Federal Register / Vol. 73, No. 188 / Friday, September 26, 2008 / Rules and Regulations 55763 

quarter; a rolling error rate average over 

more than 1 quarter is not permitted. 

(4) After the contractor determines 

that the provider or supplier must be 

terminated from non-random 

prepayment complex medical review, 

the claims processing system must be 

updated within 5 business days to 

ensure that a provider’s or supplier’s 

claims for a specific billing error are no 

longer suspended for non-random 

prepayment complex medical review. 

(d) Periodic re-evaluation. (1) Once a 

provider or supplier is terminated from 

non-random prepayment complex 

medical review, contractors may 

periodically re-evaluate the provider or 

supplier’s data and may place a 

provider or supplier that appears to 

have resumed a high level of payment 

error on non-random prepayment 

complex medical review. 

(2) This review would only be 

initiated if a probe review confirms that 

there continues to be a high level of 

payment error. 

(3) If there is a high level of payment 

error, a provider or supplier may be 

placed on non-random prepayment 

complex medical review no earlier than 

6 months after termination of a previous 

non-random prepayment complex 

medical review. As set forth in 

§ 421.505(a)(3) contractors may also 

refer the provider or supplier to the 

contractor responsible for benefit 

integrity review or place the provider or 

supplier on postpayment medical 

review. 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: March 21, 2008. 

Kerry Weems, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: June 3, 2008. 

Michael O. Leavitt, 

Secretary. 

[FR Doc. E8–22307 Filed 9–25–08; 8:45 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 422 and 423 

[CMS–4124–F2] 

RIN–0938–AO78 

Medicare Program; Revisions to the 

Medicare Advantage and Part D 

Prescription Drug Contract 

Determinations, Appeals, and 

Intermediate Sanctions Processes; 

Correcting Amendment 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule; correcting 

amendment. 

SUMMARY: In the December 5, 2007 issue 

of the Federal Register, we published a 

final rule finalizing the Medicare 

program provisions relating to contract 

determinations involving Medicare 

Advantage (MA) organizations and 

Medicare Part D prescription drug plan 

sponsors, including eliminating the 

reconsideration process for review of 

contract determinations, revising the 

provisions related to appeals of contract 

determinations, and clarifying the 

process for MA organizations and Part D 

sponsors to complete corrective action 

plans. In that final rule, we also clarified 

the intermediate sanction and civil 

money penalty provisions that apply to 

MA organizations and Part D sponsors, 

modified elements of MA organizations 

and Part D sponsors’ compliance plans, 

retained voluntary self-reporting for Part 

D sponsors, implemented voluntary selfreporting for MA organizations, and 

revised provisions to ensure HHS has 

access to the books and records of MA 

organizations and Part D sponsors’ first 

tier, downstream, and related entities. 

This correcting amendment corrects a 

limited number of technical and 

typographical errors identified in the 

December 5, 2007 final rule. 

DATES: These correcting amendments 

are effective September 26, 2008, except 

for the amendment to § 423.505, which 

is effective on January 1, 2009. The 

correcting amendments for § 422.756(d) 

and § 423.756(d) are applicable 

beginning January 4, 2008. 

FOR FURTHER INFORMATION CONTACT: 

Christine Reinhard (410) 786–2987. 

Stephanie Blaydes Kaisler (410) 786– 

0957. 

SUPPLEMENTARY INFORMATION: 

I. Background 

In FR Doc. 07–5946 (72 FR 68700 

through 68741), the final rule entitled, 

‘‘Revisions to the Medicare Advantage 

and Part D Prescription Drug Contract 

Determinations, Appeals, and 

Intermediate Sanctions Processes,’’ 

there were technical errors that have 

been identified and corrected in the 

regulations text of this correcting 

amendment. We note that correcting 

two of these technical errors, found at 

§ 422.756(d) and § 423.756(d), ensure 

that certain existing provisions which 

were never intended to be the subject of 

notice and comment rulemaking, remain 

in place for the benefit of all affected 

parties, including MA organizations and 

Part D sponsors. The provisions in this 

correcting amendment for § 422.756(d) 

and § 423.756(d) are effective as if they 

were included in the final rule 

published December 5, 2007. 

Accordingly, the corrections are 

effective retroactive to January 4, 2008, 

the effective date of most of the 

provisions of the final rule. However, 

the provisions in this correcting 

amendment for § 423.505 are effective 

January 1, 2009 since these particular 

provisions in § 423.505 were not set to 

take effect until January 1, 2009. 

II. Summary of Errors in the 

Regulations Text 

On pages 68726 and 68735 of the 

December 5, 2007 final rule, there were 

technical errors made in the regulation 

text of § 422.756(d) and § 423.756(d). 

Specifically, a typographical error in our 

amendatory instructions caused us to 

inadvertently omit from the Code of 

Federal Regulations (CFR) existing 

paragraphs § 422.756(d)(3) and 

§ 423.756(d)(3) regarding the duration of 

an MA and Part D intermediate 

sanction, respectively. We note that 

these existing provisions were not 

intended to be revised in the December 

5, 2007 final rule (72 FR 68700 through 

68741). 

On page 68732 of the December 5, 

2007 final rule, our amendatory 

instruction indicated that we were 

revising § 423.505(i)(2)(i). However, 

when we set out the changed 

regulations text, we inadvertently 

revised paragraph (i)(2)(ii) instead of 

paragraph (i)(2)(i). This typographical 

error, if not corrected, would have 

inadvertently deleted from the CFR the 

current paragraph at § 423.505(i)(2)(ii) 

regarding the 10-year record retention 

requirement as of January 1, 2009, the 

effective date of this provision as 

specified in the final rule. The correct 

§ 423.505(i)(2)(i) should read ‘‘HHS, the 

Comptroller General, or their designees 


sroberts on PROD1PC70 with RULES
55764 Federal Register / Vol. 73, No. 188 / Friday, September 26, 2008 / Rules and Regulations 

have the right to audit, evaluate and 

inspect any books, contracts, records, 

including medical records, and 

documentation of the first tier, 

downstream, and related entities 

involving transactions related to CMS’ 

contract with the Part D sponsor.’’ As 

stated above, the existing 

§ 423.505(i)(2)(ii), which references the 

10-year record retention requirements, 

remains in the CFR unchanged. 

In § 423.505(i)(3)(iii) the term ‘‘related 

entity’’ is incorrectly used twice in the 

same sentence, so we have removed this 

duplication. In addition, we 

inadvertently included MA organization 

in § 423.505(i)(3)(iv) which only applies 

to Part D sponsors. We have revised the 

language accordingly. 

III. Waiver of Proposed Rulemaking 

and Delay in Effective Date 

We ordinarily publish a notice of 

proposed rulemaking in the Federal 

Register to provide a period for public 

comment before the provisions of a rule 

take effect in accordance with section 

553(b) of the Administrative Procedure 

Act (APA) (5 U.S.C. 553(b)). However, 

we can waive this notice and comment 

procedure if the Secretary finds, for 

good cause, that the notice and 

comment process is impracticable, 

unnecessary, or contrary to the public 

interest, and incorporates a statement of 

the finding and the reasons therefore in 

the notice. 

Section 553(d) of the APA ordinarily 

requires a 30-day delay in effective date 

of final rules after the date of their 

publication in the Federal Register. 

This 30-day delay in effective date can 

be waived, however, if an agency finds 

for good cause that the delay is 

impracticable, unnecessary, or contrary 

to the public interest, and the agency 

incorporates a statement of the findings 

and its reasons in the rule issued. 

The provisions of this correcting 

amendment regarding the duration of 

sanctions at § 422.756(d) and 

§ 423.756(d) make no substantive 

changes and are intended to restore 

provisions which were inadvertently 

removed from the CFR. These 

provisions were not revised in the final 

rule but were dropped because of a 

typographical error in our amendatory 

instructions. We must reinstate these 

provisions in the CFR to ensure that 

CMS may lift sanctions on MA and Part 

D plans as appropriate. 

In addition, a typographical error in 

our regulations text would have 

inadvertently removed the current 

§ 423.505(i)(2)(ii) from the CFR as of the 

effective date for these provisions on 

January 1, 2009. We are taking this 

opportunity to correct this error in the 

CFR to ensure that the 10-year record 

retention requirements for Part D 

sponsors remains in the CFR 

unchanged. Without this correcting 

amendment, the Medicare Part D 

regulations could have been construed 

as being silent on the 10-year Part D 

recordkeeping requirement which could 

create confusion and uncertainty for 

affected parties regarding CMS’ policy 

on this issue. 

Finally, we are also taking this 

opportunity to correct typographical 

errors in § 423.505(i)(3)(iii) and (iv). 

Because we are issuing this correcting 

amendment based on typographical 

errors, we find that undertaking further 

notice and comment procedures to 

incorporate these corrections into the 

December 5, 2007 final rule is 

unnecessary and contrary to the public 

interest. 

For the same reasons, we are also 

waiving the 30-day delay in effective 

date for § 422.756(d) and § 423.756(d) in 

this correcting amendment. We believe 

that it is in the public interest to ensure 

that the December 5, 2007 final rule 

accurately state the current law and 

CMS policy. Thus, delaying the effective 

date of these corrections would be 

contrary to the public interest. 

Therefore, we also find good cause to 

waive the 30-day delay in effective date 

for § 422.756(d) and § 423.756(d). 

List of Subjects 

42 CFR Parts 422 and 423 

■ Accordingly, 42 CFR chapter IV is 

corrected by making the following 

correcting amendments to parts 422 and 

423. 

PART 422—MEDICARE ADVANTAGE 

PROGRAM 

■ 1. The authority citation for part 422 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

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

1395hh). 

■ 2. Section 422.756 is amended by 

adding paragraph (d)(3) to read as 

follows: 

§ 422.756 Procedures for imposing 

intermediate sanctions and civil money 

penalties. 

* * * * * 

(d) * * * 

(3) Duration of sanction. The sanction 

remains in effect until CMS notifies the 

MA organization that CMS is satisfied 

that the basis for imposing the sanction 

has been corrected and is not likely to 

recur. 

* * * * * 

PART 423—VOLUNTARY MEDICARE 

PRESCRIPTION DRUG BENEFIT 

■ 3. The authority citation for part 423 

continues to read as follows: 

Authority: Secs. 1102, 1860D–1 through 

1860D–42, and 1871 of the Social Security 

Act (42 U.S.C. 1302, 1395w–101 through 

1395w–152, and 1395hh). 

■ 4. Section 423.505 is amended by— 

■ A. Revising paragraph (i)(2)(i). 

■ B. Revising paragraph (i)(2)(ii). 

■ C. Revising paragraph (i)(3)(iii). 

■ D. Revising paragraph (i)(3) (iv). 

The revisions read as follows: 

§ 423.505 Contract provisions. 

* * * * * 

(i) * * * 

(2) * * * 

(i) HHS, the Comptroller General, or 

their designees have the right to audit, 

evaluate, and inspect any books, 

contracts, records, including medical 

records, and documentation of the first 

tier, downstream, and related entities 

involving transactions related to CMS’ 

contract with the Part D sponsor. 

(ii) HHS’, the Comptroller General’s, 

or their designee’s right to inspect, 

evaluate, and audit any pertinent 

information for any particular contract 

period exists through 10 years from the 

final date of the contract period or from 

the date of completion of any audit, 

whichever is later. 

(3) * * * 

(iii) A provision requiring that any 

services or other activity performed by 

a first tier, downstream, and related 

entity in accordance with a contract or 

written agreement are consistent and 

comply with the Part D sponsor’s 

contractual obligations. 

(iv) A provision requiring the Part D 

sponsor’s first tier, downstream, and 

related entities to produce upon request 

by CMS, or its designees, any books, 

contracts, records, including medical 

records and documentation of the Part 

D sponsor, relating to the Part D 

program, to either the sponsor to 

provide to CMS, or directly to CMS or 

its designees. 

* * * * * 

■ 5. Section 423.756 is amended by 

adding paragraph (d)(3) to read as 

follows: 

§ 423.756 Procedures for imposing 

intermediate sanctions and civil money 

penalties. 

* * * * * 

(d) * * * 

(3) Duration of sanction. The sanction 

remains in effect until CMS notifies the 

Part D sponsor that CMS is satisfied that 


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Federal Register / Vol. 73, No. 188 / Friday, September 26, 2008 / Rules and Regulations 55765 

the basis for imposing the sanction is 

corrected and is not likely to recur. 

* * * * * 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: September 16, 2008. 

Ann C. Agnew, 

Executive Secretary to the Department. 

[FR Doc. E8–22592 Filed 9–25–08; 8:45 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 455 

[CMS–2271–F] 

RIN 0938–AO97 

Medicaid Integrity Program; Eligible 

Entity and Contracting Requirements 

for the Medicaid Integrity Audit 

Program 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: Section 1936 of the Social 

Security Act (the Act) (as added by 

section 6034 of the Deficit Reduction 

Act of 2005 (DRA) established the 

Medicaid Integrity Program to promote 

the integrity of the Medicaid program by 

requiring CMS to enter into contracts 

with eligible entities to: (1) Review the 

actions of individuals or entities 

furnishing items or services (whether on 

a fee-for-service, risk, or other basis) for 

which payment may be made under an 

approved State plan and/or any waiver 

of such plan approved under section 

1115 of the Act; (2) audit claims for 

payment of items or services furnished, 

or administrative services rendered, 

under a State plan; (3) identify 

overpayments to individuals or entities 

receiving Federal funds; and (4) educate 

providers of services, managed care 

entities, beneficiaries, and other 

individuals with respect to payment 

integrity and quality of care. 

This final rule will provide 

requirements for an eligible entity to 

enter into a contract under the Medicaid 

integrity audit program. The final rule 

will also establish the contracting 

requirements for eligible entities. The 

requirements will include procedures 

for identifying, evaluating, and 

resolving organizational conflicts of 

interest that are generally applicable to 

Federal acquisition and procurement; 

competitive procedures to be used; and 

procedures under which a contract may 

be renewed. 

DATES: This final rule is effective 

October 27, 2008. 

FOR FURTHER INFORMATION CONTACT: 

Barbara Rufo, 410 786–5589 or Crystal 

High, 410–786–8366. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Current Law 

States and the Federal government 

share in the responsibility for 

safeguarding Medicaid program 

integrity. States must comply with 

Federal requirements designed to ensure 

that Medicaid funds are properly spent 

(or recovered, when necessary). CMS is 

the primary Federal agency responsible 

for providing oversight of States’ 

Medicaid activities and facilitating their 

program integrity efforts. 

B. Medicaid Integrity Program 

Section 6034 of the Deficit Reduction 

Act (DRA) of 2005 (Pub. L. 109–171, 

enacted on February 8, 2006) added a 

new section 1936 to the Act that 

established the Medicaid Integrity 

Program, referenced as the ‘‘Program’’ 

hereafter, to combat Medicaid fraud and 

abuse. The Program is intended to 

identify, recover, and prevent Medicaid 

overpayments. It is also intended to 

support the efforts of the State Medicaid 

agencies through a combination of 

support and technical assistance. 

Although individual States work to 

ensure the integrity of their respective 

Medicaid programs, the Program 

represents CMS’ first national strategy to 

detect and prevent Medicaid fraud and 

abuse. The Program will provide CMS 

with the ability to more directly ensure 

the accuracy of Medicaid payments and 

to deter those who would exploit the 

program. 

Section 6034 of the DRA amended 

title XIX of the Act by redesignating the 

former section 1936 as section 1937; and 

adding the new 1936 ‘‘Medicaid 

Integrity Program.’’ The new section 

1936 states the Secretary will promote 

the integrity of the Medicaid program by 

entering into contracts with eligible 

entities to carry out the following 

activities: 

• Review of actions of individuals or 

entities furnishing items or services 

(whether on a fee-for-service, risk, or 

other basis) for which payment may be 

made under the State plan approved 

under title XIX (or under any waiver of 

such plan approved under section 1115 

of the Act) to determine whether fraud, 

waste, or abuse has occurred, or is likely 

to occur, or whether such actions have 

a potential for resulting in an 

expenditure of funds under title XIX in 

a manner which is not intended under 

the provisions of title XIX. 

• Audit of claims for payment for 

items or services furnished, or 

administrative services rendered, under 

a State plan under title XIX, including 

cost reports, consulting contracts, and 

risk contracts under section 1903(m) of 

title XIX. 

• Identification of overpayments to 

individuals or entities receiving Federal 

funds under title XIX. 

• Education of providers of services, 

managed care entities, beneficiaries, and 

other individuals with respect to 

payment integrity and quality of care. 

Section 1936 of the Act also mandates 

that the Secretary will, by regulation, 

establish procedures which will include 

the following: 

• Procedures for identifying, 

evaluating, and resolving organizational 

conflicts of interest that are generally 

applicable to Federal acquisition and 

procurement. 

• Competitive procedures to be used 

when entering into new contracts under 

this section; when entering into 

contracts that may result in the 

elimination of responsibilities under 

section 202(b) of the Health Insurance 

Portability and Accountability Act of 

1996; and any other time considered 

appropriate by the Secretary. 

• Procedures under which a contract 

under this section may be renewed 

without regard to any provision of law 

requiring competition if the contractor 

has met or exceeded the performance 

requirements established in the current 

contract. 

CMS has determined not to address in 

this final rule the above bullet that 

references the Health Insurance 

Portability and Accountability Act of 

1996 (HIPAA). We have determined that 

section 202(b) of HIPAA addressed 

certain Medicare contracting issues 

which, because of structural differences 

between the Medicare and Medicaid 

programs, such as the fact that the 

Federal Government does not utilize 

carriers or fiscal intermediaries in the 

Federal administration of the Medicaid 

program, do not pertain to the Medicaid 

contracting environment. Moreover, we 

have also determined that the 

provisions of the Act established by 

section 202(b) of HIPAA have since 

been repealed by section 911 of the 

Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003. 


sroberts on PROD1PC70 with RULES