Federal Register / Vol. 70, No. 169 / Thursday, September 1, 2005 / Rules and Regulations 52019 

package, including a Responsiveness 

Summary in the Site repositories. 

DATES: The direct final action published 

on July 7, 2005, at 70 FR 129, is 

withdrawn as of September 1, 2005. 

ADDRESSES: Comprehensive information 

on the Site, as well as the comments 

that were received during the comment 

period are available through the public 

docket contained at: U.S. Environmental 

Protection Agency, Region 2, Superfund 

Records Center, 290 Broadway, 20th 

Floor, New York, New York 10007–

1866, (212) 637–4308. Hours: 9 a.m. to 

5 p.m., Monday through Friday. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Isabel Rodrigues, Remedial Project 

Manager, U.S. EPA Region 2, 290 

Broadway, 20th Floor, New York, New 

York 10007–1866, (212) 637–4248; Fax 

Number (212) 637–4284; E-mail address: 

Rodrigues.Isabel@EPA.GOV. 

SUPPLEMENTARY INFORMATION: 

Comprehensive information about the 

Site is available for viewing and copying 

at the Site information repositories 

located at: 

U.S. Environmental Protection Agency, 

Region 2, Superfund Records Center, 

290 Broadway, Room 1828, New 

York, New York 10007–1866, (212) 

637–4308. Hours: 9 a.m. to 5 p.m., 

Monday through Friday; by 

appointment 

and, 

Hyde Park Free Public Library, 2 Main 

Street, Hyde Park, NY 12538. Hours: 

9 a.m. to 8 p.m., Monday and 

Tuesday; 12 to 8 p.m., Wednesday 

and Thursday; 9 a.m. to 2 p.m., 

Saturday. 

List of Subjects in 40 CFR Part 300 

Environmental protection, Air 

pollution control, Chemicals, Hazardous 

waste, Hazardous substances, 

Intergovernmental relations, Penalties, 

Reporting and recordkeeping 

requirements, Superfund, Water 

pollution control, Water supply. 

Dated: August 19, 2005. 

Dore Laposta, 

Acting Regional Administrator, Region II. 

[FR Doc. 05–17435 Filed 8–31–05; 8:45 am] 

BILLING CODE 6560–50–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 403 

[CMS–4063–F] 

RIN 0938–AN97 

Medicare Program; Medicare 

Prescription Drug Discount Card; 

Revision of Marketing Rules for 

Endorsed Drug Card Sponsors 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule will revise the 

current limitations prohibiting an 

endorsed drug card sponsor from 

marketing its Part D plans to its drug 

card enrollees. This revised rule will 

give the current drug card sponsors the 

ability to market to their enrollees Part 

D plans that are either offered by the 

same endorsed drug card sponsor or an 

affiliated organization of the same 

endorsed drug card sponsor. We are 

making these changes after considering 

the public comments received regarding 

the need to ensure a smooth transition 

from the drug card to the Medicare 

Prescription Drug Benefit. 

DATES: Effective Date: These regulations 

are effective on October 1, 2005. 

FOR FURTHER INFORMATION CONTACT: 

Jennifer Shapiro, (410) 786–7407. 

SUPPLEMENTARY INFORMATION: 

Availability of Final Rule 

Electronic Copies: An electronic copy 

of this document may be downloaded 

using a modem and suitable 

communications software. Internet users 

may reach CMS’s Web page at 

• http://www.cms.hhs.gov/ 

regulations; 

• http://www.regulations.gov; or 

• http://www.gpoaccess.gpo/nara/ 

index.html. 

Order Copies: To order copies of the 

Federal Register containing this 

document, send your request to: New 

Orders, Superintendent of Documents, 

P.O. Box 371954, Pittsburgh, PA 15250–

7954. 

Specify the date of the issue requested 

and enclose a check or money order 

payable to the Superintendent of 

Documents, or enclose your Visa or 

Master Card number and expiration 

date. Credit card orders can also be 

placed by calling the order desk at (202) 

512–1800 (or toll-free at 1–888–293–

6498) or by faxing to (202) 512–2250. 

The cost for each copy is $10. 

Photocopies: As an alternative, you 

can view and photocopy the Federal 

Register document at most libraries 

designated as Federal Depository 

Libraries and at many other public and 

academic libraries throughout the 

country that receive the Federal 

Register. 

I. Background 

The Medicare drug discount card 

program was established by section 101, 

subpart 4, of the Medicare Prescription 

Drug, Improvement, and Modernization 

Act of 2003 and is codified in section 

1860D–31 of the Social Security Act (the 

‘‘Act’’). On December 15, 2003, in 

accordance with section 105(c)(1)(C) of 

the Act, we published the interim final 

rule with comment period (hereafter 

referred to as ‘‘interim final rule’’) for 

the Medicare drug discount card 

program on December 15, 2003 (68 FR 

69840). 

The interim final rule at § 403.813(a) 

addresses marketing limitations 

applicable to endorsed discount card 

sponsors in accordance with section 

1860D–31(h)(7)(B) of the Act. Under 

these marketing limitations, an 

endorsed sponsor may only market 

those products and services offered 

under its endorsed program that are 

inside the scope of endorsement and 

permitted under the HIPAA Privacy 

Rule. 

After considering the public 

comments on these issues we agree with 

the commenters that this policy does 

not comply with the intent of the 

Medicare Modernization Act which 

directs the Secretary to facilitate 

efficient enrollment into Part D plans. 

This final rule allows an endorsed card 

sponsor to market information to its 

Medicare drug card enrollees 

concerning its Part D plans offered by 

the endorsed card sponsor or an 

affiliated organization. This change will 

increase Medicare beneficiaries’

awareness and knowledge of Part D 

plans, thereby facilitating a smooth 

transition from the Medicare 

Prescription Drug Discount Card 

Program to the Medicare Prescription 

Drug Benefit. 

Requirements for Issuance of 

Regulations 

Section 902 of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA) 

amended section 1871(a) of the Act and 

requires, in part, that the Secretary, in 

consultation with the Director of the 

Office of Management and Budget 

establish and publish timelines for the 

publication of Medicare final 

regulations based on the previous 

52020 Federal Register / Vol. 70, No. 169 / Thursday, September 1, 2005 / Rules and Regulations 

publication of a Medicare proposed or 

interim final regulation. Section 

902(a)(1) of the MMA also states that the 

timelines for these regulations may vary 

but shall not exceed 3 years after 

publication of the preceding proposed 

or interim final regulation except under 

exceptional circumstances. 

Therefore, we believe that the final 

rule is in accordance with the 

Congress’s intent to ensure timely 

publication of final regulations. 

II. Discussion of the Provisions of the 

Final Rule 

A. Provision of the Interim Final Rule 

Section 403.813(a)(1) of the December 

15, 2003 interim final rule provides that 

an endorsed sponsor may only market 

those products and services offered 

under its endorsed program that are 

inside the scope of endorsement as 

defined in § 403.806(h) and permitted 

under § 403.812(b) (pertaining to the 

HIPAA privacy requirements). Section 

403.806(h)(2) defines products and 

services inside the scope of the 

Medicare endorsement as products and 

services that are: (1) Directly related to 

covered discount card drugs or 

discounts for over-the-counter drugs; 

and (2) offered for no additional fee 

(other than the enrollment fee). 

Section 403.813(a) of the interim final 

rule provides that an endorsed sponsor 

may not request that a drug card 

enrollee or an individual seeking to 

enroll in its endorsed discount card 

program authorize the endorsed sponsor 

to use or disclose individually 

identifiable health information for 

marketing other products or services not 

otherwise allowed under § 403.813(a)(1) 

(§ 403.813(a)(2)); that an endorsed 

sponsor may not commingle any 

materials related to the marketing of 

products or services allowed under 

§ 403.813(a)(1) with other marketing 

materials (§ 403.813(a)(3)); and that 

following termination of an endorsed 

sponsor’s endorsement under 

§ 403.820(c), (d) or (e) or termination of 

the Medicare Drug Discount Card and 

Transitional Assistance Program, a drug 

card enrollee’s individually identifiable 

health information collected or 

maintained by an endorsed sponsor may 

not be used or disclosed for purposes of 

marketing any product or service 

(§ 403.813(a)(4)). 

These provisions on marketing 

limitations are based on section 1860D–

31(h)(7)(B) of the Act, which states that 

an endorsed sponsor may market a 

product or service under the program 

only if the product or service is directly 

related to a covered discount card drug 

or a discount price for a nonprescription drug, and on section 

1860D–31(h)(8) of the Act, which 

charges us with protecting and 

promoting the interests of discount card 

eligible individuals. 

In addition to the specific 

requirements of the Act that the product 

or services be directly related to a 

covered discount card drug or a 

discount on a non-prescription drug, 

§ 403.806(h)(2) of the interim final 

regulation further requires that products 

and services inside the scope of 

endorsement are limited to products or 

services offered for no additional charge 

because, as we stated in the preamble, 

we were concerned that beneficiaries 

would be unable to access negotiated 

prices and transitional assistance, as 

intended by the Congress, if endorsed 

sponsors required that they pay 

additional fees for optional products 

and services. Further, we believed that 

permitting endorsed sponsors to charge 

additional fees could be confusing to 

beneficiaries. Also, if we were to allow 

endorsed sponsors to charge additional 

fees, we believe beneficiaries might, in 

effect, be charged annual enrollment 

fees higher than the $30 limit mandated 

by section 1860D–31(c)(2)(B) of the Act, 

especially if endorsed sponsors were to 

condition enrollment in their endorsed 

programs on beneficiaries paying these 

additional fees. 

III. Analysis of and Response to Public 

Comments 

A. Overview of Comments 

We received 49 public comments 

concerning the Medicare drug discount 

card program. Of these comments, 8 

timely comments were received that 

addressed issues on marketing and 

information and outreach in two 

separate areas. A summary of the major 

issues and our responses are as follows: 

Comment: Of the 8 comments related 

to marketing, 4 of the comments 

expressed the need to minimize the 

potential for beneficiary confusion and 

encouraged us to allow sponsors to 

provide enrollees with valuable health 

education and other information. One 

commenter encouraged us to ensure that 

the regulation reflect the intent of the 

conferees that there be a seamless 

transition between the drug card 

program and the Medicare Prescription 

Drug Benefit. The other commenters 

encouraged us to create guidelines 

concerning marketing materials and 

fairness in marketing. None of the 

comments were opposed to us issuing 

additional guidelines. 

Response: We agree with the 

commenters’ concerns regarding the 

need to minimize beneficiary confusion 

by allowing endorsed sponsors to 

distribute certain important and 

valuable information to beneficiaries, 

including information which will 

promote a smoother transition for drug 

card enrollees from the Medicareapproved prescription drug discount 

card program to the Medicare 

Prescription Drug Benefit. The Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 Conference 

Report clearly articulates this intent 

where the report discusses the history of 

the drug card program and its original 

purpose as an interim step toward 

prescription drug coverage for Medicare 

beneficiaries. Furthermore, a separate 

discussion appearing in the Conference 

Report addressing Part D emphasizes 

the need to facilitate outreach to 

beneficiaries to ensure participation in 

Medicare prescription drug coverage 

and to reduce barriers associated with 

marketing to minimize the potential for 

confusion and to facilitate enrollment 

into the Medicare Prescription Drug 

Benefit. 

We agree with the commenter that 

encouraged us to ensure that the 

regulation reflect the intent of the 

conferees that there be a seamless 

transition between the drug card 

program and the Medicare Prescription 

Drug Benefit. As we move toward 

implementation of the Medicare 

Prescription Drug Benefit, it has become 

evident that certain aspects of the 

interim final rule are creating 

unintended consequences for Medicare 

beneficiaries and endorsed card 

sponsors. Specifically the marketing 

limitations at § 403.813(a) contradict 

Congressional intent for the Medicare 

prescription drug discount card program 

to serve as a transitional program to the 

Medicare Prescription Drug Benefit. As 

previously mentioned, the provisions in 

the interim final rule prevent an 

endorsed drug card sponsor from 

marketing its Part D plans to its drug 

card enrollees. Moreover, we agree that 

clarifications and modifications to the 

marketing limitation rules would reduce 

beneficiary confusion as the drug card 

program concludes and the Medicare 

Prescription Drug Benefit begins. 

Finally, it is crucial that Medicare 

beneficiaries have complete and 

accurate information on the forthcoming 

Medicare Prescription Drug Benefit. We 

agree with all comments that expressed 

an important aspect of ensuring that 

beneficiaries receive this information is 

by allowing a beneficiary’s drug card 

sponsor, an entity with which the 

beneficiary is familiar and has an 

existing relationship to provide 

educational and related information 

Federal Register / Vol. 70, No. 169 / Thursday, September 1, 2005 / Rules and Regulations 52021 

about the transition to the Medicare 

prescription drug benefit and the Part D 

plans that will be offered by the 

endorsed sponsor or its affiliated 

organizations. Allowing endorsed 

sponsors to provide information to their 

members about certain Part D plans 

available to them is a component of the 

Secretary’s strategy for meeting his 

obligation under sections 1851(d)(1) and 

1860D–1(c) of the Act to promote an 

active, informed selection by 

beneficiaries among their Medicare 

coverage options. 

As a result, this final rule amends 

§ 403.813(a)(1) to allow an endorsed 

card sponsor to market to its drug card 

enrollees not only items and products 

offered within the scope of 

endorsement, but also Part D plans 

offered by the endorsed sponsor or an 

affiliated organization of the endorsed 

sponsor. 

Section 1860D–31(h)(7)(B) of the Act 

provides that endorsed sponsors may 

only market products or services ‘‘under 

the program’’ if they directly relate to 

either a covered discount card drug or 

discount prices available for over-thecounter drugs. We believe products or 

services marketed ‘‘under the program’’

include not only those within the scope 

of endorsement, but also Part D plans. 

Because information about Part D plans 

offered by an endorsed sponsor or its 

affiliated organizations would reinforce 

the purpose of the Medicare 

prescription drug discount card program 

to serve as a transitional program to the 

Medicare prescription drug benefit, we 

believe marketing of such Part D plans 

constitutes marketing of a product or 

service under the Medicare prescription 

drug discount card program. In 

addition, we believe Part D plans are 

directly related to covered discount card 

drugs, as evidenced by the fact that the 

statutory definition of a covered drug 

under section 1860D–31(a)(4)(a) of the 

Act cross-references the definition of 

covered Part D drug under section 

1860D–2(e) of the Act, and thus is 

identical to the definition of covered 

Part D drug. 

Therefore, we amend the marketing 

limitations in § 403.813(a)(1) by 

explicitly stating that Part D plans 

offered by an endorsed sponsor or its 

affiliated organization may be directly 

marketed by the endorsed sponsor to its 

enrollees. We will not otherwise change 

the marketing limitation provisions of 

the interim final rule because we 

maintain that section 1860D–31(h)(8) of 

the Act charges us with protecting and 

promoting the interests of Medicare 

beneficiaries who may be unable to 

access negotiated prices and transitional 

assistance, as intended by the Congress, 

if endorsed sponsors require that they 

pay additional fees for optional 

products and services, such as Part B 

supplies. Furthermore, permitting 

endorsed sponsors to charge additional 

fees for products and services outside 

the scope of the endorsement could be 

confusing to beneficiaries. Also, if we 

were to allow endorsed sponsors to 

charge additional fees, we believe 

beneficiaries might, in effect, be charged 

annual enrollment fees higher than the 

$30 limit mandated by section 1860D–

31(c)(2)(B) of the Act, especially if 

endorsed sponsors were to condition 

enrollment in their endorsed programs 

on beneficiaries paying these additional 

fees. The amendment to allow 

marketing of Part D plans makes sense 

in this instance because in this context 

it does not negate the intent or practice 

of the original restriction (for example, 

regarding Part B supplies). We believe 

that this amendment is consistent with 

the intent of the Congress, which would 

reduce confusion and facilitate a smooth 

transition to the Medicare Prescription 

Drug Benefit which protects and 

promotes interests of all Medicare 

beneficiaries. Also, this exception will 

not affect the enrollment fee. 

We will require information and 

outreach (marketing) materials 

discussing Part D plans that are 

disseminated by endorsed drug card 

sponsors or their affiliated organizations 

to the endorsed sponsors’ drug card 

enrollees to be approved through the 

Medicare Prescription Drug Benefit 

review process as described under 

§ 423.50 as opposed to the drug card 

review process. This change addresses 

comments that CMS should create 

guidelines concerning marketing 

materials and fairness in marketing, and 

comments that we should endeavor to 

reduce beneficiary confusion. Using a 

single review process, with consistent 

guidelines specifically developed for 

Part D materials, is the optimal process 

for ensuring adherence to guidelines 

and reducing beneficiary confusion. 

Therefore, we are amending 

§ 403.806(g)(5) to state that all materials 

related to Part D plans being offered by 

the same endorsed sponsor or its 

affiliated organization must comply 

with the requirements described in 

§ 423.50. 

We are cognizant that constraints and 

clarifications must be made about 

whose products an endorsed card 

sponsor may provide marketing 

materials about to its drug card 

enrollees. An endorsed drug card 

sponsor may market a Part D plan 

offered by it or its affiliated 

organization. By allowing an endorsed 

card sponsor to market Part D plans 

offered by an affiliated organization of 

the endorsed sponsor, we are treating 

Part D plans offered by an affiliated 

organization of the endorsed sponsor as 

a product or service under the program. 

Allowing such treatment gives practical 

effect to the Congressional intent of a 

smooth transition between the drug card 

program and the Medicare Prescription 

Drug Benefit because it recognizes that 

rather than offer Part D plans through 

the same legal entity, organizations may 

have legitimate business and legal 

reasons for offering Part D plans through 

another legal entity, or may offer Part D 

plans through different legal entities 

based on geography (for example, Part D 

plans in region A offered through legal 

entity A, Part D plans in region B 

offered through legal entity B). We do 

not want to constrain an organization’s 

ability to offer its Part D plans through 

the legal entities that make the most 

sense given other business and legal 

considerations. A Part D Plan is not 

offered under the program, however, if 

the plan is offered by an organization 

that is not the endorsed sponsor or an 

affiliated organization of the endorsed 

sponsor. 

Therefore, we are adding a definition 

of affiliated organization to § 403.802. 

This definition would allow an 

endorsed drug card sponsor to market to 

its enrollees a Part D plan of an 

affiliated organization if the 

organization is legally separate and at 

least one of the following conditions is 

met: 

(1) Both the affiliated organization 

and the endorsed drug card sponsor are 

under common control (common 

control exists if another entity has the 

power, directly or indirectly, to 

significantly influence or direct the 

actions or policies of the affiliated 

organization and the endorsed drug card 

sponsor); 

(2) The affiliated organization is 

under the control of the endorsed drug 

card sponsor or the affiliated 

organization controls the endorsed drug 

card sponsor (control exists if an entity 

has the power, directly or indirectly, to 

significantly influence or direct the 

actions or policies of another entity); or 

(3) The affiliated organization 

possesses an ownership or equity 

interest of 5 percent or more in the 

endorsed drug card sponsor on both: 

The date on which the endorsed drug 

card sponsor markets the affiliated 

organization’s Part D plan; and the date 

on which the endorsed drug card 

sponsor signed its endorsement contract 

with us. This is to ensure that the entity 

is currently affiliated with the endorsed 

sponsor and ensures that a Part D plan 

does not acquire a drug card sponsor 

52022 Federal Register / Vol. 70, No. 169 / Thursday, September 1, 2005 / Rules and Regulations 

after publication of this rule in order to 

gain access to the sponsors’ drug card 

enrollees. 

We will not permit endorsed sponsors 

to market to their drug card enrollees 

Part D plans offered by unaffiliated third 

parties (as described by this new 

section) because an endorsed sponsor’s 

marketing of a Part D plan offered by a 

third party generally is prohibited by 

the HIPAA privacy rule absent 

authorization from the individual. 

As important, information that is 

provided by a drug card sponsor about 

its or its affiliate’s Part D plan will, we 

believe, be more likely to promote a 

smoother transition to Part D since the 

beneficiary is familiar with the endorsed 

sponsor, and we anticipate that there 

will be similarities between the 

Medicare drug discount card and the 

Part D plan (for example, similar 

pharmacy network, similar formulary). 

Furthermore, under certain 

circumstances, HIPAA may prohibit an 

endorsed sponsor’s marketing of Part D 

plans offered by certain affiliated 

entities. Thus, any use or disclosure of 

enrollee’s protected health information 

by an endorsed card sponsor must 

comply with all Federal laws, including 

the HIPAA Privacy Rule. 

IV. Provisions of the Final Regulations 

Except as mentioned below, this final 

rule incorporates the marketing and 

information and outreach provisions of 

the interim final rule. This rule creates 

a definition at section 403.802 

pertaining to the requirements that must 

be met before an organization will be 

considered an affiliated organization to 

an endorsed drug card sponsor. 

We are also revising § 403.813 to 

permit an endorsed card sponsor to 

market to its drug card enrollees a Part 

D plan offered by the endorsed sponsor 

or an affiliated organization of the 

endorsed sponsor. 

We will require information and 

outreach (marketing) materials provided 

by an endorsed drug card sponsor that 

are discussing Part D plan offerings to 

be approved through the Medicare 

Prescription Drug Benefit review 

process as described under § 423.50. 

V. 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). 

VI. Regulatory Impact 

We have examined the impact of this 

rule as required by Executive Order 

12866 September 1993, Regulatory 

Planning and Review), the Regulatory 

Flexibility Act (RFA) (September 19, 

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

the Social Security Act, the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4) 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 of small 

businesses. For purposes of the RFA, 

small entities include small businesses, 

nonprofit organizations, and small 

governmental agencies. 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. We 

are not preparing an analysis for the 

RFA because we have determined that 

this rule will not have a significant 

economic impact on a substantial 

number of small entities. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 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 are not 

preparing an analysis for section 1102(b) 

of the Act because we have determined 

that this rule will not have a significant 

impact on the operations of a substantial 

number of small rural hospitals. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule 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, 

the requirements of E.O. 13132 are not 

applicable. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was not reviewed by the Office of 

Management and Budget. 

List of Subjects in 42 CFR Part 403 

Grant programs—health, Health 

insurance, Hospitals, Intergovernmental 

relations, 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 403—SPECIAL PROGRAMS AND 

PROJECTS 

■ 1. The authority citation for part 403 

continues to read as follows: 

Authority: 42 U.S.C. 1359b–3 and secs. 

1102 and 1871 of the Social Security Act (42 

U.S.C. 1302 and 1395hh). 

■ 2. In Subpart H, § 403.802 is amended 

by adding in alphabetical order the 

definitions of ‘‘Affiliated organization’’

and ‘‘Part D plan’’ to read as follows: 

Subpart H—Medicare Prescription 

Drug Discount Card and Transitional 

Assistance Program 

§ 403.802 Definitions. 

* * * * * 

Affiliated organization means an 

organization that is a legally separate 

entity from the endorsed drug card 

sponsor and meets one of the following 

conditions: 

(1) The organization and the endorsed 

drug card sponsor are under common 

control. Common control exists if 

another entity has the power, directly or 

indirectly, to significantly influence or 

direct the actions or policies of the 

organization and the endorsed drug card 

sponsor. 

(2) The organization is under the 

control of the endorsed drug card 

sponsor or the organization controls the 

endorsed drug card sponsor. Control 

exists if an entity has the power, 

directly or indirectly, to significantly 

influence or direct the actions or 

policies of another entity. 

Federal Register / Vol. 70, No. 169 / Thursday, September 1, 2005 / Rules and Regulations 52023 

(3) The organization possesses an 

ownership or equity interest of 5 

percent or more in the endorsed drug 

card sponsor on both the date on which 

the endorsed drug card sponsor markets 

the organization’s Part D plan, and the 

date on which the endorsed drug card 

sponsor signed its endorsement contract 

with CMS. 

* * * * * 

Part D plan has the meaning given the 

term at § 423.4. 

* * * * * 

■ 3. Section 403.806(g)(5) is amended 

by—

■ A. Revising paragraph (g)(5)(i). 

■ B. Revising paragraph (g)(5)(iii). 

■ C. Adding paragraph (g)(5)(vi). 

The revisions and addition read as 

follows: 

§ 403.806 Sponsor requirements for 

eligibility for endorsement. 

* * * * * 

(g) * * * 

(5) * * * 

(i) Comply with the Information and 

Outreach Guidelines published by CMS 

except as provided in paragraph 

(g)(5)(vi) of this section. 

* * * * * 

(iii) If CMS does not disapprove the 

initial submission of information and 

outreach materials within 30 days of 

receipt of these materials, the materials 

are deemed approved under paragraph 

(g)(5)(ii) of this section. 

* * * * * 

(vi) All materials related to products 

and services that are Part D plans must 

comply with the requirements specified 

in § 423.50 of this chapter. 

* * * * * 

■ 4. Section 403.813 is amended by 

revising paragraph (a)(1) to read: 

§ 403.813 Marketing limitations and record 

retention requirements. 

(a) Marketing limitations. (1) An 

endorsed sponsor may only market the 

following: 

(i) Those products and services 

offered under the endorsed program that 

are inside the scope of endorsement 

defined in § 403.806(h) and permitted 

under § 403.812(b). 

(ii) A Part D plan offered by the 

endorsed sponsor or an affiliated 

organization of the endorsed sponsor. 

* * * * * 

(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: July 8, 2005. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: August 10, 2005. 

Michael O. Leavitt, 

Secretary. 

[FR Doc. 05–17424 Filed 8–29–05; 11:58 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 422 

[CMS–4069–F3] 

RIN 0938–AN06 

Medicare Program; Establishment of 

the Medicare Advantage Program 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule; correcting 

amendment; partial stay of 

effectiveness. 

SUMMARY: This document corrects 

technical errors that appeared in the 

final rule published in the Federal 

Register on January 28, 2005 entitled 

‘‘Establishment of the Medicare 

Advantage Program.’’ It also stays 

several amendments made in the 

previous rule. 

EFFECTIVE DATES: This final rule is 

effective March 22, 2005. Sections 

422.152(a)(1) and (c), 422.156(b)(7), 

422.316, and 422.527 are stayed from 

September 1, 2005 until January 1, 2006. 

FOR FURTHER INFORMATION CONTACT: 

Christopher McClintick, (410) 786–

4682. 

SUPPLEMENTARY INFORMATION: 

I. Background 

In FR Doc. 05–1322 of January 28, 

2005 (70 FR 4588), there were several 

errors that we identify in the ‘‘Summary 

of Errors’’ section and correct in the 

‘‘Correction of Errors’’ section below. 

The provisions in this correcting 

amendment are effective as if they were 

included in the final rule published 

January 28, 2005. Accordingly, the 

corrections are effective retroactive to 

March 22, 2005, the effective date of 

most of the provisions of the January 28, 

2005 final rule, except for those 

provisions that are specifically 

designated in the EFFECTIVE DATES

section as being stayed effective 

September 1, 2005 until January 1, 2006. 

II. Summary of Errors 

In the January 28, 2005 final rule, on 

page 4588, we inadvertently omitted 

from the list of provisions that will 

become effective January 1, 2006, the 

following provisions relating to changes 

in the quality improvement provisions 

in subpart D: §§ 422.152(a)(1) and (c), 

and 422.156(b)(7). These provisions 

implement changes to section 1852(e) of 

the Social Security Act (the Act) that, 

under section 722(c) of the MMA, apply 

to contract years beginning on and after 

January 1, 2006. Sections 422.152(a)(1) 

and (c) concern the requirement that an 

MA organization must have a chronic 

care improvement program for each 

plan it offers. In order to clarify that 

these provisions of the quality 

improvement requirements do not apply 

to contracts previous to contract periods 

beginning January 1, 2006, and to 

comply with the Act, we are staying the 

effective dates of §§ 422.152(a)(1) and 

(c) until January 1, 2006. We are also 

staying § 422.156(b)(7), a quality 

improvement provision concerning 

deemable requirements and Part D 

prescription drug programs offered by 

MA programs. We also inadvertently 

omitted from the list of provisions that 

will become effective January 1, 2006, 

the following provisions relating to 

arrangements with federally qualified 

health centers: §§ 422.316 and 422.527. 

Section 237(c) of the MMA provides 

that these changes apply to services 

provided on or after January 1, 2006, 

and contract years beginning on or after 

that date. In order to clarify the effective 

dates of these provisions and to bring 

our regulations into conformance with 

the statute, we are also staying the 

effective dates of §§ 422.316 and 

422.527 until January 1, 2006. 

On page 4676, we clarify that an MA 

organization and not a practitioner is 

responsible for providing a written 

notice to the beneficiary when an 

adverse decision is made in an office 

setting. In other words, if an enrollee 

requests an explanation of a 

practitioner’s denial of an item or 

service, in whole or in part, the MA 

organization is responsible for giving 

the enrollee a written notice. We are 

making a corresponding change to 

§ 422.568(d) of the regulation text. 

On page 4681, we inadvertently 

specified 72 hours as the timeline for 

the expedited grievance process MA 

organizations must establish for 

complaints involving certain procedural 

matters in the appeals process. In that 

discussion, we were referring to 42 CFR 

422.564(d), which we redesignated in 

the final rule as § 422.564(f), but did not 

otherwise change. The timeline, as