Federal Register / Vol. 60, No. 32 / Thursday, February 16, 1995 / Rules and Regulations 8951

(4) Rule 8–22, adopted on June 1, 1994.

* * * * *

[FR Doc. 95–3864 Filed 2–15–95; 8:45 am]

BILLING CODE 6560–50–W

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 410

[BPD–424–F]

RIN 0938–AE94

Medicare Program; Medicare Coverage

of Prescription Drugs Used in

Immunosuppressive Therapy

AGENCY: Health Care Financing

Administration (HCFA), HHS.

ACTION: Final rule.

SUMMARY: This final rule amends the

regulations to provide Medicare

coverage for prescription drugs used in

immunosuppressive therapy furnished

to an individual who receives an organ

transplant for which Medicare payment

is made. This rule reflects the enactment

of section 1861(s)(2)(J) of the Social

Security Act that provides Medicare

coverage for prescription drugs used in

immunosuppressive therapy for a

period of up to 1 year from the date of

discharge from an inpatient hospital

stay during which the Medicare-covered

organ or tissue transplant was

performed.

This final rule also implements

section 13565 of the Omnibus Budget

Reconciliation Act of 1993 (Public Law

103–66) and section 160 of the Social

Security Act Amendments of 1994

(Public Law 103–432) that, beginning

January 1, 1995, expand Medicare

coverage for prescription drugs used in

immunosuppressive therapy from 1 year

to a phased-in period of 3 years from the

date of discharge from a hospital stay

during which the Medicare-covered

organ or tissue transplant was

performed.

DATES: These regulations are effective

January 1, 1995, the effective date of the

statute.

FOR FURTHER INFORMATION CONTACT:

Debra McKeldin, (410) 966–9671.

SUPPLEMENTARY INFORMATION:

I. Background

Before enactment of section 9335(c) of

the Omnibus Budget Reconciliation Act

of 1986 (OBRA ’86), Public Law 99–509,

there was no specific Medicare benefit

that provided for Medicare Part B

coverage of prescription drugs used in

immunosuppressive therapy.

OBRA ’86 added subparagraph (J) to

section 1861(s)(2) of the Social Security

Act (the Act) to provide Medicare

coverage for immunosuppressive drugs,

furnished to an individual who receives

an organ transplant for which Medicare

payment is made, for a period not to

exceed 1 year after the transplant

procedure. Coverage of these drugs

under Medicare Part B began January 1,

1987.

We published a proposed rule with a

60-day public comment period (53 FR

1383) on January 19, 1988, which we

discuss below. Before its publication,

however, the Omnibus Budget

Reconciliation Act of 1987 (OBRA ’87),

Public Law 100–203, was enacted and

effective December 22, 1987, revised

section 1861(s)(2)(J) of the Act so that

the scope of coverage was expanded

from coverage of ‘‘immunosuppressive

drugs’’ to coverage of ‘‘prescription

drugs used in immunosuppressive

therapy.’’ We issued the proposed rule

before changes could be made to reflect

this new terminology. We did propose,

however, coverage that would include,

in addition to immunosuppressive

drugs, other drugs used in conjunction

with immunosuppressive therapy. In

addition, in April 1988, we issued

manual instructions to Medicare

contractors that reflected the new

terminology.

Also, section 202 of the Medicare

Catastrophic Coverage Act of 1988,

Public Law 100–360, enacted on July 1,

1988, extended coverage of drugs used

in immunosuppressive therapy to

include drugs furnished in subsequent

years after the first year following a

covered transplant. It also extended

coverage to include drugs used

following a noncovered transplant

irrespective of any prescribed time

limitations. This extended coverage,

which was to be effective on January 1,

1990, was part of the outpatient drug

coverage set forth in section 202(a) of

Public Law 100–360. On December 19,

1989, however, these provisions of the

law were repealed as part of the

Medicare Catastrophic Coverage Repeal

Act of 1989, Public Law 101–234. As a

result, the extended Medicare coverage

of drugs used in immunosuppressive

therapy set forth in Public Law 100–360

never became effective.

Since publication of the proposed

rule, section 13565 of the Omnibus

Reconciliation Act of 1993 (OBRA ’93),

Public Law 103–66, amended section

1861(s)(2)(J) of the Act. In accordance

with OBRA ’93, the coverage period for

prescription drugs used in

immunosuppressive therapy will be

extended to 18 months from the hospital

discharge date following a covered

transplant procedure for drugs

furnished in 1995; 24 months for drugs

furnished in 1996; 30 months for drugs

furnished in 1997; and 36 months for

drugs furnished after 1997.

Subsequently, section 160 of the Social

Security Act Amendments of 1994,

Public Law 103–432, enacted on

October 31, 1994, allows us to

administer the OBRA ’93 provision in

such a way that coverage would be

continued consecutively.

Since this provision is self-executing,

we have issued it as part of this final

rule, rather than in proposed form.

II. Provisions of the Proposed Rule

In the January 1988 proposed rule, we

proposed to amend 42 CFR part 410

(‘‘Supplementary Medical Insurance

(SMI) Benefits’’) to incorporate the

following:

• Cover immunosuppressive drugs

under Medicare Part B by revising

§ 410.10 to include immunosuppressive

drugs in the term ‘‘medical and other

health services’’;

• Add a new § 410.31 to provide

specifically for coverage of

immunosuppressive drugs generally;

and

• Add a new § 410.65 to provide

Medicare coverage of drugs used in

immunosuppressive therapy, that are

furnished to an individual who receives

an organ transplant for which Medicare

payment is made, for a period of up to

1 year beginning with the date of

discharge from the inpatient hospital

stay during which the transplant was

performed (the proposed rule did not, of

course, include the OBRA ’93 phased-in

extension to the coverage period that

follows a Medicare approved

transplant). We proposed that coverage

include: (1) Those immunosuppressive

drugs specifically labeled as

immunosuppressive drugs and

approved for marketing by the Food and

Drug Administration (FDA) and (2)

other drugs that FDA-approved labeling

indicates are used in conjunction with

immunosuppressive drug therapy.

III. Discussion of Comments

We received 11 timely comments in

response to the January 1988 proposed

rule. The comments were from

representatives of hospitals, medical

centers, national associations

representing health care professionals,

and a university. The specific comments

and our responses follow:

Comment: Several commenters

suggested that coverage of

immunosuppressive drugs be extended

beyond 1 year.

Response: As stated earlier, since the

publication of the proposed rule, OBRA
8952 Federal Register / Vol. 60, No. 32 / Thursday, February 16, 1995 / Rules and Regulations

’93 has authorized phased-in extensions

to the Medicare coverage period for

prescription drugs used in

immunosuppressive therapy. In

accordance with this new legislation,

the period after the hospital discharge

date in which a Medicare beneficiary is

eligible to receive Part B coverage of

prescription drugs used in

immunosuppressive therapy has been

extended as follows:

• For drugs furnished during 1995, a

Medicare beneficiary is eligible for

coverage within 18 months after the

date of discharge from an inpatient stay

during which the covered transplant

was performed.

• For drugs furnished during 1996, a

Medicare beneficiary is eligible for

coverage within 24 months after the

date of discharge from an inpatient stay

during which the covered transplant

was performed.

• For drugs furnished during 1997, a

Medicare beneficiary is eligible for

coverage within 30 months after the

date of discharge from an inpatient stay

during which the covered transplant

was performed.

• For drugs furnished after 1997, a

Medicare beneficiary is eligible for

coverage within 36 months after the

date of discharge from an inpatient stay

during which the covered transplant

was performed.

Thus, the extension provides a range

of coverage extending from 12 to 36

months depending on the date of

discharge from an inpatient stay during

which the covered transplant was

performed.

For example, if prescription drugs

used in immunosuppressive therapy are

furnished to a beneficiary who received

a covered transplant and was discharged

on February 1, 1994, the initial coverage

period is for 12 months (February 1,

1994 to January 31, 1995). In accordance

with OBRA ’93, on January 1, 1995, the

coverage period for prescription drugs

used in immunosuppressive therapy

will be extended to 18 months from the

hospital discharge date following a

covered transplant procedure.

Therefore, the initial 12-month coverage

period is extended to July 31, 1995

because section 13565 of OBRA ’93

extends coverage for drugs furnished in

1995 to 18 months. Subsequently, the

eligibility for coverage for drugs

furnished in 1996 is extended to 24

months after the discharge date. Because

January 31, 1996 is 24 months after the

discharge date of the covered transplant

procedure in this example, the

beneficiary is eligible for an additional

month of coverage beginning January 1,

1996 and ending on January 31, 1996.

Thus, the beneficiary will receive a total

of 19 months of coverage for

prescription drugs used in

immunosuppressive therapy.

The following chart illustrates how

the extension periods prescribed by

OBRA ’93 will be phased in using a

discharge date of the first day of each

month.

PHASED-IN BENEFIT PERIODS FOR IMMUNOSUPPRESSIVE DRUG THERAPY

Discharge date Coverage period ends Coverage period resumes Coverage period ends Total months of coverage

08/1/93 07/31/94 01/1/95 01/31/95 13

09/1/93 08/31/94 01/1/95 02/28/95 14

10/1/93 09/30/94 01/1/95 03/31/95 15

11/1/93 10/31/94 01/1/95 04/30/95 16

12/1/93 11/30/94 01/1/95 05/31/95 17

01/1/94 06/30/95 ........................................... ........................................... 18

02/1/94 07/31/95 01/1/96 01/31/96 19

03/1/94 08/31/95 01/1/96 02/29/96 20

04/1/94 09/30/95 01/1/96 03/31/96 21

05/1/94 10/31/95 01/1/96 04/30/96 22

06/1/94 11/30/95 01/1/96 05/31/96 23

07/1/94 06/30/96 ........................................... ........................................... 24

08/1/94 07/31/96 01/1/97 01/31/97 25

09/1/94 08/31/96 01/1/97 02/28/97 26

10/1/94 09/30/96 01/1/97 03/31/97 27

11/1/94 10/31/96 01/1/97 04/30/97 28

12/1/94 11/30/96 01/1/97 05/31/97 29

01/1/95 06/30/97 ........................................... ........................................... 30

02/1/95 07/31/97 01/1/98 01/31/98 31

03/1/95 08/31/97 01/1/98 02/28/98 32

04/1/95 09/30/97 01/1/98 03/31/98 33

05/1/95 10/31/97 01/1/98 04/30/98 34

06/1/95 11/30/97 01/1/98 05/31/98 35

07/1/95 06/30/98 ........................................... ........................................... 36

As illustrated in the chart, the

statutory construction of the provision

in OBRA ’93 that prescribed the phasedin extension of coverage for drugs used

in immunosuppressive therapy resulted

in gaps in the coverage period.

However, as stated earlier, section 160

of the Social Security Act Amendments

of 1994 allows us to administer this

provision in such a way that

consecutive months of coverage are

furnished provided the total number of

months of coverage allowed by OBRA

’93 are the same. Thus, in the above

example, the beneficiary who was

discharged on February 1, 1994 will

receive 19 consecutive months of

coverage (through August 31, 1995) for

prescription drugs used in

immunosuppressive therapy.

The periods of consecutive coverage

for prescription drugs used in

immunosuppressive therapy are

illustrated in the following chart. The

chart demonstrates how the OBRA ’93

provisions would be phased in using a

discharge date of the first day of each

month.

PHASED-IN CONSECUTIVE BENEFIT PERIODS FOR IMMUNOSUPPRESIVE

DRUG THERAPY

Discharge

date

Coverage period endsTotal months

of coverage

08/1/93 08/31/94 13

09/1/93 10/31/94 14

10/1/93 12/31/94 15

11/1/93 02/28/95 16

12/1/93 04/30/95 17

01/1/94 06/30/95 18

02/1/94 08/31/95 19

03/1/94 10/31/95 20
Federal Register / Vol. 60, No. 32 / Thursday, February 16, 1995 / Rules and Regulations 8953

PHASED-IN CONSECUTIVE BENEFIT PERIODS FOR IMMUNOSUPPRESIVE

DRUG THERAPY—Continued

Discharge

date

Coverage period endsTotal months

of coverage

04/1/94 12/31/95 21

05/1/94 02/29/96 22

06/1/94 04/30/96 23

07/1/94 06/30/96 24

08/1/94 08/31/96 25

09/1/94 10/31/96 26

10/1/94 12/31/96 27

11/1/94 02/28/97 28

12/1/94 04/30/97 29

01/1/95 06/30/97 30

02/1/95 08/31/97 31

03/1/95 10/31/97 32

04/1/95 12/31/97 33

05/1/95 02/28/98 34

06/1/95 04/30/98 35

07/1/95 06/30/98 36

Comment: One commenter

recommended that each patient be given

a card showing eligibility dates for

immunosuppressive drug therapy.

Response: We have not adopted this

suggestion because it would add an

unnecessary paperwork burden without

a commensurate benefit to the program.

This information is contained in the

Medicare Handbook.

The Medicare contractors processing

claims for prescription drugs used in

immunosuppressive therapy are

prepared to implement the extended

periods of coverage. The claims

processing systems are capable of

determining the periods for which Part

B coverage is available beginning with

the date of discharge from a hospital

stay during which a covered transplant

was performed.

Comment: One commenter requested

that we define several classes of drugs,

such as treatment related drugs (for

example, prednisone, antihypertensives,

and cardiac medicines) that, in his

opinion, would be eligible for payment.

This classification would provide

guidelines for coverage of each type of

drug. Another commenter urged that

there be flexible criteria to permit

providers to use a full range of drug

therapy, including drugs prescribed for

unapproved indications, rather than

limiting coverage to ‘‘other drugs that

are used in conjunction with

immunosuppressive drugs as part of a

therapeutic regimen.’’

Response: Section 1861(s)(2)(J) of the

Act provides for coverage of only

prescription drugs used in

immunosuppressive therapy. We

interpret this to mean that coverage is

limited to those drugs that are medically

necessary and appropriate for the

specific purpose of preventing or

treating the rejection of a transplanted

organ or tissue by suppressing a

patient’s natural immune responses. To

meet this definition, a drug must be

approved by the FDA, be available only

through a prescription, and belong to

one of the following three categories:

• It is a drug approved for marketing

by the FDA and is labeled as an

immunosuppressive drug.

• It is a drug, such as a corticosteroid,

that is approved by the FDA and is

labeled for use in conjunction with

immunosuppressive drugs to treat or

prevent the rejection of a patient’s

transplanted organ or tissue.

• It is a drug that a Part B carrier, in

processing a Medicare claim,

determined to be reasonable and

necessary for the specific purpose of

preventing or treating the rejection of a

patient’s transplanted organ or tissue, or

for use in conjunction with those

immunosuppressive drugs for the

purpose of preventing or treating the

rejection of a patient’s transplanted

organ or tissue.

Accordingly, drugs that are used for

the treatment of conditions that may

result from an immunosuppressive drug

regimen (for example, antibiotics,

antihypertensives, analgesics, vitamins,

and other drugs that are not directly

related to organ rejection) are not

covered under this benefit.

Comment: One commenter suggested

that we clarify the statement in the

proposed rule (53 FR 1383) that implied

that corticosteroids may be covered by

Medicare only if used in association

with Sandimmune (that is,

cyclosporine).

Response: The statement in the

proposed rule was meant as an example

of a drug treatment regimen that

included corticosteroids. It was not our

intention to imply that corticosteroids

would not be covered if prescribed in

conjunction with another

immunosuppressive, or alone, to

prevent rejection of an organ or tissue

transplant.

Comment: One commenter concluded

that our statement that commonly

prescribed immunosuppressive drugs

are available at substantial discounts

from prices listed in the Red Book (an

annual publication that lists drugs and

their wholesale prices) is wrong because

the drugs we listed (with the exception

of prednisone) are sole source drugs and

there is no competition to reduce the

prices.

Response: Since publication of the

proposed rule in January 1988, payment

for Medicare Part B drugs was modified

by the November 25, 1991 final rule for

the fee schedule for physicians’ services

(56 FR 59502). Section 405.517 states

that payment for drugs (other than those

paid on a cost or prospective basis) is

based on the lower of the estimated

acquisition cost or the national average

wholesale price of the drug. The

estimated acquisition cost is determined

by individual carrier surveys of actual

invoice prices paid for the drug. If

physicians or pharmacies receive price

discounts, the reductions are reflected

in their invoice costs.

Comment: One commenter objected to

our statement in the preamble to the

proposed rule (53 FR 1385) that mail

service pharmacies ‘‘offer reduced

prices that minimize beneficiaries’

coinsurance liability,’’ on the grounds

that it amounted to a ‘‘commercial’’ on

behalf of mail service pharmacies.

Response: Our intent was not to

endorse one source of drugs over

another, but to make the public aware

of the alternative of mail service

pharmacies.

Comment: One commenter expressed

concern that ordering drugs through the

mail eliminates patient-pharmacist

contact.

Response: The absence of face-to-face

contact is one of the many things a

beneficiary would want to consider in

deciding from whom he or she will

obtain prescribed drugs.

Comment: One commenter suggested

that we buy drugs from manufacturers

and have them shipped directly to

participating transplant centers.

Response: We lack the legal authority

to do this. We administer the Medicare

program at the national level as

authorized by the law. We are not

empowered to participate in the

delivery of health care services.

Comment: One commenter asked that

we update prices for

immunosuppressive drugs.

Response: Medicare carriers use the

Red Book or a similar publication that

is updated periodically during the year

for current prices.

Comment: One organization suggested

that our payment policy cover not only

the costs of drugs, but also

pharmaceutical care services. The

organization explained that in addition

to traditional drug distribution services,

contemporary pharmaceutical services

include clinical functions that ensure

the safe and effective use of drug

therapy. Examples of these functions,

which were characterized by the

commenter as ‘‘pharmacy’’ services, are

providing patient education, assessing

patient compliance, and monitoring for

therapeutic effectiveness and adverse

effects.

Response: Payment for functions

furnished by pharmacists is included in

the amount that Medicare pays for the

drugs.
8954 Federal Register / Vol. 60, No. 32 / Thursday, February 16, 1995 / Rules and Regulations

Comment: One commenter

recommended that all payments,

including those to hospital outpatient

departments, should be made under Part

B on a reasonable charge basis. The

commenter maintained that payments

based on costs do not allow the hospital

to be paid a reasonable rate for

pharmaceutical services and overhead

and that many hospitals maintain

separate inventory and purchasing

practices for drugs used in the

outpatient setting.

Response: The statute mandates that

the outpatient department of a hospital

be paid based on the lower of reasonable

cost or customary charges as established

in the following sections of the Act:

• Sections 1832(a)(2)(B) and

1861(s)(2)(J), which establish that drugs

used in immunosuppressive therapy

furnished in a provider are a covered

medical service.

• Section 1833(a)(2)(B), which states

that payment is based on the lesser of

the reasonable cost of hospital

outpatient department services as

determined under section 1861(v), or

the customary charges with respect to

these services.

• Section 1861(u), which defines a

provider of services to include a

hospital.

• Section 1862(a)(14), which states, in

part, that no payment may be made

under Part A or Part B for any expenses

incurred for items or services, other

than for statutorily specified exceptions,

that are furnished to an individual who

is a patient of a hospital by an entity

other than the hospital or under

arrangements with the hospital.

(‘‘Patient’’ means inpatients and

outpatients of a hospital.)

Therefore, if a patient is an outpatient

of a hospital and receives prescription

drugs from the hospital pharmacy,

payment would have to be made to the

hospital pharmacy according to the

mandate of section 1833(a)(2)(B) of the

Act. That section establishes that

payment to any provider of services (in

this case, the outpatient pharmacy

department of a hospital) must be the

lesser of the reasonable cost of these

services, as determined under section

1861(v) (which includes recognition of

both direct and indirect costs), or the

customary charges with respect to these

services.

Comment: One commenter suggested

that we improve our communication

with fiscal intermediaries, because some

intermediaries are unaware that they

should be paying for prescription drugs

used in immunosuppressive therapy.

Response: We have taken steps to

ensure that all contractors processing

claims for prescription drugs used in

immunosuppressive therapy are aware

of current Medicare coverage and

payment policies. We have not been

informed of any specific problems in

this area of program administration.

IV. Provisions of This Final Rule

The provisions of this final rule

restate the provisions of the January

1988 proposed rule. The final rule

differs from the proposed rule in that we

have changed the term

‘‘immunosuppressive drugs,’’ wherever

it appears, to ‘‘prescription drugs used

in immunosuppressive therapy’’ to

conform with section 4075 of OBRA ‘87.

Also, we have redesignated the

proposed § 410.65 as § 410.31. The final

rule also differs from the proposed rule

in that we have specified that drugs also

will be covered if they have been

determined, by a Part B carrier in

processing a Medicare claim, to be

reasonable and necessary (that is, safe

and effective) for the purpose of treating

or preventing the rejection of a patient’s

transplanted organ or tissue, or for use

in conjunction with these

immunosuppressive drugs for the

purpose of preventing or treating the

rejection of a patient’s transplanted

organ or tissue. The carriers make these

determinations by considering factors

such as authoritative drug compendia,

current medical literature, recognized

standards of medical practice, and

professional medical publications. This

change makes the policy governing

drugs used in immunosuppressive

therapy consistent with Medicare’s

general drug coverage policy.

An additional point of clarification is

that the coverage of prescription drugs

for transplants under this rule includes

prescription drugs used in

immunosuppressive therapy furnished

to an individual who receives a bone

marrow tissue transplant for which

Medicare payment is made. For

purposes of this rule, we consider bone

marrow tissue transplants to be

subsumed within the term ‘‘organ

transplant’’ under section 1861(s)(2)(J)

of the Act. Medicare currently covers

heart, kidney, bone marrow, and certain

liver transplants.

The final rule also differs from the

proposed rule in that OBRA ’93 requires

phased-in extensions (up to 3 years) to

the coverage period for prescription

drugs used in immunosuppressive

therapy.

V. Collection of Information

Requirements

This notice does not impose

information collection or recordkeeping

requirements. Consequently, it need not

be reviewed by the Office of

Management and Budget under the

authority of the Paperwork Reduction

Act of 1980 (44 U.S.C 3501 et seq.).

VI. Regulatory Impact Statement

A. Introduction

This final rule amends the regulations

to provide Medicare coverage for

prescription drugs used in

immunosuppressive therapy following

an inpatient hospital stay during which

a Medicare-covered organ transplant

was performed. OBRA ’86 amended

section 1861(s)(2) of the Act to provide

Part B coverage for a period not to

exceed 1 year beginning July 1, 1987. As

a result of OBRA ’93, the period of

coverage of prescription drugs used in

immunosuppressive therapy after the

discharge from a hospital has been

increased to 18 months for drugs

furnished in 1995, 24 months for drugs

furnished in 1996, 30 months for drugs

furnished in 1997, and 36 months for

drugs furnished after 1997. The

following table shows the estimated

additional expenditures as a result of

the extended coverage.

ESTIMATED ADDITIONAL COST BECAUSE OF EXTENDED COVERAGE OF DRUGS FOR IMMUNOSUPPRESSIVE THERAPY—

ROUNDED TO THE NEAREST $5 MILLION

FY 1995 FY 1996 FY 1997 FY 1998 FY 1999

$20 $60 $90 $110 $120

The use of immunosuppressive drug

therapy is indicated for the prevention

of organ rejection when an organ or

tissue transplant is performed. The

estimated number of transplants that

will be performed in CY 1994 is 10,125,

some of which will have an effect on

immunosuppressive drug therapy

expenditures in CYs 1995 and 1996. The

estimated 10,850 transplants that will be

performed in CY 1995 will have an

effect on drug therapy costs in CYs
Federal Register / Vol. 60, No. 32 / Thursday, February 16, 1995 / Rules and Regulations 8955

1996, 1997, and 1998. We estimate that

the annual drug cost following

transplantation for a full time user of

immunosuppressive drugs will be as

follows:

ESTIMATED ANNUAL COST OF IMMUNOSUPPRESSIVE DRUGS FOR EACH

TRANSPLANT PATIENT

CY 1995 CY 1996 CY 1997

$5580 $5910 $6275

This final rule also differs from the

proposed rule in that the term

‘‘immunosuppressive drugs’’ has been

changed to ‘‘prescription drugs used in

immunosuppressive therapy’’ to

conform with section 4075 of OBRA ’87.

This expanded coverage will allow

payment for other necessary drugs used

in conjunction with

immunosuppressive drugs.

B. Regulatory Flexibility Act

Consistent with the Regulatory

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

through 612), we prepare a regulatory

flexibility analysis unless the Secretary

certifies that a rule will not have a

significant economic impact on a

substantial number of small entities. For

purposes of the RFA, pharmacists,

physicians who perform transplantation

services, and manufacturers of covered

pharmaceuticals are considered to be

small entities. Although pharmaceutical

manufacturers are frequently not

considered to be small entities, the

possibility exists that certain

manufacturers affected by this final rule

may meet the definition of a small

entity.

In addition, section 1102(b) of the Act

requires the Secretary 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 50

beds.

Because of the high cost of a majority

of the drugs used for

immunosuppressive therapy and the

extended time that beneficiaries are

required to take the drugs to ensure that

the transplanted organ is not rejected,

all Medicare transplant patients and

many small entities will benefit by this

regulation. In many cases, 1 year of

immunosuppressive therapy is not

sufficient. Also, it is possible that we

may avoid the additional cost of a

second transplant if a patient is kept on

immunosuppressive drug therapy

beyond the original 12 month coverage

period.

We are not preparing analyses for

either the RFA or section 1102(b) of the

Act because we have determined, and

the Secretary certifies, 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 not reviewed by the Office of

Management and Budget.

List of Subjects in 42 CFR Part 410

Medical and other health services,

Medicare.

For the reasons set forth in the

preamble, 42 CFR chapter IV, part 410

is amended as set forth below:

PART 410—SUPPLEMENTARY

MEDICAL INSURANCE (SMI)

BENEFITS

1. The authority citation continues to

read as follows:

Authority: Secs. 1102 and 1871 of the

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

1395hh).

2. In § 410.10, the introductory text is

republished and a new paragraph (u) is

added to read as follows:

§ 410.10 Medical and other health

services: Included services.

Subject to the conditions and

limitations specified in this subpart,

‘‘medical and other health services’’

includes the following services:

* * * * *

(u) Prescription drugs used in

immunosuppressive therapy.

3. A new § 410.31 is added to read as

follows:

§ 410.31 Prescription drugs used in

immunosuppressive therapy.

(a) Scope. Payment may be made for

prescription drugs used in

immunosuppressive therapy that have

been approved for marketing by the

FDA and that meet one of the following

conditions:

(1) The approved labeling includes

the indication for preventing or treating

the rejection of a transplanted organ or

tissue.

(2) The approved labeling includes

the indication for use in conjunction

with immunosuppressive drugs to

prevent or treat rejection of a

transplanted organ or tissue.

(3) Have been determined by a carrier

(in accordance with part 421, subpart C

of this chapter), in processing a

Medicare claim, to be reasonable and

necessary for the specific purpose of

preventing or treating the rejection of a

patient’s transplanted organ or tissue, or

for use in conjunction with

immunosuppressive drugs for the

purpose of preventing or treating the

rejection of a patient’s transplanted

organ or tissue. (In making these

determinations, the carriers may

consider factors such as authoritative

drug compendia, current medical

literature, recognized standards of

medical practice, and professional

medical publications.)

(b) Period of eligibility. Coverage is

available only for prescription drugs

used in immunosuppressive therapy,

furnished to an individual who receives

an organ or tissue transplant for which

Medicare payment is made, for the

following periods:

(1) For drugs furnished before 1995,

for a period of up to 1 year beginning

with the date of discharge from the

hospital during which the covered

transplant was performed.

(2) For drugs furnished during 1995,

within 18 months after the date of

discharge from the hospital during

which the covered transplant was

performed.

(3) For drugs furnished during 1996,

within 24 months after the date of

discharge from the hospital during

which the covered transplant was

performed.

(4) For drugs furnished during 1997,

within 30 months after the date of

discharge from the hospital during

which the covered transplant was

performed.

(5) For drugs furnished after 1997,

within 36 months after the date of

discharge from the hospital during

which the covered transplant was

performed.

(c) Coverage. Drugs are covered under

this provision irrespective of whether

they can be self-administered.

(Catalog of Federal Domestic Assistance

Program No. 93.774, Medicare—

Supplementary Medical Insurance)

Dated: January 9, 1995.

Bruce C. Vladeck,

Administrator, Health Care Financing

Administration.

Approved: February 9, 1995.

Donna E. Shalala,

Secretary.

[FR Doc. 95–3835 Filed 2–15–95; 8:45 am]

BILLING CODE 4120–01–P