57368 Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 505 

[CMS–1287–IFC] 

RIN 0938–AO03 

Medicare Program; Health Care 

Infrastructure Improvement Program; 

Selection Criteria of Loan Program for 

Qualifying Hospitals Engaged in 

Cancer-Related Health Care 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Interim final rule with comment 

period. 

SUMMARY: This interim final rule with 

comment period sets forth the criteria 

for implementing a loan program for 

qualifying hospitals engaged in research 

in the causes, prevention, and treatment 

of cancer as specified in section 1016 of 

the Medicare Prescription Drug, 

Improvement and Modernization Act of 

2003 (MMA) (Pub. L. 108–173). 

Specifically, this rule establishes a loan 

application process by which qualifying 

hospitals including specified entities 

may apply for a loan for the capital costs 

of health care infrastructure 

improvement projects. 

DATES: Effective Date: This interim final 

rule with comment period is effective 

November 29, 2005. 

Comment date: To be assured 

consideration, comments must be 

received at one of the addresses 

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

November 29, 2005. 

In commenting, please refer to file 

code CMS–1287–IFC. Because of staff 

and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

Deadline for submission of loan 

requests: To be assured consideration, 

applications must be received at the 

appropriate address from November 29, 

2005 through 5 p.m. on December 29, 

2005. 

ADDRESSES: Comments: You may submit 

comments in one of three ways (no 

duplicates, please): 

1. Electronically. You may submit 

electronic comments on specific issues 

in this regulation to http:// 

www.cms.hhs.gov/regulations/ 

ecomments. (Attachments should be in 

Microsoft Word, WordPerfect, or Excel; 

however, we prefer Microsoft Word.) 

2. By 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–1287–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 hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments (one original 

and two copies) before the close of the 

comment period to one of the following 

addresses. If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786– 

9994 in advance to schedule your 

arrival with one of our staff members. 

Room 445–G, Hubert H. Humphrey 

Building, 200 Independence Avenue, 

SW., Washington, DC 20201; or 7500 

Security Boulevard, Baltimore, MD 

21244–1850. 

(Because access to the interior of the 

HHH Building is not readily available to 

persons without Federal Government 

identification, commenters are 

encouraged to leave their comments in 

the CMS drop slots located in the main 

lobby of the building. A stamp-in clock 

is available for persons wishing to retain 

a proof of filing by stamping in and 

retaining an extra copy of the comments 

being filed.) 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

Applications: Applications must be 

submitted to the following address: 

Centers for Medicare and Medicaid 

Services, Center for Medicare 

Management, Hospital and Ambulatory 

Policy Group, Division of Acute Care, 

Attention: Loan for Cancer Hospitals, 

Mail Stop C4–08–06, 7500 Security 

Boulevard, Baltimore, Maryland 21244– 

1850. 

FOR FURTHER INFORMATION CONTACT: Tzvi 

Hefter, (410) 786–4487. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Section 1016 of the Medicare 

Prescription Drug, Improvement, and 

Modernization Act of 2003 (MMA) (Pub. 

L. 108–173) amended title XVIII of the 

Social Security Act (the Act) to establish 

section 1897 of the Act, the Health Care 

Infrastructure Improvement Program. 

Section 1897 of the Act authorizes the 

Secretary to establish a loan program 

that provides loans to qualifying 

hospitals for payment of the capital 

costs of eligible projects. 

Section 1897(c) of the Act as amended 

by section 6045 of the Emergency 

Supplemental Appropriations Act for 

Defense, the Global War on Terror, and 

Tsunami Relief, 2005 (Tsunami Relief 

Act of 2005) (Pub. L. 109–13) defines a 

qualifying hospital as a hospital or 

entity that is engaged in research in the 

causes, prevention, and treatment of 

cancer; and is designated as a cancer 

center for the National Cancer Institute 

(NCI) or is designated by the State 

legislature as the official cancer institute 

of the State and such designation by the 

State legislature occurred before 

December 8, 2003. Section 1897(c)(3) of 

the Act also specifies that an entity has 

the same meaning as specified in 

section 501(c)(3) of the Internal Revenue 

Code of 1986 and is exempt from tax 

under section 501(a) of the Code; has at 

least one existing memorandum of 

understanding or affiliation agreement 

with a hospital located in the State in 

which the entity is located; and retains 

clinical outpatient treatment for cancer 

on site as well as lab research and 

education and outreach for cancer in the 

same facility. 

Section 1897(d) of the Act specifies 

that an eligible project is a project of a 

qualifying hospital that is designed to 

improve the health care infrastructure of 

the hospital, including construction, 

renovation, or other capital 

improvements. 

Section 1897(f) of the Act states that 

the Secretary may forgive a loan 

provided to a qualifying hospital, under 

terms and conditions that are analogous 

to the loan forgiveness provision for 

student loans under part D of title IV of 

the Higher Education Act of 1965, (20 

U.S.C. 1087a et seq.). However, the 

Secretary shall condition such 

forgiveness on the establishment by the 

hospital of—(1) an outreach program for 

cancer prevention, early diagnosis and 

treatment that provides services to a 

substantial majority of the residents of 

the State or region, including residents 

of rural areas; (2) an outreach program 

that provides services to multiple Indian 

tribes; and (3) unique research resources 

(such as population databases); or an 

affiliation with an entity that has unique 

research resources. 

Furthermore, before the Tsunami 

Relief Act of 2005, section 1897(g)(1) of 

the Act appropriated $200,000,000 to 

carry out the loan program. The funds 

allocated for the loan program are to 

remain available during the period 

beginning on July 1, 2004, and ending 

on September 30, 2008. However, the 

Congress rescinded $58,000,000 leaving 

$142,000,000 available for the loan 

program. The statute also states that not 

more than $2,000,000 can be used for 

the administration of the loan program 

for each of the fiscal years (that is, 2004 

Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 57369 

through 2008). No administrative 

funding was used in fiscal year 2004. 

In addition, section 1897(i) of the Act 

as amended by section 6045(b) of the 

Tsunami Relief Act of 2005 states that 

there shall be no administrative or 

judicial review of any determination 

made by the Secretary under this 

section. 

II. Provisions of the Interim Final Rule 

With Comment Period 

Section 1897 of the Act authorizes the 

Secretary to establish a loan program 

that provides loans to qualifying 

hospitals for payment of the capital 

costs of qualifying projects. Section 

1897 of the Act also provides that 

criteria be established for—(1) selecting 

among qualifying hospitals that apply to 

participate in the loan program; and (2) 

forgiving indebtedness. This interim 

final rule with comment period 

establishes the loan program and the 

selection criteria for qualifying hospitals 

to participate in the loan program. We 

will publish a separate rule making 

document to describe the criteria for 

loan forgiveness. 

A. Overview of the Loan Program 

The statute provides specific 

definitions for a qualifying hospital and 

entity. However, in addition to being a 

‘‘hospital’’ as defined in section 1861(e) 

of the Act or an ‘‘entity’’ as defined in 

section 1897(c)(3) of the Act, the 

applicant must meet the criteria 

described in section 1897(c)(2) of the 

Act in order to be considered a 

qualifying hospital. 

To be designated as a cancer center 

for the NCI of the National Institutes of 

Health (NIH), the hospital must have 

been awarded a P30 Cancer Center 

Support Grant (CCSG) from NCI to fund 

the scientific infrastructure of the cancer 

center, see http://www.cancer.gov/ 

cancercenters/description.html. 

NCI designates two types of cancer 

centers: cancer centers, and 

comprehensive cancer centers. NCI 

describes ‘‘cancer centers’’ as those that 

have a scientific agenda that is primarily 

focused on basic science, populationbased research or clinical research, or 

any two of the three components. 

NCI describes ‘‘comprehensive cancer 

centers’’ as those that integrate research 

activities across three major areas: 

Laboratory, clinical, and populationbased research. Hospitals that have been 

awarded a CCSG and are designated by 

NCI as either a cancer center or a 

comprehensive cancer center before 

December 8, 2003, will be considered 

qualifying hospitals. We chose the 

December 8, 2003 date for the NCI CCSG 

designation because it is the date of 

enactment of the MMA and consistent 

with the statutory date for State 

legislature designation of the official 

cancer institute of the State. 

To be designated as the official cancer 

institute of the State, the entity must be 

designated by the State legislature as 

‘‘the official cancer institute of the 

State.’’ Section 1897 of the Act specifies 

that designation by the State legislature 

must have occurred before December 8, 

2003. 

In this rule, we have added 

Subchapter H—Health Care 

Infrastructure Improvement Program to 

comply with section 1897 of the Act. 

Specifically, we have added part 505—

’’Establishment of the Health Care 

Infrastructure Improvement Program.’’

We have added subpart A—Loan 

Criteria. Section 505.1 sets forth the 

‘‘Basis and Scope’’ of part 505 which 

implements section 1016 of the MMA 

which amends Title XVIII of the Act to 

add section 1897. Section 1897 of the 

Act, as amended by section 6045 of the 

Tsunami Relief Act of 2005, authorizes 

the Secretary to establish a loan program 

by which qualifying hospitals may 

apply for a loan for the capital costs of 

the health care infrastructure 

improvement projects. 

In § 505.3, for purposes of subpart A, 

we have set forth the following 

definitions: 

• Eligible project means the project of 

a qualifying hospital that is designed to 

improve the health care infrastructure of 

the hospital, including construction, 

renovation, or other capital 

improvements. 

• Entity is an entity described in 

section 501(c)(3) of the Internal Revenue 

Code of 1986 and exempt from tax 

under section 501(a) of the code. An 

entity also has at least one existing 

memorandum of understanding or 

affiliation agreement with a hospital 

located in the State in which the entity 

is located and retains clinical outpatient 

treatment for cancer on site as well as 

lab research, education, and outreach 

for cancer in the same facility. 

• Qualifying hospital means a 

hospital as defined at section 1861(e) of 

the Act (42 U.S.C. 1395x(e)) or an entity 

(as defined in this section) that is—

(1) Engaged in research in the causes, 

prevention, and treatment of cancer; and 

is either 

(2) Designated as a cancer center for 

the National Cancer Institute; or 

(3) Designated by the State legislature 

as the official cancer institute of the 

State before December 8, 2003. 

B. Qualifying Hospital Criteria for the 

Loan Program 

The statute provides the following 

two sets of criteria for establishing the 

loan program: (1) Selecting among 

qualifying hospitals; and (2) forgiving 

indebtedness (that is, deciding if the 

loan funds may be forgiven). The statute 

also specifies conditions under which a 

loan may be forgiven. These conditions 

are based upon the qualifying hospital’s 

establishment of the following: 

• An outreach program for cancer 

prevention, early diagnosis, and 

treatment that provides services to a 

substantial majority of the residents of 

a State or region, including residents of 

rural areas; 

• An outreach program for cancer 

prevention, early diagnosis, and 

treatment that provides services to 

multiple Indian tribes; and 

• Unique research resources (such as 

population databases); or an affiliation 

with an entity that has unique research 

resources. 

Since the statute outlines specific 

criteria in which to forgive loans, we 

believe that it is consistent with the 

Congressional intent to give priority to 

qualifying hospitals that meet at least 

some of the statutory conditions for loan 

forgiveness when selecting qualifying 

hospitals for the loan program. 

Although the statute does not require 

that these provisions be adopted as 

criteria for receiving funds under the 

loan program, these criteria are 

specified in statute for qualifying for 

loan forgiveness. Therefore, we 

recognize that it is not possible to 

forgive the qualifying hospital’s debt if 

it had not initially been selected to 

receive funds under the loan program. 

As previously stated, we will publish 

a separate rule-making document on the 

forgiveness of indebtedness. We are 

seeking specific comment on what 

additional criteria we should establish 

for any qualifying hospitals that do not 

meet these initial criteria, in the event 

that after granting loans to the initial 

applicants there are residual funds up to 

the $140 million maximum available for 

loan funds. 

In § 505.5(a), we set forth the 

‘‘qualifying criteria’’ requirements. To 

qualify for the loan program, the 

applicant must—

• Meet the definition of a qualifying 

hospital as set forth in § 505.3 of this 

part; and 

• Request a loan for the capital costs 

of an eligible project as defined in 

§ 505.3 of this part. The capital costs for 

which a qualifying hospital may obtain 

a loan are limited to the reasonable costs 

incurred by the hospital, and capitalized 

57370 Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 

on the Medicare cost report, for any 

facility or item of equipment that it has 

acquired the possession or use of at the 

time the loan funding is awarded. 

C. Selection Criteria 

In § 505.5(b), we set forth the 

‘‘selection criteria’’ requirements. In 

selecting loan recipients, we will 

prioritize qualifying hospitals that meet 

the following criteria: 

• The hospital is located in a State 

which based on population density is 

defined as a rural State. A rural State is 

one of ten States with the lowest 

population density. The ten States are 

prioritized beginning with the State 

with the lowest population density. 

Population density is determined based 

on the most recent available U.S. Census 

Bureau data. 

• The hospital is located in a State 

with presence of multiple Indian tribes 

in the State. After prioritizing based on 

paragraph (b)(1), States are further 

prioritized based on the States with the 

most Indian tribes. The number of 

Indian tribes in the State is based on the 

most recent data available published in 

‘‘Indian Entities Recognized and Eligible 

to Receive Services from the United 

State Bureau of Indian Affairs’’ (68 FR 

68180) published on December 5, 2003. 

1. Rural States 

We recognize that conducting 

outreach to Indian tribes in sparsely 

populated, rural areas presents 

additional barriers and challenges. 

According to the Health Resources and 

Services Administration’s (HRSA) 

History of the Rural Health Care 

Services Outreach Grant Program 

(2004), the rural population of the U.S. 

differs significantly from the urban 

population in such parameters as age, 

income, education, and health status. 

The HRSA report can be found at 

http://www.ruralhealth.hrsa.gov/ 

funding/outreachhistory.asp. The HRSA 

report also states that generally, nonmetropolitan populations have higher 

rates of poverty and unemployment and 

have fewer years of education than their 

metropolitan counterparts. Also 

according to the HRSA report, rural 

residents also experience poorer health 

status. Furthermore, the same report 

maintains that there are higher rates of 

chronic disease, infant mortality, 

accidental injuries related to farming 

activities, occupational hazards, and 

trauma mortality in rural areas as 

compared to metropolitan areas. In 

accordance with the HRSA report, lack 

of access to health care in rural 

communities compounds the effect of 

these health problems and that long 

distances between rural and urban 

communities and inadequate public 

transportation systems for rural areas 

further worsen these conditions. 

Additionally, cancer care requires a 

sophisticated set of surgical and medical 

resources; however currently those 

resources are more commonly found in 

large urban settings. Finally, the HRSA 

report found that greater proportions of 

rural cancer patients are diagnosed at 

later stages than urban patients and are 

less likely than urban patients to receive 

state-of-the-art cancer treatments. 

These factors illustrate some of the 

difficulties faced when trying to develop 

new and innovative cancer care 

outreach systems in rural communities. 

Given the inherent barriers in 

conducting outreach in rural areas and 

the statutory priority placed on a 

qualifying hospital establishing an 

outreach program that services a 

substantial majority of the residents of 

a State, including residents of rural 

areas, we are prioritizing applicant 

entities located in rural States. One way 

to identify States that are rural is based 

on population density. Using 

population density as a measure of rural 

status is consistent with another section 

of the statute, which directs the 

establishment of a rural community 

hospital demonstration in States with 

low population densities (see section 

410A of the MMA). 

Section 410A of the MMA established 

a Rural Community Hospital 

Demonstration Program where the 

Secretary was given the authority to 

determine rural areas and select States 

with low population densities. In 

implementing section 410A of the 

statute, the Secretary determined the ten 

States with the lowest population 

density. Using Census Data released in 

2004, the ten States with the lowest 

population density are: Alaska, Idaho, 

Montana, Nebraska, Nevada, New 

Mexico, North Dakota, South Dakota, 

Utah, and Wyoming. 

Since the loan forgiveness criteria in 

section 1016 of the MMA also focus on 

rural populations (that is, establishing 

outreach programs that provide services 

to residents of rural areas) and in order 

to be consistent, for purposes of 

implementing section 1016 of the MMA, 

we have chosen to use the same criteria 

we used to implement section 410A of 

the MMA to determine States with low 

population density. Therefore, we are 

requiring that qualifying hospitals be 

located in 1 of the 10 States with the 

lowest population density in order to 

receive funding under section 1897 of 

the Act. 

2. Indian Tribes 

The statute places a priority for loan 

forgiveness on qualifying hospitals that 

conduct outreach to multiple Indian 

tribes. Therefore, we believe it is 

important that funds under section 1897 

of the Act be directed to qualifying 

hospitals in States that have a 

significant presence of Indian tribes. To 

identify States that have a significant 

presence of Indian tribes, we looked to 

the list of ‘‘Indian Entities Recognized 

and Eligible to Receive Services from 

the United States Bureau of Indian 

Affairs.’’ The most recent notice was 

published in the Federal Register on 

December 5, 2003 (68 FR 68180) by the 

Department of the Interior, Bureau of 

Indian Affairs. 

The statute places a top priority for 

loan forgiveness on hospitals that are 

conducting outreach programs, 

specifically, on outreach programs that 

provide services to multiple Indian 

tribes. Since the Congress provided 

special recognition in the loan 

forgiveness criteria to qualifying 

hospitals providing outreach services to 

multiple Indian tribes, we believe it is 

appropriate to focus on this same 

criteria in prioritizing which qualifying 

hospitals should be granted a loan. 

Therefore, we have based the second 

loan selection criterion on the presence 

of multiple Indian tribes, that is, that the 

qualifying hospital be located in a State 

with a large number of Indian tribes. We 

do not believe, in light of our 

understanding of the congressional 

intent, that it would be appropriate to 

initially provide for loans under section 

1897 of the Act to qualifying hospitals 

in States which do not have a significant 

Indian tribe presence. 

Therefore, in light of this priority on 

hospitals providing outreach to Indian 

tribes, the second criterion we are using 

to further rank qualifying hospitals is 

based on the number of Indian tribes 

within a State. Qualifying hospitals 

located in 1 of the 10 States with the 

lowest population densities (States that 

meet the first criterion) will be ranked 

subsequently according to the number 

of Indian tribes, in which the States 

with the most Indian tribes are given top 

priority. We believe hospitals and 

entities located in States with many 

Indian tribes, spread over a large, 

sparsely populated area, should be 

given first priority for loans under 

section 1897 of the Act, given the focus 

in the statute on rural populations and 

Indian tribes. 

Table 1 below, shows the 10 least 

densely populated States, and ranks 

them according to the number of Indian 

tribes. 

Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 57371 

TABLE 1.—LEAST DENSELY POPULATED STATES

Rank for purposes of Section 

1016 of the MMA State Number of Indian tribes 

Population density—average 

population per 

square mile 

1 ................................................... Alaska ................................................................................................ 229 1.2 

2 ................................................... New Mexico ....................................................................................... 23 15.7 

3 ................................................... Nevada .............................................................................................. 19 21.3 

4 ................................................... South Dakota .................................................................................... 9 10.2 

5 ................................................... Montana ............................................................................................ 7 6.4 

6 ................................................... Utah ................................................................................................... 7 29.1 

7 ................................................... Nebraska ........................................................................................... 6 22.7 

8 ................................................... North Dakota ..................................................................................... 4 9.2 

9 ................................................... Idaho ................................................................................................. 4 16.8 

10 ................................................. Wyoming ........................................................................................... 2 5.2 

Source: ‘‘Indian Entities Recognized and Eligible to Receive Services from the United State Bureau of Indian Affairs.’’ The most recent notice 

was published in the FEDERAL REGISTER on December 5, 2003 (68 FR 68180). 

U.S. Census Bureau, Population Division, Population Estimates Program, Population Density for States and Puerto Rico, July 1, 2004, http:// 

www.census.gov/popest/gallery/maps/popdens_2004.html. 

D. Application and Selection Criteria 

(§ 505.11) 

1. Application Requirements 

Qualifying hospitals interested in 

applying for the loan program must 

complete the loan application form 

which is available at http:// 

www.cms.hhs.gov/providers/hipps. The 

qualifying hospital must provide all 

appropriate supporting documentation 

for each answer made on the loan 

application. The appropriate official 

(that is, a Chief Financial Officer, Chief 

Executive Officer or equivalent) of the 

qualifying hospital must provide 

signatures for each place indicated on 

the application. In accordance with the 

foregoing discussion, we believe 

qualifying hospitals located in States 

with multiple (or a significant number) 

of Indian tribes and low population 

density, should be given first priority for 

loans under section 1897 of the Act. 

2. Submission of Application 

We will begin to accept applications 

on September 30, 2005. All applications 

must be received by CMS no later than 

5 p.m. on December 29, 2005. The 

request must be mailed or delivered by 

courier service. Facsimile (fax) or other 

electronic means are not acceptable. The 

request must be typed or clearly printed 

in ink. Qualifying hospitals must mail 

or deliver an original copy of their loan 

application to the following address: 

Centers for Medicare & Medicaid 

Services, Center for Medicare 

Management, Hospital and Ambulatory 

Policy Group, Division of Acute Care, 

Attention: Loan for Cancer Hospitals 

Mail Stop C4–08–06 7500 Security 

Boulevard Baltimore, Maryland 21244–

1850. 

Applicants may want to send their 

application by a delivery method that 

guarantees a signed receipt, which 

indicates delivery and date of delivery 

of their loan request. The address listed 

above is applicable for both United 

States mail and courier service delivery. 

3. Evaluation Process 

When we receive applications from 

qualifying hospitals, we will first 

evaluate the applicants to determine 

whether they meet the minimum 

qualifications as specified in section 

1897 of the Act (that is, they are NCI 

designated cancer centers or designated 

as the official cancer institute of the 

State). We will then rank applicant 

entities based on the criteria as specified 

in § 505.5. We will continue to evaluate 

the request for funds under the loan 

program from any applicants in the 

highest ranking State, and subsequently 

move to the next highest ranking State, 

until the funds allocated under the loan 

program are exhausted. 

If there are multiple qualified 

applicants from the State with requests 

for funds under the loan program that 

exceed the amount of funds remaining, 

we will pro-rate all loan requests of 

entities in that State to determine the 

loan amount for each applicant. 

4. Capital Costs Criteria 

Section 1897 of the Act provides for 

making loans to a qualified hospital to 

pay for the capital costs of projects. 

Projects are defined as those designed to 

improve the health care infrastructure of 

the hospital, including construction, 

renovation, or other capital 

improvements. Therefore, the capital 

costs for which a qualifying hospital 

may obtain funds under the loan 

program will be based on the reasonable 

costs incurred by the hospital. In 

addition, the capital costs are to be 

appropriately capitalized on the 

Medicare cost report, for any facility or 

item of equipment that it has acquired 

the possession or use of at the time of 

application for the loan program. In 

determining the reasonableness of the 

amount of the loan for any particular 

facility or item for purposes of the loan 

program, the hospital and CMS will 

follow Medicare reasonable cost 

principles as specified in Medicare 

regulations and program operating 

instructions. Payment based on 

reasonable cost principles is a longstanding and established methodology 

used by Medicare and we believe it is 

appropriate to apply it to the loan 

program. 

Accordingly, a qualifying hospital 

that has acquired or built a facility and/ 

or has acquired equipment as an eligible 

project defined at § 505.3 and the 

acquisition costs of the asset(s) are 

appropriately reported on its Medicare 

cost report following Medicare 

reasonable cost principles, could apply 

for a loan not to exceed the net book 

value of the asset(s) as of the date of its 

application to CMS for the loan 

program. Since CMS has been directed 

to implement section 1897 of the Act, 

we believe that it is appropriate to apply 

the standard Medicare interest rate 

specified in 45 CFR 30.13(a), established 

by the Secretary of the Treasury, and 

published quarterly in the Federal 

Register, which we use for our Medicare 

program, to the loan program. 

Alternatively, if a qualifying hospital 

had not acquired the possession or use 

of the asset(s) by the date of the 

application for the funds available 

under the loan program, the reasonable 

cost of the asset(s) could nevertheless be 

the basis for the hospital to apply for 

funds available under the loan program 

if the hospital has entered into a 

contractual obligation via a binding 

written agreement before December 8, 

2003 (the date of enactment of the 

57372 Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 

MMA) in order to ensure that the funds 

are being used in accordance with the 

program. 

The amount of the loan cannot exceed 

the cost of the asset as of the date the 

application is due to CMS September 

30, 2005 based on the cost in the 

binding written agreement and 

following Medicare reasonable cost 

principles. 

E. Terms of the Loan Program 

In § 505.7, we set forth the ‘‘terms and 

conditions’’ of the loan program. 

In order to be awarded funds under 

the loan program, a participating entity 

must meet the criteria of a qualified 

hospital or entity as specified in § 505.3. 

1. Loan Obligation (§ 505.7(a)) 

An authorized official of each 

qualifying hospital must execute a 

promissory note, loan agreement, or any 

other approved form that we may 

designate, to ensure compliance with 

the terms of the loan program. 

2. Schedule of Loan (§ 505.7(b)) 

Each loan recipient will receive a 

lump sum distribution for which 

payment of principal and interest is 

deferred for 60 months beginning with 

the day we notify the qualifying hospital 

of award notification. The loan 

repayment period is 20 years. However, 

the loan recipient must agree to furnish 

to us cancer care data during the 

deferment period. 

3. Bankruptcy Protection (§ 505.7(c)) 

In the event a loan recipient should 

file for bankruptcy protection in a court 

of competent jurisdiction or should 

otherwise evidence insolvency, we may 

terminate the deferment and require 

immediate payment of the loan. If a loan 

recipient should file for bankruptcy 

protection in a court of competent 

jurisdiction or should otherwise 

evidence insolvency after the deferment 

period we will require immediate 

repayment of the outstanding principal 

and interest due. Those payments may 

be deducted from any Medicare 

payments otherwise due that hospital. 

4. Loan Forgiveness (§ 505.7(d)) 

As previously mentioned, we are 

publishing a separate rule making 

document regarding the forgiveness of 

indebtedness in which we will propose 

criteria as specified in the statute. 

5. Default (§ 505.7(e)) 

Additionally, if a loan recipient fails 

to make any payment in repayment of 

a loan under the loan program within 10 

days of its due date, the loan recipient 

may be considered in default on the 

loan. Under the Federal Debt Collection 

Act, upon default, all principal and 

interest become due immediately, and 

we reserve the right to collect on any 

remaining principal and interest due. 

Those payments may be deducted from 

any Medicare payments otherwise due 

that hospital. 

F. Loan Repayment (§ 505.7(f)) 

The loan recipient agrees to make 

payments every month for 20 years until 

the loan, including interest, is repaid. 

For qualifying hospitals that are 

ineligible for loan forgiveness, payments 

are due starting on the first day of the 

next month following the deferment 

period. Payments will be made monthly 

until all of the principal and interest 

owed are paid in full. Interest will be 

charged on the unpaid principal until 

the full amount of principal has been 

paid. A loan recipient will pay interest 

at a yearly rate based upon the rate as 

fixed by the Secretary of the Treasury 

which is published quarterly in the 

Federal Register as specified in 45 CFR 

30.13(a). Payments must be mailed to: 

CMS/Division of Accounting 

Operations, P.O. Box 7520, Baltimore, 

MD 21207–0520. 

G. Payments 

1. Interest Rate and Monthly Payment 

Changes (§ 505.7(g)) 

The regulations in 42 CFR part 405 

subpart C provide authority for us to 

collect interest on certain payments. 

Therefore, to the extent that payments 

are due, we are establishing that interest 

charges and payments be made 

consistent with § 405.378. 

2. Loan Recipient’s Right To Prepay 

(§ 505.7(h)) 

A loan recipient has the right to make 

payments of principal at any time before 

they are due. A payment of principal 

only is known as a ‘‘prepayment.’’ A 

loan recipient may make full 

prepayment or partial prepayment 

without paying any prepayment charge. 

When a prepayment is made, the 

qualifying hospital must provide us 

with written notice. 

H. State and Local Permits (§ 505.9) 

In § 505.9, we set forth the ‘‘State and 

local permit’’ requirements. Consistent 

with section 1897 of the Act, the entity 

must agree to the following terms and 

conditions: The provision of a loan 

under section 1897 shall not—

• Relieve the hospital of any 

obligation to obtain any required State 

or local permit or approval with respect 

to the project; 

• Limit the right of any unit of State 

or local government to approve or 

regulate any rate of return on private 

equity invested in the project; or 

• Otherwise supersede any State or 

local law (including any regulation) 

applicable to the construction or 

operation of the project. 

III. 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. 

IV. Waiver of Proposed Rulemaking 

We ordinarily publish a notice of 

proposed rulemaking in the Federal 

Register and invite public comment on 

the proposed rule before the effective 

date of the rule. This procedure can be 

waived, however, when an agency finds 

good cause that a notice and comment 

procedure is impracticable, unnecessary 

or contrary to the public interest. We 

find good cause to implement this rule 

as an interim final rule because the 

delay involved in the prior notice and 

comment procedure for the loan 

program for the infrastructure for cancer 

centers would be impracticable and 

contrary to the public interest. 

The Congress enacted section 1897 of 

the Act to provide a loan program for a 

qualifying hospital to improve the 

health care infrastructure of the 

hospital. The program is designed to 

enable a number of cancer hospitals to 

expand or improve their healthcare 

infrastructure, develop enhanced 

capacity and research resources, and 

serve the medical needs of their 

populations. We believe that it is not in 

the public interest to delay the loan 

program and prevent the affected parties 

from having access to such services. 

The Congress provided $142,000,000 

for the loan program effective July 1, 

2004 through September 30, 2008, and 

not more than $2,000,000 may be used 

for the administration of the loan 

program for each of the fiscal years (that 

is, 2004 through 2008). 

These legislative changes demonstrate 

that the Congress has concerns about the 

improvement of the cancer-related 

health care hospital infrastructure in the 

United States. As specified in section 

1897(c)(2) of the Act, in order to receive 

funds under the loan program, an 

applicant entity is required to—(1) be 

engaged in research into the causes, 

prevention, and treatment of cancer; (2) 

be designated as a cancer center for the 

Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 57373 

NCI, or be designated by the State 

legislature as the official cancer institute 

of the State before December 8, 2003. 

Delay in issuing this interim final rule 

with comment period could hinder our 

programmatic objective of improving 

cancer care and outreach, particularly 

with respect to the residents in rural 

areas, and Indian tribes. For example, 

this interim final rule with comment 

period provides funding to hospitals in 

rural areas that engage in research in the 

causes, prevention, and treatment of 

cancer and that establish an outreach 

program for cancer prevention, early 

diagnosis, and treatment. Beneficiary 

access to quality cancer care in 

underserved or rural areas is a critical 

programmatic objective. It is not in the 

public interest to delay finalizing this 

loan program which is designed to serve 

this purpose. 

The Congress further indicated that 

the selection criteria for making loans 

consider the extent of medical benefit 

gained from projects to expand or 

improve the health care infrastructure 

for which this loan program is intended. 

The funds made available to improve 

that infrastructure are only available for 

a time-limited period (ending 

September 30, 2008) and nearly 1 year 

has passed since those funds were first 

made available. It would be 

impracticable and contrary to the public 

interest to issue a proposed rule and 

further delay access to these timelimited funds. 

In accordance with the foregoing, we 

believe that it would be impracticable 

and contrary to the public interest to 

delay implementation of the loan 

program pending the process of 

publishing both a proposed rule and a 

final rule. Publishing these provisions 

in an interim final rule with comment 

period will give the public an 

opportunity to submit comments. 

Publication of this interim final rule 

with comment period will serve the 

public interest by ensuring that 

providers have access to funds, and that 

beneficiaries, Indian tribes, and 

residents of rural areas have access to 

improved cancer outreach services, as 

expeditiously as possible, consistent 

with Congressional intent. Therefore, in 

order to establish the loan application 

process and selection criteria to award 

the funds of the time-limited loan 

program, we find good cause to waive 

proposed rulemaking for the revised 

requirements set forth under the 

Administrative Procedure Act (5 U.S.C. 

553(b))and to issue these regulations in 

final. However, we are providing a 60 

day period for public comment, as 

indicated at the beginning of this rule. 

V. Collection of Information 

Requirements 

The collection of information 

requirements at 5 CFR 1320 are 

applicable to requirements affecting 10 

or more entities. While this regulation 

contains information collection 

requirements, because we believe that 

these requirements will affect less than 

10 entities, we believe that these 

collection requirements are exempt from 

OMB for review and approval, as 

specified at 5 CFR 1320.3(c)(4). 

Consequently, this rule does not need to 

be reviewed by the Office of 

Management and Budget under the 

authority of the Paperwork Reduction 

Act of 1995. 

VI. Regulatory Impact 

A. Overall Impact 

We have examined the impacts 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 (as amended 

by Executive Order 13258, which 

merely reassigns responsibility of 

duties) 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 interim final rule with comment 

period is a major rule in which $142 

million is appropriated to carry out the 

Health Care Infrastructure Improvement 

Program. 

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 jurisdictions. Most 

hospitals and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of $6 million to $29 million in any 1 

year. For purposes of the RFA, all 

hospitals are considered small 

businesses according to the Small 

Business Administration’s latest size 

standards with total revenues of $26 

million or less in any 1 year (for further 

information, see the Small Business 

Administration’s regulation at 65 FR 

69432, November 17, 2000). Individuals 

and States are not included in the 

definition of a small entity. This interim 

final rule with comment period affects 

qualifying hospitals as defined by 

section 1897 as—(1) a hospital or entity 

as defined in § 505.3 that is engaged in 

research in the causes, prevention, and 

treatment of cancer; and (2) designated 

as a cancer center for the National 

Cancer Institute (NCI) or is designated 

by the State legislature as the official 

cancer institute of the State and such 

designation by the State legislature 

occurred before December 8, 2003. We 

believe a total of 61 facilities meet the 

definition of qualifying hospitals as 

specified in § 505.3 (that is, 60 NCI 

cancer centers and 1 State legislature 

designated cancer institute). 

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. None of the 61 

eligible facilities that we have identified 

are 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 whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation. 

That threshold level is currently 

approximately $120 million. This 

interim final rule with comment period 

does not mandate any requirements for 

State, local, or tribal governments, nor 

will it result in expenditures by the 

private sector of $120 million in any 1 

year. 

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. 

As specified in section 1897 of the Act, 

no provisions under the loan program 

will relieve an obligation of State, local 

permits or limit or otherwise supersede 

any State or local law. 

B. Anticipated Effects 

1. Effects on Hospitals 

The provisions of this interim final 

rule with comment period are limited to 

qualifying hospitals. Only 61 facilities 

57374 Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 

meet the definition of qualified 

hospitals as specified in § 505.3. Since 

the capital costs of projects which the 

loan program is designed to pay for are 

likely to be substantial and expensive, 

we expect only a small percentage of the 

61 eligible facilities will actually be 

granted loans under this provision 

before the funds are exhausted. For the 

few qualifying hospitals that will 

receive funds under the loan program, 

we expect they will use the money on 

projects that are designed to improve 

the healthcare infrastructure of the 

hospital including construction, 

renovation, or other capital 

improvements and which would result 

in better facilities in which to provide 

cancer care to our beneficiaries. 

However, we believe that the effect will 

be limited to those few qualifying 

hospitals that will receive loan funds. 

Thus, the provisions in this IFC will not 

have a significant economic impact on 

a substantial number of hospitals. 

2. Effects on the Medicare and Medicaid 

programs 

This interim final rule with comment 

period will have little impact on the 

Medicare trust fund. The Congress 

provided $142,000,000 for the loan 

program effective July 1, 2004 through 

September 30, 2008, and not more than 

$2,000,000 may be used for the 

administration of the loan program for 

each of the fiscal years (that is, 2004 

through 2008). 

C. Alternatives Considered 

We considered no alternatives to the 

policies in this interim final rule with 

comment period since the statute 

authorizes the establishment of these 

policies. 

D. Conclusion 

For these reasons, we are not 

preparing further analyses for either the 

RFA or section 1102(b) of the Act 

because we have determined that this 

rule will not have a significant 

economic impact on a substantial 

number of small entities or a significant 

impact on the operations of a substantial 

number of small rural hospitals. 

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 505 

Administrative practice and 

procedure, Health facilities, Loan 

programs, Infrastructure improvement 

program, Reporting and recordkeeping, 

and Rural areas. 

■ For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV by adding a new subchapter 

H (consisting of a new part 505) to read 

as follows: 

SUBCHAPTER H—HEALTH CARE 

INFRASTRUCTURE IMPROVEMENT 

PROGRAM 

PART 505—ESTABLISHMENT OF THE 

HEALTH CARE INFRASTRUCTURE 

IMPROVEMENT PROGRAM 

Subpart A—Loan Criteria 

Secs. 

505.1 Basis and scope. 

505.3 Definitions. 

505.5 Loan criteria. 

505.7 Terms of the loan. 

505.9 State and local permits. 

505.11 Loan application requirements and 

procedures. 

Subpart B—[Reserved] 

Authority: Secs. 1102 and 1871 of the 

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

1395hh). 

Subpart A—Loan Criteria 

§ 505.1 Basis and scope. 

This part implements section 1016 of 

the Medicare Prescription Drug, 

Improvement and Modernization Act of 

2003 (MMA) which amends section 

1897 of the Act. Section 1897 of the Act 

as amended by section 6045 of the 

Tsunami Relief Act of 2005 authorizes 

the Secretary to establish a loan program 

by which qualifying hospitals may 

apply for a loan for the capital costs of 

the health care infrastructure 

improvement projects. Section 1897 of 

the Act appropriates $142,000,000 for 

the loan program including program 

administration. The funds are available 

beginning July 1, 2004 through 

September 30, 2008. This part sets forth 

the criteria that CMS uses to select 

among qualifying hospitals. 

§ 505.3 Definitions. 

For purposes of this subpart, the 

following definitions apply: 

Eligible project means the project of a 

qualifying hospital that is designed to 

improve the health care infrastructure of 

the hospital, including construction, 

renovation, or other capital 

improvements. 

Entity is an entity described in section 

501(c)(3) of the Internal Revenue Code 

of 1986 and exempt from tax under 

section 501(a) of the code. An entity 

must also have at least one existing 

memorandum of understanding or 

affiliation agreement with a hospital 

located in the State in which the entity 

is located and retains clinical outpatient 

treatment for cancer on site as well as 

laboratory research, education, and 

outreach for cancer in the same facility. 

Qualifying hospital means a hospital 

as defined at section 1861(e) of the Act 

(42 U.S,C. 1395x(e)) or an entity (as 

defined in this section) that is engaged 

in research in the causes, prevention, 

and treatment of cancer; and is either 

designated as a cancer center for the 

National Cancer Institute; or designated 

by the State legislature as the official 

cancer institute of the State before 

December 8, 2003. 

§ 505.5 Loan criteria. 

(a) Qualifying criteria. To qualify for 

the loan program, the applicant must 

meet the following conditions: 

(1) Meet the definition of a 

‘‘qualifying hospital’’ as set forth in 

§ 505.3 of this part. 

(2) Request a loan for the capital costs 

of an ‘‘eligible project’’ as defined in 

§ 505.3 of this part. The capital costs for 

which a qualifying hospital may obtain 

a loan are limited to the reasonable costs 

incurred by the hospital, and capitalized 

on the Medicare cost report, for any 

facility or item of equipment that it has 

acquired the possession or use of at the 

time the loan funding is awarded. 

(b) Selection criteria. In selecting loan 

recipients, CMS prioritizes qualifying 

hospitals that meet the following 

criteria: 

(1) The hospital is located in a State 

that, based on population density, is 

defined as a rural State. A rural State is 

one of ten States with the lowest 

population density. An applicant entity 

is required to be located in one of these 

ten States. The ten States are prioritized 

beginning with the State with the lowest 

population density. Population density 

is determined based on the most recent 

available U.S. Census Bureau data. 

(2) The hospital is located in a State 

with multiple Indian tribes in the State. 

After prioritizing based on paragraph 

(b)(1) of this section, States are further 

prioritized based on the States with the 

most Indian tribes. The number of 

Indian tribes in a State is based on the 

most recent data available published in 

‘‘Indian Entities Recognized and Eligible 

to Receive Services from the United 

State Bureau of Indian Affairs.’’ (68 FR 

68180) published on December 5, 2003. 

(c) CMS will send written notice to 

qualifying hospitals that have been 

selected to participate in the loan 

program under this part. 

§ 505.7 Terms of the loan. 

All loan recipients must agree to the 

following loan terms: 

(a) Loan obligation. An authorized 

official of a qualifying hospital must 

execute a promissory note, loan 

agreement, or a form approved by CMS 

and accompanied by any other 

Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 57375 

documents CMS may designate. The 

loan recipient must provide required 

documentation in a timely manner. 

(b) Schedule of loan. A loan recipient 

receives a lump sum distribution for 

which payment of principal and interest 

is deferred for 60 months beginning 

with the day of award notification from 

CMS. The loan repayment period is 20 

years. 

(c) Bankruptcy protection. In the 

event a loan recipient files for 

bankruptcy protection in a court of 

competent jurisdiction or otherwise 

proves to be insolvent, CMS may 

terminate the deferment period 

described in paragraph (b) of this 

section and require immediate payment 

of the loan. If a loan recipient should 

file for bankruptcy protection in a court 

of competent jurisdiction or should 

otherwise evidence insolvency after the 

deferment period we will require 

immediate repayment of the outstanding 

principal and interest due. Those 

payments may be deducted from any 

Medicare payments otherwise due that 

hospital. 

(d) Loan forgiveness. CMS does not 

require a loan recipient to begin making 

payments of principal or interest at the 

end of the 60-month deferment period if 

it determines that the loan recipient 

meets the criteria for loan forgiveness 

under section 1897 of the Act, as 

determined by the Secretary. 

(e) Default. If a loan recipient fails to 

make any payment in repayment of a 

loan under this subpart within 10 days 

of its due date, the loan recipient may 

be considered to have defaulted on the 

loan. Upon default, all principal and 

accrued interest become due 

immediately, and CMS may require 

immediate payment of any outstanding 

principal and interest due. Those 

payments may be deducted from any 

Medicare payments otherwise due that 

hospital. 

(f) Loan repayment. The loan 

recipient must meet the following 

conditions: 

(1) Make payments every month for 

20 years until the loan, including 

interest payments, are paid in full. 

(2) Pay interest on the unpaid 

principal until the full amount of 

principal has been paid. 

(3) Pay interest at a yearly rate based 

upon the rate as fixed by the Secretary 

of the Treasury and set forth at 45 CFR 

30.13(a). 

(4) If a loan recipient fails to make any 

payment in repayment of a loan under 

this subpart within 10 days of its due 

date, that payment may be deducted 

from any Medicare payments otherwise 

due to the recipient. 

(g) Interest rate and monthly payment 

charges. CMS calculates interest charges 

and payments consistent with § 405.378 

of this chapter. 

(h) Loan recipient’s right to prepay. A 

loan recipient has the right to make 

payments of principal at any time before 

they are due. A loan recipient may make 

full prepayment or partial prepayment 

without paying any prepayment charge. 

If a prepayment is made, the loan 

recipient must provide written notice to 

CMS at CMS, Division of Accounting 

Operations, P.O. Box 75120, Baltimore, 

MD 21207–0520. 

§ 505.9 State and local permits. 

With respect to an eligible project, the 

provision of a loan under this part shall 

not—

(a) Relieve the recipient of the loan or 

any obligation to obtain any required 

State or local permit or approval with 

respect to the project. 

(b) Limit the right of any unit of State 

or local government to approve or 

regulate any rate of return on private 

equity invested in the project. 

(c) Supersede any State or local law 

(including any regulation) applicable to 

the construction or operation of the 

project. 

§ 505.11 Loan application requirements 

and procedures. 

(a) The loan application must be 

received by CMS no later than 5 p.m. 

e.d.t. on December 29, 2005. 

(b) The requested information must be 

typed or clearly printed in ink and the 

loan recipient must mail or deliver an 

original copy of the loan to CMS. The 

loan application must contain the 

following information: 

(1) Qualifying hospital’s name and 

street address. 

(2) Qualifying hospital’s Medicare 

provider number. 

(3) Name, title, and telephone number 

of a contact person submitting the 

application. 

(4) Provide all appropriate supporting 

documentation for each answer made on 

the loan application. 

Subpart B—[Reserved] 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: June 28, 2005. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: August 3, 2005. 

Michael O. Leavitt, 

Secretary. 

[FR Doc. 05–19306 Filed 9–23–05; 4:00 pm] 

BILLING CODE 4120–03–P