 

and that we would receive 15,973 bids. 

Although we expect the amount of 

hours to generally remain the same (68 

hours) for the round 1 rebid, based on 

our round 1 experience we anticipate 

fewer bids. For the 2007 round 1 of the 

competitive bidding program, we 

received approximately 6,500 bids. 

Therefore, the total estimated burden 

associated with the round 1 rebid is 

approximately 442,000 hours (68 hours 

X 6,500). 

B. ICRs Regarding Disclosure of 

Subcontracting Arrangements 

Section 414.422(f) states that 

suppliers entering into a contract with 

CMS must disclose information on each 

subcontracting arrangement that the 

supplier has to furnish items and 

services under the contract and whether 

each subcontractor meets the 

accreditation requirements in § 424.57, 

if applicable. Section 414.422(f) also 

requires that the required disclosure be 

made no later than 10 days after the date 

a supplier enters into a contract with 

CMS or 10 days after a supplier enters 

into a subcontracting arrangement after 

entering into a contract with CMS. 

The burden associated with the 

requirements in § 414.422(f) are the time 

and effort necessary to disclose the 

information to CMS. In the 2007 Round 

1 competition, there were 329 winning 

suppliers. Therefore, we approximate 

fewer than 400 winning suppliers for 

the Round 1 rebid. Also, we estimate it 

will take each of the winning suppliers 

that use subcontractors on average 

approximately 1.5 hours to submit 

information on each subcontracting 

arrangement to furnish items and 

services under the contract and whether 

each subcontractor meets the 

accreditation requirements in § 424.57, 

if applicable. Those that do not use 

subcontractors will not have a reporting 

burden. The total estimated burden 

associated with these requirements is 

approximately 600 hours (1.5 hours X 

400 winning suppliers). 

If you comment on these information 

collection and recordkeeping 

requirements, please do either of the 

following: 

1. Submit your comments 

electronically as specified in the 

ADDRESSES section of this proposed rule; 

or 

2. Mail copies to the address specified 

in the ADDRESSES section of this 

proposed rule and to the Office of 

Information and Regulatory Affairs, 

Office of Management and Budget, 725 

17th Street, NW., Room 10235, 

Washington, DC 20503, Attn: CMS Desk 

Officer, Fax (202) 395–6974, E-mail: 

OIRA_submission@omb.eop.gov. 

VII. Regulatory Impact Statement 

We have examined the impacts of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993, as further 

amended), the Regulatory Flexibility 

Act (RFA) (September 19, 1980, Pub. L. 

96–354), section 1102(b) of the Social 

Security Act, section 202 of the 

Unfunded Mandates Reform Act of 1995 

(Pub. L. 104–4), and Executive Order 

13132. 

Executive Order 12866, as amended, 

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). 

The provisions of this rule only 

implement limited changes to how the 

program will be implemented and will 

not result in a change in expenditures 

of $100 million or more annually, and 

is therefore not a major rule as defined 

in Title 5, United States Code, section 

804(2) and is not an economically 

significant rule under Executive Order 

12866. 

As stated in section I.B. of this 

preamble, section 154 of the MIPPA 

amended section 1847 of the Act to 

make limited changes to the Medicare 

DMEPOS Competitive Bidding Program. 

This regulation merely incorporates 

limited statutory changes to the 

Medicare DMEPOS Competitive Bidding 

Program and does not change the 

fundamental requirements of the 

program. In addition, a regulatory 

impact is unnecessary due to previous 

regulatory action taken when 

implementing the competitive bidding 

program, as described in the May 1, 

2006 Federal Register (72 FR 25654) 

proposed rule. Specifically, this rule 

cites the new timeframes for 

competition to occur under the program. 

In addition, the rule implements the 

MIPPA provisions that mandate limited 

changes that affect competition under 

the program including a process for 

providing feedback to suppliers 

regarding missing financial 

documentation, requiring contractors to 

disclose to CMS information regarding 

subcontracting relationships, and 

exempting from competitive bidding 

certain items and services. 

The MIPPA also mandated a 9.5 

percent reduction in payment for all 

items and services that were 

competitively bid during the round of 

competition in 2008 regardless of any 

exclusion such as group 3 complex 

rehabilitative wheelchairs. The 9.5 

percent reduction in payment was 

completed through the standard process 

for covered item updates rather than 

through this rule. Because we are not 

implementing the 9.5 percent reduction 

in payment in this rule and the 

provisions of this rule do not change the 

fundamentals of this program, and 9.5 

percent reduction in payment is not 

included in this rule, we have 

determined that a full regulatory impact 

analysis is unnecessary. Because the 

statute rather than the regulation is 

imposing a 9.5 reduction in payment, 

this rule is not a major rule. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses. For purposes of section 604 

of the RFA, small entities include small 

businesses, non-profit organizations and 

government agencies. Individuals and 

States are not included in the definition 

of a small entity. Based on data from the 

Small Business Administration (SBA), 

we estimate that 85 percent of suppliers 

of the items and services affected by this 

rule would be defined as small entities 

with total revenues of $6.5 million or 

less in any 1 year. This regulation 

merely codifies the MIPPA provisions, 

so there are no options for regulatory 

relief for small suppliers. The RFA 

therefore does not require that we 

analyze regulatory options for small 

businesses. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 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 of 

a Metropolitan Statistical Area and has 

fewer than 100 beds. We have 

determined that this rule will not have 

a significant impact on a substantial 

number of small entities and on 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 an expenditure 


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in any year by State, local or tribal 

governments, in the aggregate, or by the 

private sector, of $100 million. The $100 

million in 1995 dollars is updated 

annually for inflation and the current 

expenditure threshold is approximately 

$130 million. This rule will not have an 

effect on the governments mentioned, 

and the private sector costs would be 

less than the $130 million per year 

threshold. Hence, the Unfunded 

Mandates Reform Act of 1995 would not 

apply. 

Lastly, Executive Order 13132 

establishes certain requirements that an 

agency must meet when it promulgates 

a proposed rules (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

We have determined that this rule will 

not have a significant effect on the 

rights, roles and responsibilities of 

States. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

List of Subjects in 42 CFR Part 414 

Administrative practice and 

procedure, Health facilities, Health 

professions, Kidney diseases, Medicare 

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 414—PAYMENT FOR PART B 

MEDICAL AND OTHER HEALTH 

SERVICES 

■ 1. The authority citation for part 414 

continues to read as follows: 

Authority: Secs. 1102, 1871, and 1881(b)(1) 

of the Social Security Act (42 U.S.C. 1302, 

1395hh, and 1395rr(b)(1)). 

Subpart F—Competitive Bidding for 

Certain Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

(DMEPOS) 

■ 2. Section 414.402 is amended by— 

■ A. Revising the introductory text of 

paragraph (1) of the definition of 

‘‘item.’’ 

■ B. Adding the definitions of ‘‘covered 

document’’, ‘‘covered document review 

date’’ and ‘‘hospital’’. 

§ 414.402 Definitions. 

* * * * * 

Covered document means a financial, 

tax, or other document required to be 

submitted by a bidder as part of an 

original bid submission under a 

competitive acquisition program in 

order to meet the required financial 

standards. 

Covered document review date means 

the later of— 

(1) The date that is 30 days before the 

final date for the closing of the bid 

window; or 

(2) The date that is 30 days after the 

opening of the bid window. 

Hospital has the same meaning as in 

section 1861(e) of the Act. 

Item * * * 

(1) Durable medical equipment (DME) 

other than class III devices under the 

Federal Food, Drug and Cosmetic Act, 

as defined in § 414.202 of this part and 

group 3 complex rehabilitative 

wheelchairs and further classified into 

the following categories: 

* * * * * 

■ 3. Section 414.404 is amended by 

revising paragraphs (b)(1) introductory 

text, (b)(1)(ii), and (b)(1)(iii) to read as 

follows: 

§ 414.404 Scope and applicability. 

* * * * * 

(b) * * * 

(1) Physicians, treating practitioners, 

and hospitals may furnish certain types 

of competitively bid durable medical 

equipment without submitting a bid and 

being awarded a contract under this 

subpart, provided that all of the 

following conditions are satisfied: 

* * * * * 

(ii) The items are furnished by the 

physician or treating practitioner to his 

or her own patients as part of his or her 

professional service or by a hospital to 

its own patients during an admission or 

on the date of discharge. 

(iii) The items are billed under a 

billing number assigned to the hospital, 

physician, the treating practitioner (if 

possible), or a group practice to which 

the physician or treating practitioner 

has reassigned the right to receive 

Medicare payment. 

* * * * * 

■ 4. Section 414.408 is amended by 

revising paragraph (e)(2)(iv) to read as 

follows: 

§ 414.408 Payment rules. 

* * * * * 

(e) * * * 

(2) * * * 

(iv) A physician, treating practitioner, 

physical therapist in private practice, 

occupational therapist in private 

practice, or hospital may furnish an 

item in accordance with § 414.404(b) of 

this subpart. 

* * * * * 

■ 5. Section 414.410 is amended by 

revising paragraph (a) as follows: 

§ 414.410 Phased-in implementation of 

competitive bidding programs. 

(a) Phase-in of competitive bidding 

programs. CMS phases in competitive 

bidding programs so that competition 

under the programs occurs— 

(1) In CY 2009, in Cincinnati— 

Middletown (Ohio, Kentucky and 

Indiana), Cleveland—Elyria—Mentor 

(Ohio), Charlotte—Gastonia—Concord 

(North Carolina and South Carolina), 

Dallas—Fort Worth—Arlington (Texas), 

Kansas City (Missouri and Kansas), 

Miami—Fort Lauderdale—Miami Beach 

(Florida), Orlando (Florida), Pittsburgh 

(Pennsylvania), and Riverside—San 

Bernardino—Ontario (California). 

(2) In CY 2011, the additional 70 

MSAs selected by CMS as of June 1, 

2008. 

(3) After CY 2011, additional CBAs 

(or, in the case of national mail order for 

items and services, after CY 2010). 

* * * * * 

■ 6. Section 414.414 is amended by 

revising paragraph (c) and (d) as 

follows: 

§ 414.414 Conditions for awarding 

contracts. 

* * * * * 

(c) Quality standards and 

accreditation. Each supplier furnishing 

items and services directly or as a 

subcontractor must meet applicable 

quality standards developed by CMS in 

accordance with section 1834(a)(20) of 

the Act and be accredited by a CMSapproved organization that meets the 

requirements of § 424.58 of this 

subchapter, unless a grace period is 

specified by CMS. 

(d) Financial standards. 

(1) General rule. Each supplier must 

submit along with its bid the applicable 

covered documents (as defined in 

§ 414.402) specified in the request for 

bids. 

(2) Process for reviewing covered 

documents. 

(i) Submission of covered documents 

for CMS review. To receive notification 

of whether there are missing covered 

documents, the supplier must submit its 

applicable covered documents by the 

later of the following covered document 

review dates: 

(A) The date that is 30 days before the 

final date for the closing of the bid 

window; or 

(B) The date that is 30 days after the 

opening of the bid window. 

(ii) CMS feedback to a supplier with 

missing covered documents. 

(A) For Round 1 bids. CMS has up to 

45 days after the covered document 

review date to review the covered 

documents and to notify suppliers of 

any missing documents. 


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Federal Register / Vol. 74, No. 11 / Friday, January 16, 2009 / Rules and Regulations 2881 

(B) For subsequent Round bids. CMS 

has 90 days after the covered document 

review date to provide notify suppliers 

of any missing covered documents. 

(iii) Submission of missing covered 

documents. Suppliers notified by CMS 

of missing covered documents have 10 

business days after the date of such 

notice to submit the missing documents. 

CMS does not reject the supplier’s bid 

on the basis that the covered documents 

are late or missing if all the applicable 

missing covered documents identified 

in the notice are submitted to CMS not 

later than 10 business days after the date 

of such notice. 

* * * * * 

■ 7. Section 414.422 is amended by— 

■ A. Redesignating paragraph (f) as 

paragraph (g). 

■ B. Adding a new paragraph (f). 

The addition reads as follows: 

§ 414.422 Terms of contracts. 

* * * * * 

(f) Disclosure of subcontracting 

arrangements. 

(1) Initial disclosure. Not later than 10 

days after the date a supplier enters into 

a contract under this section the 

supplier must disclose information on 

both of the following: 

(i) Each subcontracting arrangement 

that the supplier has in furnishing items 

and services under the contract. 

(ii) Whether each subcontractor meets 

the requirement of section 

1834(a)(20)(F)(i) of the Act if applicable 

to such subcontractor. 

(2) Subsequent disclosure. Not later 

than 10 days after the date a supplier 

enters into a subcontracting 

arrangement subsequent to contract 

award with CMS, the supplier must 

disclose information on both of the 

following: 

(i) The subcontracting arrangement 

that the supplier has in furnishing items 

and services under the contract. 

(ii) Whether the subcontractor meets 

the requirement of section 

1834(a)(20)(F)(i) of the Act, if applicable 

to such subcontractor. 

* * * * * 

(Catalog of Federal Domestic Assistance 

Program No. 93.778, Medical Assistance 

Program) 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: November 13, 2008. 

Kerry Weems, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: December 5, 2008. 

Michael O. Leavitt, 

Secretary. 

[FR Doc. E9–863 Filed 1–15–09; 8:45 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 423 

[CMS 4138–IFC4] 

RIN 0938–AP24 

Medicare Program: Medicare 

Advantage and Prescription Drug 

Programs MIPPA Drug Formulary & 

Protected Classes Policies 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Interim final rule with comment 

period. 

SUMMARY: This interim final rule with 

comment period revises the regulations 

governing the Medicare prescription 

drug benefit program (Part D). This 

regulation makes conforming changes to 

reflect revisions to the rules governing 

Part D that were made as a result of 

provisions in the Medicare 

Improvements for Patients and 

Providers Act (MIPPA), which became 

law on July 15, 2008. These MIPPA 

provisions change the definition of a 

covered Part D drug, and add new 

requirements that apply to Part D 

formularies. 

DATES: Effective date: These regulations 

are effective January 16, 2009. 

Comment date: To be assured 

consideration, comments must be 

received at one of the addresses 

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

March 17, 2009. 

ADDRESSES: In commenting, please refer 

to file code CMS–4138–IFC4. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed) 

1. Electronically. You may submit 

electronic comments on specific issues 

in this regulation to http:// 

www.regulations.gov. Follow the 

instructions for ‘‘Comment or 

Submission’’ and enter the file code to 

find the document accepting comments. 

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–4138– 

IFC4, P.O. Box 8016, Baltimore, MD 

21244–8016. 

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–4138–IFC4, 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 either of the 

following addresses: 

a. Room 445–G, Hubert H. Humphrey 

Building, 200 Independence Avenue, 

SW., Washington, DC 20201; 

(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.) 

b. 7500 Security Boulevard, 

Baltimore, MD 21244–1850. 

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. 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Alissa DeBoy at (410) 786–6041)or 

Vanessa Duran at (410)786–8697. 

SUPPLEMENTARY INFORMATION: 

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 


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