Federal Register / Vol. 66, No. 249 / Friday, December 28, 2001 / Notices 67257

Louisiana, to be used as a park, are

designated as follows: Richard J.

Putnam Park, on the grounds of the John

M. Shaw United States Courthouse, 800

Lafayette Street, Lafayette, LA 70501.

Dated: December 19, 2001.

Stephen A. Perry,

Administrator of General Services.

[FR Doc. 01–31883 Filed 12–27–01; 8:45 am]

BILLING CODE 6820–24–M

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Centers for Medicare & Medicaid

Services

[CMS–4021–GNC]

RIN 0938–ZA22

Medicare Program; Criteria and

Standards for Evaluating Intermediary,

Carrier, and Durable Medical

Equipment, Prosthetics, Orthotics, and

Supplies (DMEPOS) Regional Carrier

Performance During Fiscal Year 2002

AGENCY: Centers for Medicare &

Medicaid Services (CMS), Health and

Human Services (HHS).

ACTION: General notice with comment

period.

SUMMARY: This notice describes the

criteria and standards to be used for

evaluating the performance of fiscal

intermediaries, carriers, and DMEPOS

regional carriers in the administration of

the Medicare program beginning the

first day of the month following

publication in the Federal Register. The

results of these evaluations are

considered whenever we enter into,

renew, or terminate an intermediary

agreement, carrier contract, or DMEPOS

regional carrier contract or take other

contract actions, for example, assigning

or reassigning providers or services to

an intermediary or designating regional

or national intermediaries. The criteria

and standards for DMEPOS regional

carriers (also referred to as Durable

Medical Equipment Regional Carriers

(DMERCs)) were previously published

under a separate Federal Register

notice, but with this release will now be

incorporated in the notice of criteria and

standards for the intermediaries and

carriers. We are requesting public

comment on these criteria and

standards.

EFFECTIVE DATE: The criteria and

standards are effective January 2, 2002.

COMMENTS: Comments will be

considered if we receive them at the

appropriate address as provided below

no later than 5 p.m. (EDT) on January

28, 2002.

ADDRESSES: In commenting, please refer

to file code CMS–4021–GNC. Because of

staff and resource limitations, we cannot

accept comments by facsimile (fax)

transmission. Mail written comments

(one original and three copies) to the

following address: Centers for Medicare

& Medicaid Services, Department of

Health and Human Services, Attention:

CMS–4021–GNC, P.O. Box 8016,

Baltimore, MD 21244–8016.

If you prefer, you may deliver (by

hand or courier) your written comments

(one original and three copies) to one of

the following addresses:

Room 443–G, Hubert H. Humphrey

Building, 200 Independence Avenue,

SW., Washington, DC, 20201 or

Room C5–16–03, 7500 Security

Boulevard, Baltimore, Maryland

21244–8016.

Comments mailed to the addresses

indicated as appropriate for hand or

courier delivery may be delayed and

could be considered late.

For information on viewing public

comments, see the beginning of the

SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Sue

Lathroum, (410) 786–7409.

SUPPLEMENTARY INFORMATION

Inspection of Public Comments:

Comments received timely will be

available for public inspection as they

are received, generally beginning

approximately 3 weeks after publication

of a document, at the headquarters of

the Centers for Medicare & Medicaid

Services, 7500 Security Boulevard,

Baltimore, Maryland 21244, Monday

through Friday of each week from 8:30

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

appointment to view public comments,

phone (410) 786–7197.

I. Background

A. Part A—Hospital Insurance

Under section 1816 of the Social

Security Act (the Act), public or private

organizations and agencies participate

in the administration of Part A (Hospital

Insurance) of the Medicare program

under agreements with us. These

agencies or organizations, known as

fiscal intermediaries, determine whether

medical services are covered under

Medicare, determine correct payment

amounts and then make payments to the

health care providers (for example,

hospitals, skilled nursing facilities

(SNFs), community mental health

centers, etc.) on behalf of the

beneficiaries. Section 1816(f) of the Act

requires us to develop criteria,

standards, and procedures to evaluate

an intermediary’s performance of its

functions under its agreement.

Evaluations of Medicare fee-for-service

performance need not be limited to the

current fiscal year (FY), other fixed term

basis, or agreement term. We may

evaluate performance using a time frame

that does not mirror the FY or other

fixed term. The evaluation of

intermediary performance is part of our

contract management process.

B. Part B Medical Insurance

Under section 1842 of the Act, we are

authorized to enter into contracts with

carriers to fulfill various functions in

the administration of Part B

(Supplementary Medical Insurance) of

the Medicare program. Beneficiaries,

physicians, and suppliers of services

submit claims to these carriers. The

carriers determine whether the services

are covered under Medicare and the

amount payable for the services or

supplies, and then make payment to the

appropriate party.

Under section 1842(b)(2) of the Act,

we are required to develop criteria,

standards, and procedures to evaluate a

carrier’s performance of its functions

under its contract. Evaluations of

Medicare fee-for-service performance

need not be limited to the current FY,

other fixed term basis, or contract term.

We may evaluate performance using a

timeframe that does not mirror the FY.

The evaluation of carrier performance is

part of our contract management

process.

C. Durable Medical Equipment,

Prosthetics, Orthotics, and Supplies

(DMEPOS) Regional Carriers

In accordance with section

1834(a)(12) of the Act, CMS has entered

into contracts with four DMEPOS

regional carriers to perform all of the

duties associated with the processing of

claims for DMEPOS, under Part B of the

Medicare program. These DMEPOS

regional carriers process claims based

on a Medicare beneficiary’s principal

residence by State. Section 1842(a) of

the Act authorizes contracts with

carriers for the payment of Part B claims

for Medicare covered services and

items. Section 1842(b)(2) of the Act

requires us to publish in the Federal

Register criteria and standards for the

efficient and effective performance of

carrier contract obligations. The criteria

and standards to be used for evaluating

the performance of DMEPOS regional

carriers were first published on June 18,

1992 at 57 FR 27302. The evaluation of

DMEPOS regional carrier performance is

part of our contract management

process.

67258 Federal Register / Vol. 66, No. 249 / Friday, December 28, 2001 / Notices

D. Development and Publication of

Criteria and Standards

In addition to the statutory

requirements, 42 CFR 421.120 and

421.122 provide for publication of a

Federal Register notice to announce

criteria and standards for intermediaries

prior to implementation. Section

421.201 provides for publication of a

Federal Register notice to announce

criteria and standards for carriers prior

to implementation. The current criteria

and standards for intermediaries and

carriers were published in the Federal

Register on October 31, 2000 at 65 FR

64968 and for DMEPOS regional carriers

on January 26, 1996 at 61 FR 2516.

To the extent possible, we make every

effort to publish the criteria and

standards before the beginning of the

Federal FY, which is October 1. If we do

not publish a Federal Register notice

before the new FY begins, readers may

presume that until and unless notified

otherwise, the criteria and standards

that were in effect for the previous FY

remain in effect.

In those instances in which we are

unable to meet our goal of publishing

the subject Federal Register notice

before the beginning of the FY, we may

publish the criteria and standards notice

at any subsequent time during the year.

If we publish a notice in this manner,

the evaluation period for the criteria and

standards that are the subject of the

notice will be effective on the first day

of the first month following publication.

Any revised criteria and standards will

measure performance prospectively;

that is, we will not apply new

measurements to assess performance on

a retroactive basis.

It is not our intention to revise the

criteria and standards that will be used

during the evaluation period once this

information has been published in a

Federal Register notice. However, on

occasion, either because of

administrative action or congressional

mandate, there may be a need for

changes that have a direct impact on the

criteria and standards previously

published, or that require the addition

of new criteria or standards, or that

cause the deletion of previously

published criteria and standards. If we

must make these changes, we will

publish a Federal Register notice prior

to implementation of the changes. In all

instances, necessary manual issuances

will be published to ensure that the

criteria and standards are applied

uniformly and accurately. Also, as in

previous years, this Federal Register

notice will be republished and the

effective date revised if changes are

warranted as a result of the public

comments received on the criteria and

standards.

II. Analysis of and Response to Public

Comments Received on FY 2001

Criteria and Standards

In response to the October 31, 2000

Federal Register general notice with

comments, we received comments from

12 entities or individuals. We

acknowledge and thank each

respondent for submitting comments.

All comments were reviewed, but none

necessitated our reissuance of the FY

2001 Criteria and Standards. Not all

comments submitted pertained

specifically to the FY 2001 Criteria and

Standards. Medicare program

components were advised of the

concerns as appropriate. When

warranted, revisions have been

incorporated in this Federal Register

notice. We are responding to the

following performance evaluation

issues:

Comment: We were asked to clarify

the time frames of 45 days for Standard

4 and 120 days for Standard 5 under the

Customer Service criterion for carriers.

Response: Sections 1842(b)(2)(B)(i)

and (ii) of the Act specifies time frames

for carriers to complete review

determinations and to make hearing

decisions. A review determination is to

be completed within 45 days after the

date of a request. A hearing decision is

to be made within 120 days after the

date of receipt of a request. The date of

receipt is the date the request is

received and date stamped in the

contractor’s mailroom.

Comment: A commenter advised us of

their concern about what they feel is the

inconsistent manner in which the

DMERCs conduct medical review. We

were asked to instruct the DMERCs on

what constitutes appropriate medical

record review regarding suppliers,

facilities, and physicians, and to

instruct the DMERC to take into account

that suppliers are not the appropriate

conduits for medical record review.

Further, we were asked to develop

standards to ensure that DMERCs

comply with these instructions.

Response: We must hold the entity

receiving Medicare payments

accountable for providing

documentation that supports that

services and equipment are covered by

the Medicare program. The law requires

physicians or practitioners ordering

certain services and equipment to

provide suppliers with this information

to support claims payments.

Comment: Several commenters

advised us that there seemed to be a

discrepancy between the All Trunks

Busy (ATB) internal rate, under the

Customer Service criterion for carriers

Standard 1, published in the October 31,

2000 Federal Register notice and the

ATB internal rate in CMS’ FY 2001

Budget and Performance Requirements

(BPRs) for contractors. The October 31,

2000 Federal Register notice states,

‘‘Carriers are to achieve a monthly ATB

rate of not more than 10%.’’ In contrast,

the FY 2001 BPRs states the monthly

ATB rate ‘‘shall average 10%.’’

Response: The BPRs changed during

FY 2001. The commenter is correct in

noting a difference between the BPRs

ATB internal rate and the ATB internal

rate published in the Federal Register.

However, we want to assure the

commenter that we conducted

Contractor Performance Evaluation

(CPE) reviews based on the BPRs. If any

contractor was evaluated earlier in the

fiscal year on the basis of a BPR

requirement that was subsequently

changed, CMS subsequently reevaluated

its performance against the latest BPR

requirements. When necessary, revised

CPE reports were issued to reflect our

evaluation changes.

Comment: Commenters asked several

questions concerning issues under

section VII, Action Based on

Performance Evaluations of the FY 2001

notice. The questions are as follows:

CMS refers to the possibility of

contractors (manipulating data in order

to receive a ‘‘more favorable

performance evaluation.)’’ How does the

intermediary or carrier obtain a more

favorable evaluation? How will the

affected public know whether a

contractor ‘‘meets the level of

performance required?’’ Will the

contractor’s annual performance reports,

referred to in paragraph three, be made

available to the affected public?

Response: Many standards established

for contractors, including some

mandated ones specified in each year’s

Federal Register notice, rely on data

submitted to the CMS Contractor

Reporting of Operational and Workload

Data Database. If a contractor

manipulates data to reflect quicker

processing of appeals or changes a claim

identified as clean to be one identified

as other than clean, the contractor’s

actions could result in more favorable

timeliness data for those workloads.

Because we identified only those

performance standards, which are

mandated by law, regulations, or

judicial decision and provide examples

of some other possible standards, we

believe we have minimized the

situations in which contractors are

certain of the precise methodology by

which we evaluate them.

The public may request CPE review

reports through the Freedom of

Federal Register / Vol. 66, No. 249 / Friday, December 28, 2001 / Notices 67259

Information Act, but we do not normally

publish information on the findings of

our performance evaluations.

Comment: A commenter stated, ‘‘We

understand that the numerical CPEP

requirements of past years, for example,

an old requirement that intermediaries

find $5.99 to $7.99 in disallowance for

every dollar they received to perform

medical review and utilization review,

have been eliminated.’’ ‘‘Clearly

something has been substituted for the

old ‘‘quotas’’.’’ ‘‘We ask that CMS make

this information available to the affected

public.’’ ‘‘Many providers have the

perception that CMS still requires its

contractors to meet some sort of

numerical ratios and/or that the

contractors are free to set up their own

quotas and reward system.’’

Response: CMS does not require

contractors to meet savings quotas or

targets, nor have reward systems.

Instead, CMS assesses contractor

activities that support the

accomplishment of core performance

standards specified in the annual

Budget and Performance Requirements

for medical review. These activities

include, for example, workload

management and data analysis.

Comment: One commenter stated that

Medicare intermediary workload data

from some recent years showed that

approximately 35–40 percent of

intermediary denials of home health or

hospice care were reversed by

Administrative Law Judges (ALJs) after

reconsideration determinations by

intermediaries. The commenter believes

that, in light of CMS’ definition of an

acceptable reversal rate, this past data

on reversals is quite disturbing. Home

health intermediaries should be held

accountable to the standards and criteria

established by CMS.

Response: Certain intermediaries have

as an amendment to their contract the

responsibility to serve as a Regional

Home Health Intermediary (RHHI). This

means that in addition to processing

claims from hospitals and skilled

nursing facilities they are also

responsible for claims and appeals from

home health agencies and hospices. The

mandate for intermediaries to have an

acceptable ALJ reversal rate of their

determinations applies to the full range

of claims determinations which may be

appealed to the ALJ level. That is, the

determination of acceptable is not based

solely on ALJ decisions concerning

home health claims for intermediaries

designated as RHHI’s. As a result, the

data applicable to only reversals of

home health and hospice claims is not

reflective of the data CMS uses to

evaluate this standard.

Comment: Commenters stated that the

use of the verbiage, ‘‘criterion may

include, but is not limited to * * *’’

specific items, appears to broaden the

scope of CMS’ contractor performance

evaluation by indicating that the five

criteria can be expanded. The

commenter believes that in a year of

tight contractor funding, CMS should be

more focused in its directions to carriers

and intermediaries and indicate

standards for activities that must be

performed regardless of budgeted levels.

This will allow contractors to prioritize

activities within funding constraints.

Response: In the general criteria and

standards we state the goal of the

contractor performance evaluation is to

ensure that contractors meet their

contractual obligations. To ensure that

contractors are meeting their contractual

obligations we have established criteria

and standards that are mandated or

authorized by law, regulation, judicial

decision, contract, or administration

directives. We take into consideration

the BPRs, any changes to them, and any

abatements. It is not our intention to

evaluate performance for which a

contractor is not budgeted.

Comment: A commenter noted that in

the Actions Based on Performance

Evaluations section we state, ‘‘In

addition, if the cost incurred by the

intermediary or carrier to meet its

contractual requirements exceeds the

amount that we find to be reasonable

and adequate to meet the cost that must

be incurred by an efficiently and

economically operated intermediary or

carrier, these high costs may also be

grounds for adverse action.’’ The

commenter states CMS should identify

and ensure that contractors report costs

accurately within each activity and

ensure that there is consistent

performance activities across the

contractor community. This will allow

effective contractor comparisons.

Response: CMS budget staff, who

review contractor cost reporting and

budget expenditures, review the overall

spending associated with contractors’

work. Additionally, CMS’ functional

components may include in their

protocols an evaluation of the

appropriateness of spending for the

work performed.

Comment: A commenter

recommended that until Administrative

Law Judges (ALJs) are required to follow

CMS manuals, the standard for

intermediaries to not have more than 5.0

percent of appeals determinations

reversed by ALJs should be removed.

Response: Section 1816 (f)(2)(A)(ii) of

the Act requires that CMS evaluate ‘‘the

extent to which such agency’s or

organization’s determinations are

reversed on appeal.’’ In response to this

requirement, CMS has defined an

acceptable reversal rate by ALJs as one

that is at or below 5.0 percent. We

recognize that ALJs act independently.

As we evaluate this standard we take

into consideration whether the ALJ

followed Medicare laws, regulations,

and/or CMS program manuals.

Comment: Commenters stated that

while the preamble mentions provider

education as an element for evaluation

under the Customer Service criterion it

is unclear in the standards whether

intermediaries are being evaluated on

responsiveness to providers or just to

beneficiaries.

Response: We agree that clarification

is needed. With this notice we have

specified that intermediaries may be

evaluated on their responsiveness to

providers as well as to beneficiaries.

Comment: One commenter expressed

disappointment that the details of the

FY 2001 process, while containing a

number of objectively measured

standards, depended heavily upon the

subjective judgements of the individuals

who would perform the reviews.

Response: We acknowledge that there

were criteria and standards that

permitted reviewers to make more

subjective determinations concerning

acceptableness of performance. We are

working to decrease the number of these

standards.

Comment: A commenter noted that

the background portion of Section I

indicated CMS may evaluate

contractors’ performance using a time

frame that does not mirror the fiscal

year or other fixed term. This means

that the criteria and standards do not

necessarily pertain to work performed

during FY 2001, but rather to

evaluations performed during that time.

The concern is that a lack of a uniform

time frame for the work being evaluated

adds further to the subjectivity,

imprecision, and variability that

characterize the ‘‘rules’’ by which

individual contractors’ performance will

be judged.

Response: Reviewers use evaluation

protocols developed by CMS business

function components. The use of

standard protocols by all CPE reviewers

helps to add greater overall consistency

to the evaluation process. Our general

focus, is on reviewing the work

performed during the current FY,

however, there could be situations

where review of work conducted in

previous years may be appropriate. The

criteria and standards that were in effect

at the time the work was performed will

be used to evaluate work performed in

previous years.

67260 Federal Register / Vol. 66, No. 249 / Friday, December 28, 2001 / Notices

Comment: Commenters stated that

contractor workloads, overall funding,

and funding for specific activities, as

well as CMS priorities and instructions

to contractors, all fluctuate from year to

year. In addition, in any fiscal year

contractors often spend several months

operating under restricted continuation

budgets that do not reflect the full level

of funding for the year that CMS

eventually authorizes sometimes too

late to be spent efficiently. We were told

it is important that reviews of contractor

performance take these time-related

variances into account.

Response: In conducting CPE reviews

we take into consideration budgetary

restraints and situations experienced by

each contractor. Authorizing the full

level of funding to contractors is

dependent upon the timing of

Congressional appropriations.

Comment: A commenter requested

that we provide a description of the

types of analysis by intermediaries and

carriers that we intend to address under

the Claims Processing Criterion.

Response: In the October 31, 2000

Federal Register notice of criteria and

standards we identified analysis and

validation of data as additional

functions that may be evaluated under

the Claims Processing Criterion.

However, rather than being functions

we may evaluate, they are methods by

which we can evaluate the accuracy of

data submitted to CMS by

intermediaries and carriers. We erred in

listing this as a contractor function that

could be reviewed. Thus, there was no

analysis in this area that we had

planned to evaluate.

Comment: A commenter noted that

the FY 2001 Payment Safeguards

Criterion specifies identifying fraud

cases, investigating allegations of fraud,

and putting in place effective fraud

detection and deterrence programs. In

contrast, the same criterion for carriers

specifies identifying fraud and abuse

cases, investigating fraud and/or abuse

cases, and putting into place effective

fraud and abuse detection and

deterrence programs. We were asked if

the failure to mention ‘‘abuse’’ in the

criteria and standards for intermediaries

meant to imply a distinction between

CMS’’ evaluations of intermediaries and

those of carriers, or was this a drafting

oversight?

Response: Failing to mention ‘‘abuse’’

under the Payment Safeguards Criterion

for intermediaries was indeed a drafting

oversight. We have corrected the

oversight with this notice.

Comment: We were advised that in

section VII, Action Based on

Performance Evaluations for the FY

2001 notice, we provided a definition

for deficiency and vulnerability but not

for ‘‘weakness.’’ We have been

requested to provide a definition of

what constitutes a ‘‘weakness.’’

Response: A weakness may be an

observed decline in contractor

performance or a shortcoming in an

operational process.

III. Criteria and Standards—General

Basic principles of the Medicare

program are to pay claims promptly and

accurately and to foster good beneficiary

and provider relations. Contractors must

administer the Medicare program

efficiently and economically. The goal

of performance evaluation is to ensure

that contractors meet their contractual

obligations. We measure contractor

performance to ensure that contractors

do what is required of them by law,

regulation, contract, and our directives.

We have developed a contractor

oversight program for FY 2002 that

outlines expectations of the contractor;

measures the performance of the

contractor; evaluates the performance

against the expectations; and, takes

appropriate contract action based upon

the evaluation of the contractor’s

performance. We will work to develop

and refine measurable performance

standards in key areas in order to better

evaluate contractor performance. In

addition to evaluating performance

based upon expectations for FY 2002,

we may conduct follow-up evaluations

of areas in which contractor

performance was out of compliance

with laws, regulations, and our

performance expectations during FY

2001, thus having required the

contractor to submit a Performance

Improvement Plan (PIP).

In FY 2001, CMS introduced the

Contractor Rebuttal Process as a

commitment to continual improvement

of CPE. This mechanism provides an

opportunity for contractors to submit a

written rebuttal of CPE findings of fact.

Contractors have 7 calendar days from

the CPE exit conference to submit a

written rebuttal. The contents of the

rebuttal will be considered by the

review team prior to the issuance of the

final CPE report to the contractor. We

will assess the implementation and

effectiveness of this new process during

the FY 2001 CPE review cycle and, in

consultation with the Medicare

contractors, will determine if the

rebuttal process adequately meets our

respective needs.

Throughout this notice, we frequently

refer to mandated standards. Mandated

standards are those required by law,

regulation, or judicial decision. We have

reviewed the language of the laws,

regulations, and court decisions in

which the mandates were presented

comparing them to those standards we

identified as mandated in the more

recent notices that have been published.

In so doing, we determined that in some

cases we had included requirements

that in fact were not mandated, for

example, accuracy of review decisions.

In this FY 2002 notice of criteria and

standards we have corrected those

erroneously indicated performance

mandates. Those requirements were

standards in the Claims Processing

Criterion and Customer Service

Criterion.

The FY 2002 Contractor Performance

Evaluation for intermediaries and

carriers is structured into five criteria

designed to meet the stated objectives.

The first criterion is ‘‘Claims

Processing,’’ which measures

contractual performance against claims

processing accuracy and timeliness

requirements, as well as activities in

handling appeals. Within the Claims

Processing Criterion, we have identified

those performance standards that are

mandated by legislation, regulation, or

judicial decision. These standards

include claims processing timeliness,

the accuracy of Explanations of

Medicare Benefits (EMOBs) and

Medicare Summary Notices (MSNs), the

appropriateness of determinations

reversed by Administrative Law Judges

(ALJs), the timeliness of intermediary

reconsideration cases, the timeliness of

carrier reviews and hearings, and the

readability of carrier reviews. Further

evaluation in the Claims Processing

Criterion may include, but is not limited

to, the accuracy of claims processing,

the percent of claims paid with interest,

and the accuracy of reconsiderations,

reviews, and hearings.

The second criterion is ‘‘Customer

Service’’ which assesses the adequacy of

the service provided to customers by the

contractor in its administration of the

Medicare program. The mandated

standards in the Customer Service

Criterion include achieving and

maintaining the monthly All Trunks

Busy rate for beneficiary telephone

inquiries; responding timely to

beneficiary telephone inquiries; and

providing beneficiaries with written

replies that are responsive, written with

appropriate customer-friendly tone and

clarity, and are at the appropriate

reading level. Further evaluation of

services under this criterion may

include, but is not limited to, the

timeliness and accuracy of all

correspondence both to beneficiaries

and providers; monitoring of the quality

of responses provided by the

contractor’s customer service

representatives (quality call

Federal Register / Vol. 66, No. 249 / Friday, December 28, 2001 / Notices 67261

monitoring); beneficiary and provider

education and outreach; and service by

contractor’s customer service

representatives to beneficiaries who

come to the contractor’s facility (walkin inquiry service).

The third criterion is ‘‘Payment

Safeguards,’’ which evaluates whether

the Medicare Trust Fund is safeguarded

against inappropriate program

expenditures. Intermediary and carrier

performance may be evaluated in the

areas of Benefit Integrity (BI) (referred to

in prior Federal Register notices as

Fraud and Abuse), Medical Review

(MR), Medicare Secondary Payer (MSP),

Overpayments (OP), and Provider

Enrollment (PE). In addition,

intermediary performance may be

evaluated in the area of Audit and

Reimbursement (A&R). Mandated

performance standards for

intermediaries in the Payment

Safeguards criterion are the accuracy of

decisions on Skilled Nursing Facility

(SNF) demand bills, and the timeliness

of processing Tax Equity and Fiscal

Responsibility Act (TEFRA) target rate

adjustments, exceptions, and

exemptions. There are no mandated

performance standards for carriers in

the Payment Safeguards criterion.

Intermediaries and carriers may also be

evaluated on any Medicare Integrity

Program (MIP) activities if performed

under their agreement or contract.

The fourth criterion is ‘‘Fiscal

Responsibility,’’ which evaluates the

contractor’s efforts to protect the

Medicare program and the public

interest. Contractors must effectively

manage Federal funds for both the

payment of benefits and costs of

administration under the Medicare

program. Proper financial and budgetary

controls, including internal controls,

must be in place to ensure contractor

compliance with its agreement with

HHS and CMS. Additional functions

reviewed under this criterion may

include, but are not limited to,

adherence to approved budget,

compliance with the Budget and

Performance Requirements (BPRs), and

compliance with financial reporting

requirements.

The fifth and final criterion is

‘‘Administrative Activities,’’ which

measures a contractor’s administrative

management of the Medicare program.

A contractor must efficiently and

effectively manage its operations. Proper

systems security (general and

application controls), Automated Data

Processing (ADP) maintenance, and

disaster recovery plans must be in place.

A contractor’s evaluation under the

Administrative Activities criterion may

include, but is not limited to,

establishment, application,

documentation, and effectiveness of

internal controls, which are essential in

all aspects of a contractor’s operation

and the degree to which the contractor

cooperates with us in complying with

the Federal Managers’ Financial

Integrity Act of 1982 (FMFIA).

Administrative Activities evaluations

may also include reviews related to

implementation of general CMS

instructions and data and reporting

requirements.

We have also developed separate

measures for evaluating unique

activities of Regional Home Health

Intermediaries (RHHIs). Section

1816(e)(4) of the Act requires us to

designate regional agencies or

organizations, which are already

Medicare intermediaries under section

1816, to perform claim processing

functions with respect to freestanding

Home Health Agency (HHA) claims. The

law requires that we limit the number

of these regional intermediaries (RHHIs)

to not more than 10; see 42 CFR 421.117

and the final rule published in the

Federal Register on May 19, 1988 at 53

FR 17936 for more details about the

RHHIs.

We have developed separate measures

for RHHIs in order to evaluate the

distinct RHHI functions. These

functions include the processing of

claims from freestanding HHAs,

hospital affiliated HHAs, and hospices.

Through an evaluation using these

criteria and standards, we may

determine whether the RHHI functions

should be moved from one intermediary

to another in order to ensure effective

and efficient administration of the

program benefit.

Below, we list the criteria and

standards to be used for evaluating the

performance of intermediaries, RHHIs,

carriers, and DMEPOS regional carriers.

In several instances, we identify a

Medicare manual as a source of more

detailed requirements. Medicare fee-forservice contractors have copies of the

various Medicare manuals referenced in

this notice. Members of the public also

have access to our manualized

instructions. Medicare manuals are

available for review at local Federal

Depository Libraries (FDLs). Under the

FDL Program, government publications

are sent to approximately 1,400

designated public libraries throughout

the United States. Interested parties may

examine the documents at any one of

the FDLs. Some may have arrangements

to transfer material to a local library not

designated as a FDL. To locate the

nearest FDL, individuals should contact

any public library.

In addition, individuals may contact

regional depository libraries, which

receive and retain at least one copy of

nearly every Federal government

publication, either in printed or

microfilm form, for use by the general

public. These libraries provide reference

services and interlibrary loans; however,

they are not sales outlets. Individuals

may obtain information about the

location of the nearest regional

depository library from any library.

Information may also be obtained from

the following web site:

www.cms.hhs.gov/pubforms/

program.htm. Some manuals may be

obtained from the following web site:

www.cms.gov/pubforms/p2192toc.htm.

Finally, all of our Regional Offices

(RO) maintain all Medicare manuals for

public inspection. To find the location

of the nearest available CMS RO, you

may call the individual listed at the

beginning of this notice. That individual

can also provide information about

purchasing or subscribing to the various

Medicare manuals.

IV. Criteria and Standards for

Intermediaries

A. Claims Processing Criterion

The Claims Processing criterion

contains 4 mandated standards.

Standard 1. 95.0 percent of clean

electronically submitted non-Periodic

Interim Payment claims paid within

statutorily specified time frames. Clean

claims are defined as claims that do not

require Medicare intermediaries to

investigate or develop them outside of

their Medicare operations on a

prepayment basis. Specifically, clean,

non-Periodic Interim Payment

electronic claims can be paid as early as

the 14th day (13 days after the date of

receipt) and must be paid by the 31st

day (30 days after the date of receipt).

CMS’ expectation is that contractors

will meet this percentage on a monthly

basis.

Standard 2. 95.0 percent of clean

paper non-Periodic Interim Payment

claims paid within specified time

frames. Specifically, clean, non-Periodic

Interim Payment paper claims can be

paid as early as the 27th day (26 days

after the date of receipt) and must be

paid by the 31st day (30 days after the

date of receipt). CMS’ expectation is that

contractors will meet this percentage on

a monthly basis.

Standard 3. 5.0 percent reversal rate

by ALJs is acceptable. We have defined

an acceptable reversal rate by ALJs as

one that is at or below 5.0 percent.

Standard 4. 75.0 percent of

reconsiderations are processed within

60 days and 90.0 percent are processed

67262 Federal Register / Vol. 66, No. 249 / Friday, December 28, 2001 / Notices

within 90 days. CMS’ expectation is that

contractors will meet this percentage on

a monthly basis.

Additional functions may be

evaluated under this criterion. These

functions include, but are not limited to,

the following:

• Claims processing accuracy.

• Establishment and maintenance of

relationship with Common Working File

(CWF) Host.

• Accuracy of processing

reconsideration cases with

determination letters that are clear and

have appropriate customer-friendly

tone.

B. Customer Service Criterion

There are no mandated standards for

this criterion for intermediaries.

Functions that may be evaluated

under this criterion include, but are not

limited to the following:

• Ensuring that the monthly All

Trunks Busy rate for beneficiary and

provider inquiries is achieved and

maintained.

• Responding timely and accurately

to beneficiary and provider telephone

inquiries.

• Quality Call Monitoring.

• Ensuring the validity of the call

center performance data that are being

reported in the Customer Service

Assessment and Management System.

• Providing timely and accurate

responses to beneficiaries and providers

that are responsive and written with

appropriate customer-friendly tone and

clarity and those written to beneficiaries

are at the appropriate reading level.

• Conducting beneficiary and

provider education and outreach.

• Walk-in inquiry service.

C. Payment Safeguards Criterion

The Payment Safeguard criterion

contains two mandated standards.

Standard 1. Decisions on SNF

demand bills are accurate.

Standard 2. TEFRA target rate

adjustments, exceptions, and

exemptions are processed within

mandated time frames. Specifically,

applications must be processed to

completion within 75 days after receipt

by the contractor or returned to the

hospitals as incomplete within 60 days

of receipt.

Intermediaries may also be evaluated

on any MIP activities if performed

under their agreement or contract. These

functions and activities include, but are

not limited to the following:

Audit and Reimbursement

• Performing the activities specified

in our general instructions for

conducting audit and settlement of

Medicare cost reports.

• Establishing accurate interim

payments.

Benefit Integrity

• Identifying potential fraud cases

that exist within the intermediary’s

service area and taking appropriate

actions to resolve these cases.

• Investigating allegations of potential

fraud that are made by beneficiaries,

providers, CMS, Office of Inspector

General (OIG), and other sources.

• Putting in place effective detection

and deterrence programs for potential

fraud.

Medical Review

• Applying analytical skills and

focusing resources on particular

providers or claim types that represent

unnecessary or inappropriate care.

• Making accurate and defensible

decisions on medical reviews.

• Developing means of addressing

any aberrance identified during the

analysis of all local and national data.

• Effectively educating and

communicating with the provider

community.

Medicare Secondary Payer

• Identifying, recovering, and

referring mistaken Medicare payments

in accordance with appropriate

Medicare Intermediary Manual

instructions and other pertinent CMS

general instructions.

• Accurately reporting savings and

following claim development

procedures.

• Prioritizing and processing

recoveries in compliance with

instructions.

• Financial reporting activities.

Overpayments

• Collecting and referring Medicare

debts timely.

• Accurately reporting overpayments

to CMS.

• Adhering to our instructions for

management of Medicare Trust Fund

debts.

Provider Enrollment

• Complying with assignment of staff

to the provider enrollment function and

training the staff in procedures and

verification techniques.

• Complying with the operational

standards relevant to the process for

enrolling providers.

D. Fiscal Responsibility Criterion

While there are no mandated

standards in this criterion, we may

review the intermediary’s efforts to

establish and maintain appropriate

financial and budgetary internal

controls over benefit payments and

administrative costs. Proper internal

controls must be in place to ensure that

contractors comply with their

agreements with us.

Additional matters that may be

reviewed under the Fiscal

Responsibility criterion include, but are

not limited to the following:

• Adherence to approved program

management and MIP budgets.

• Compliance with the BPRs.

• Compliance with financial

reporting requirements.

• Control of administrative cost and

benefit payments.

E. Administrative Activities Criterion

While there are no mandated

standards in this criterion, we may

measure an intermediary’s

administrative ability to manage the

Medicare program. We may evaluate the

efficiency and effectiveness of its

operations, its system of internal

controls, and its compliance with our

directives and initiatives. We may

measure an intermediary’s efficiency

and effectiveness in managing its

operations. Proper systems security

(general and application controls), ADP

maintenance, and disaster recovery

plans must be in place. An intermediary

must also test system changes to ensure

the accurate implementation of our

instructions.

Our evaluation of an intermediary

under the Administrative Activities

criterion may include, but is not limited

to, reviews of the following:

• Systems security.

• ADP maintenance (configuration

management, testing, change

management, security, etc).

• Disaster recovery plan.

• Implementation of general CMS

instructions.

• Data and reporting requirements

implementation.

• Internal controls establishment and

use, including the degree to which the

contractor cooperates with the Secretary

in complying with the FMFIA.

V. Criteria and Standards for Regional

Home Health Intermediaries (RHHIs)

The following standards are mandated

for the RHHI criterion:

Standard 1. 95.0 percent of clean

electronically submitted non-Periodic

Interim Payment HHA/hospice claims

are paid within statutorily specified

time frames. Clean claims are defined as

claims that do not require Medicare

intermediaries to investigate or develop

them outside of their Medicare

operations on a prepayment basis.

Specifically, clean, non-Periodic Interim

Payment electronic claims can be paid

Federal Register / Vol. 66, No. 249 / Friday, December 28, 2001 / Notices 67263

as early as the 14th day (13 days after

the date of receipt) and must be paid by

the 31st day (30 days after the date of

receipt). CMS’ expectation is that

contractors will meet this percentage on

a monthly basis.

Standard 2. 95.0 percent of clean

paper non-Periodic Interim Payment

HHA/hospice claims are paid within

specified time frames. Specifically,

clean, non-Periodic Interim Payment

paper claims can be paid as early as the

27th day (26 days after the date of

receipt) and must be paid by the 31st

day (30 days after the date of receipt).

CMS’ expectation is that contractors

will meet this percentage on a monthly

basis.

Standard 3. 75.0 percent of HHA/

hospice reconsiderations are processed

within 60 days and 90.0 percent are

processed within 90 days. CMS’

expectation is that contractors will meet

this percentage on a monthly basis.

We may use this criterion to review a

RHHI’s performance with respect to

handling the HHA/hospice workload.

This includes processing HHA/hospice

claims timely and accurately; properly

paying and settling HHA cost reports;

and timely and accurately processing

reconsiderations from beneficiaries,

HHAs, and hospices, interim rate

setting, and accuracy of MR coverage

decisions.

VI. Criteria and Standards for Carriers

A. Claims Processing Criterion

The Claims Processing criterion

contains six mandated standards.

Standard 1. 95.0 percent of clean

electronically submitted claims

processed within statutorily specified

time frames. Clean claims are defined as

claims that do not require Medicare

carriers to investigate or develop them

outside of their Medicare operations on

a prepayment basis. Specifically, clean

electronic claims can be paid as early as

the 14th day (13 days after the date of

receipt) and must be paid by the 31st

day (30 days after the date of receipt).

CMS’ expectation is that contractors

will meet this percentage on a monthly

basis.

Standard 2. 95.0 percent of clean

paper claims processed within specified

time frames. Specifically, clean paper

claims can be paid as early as the 27th

day (26 days after the date of receipt)

and must be paid by the 31st day (30

days after the date of receipt). CMS’

expectation is that contractors will meet

this percentage on a monthly basis.

Standard 3. 98.0 percent of EOMBs

and MSNs are properly generated.

Standard 4. 95.0 percent of review

determinations are completed within 45

days. CMS’ expectation is that

contractors will meet this percentage on

a monthly basis.

Standard 5. 90.0 percent of carrier

hearing decisions are completed within

120 days. CMS’ expectation is that

contractors will meet this percentage on

a monthly basis.

Standard 6. Responses to beneficiary

reviews are written at an appropriate

reading level.

Additional functions may be

evaluated under this criterion. These

functions include, but are not limited to,

the following:

• Claims Processing accuracy.

• Establishment and maintenance of

relationship with the CWF Host.

• Accuracy of processing review

cases.

• Accuracy of processing hearing

cases with determination letters that are

clear and have appropriate customerfriendly tone.

B. Customer Service Criterion

The Customer Service criterion

contains three mandated standards.

CMS’ obligation to evaluate

performance of these activities was

mandated by the court decisions of Gray

Panther v. Heckler, 1985 WL 81770

(D.D.C.) for Standards 1 and 2 and in

David v. Heckler, 591, F. Supp. 1033,

(U.S. Dist. Ct. 1984) for Standard 3.

Contractors are expected to comply with

performance expectations set forth in

the court renderings, unless

expectations established by CMS are

more stringent. In these instances,

contractors must meet CMS’

performance expectations.

Standard 1. Achieve and maintain the

monthly All Trunks Busy rate for

beneficiary telephone inquiries.

Standard 2. Respond timely to

beneficiary telephone inquiries.

Standard 3. Responses to beneficiary

correspondence are responsive, written

with appropriate customer-friendly tone

and clarity, and are at the appropriate

reading level.

Additional functions which may be

evaluated under this criterion include,

but are not limited to the following:

• Ensuring that the monthly All

Trunks Busy rate for provider inquiries

is achieved and maintained.

• Responding timely to provider

telephone inquiries.

• Quality Call Monitoring.

• Ensuring the validity of the call

center performance data that are being

reported in the Customer Service

Assessment and Management System.

• Providing timely and accurate

responses to beneficiaries and providers

that are responsive and written with

appropriate customer-friendly tone and

clarity.

• Conducting beneficiary and

provider education and outreach.

• Walk-in inquiry service.

C. Payment Safeguards Criterion

While there are no mandated

standards in this criterion, carriers may

be evaluated on any MIP activities if

performed under their contracts. In

addition, other carrier functions and

activities that may be reviewed under

this criterion include, but are not

limited to the following:

Benefit Integrity

• Identifying potential fraud cases

that exist within the carrier’s service

area and taking appropriate actions to

resolve these cases.

• Investigating allegations of potential

fraud that are made by beneficiaries,

providers, CMS, OIG, and other sources.

• Putting in place effective detection

and deterrence programs for potential

fraud.

Medical Review

• Applying analytical skills and

focusing resources on particular

providers or claim types that represent

unnecessary or inappropriate care.

• Developing effective means of

addressing any aberrance identified

through analyzing data to target prepay

and post-pay review.

• Making accurate and defensible

decisions on medical reviews.

• Effectively educating and

communicating with physician and/or

supplier communities.

Medicare Secondary Payer

• Identifying, recovering, and

referring mistaken Medicare payments

in accordance with the appropriate

Medicare Carriers Manual instructions,

and other pertinent CMS general

instructions.

• Accurately reporting savings and

following claim development

procedures.

• Prioritizing and processing

recoveries in compliance with

instructions.

• Financial reporting activities.

Overpayments

• Collecting and referring Medicare

debts timely.

• Accurately reporting overpayments

to CMS.

• Compliance with CMS instructions

for management of Medicare Trust Fund

debts.

Provider Enrollment

• Complying with assignment of staff

to the provider enrollment function and

training staff in procedures and

verification techniques.

67264 Federal Register / Vol. 66, No. 249 / Friday, December 28, 2001 / Notices

• Complying with the operational

standards relevant to the process for

enrolling providers.

D. Fiscal Responsibility Criterion

While there are no mandated

standards in this criterion, we may

review the carrier’s efforts to establish

and maintain appropriate financial and

budgetary internal controls over benefit

payments and administrative costs.

Proper internal controls must be in

place to ensure that contractors comply

with their contracts.

Additional matters that may be

reviewed under the Fiscal

Responsibility criterion include, but are

not limited to the following:

• Adherence to approved program

management and MIP budgets.

• Compliance with the BPRs.

• Compliance with financial

reporting requirements.

• Control of administrative cost and

benefit payments.

E. Administrative Activities Criterion

While there are no mandated

standards in this criterion, we may

measure a carrier’s administrative

ability to manage the Medicare program.

We may evaluate the efficiency and

effectiveness of its operations, its system

of internal controls, and its compliance

with our directives and initiatives.

We may measure a carrier’s efficiency

and effectiveness in managing its

operations. Proper systems security

(general and application controls),

Automatic Data Processing (ADP)

maintenance, and disaster recovery

plans must be in place. Also, a carrier

must test system changes to ensure

accurate implementation of our

instructions.

Our evaluation of a carrier under this

criterion may include, but is not limited

to, reviews of the following:

• Systems security.

• ADP maintenance (configuration

management, testing, change

management, security, etc.).

• Disaster recovery plan.

• Implementation of general CMS

instructions.

• Data and reporting requirements

implementation.

• Internal controls establishment and

use, including the degree to which the

contractor cooperates with the Secretary

in complying with the FMFIA.

VII. Criteria and Standards for Durable

Medical Equipment, Prosthetics,

Orthotics, and Supplies (DMEPOS)

Regional Carriers

The complete list of criteria and

standards for evaluating the

performance of DMEPOS regional

carriers is contained in detail in the

DMEPOS’ regional carrier statement of

work (SOW), which is subject to change

due to modifications to the contractor

BPRs, as well as legal and

administrative changes that have a

direct impact on the contractors.

We will use the same six criteria

contained in the DMEPOS regional

carrier SOW to evaluate the overall

performance of DMEPOS regional

carriers. They are (1) Quality, (2)

Efficiency, (3) Service, (4) Benefit

Integrity, (5) National Supplier

Clearinghouse, and (6) Statistical

Analysis DMEPOS regional carrier.

These six criteria contain a total of

nine mandated standards against which

all DMEPOS regional carriers must be

evaluated as well as examples of other

activities for which the DMEPOS

regional carriers may also be evaluated.

The mandated standards are in the

Quality, Efficiency, and Service Criteria.

In addition to being described in these

criteria, the mandated standards are also

described in Attachment J–37 to the

DMEPOS regional carrier SOW.

A. Quality Criterion

The Quality criterion contains one

mandated standard.

A DMEPOS regional carrier must pay

claims accurately and in accordance

with program instructions. The

DMEPOS regional carrier is required to:

Standard 1. Properly generate 98.0

percent of MSN’s.

The DMEPOS regional carriers must

undertake actions to promote effective

program administration with respect to

DMEPOS regional carrier claims. These

activities include, but are not limited to:

processing claims accurately,

overpayment recovery and offsetting of

claims payment; assuring the proper

submission of certificates of medical

necessity; review of the implementation

of fee schedules and reasonable charge

updates; medical review activities;

implementation of coverage policy; and,

analysis of workload to detect patterns

of outcomes. We may evaluate the

DMEPOS regional carriers in performing

these kinds of activities.

B. Efficiency Criterion

The Efficiency criterion contains five

mandated standards.

Standard 1. 95.0 percent of clean

electronically submitted claims are

processed within statutorily specified

time frames. Clean claims are defined as

claims that do not require Medicare

DMEPOS regional carriers to investigate

or develop them outside of their

Medicare operations on a prepayment

basis. Specifically, clean claims can be

paid as early as the 14th day (13 days

after the date of receipt) and must be

paid by the 31st day (30 days after the

date of receipt). CMS’ expectation is that

contractors will meet this percentage on

a monthly basis.

Standard 2. 95.0 percent of clean

paper claims are processed within

specified time frames. Specifically,

clean paper claims can be paid as early

as the 27th day (26 days after the date

of receipt) and must be paid by the 31st

day (30 days after the date of receipt).

CMS’ expectation is that contractors

will meet this percentage on a monthly

basis.

Standard 3. 95.0 percent of review

determinations are completed within 45

days. CMS’ expectation is that

contractors will meet this percentage on

a monthly basis.

Standard 4. 90.0 percent of DMEPOS

regional carrier hearing decisions are

completed within 120 days. CMS’

expectation is that contractors will meet

this percentage on a monthly basis.

Standard 5. Letters prepared to

respond to beneficiary requests for

reviews are written at an appropriate

reading level.

Additional functions which may be

evaluated under this criterion include,

but are not limited to the following:

• Determinations on review and

hearing requests are written accurately

and clearly.

• Documentation of telephone

reviews is accurate and timely.

• Requests for ALJ hearings are

processed timely, to include preparation

and forwarding to the ALJ of the case

files.

• Completed ALJ decisions are

reviewed for accuracy.

• Agency referral and case files are

submitted timely to the designated CMS

Regional Office.

• ALJ decisions are effectuated

correctly and within specified

timeframes.

• Documentation of completed ALJ

decisions is maintained.

• Requests from the Departmental

Appeals Board for ALJ case files are

processed.

C. Service Criterion

The Service criterion contains three

mandated standards.

CMS’ obligation to evaluate

performance of these activities was

mandated by the court decisions of Gray

Panther v. Heckler, 1985 WL 81770

(D.D.C.) for Standards 1 and 2 and in

David v. Heckler, 597, F. Supp. 1033,

(U.S. Dist. Ct. 1984) for Standard 3.

Contractors are expected to comply with

performance expectations set forth in

the court renderings, unless

expectations established by CMS are

Federal Register / Vol. 66, No. 249 / Friday, December 28, 2001 / Notices 67265

more stringent. In such instances,

contractors must meet CMS’

performance expectations that

beneficiaries and suppliers are served

by prompt and accurate administration

of the program in accordance with all

applicable laws, regulations, the

DMEPOS regional carrier statement of

work (SOW), and CMS’ general

instructions.

Standard 1. Achieve and maintain a

monthly All Trunks Busy rate for

beneficiary telephone inquiries.

Standard 2. Respond timely to

beneficiary telephone inquiries.

Standard 3. Responses to beneficiary

correspondence are responsive and are

written with appropriate customerfriendly tone and clarity, and are at the

appropriate reading level. Additional

functions which may be evaluated

under this criterion include, but are not

limited to the following:

• Ensuring that the monthly All

Trunks Busy rate for provider inquiries

is achieved and maintained.

• Responding timely to provider

telephone inquiries.

• Quality Call Monitoring.

• Ensuring the validity of the call

center performance data that are being

reported in the Customer Service

Assessment and Management System.

Providing timely and accurate

responses to beneficiaries, providers,

and suppliers that are responsive and

written with appropriate customerfriendly tone and clarity.

• Conducting beneficiary and

provider education and outreach.

• Responding to beneficiary and

supplier education and training needs.

D. Benefit Integrity Criterion (referred to

in prior Federal Register notices as Fraud

and Abuse)

While there are no mandated

standards in this criterion, other

DMEPOS regional carrier functions and

activities that may be reviewed under

this criterion include, but are not

limited to the following:

• Identifying potential fraud cases

that exist within the DMEPOS regional

carrier’s service area and taking

appropriate actions to resolve these

cases.

• Investigating allegations of potential

fraud made by beneficiaries, providers,

CMS, OIG, and other sources.

• Putting in place effective detection

and deterrence programs for potential

fraud.

E. National Supplier Clearinghouse

Criterion

(The National Supplier Clearinghouse

(NSC) DMEPOS regional carrier

function is assigned to one of the

DMEPOS regional carriers. It performs

the functions measured under this

criterion.)

While there are no mandated

standards in this criterion, the NSC

DMEPOS regional carrier is required to

properly administer the NSC.

We review the NSC activities to

ensure the NSC DMEPOS regional

carrier meets various requirements, such

as—processing new and renewal

applications for billing numbers,

maintaining supplier files, matching

OIG sanctioned suppliers, and enforcing

supplier standards.

F. Statistical Analysis DMEPOS

Regional Carrier Criterion

(The Statistical Analysis DMEPOS

regional carrier function is assigned to

one of the DMEPOS regional carriers. It

performs the functions measured under

this criterion.)

While there are no mandated

standards in this criterion, the

Statistical Analysis DMEPOS regional

carrier is required to properly

administer the Statistical Analysis

DMEPOS regional carrier program.

We review the activities of the

Statistical Analysis DMEPOS regional

carrier to ensure it meets various

requirements such as: analyzing

national reports to identify trends,

aberrancies, and utilization patterns;

generating reports according to our

specifications; serving as the Healthcare

Common Procedure Coding System

(HCPCS) definition resource center; and

developing national parental and enteral

nutrition pricing as well as oral anticancer drugs pricing.

In addition, we evaluate the Statistical

Analysis DMEPOS regional carrier’s

performance in conducting statistical

analysis of data to identify potential

areas of over utilization, fraudulent or

abusive claims practices, and other

areas of concern.

VIII. Action Based on Performance

Evaluations

We evaluate a contractor’s

performance against applicable program

requirements for each criterion. Each

contractor must certify that all

information submitted to us relating to

the contract management process,

including, without limitation, all files,

records, documents and data, whether

in written, electronic, or other form, is

accurate and complete to the best of the

contractor’s knowledge and belief. A

contractor will also be required to

certify that its files, records, documents,

and data have not been manipulated or

falsified in an effort to receive a more

favorable performance evaluation. A

contractor must further certify that, to

the best of its knowledge and belief, the

contractor has submitted, without

withholding any relevant information,

all information required to be submitted

with respect to the contract management

process under the authority of

applicable law(s), regulation(s),

contracts, or CMS’ manual provision(s).

Any contractor that makes a false,

fictitious, or fraudulent certification

may be subject to criminal and/or civil

prosecution, as well as appropriate

administrative action. This

administrative action may include

debarment or suspension of the

contractor, as well as the termination or

non-renewal of a contract.

If a contractor meets the level of

performance required by operational

instructions, it meets the requirements

of that criterion. When we determine a

contractor is not meeting performance

requirements, we will use the terms

major nonconformance or minor

nonconformance to classify our

findings. A major nonconformance is a

nonconformance that is likely to result

in failure of the supplies or services, or

to materially reduce the usability of the

supplies or services for their intended

purpose. A minor nonconformance is a

nonconformance that is not likely to

materially reduce the usability of the

supplies or services for their intended

purpose, or is a departure from

established standards having little

bearing on the effective use or operation

of the supplies or services. The

contractor will be required to develop

and implement a PIP for findings

determined to be either a major or minor

nonconformance. The contractor will be

monitored to ensure effective and

efficient compliance with the PIP, and

to ensure improved performance when

requirements are not met.

The results of performance

evaluations and assessments under all

criteria applying to intermediaries,

carriers, RHHIs and DMEPOS regional

carriers will be used for contract

management activities and will be

published in the contractor’s annual

Report of Contractor Performance (RCP).

We may initiate administrative actions

as a result of the evaluation of

contractor performance based on these

performance criteria. Under sections

1816 and 1842 of the Act, we consider

the results of the evaluation in our

determinations when:

• Entering into, renewing, or

terminating agreements or contracts

with contractors.

• Deciding other contract actions for

intermediaries and carriers (such as

deletion of an automatic renewal

clause). These decisions are made on a

case-by-case basis and depend primarily

67266 Federal Register / Vol. 66, No. 249 / Friday, December 28, 2001 / Notices

on the nature and degree of

performance. More specifically, they

depend on the following:

• Relative overall performance

compared to other contractors.

• Number of criteria in which

nonconformance occurs.

• Extent of each major

nonconformance.

• Relative significance of the

requirement for which major

nonconformance occurs within the

overall evaluation program.

• Efforts to improve program quality,

service, and efficiency.

• Deciding the assignment or

reassignment of providers and

designation of regional or national

intermediaries for classes of providers.

We make individual contract action

decisions after considering these factors

in terms of their relative significance

and impact on the effective and efficient

administration of the Medicare program.

In addition, if the cost incurred by the

intermediary, RHHI, carrier, or DMEPOS

regional carrier to meet its contractual

requirements exceeds the amount that

we find to be reasonable and adequate

to meet the cost that must be incurred

by an efficiently and economically

operated intermediary or carrier, these

high costs may also be grounds for

adverse action.

IX. Response to Public Comments

Because of the large number of items

of correspondence we normally receive

on Federal Register documents

published for comment, we are unable

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, if we proceed with

a subsequent document, we will

respond to the comments in the

preamble of that document.

X. Regulatory Impact Statement

We have examined the impacts of this

notice as required by Executive Order

12866 (September 1993, Regulatory

Planning and Review) and the

Regulatory Flexibility Act (RFA)

(September 19, 1980 Public Law 96–

354). Executive Order 12866 directs

agencies to assess all costs and benefits

of available regulatory alternatives and,

if regulation is necessary, to select

regulatory approaches that maximize

net benefits (including potential

economic, environmental, public health

and safety effects, distributive impacts,

and equity). A regulatory impact

analysis (RIA) must be prepared for

major rules with economically

significant effects ($100 million or more

annually). Since this notice only

describes criteria and standards for

evaluating FI’s, Carriers and DMEPOS

carriers and has no economic or social

impact on the program, its beneficiaries

or providers or suppliers, this is not a

major notice.

The RFA requires agencies to analyze

options for regulatory relief of small

businesses. This notice does not affect

small businesses, individuals and States

are not included in the definition of a

small business entities.

In addition, section 1102(b) of the Act

requires us to prepare a regulatory

impact analysis if a rule may have a

significant impact on the operations of

a substantial number of small rural

hospitals. This notice does not affect

small rural hospitals.

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.

This notice does not require an impact

analysis because it does not have an

economic impact on small entities,

small rural hospitals, or State, local, or

tribal governments.

In accordance with the provisions of

Executive Order 12866, this notice was

reviewed by the Office of Management

and Budget.

XI. Federalism

We have reviewed this notice under

the threshold criteria of Executive Order

13132, Federalism. We have determined

that the notice does not significantly

affect the rights, roles, and

responsibilities of States.

XII. Collection of Information

Requirements

This document does not impose

information collection and

recordkeeping requirements.

Consequently it need not be reviewed

by the Office of Management and

Budget under the authority of the

Paperwork Reduction Act of 1995 (44

U.S.C. 3501 et seq.).

(Catalog of Federal Domestic Assistance

Program No. 93.773, Medicare—Hospital

Insurance, and Program No. 93.774,

Medicare—Supplementary Medical

Insurance Program)

Dated: September 13, 2001.

Thomas A. Scully,

Administrator, Centers for Medicare &

Medicaid Services.

[FR Doc. 01–31720 Filed 12–27–01; 8:45 am]

BILLING CODE 4120–01–P

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Centers for Medicare & Medicaid

Services

[CMS–2135–N]

RIN: 0938–AL34

Medicare Program; Deductible Amount

for Medigap High Deductible Options

for Calendar Year 2002

AGENCY: Centers for Medicare &

Medicaid Services (CMS), HHS.

ACTION: Notice.

SUMMARY: This notice announces the

annual deductible amount of $1,620 for

the Medicare supplemental health

insurance (Medigap) high deductible

options for 2002. High deductible policy

options are those with benefit packages

classified as ‘‘F’’ or ‘‘J’’ that have a high

deductible feature. The deductible

amount represents the annual out-ofpocket expenses (excluding premiums)

that a beneficiary who chooses one of

these options must pay before the policy

begins paying benefits.

EFFECTIVE DATE: January 1, 2002.

FOR FURTHER INFORMATION CONTACT:

Kathryn McCann, (410) 786–7623.

SUPPLEMENTARY INFORMATION:

I. Background

A. Medicare Supplemental Insurance

A Medicare supplemental, or

Medigap, policy is the principal type of

private health insurance that a

beneficiary may purchase to cover

certain costs that Medicare does not

cover. The beneficiary is responsible for

deductibles and coinsurance amounts

for both Part A (hospital insurance) and

Part B (supplementary medical

insurance) of the Medicare program. In

addition, Medicare generally does not

cover custodial nursing home care,

eyeglasses, dental care, and most

outpatient prescription drugs. A

beneficiary must either pay the full cost

of these services, or he or she may

purchase additional private health

insurance to help pay these costs.

Medigap policies offer coverage for

some or all of the deductibles and

coinsurance amounts required by

Medicare. Additionally, Medigap

policies may provide coverage for some

services that are not covered under the

Medicare program.

Section 1882 of the Social Security

Act (the Act) establishes, among other

things, minimum standards for Medigap

policies. No Medigap policy may be

issued in a State unless the policy

complies with State laws that conform

to section 1882(b)(1) of the Act.