Medicare Program; Medicare Secondary Payer Amendments, 9466-9471 [06-1712]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 71, Number 37 (Friday, February 24, 2006)]
[Rules and Regulations]
[Pages 9466-9471]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-1712]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 411 and 489

[CMS-6272-IFC]
RIN 0938-AN27


Medicare Program; Medicare Secondary Payer Amendments

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Interim final rule with comment period.

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SUMMARY: This interim final rule with comment period implements 
amendments to the Medicare Secondary Payer (MSP) provisions under Title 
III of the Medicare Prescription Drug, Improvement, and Modernization 
Act of 2003 (MMA). The MMA amendments clarify the MSP provisions 
regarding the obligations of primary plans and primary payers, the 
nature of the insurance arrangements subject to the MSP rules, the 
circumstances under which Medicare may make conditional payments, and 
the obligations of primary payers to reimburse Medicare.

DATES: Effective date: These regulations are effective on April 25, 
2006.
    Comment date: To be assured consideration, comments must be 
received at one of the addresses provided below, no later than 5 p.m. 
on April 25, 2006.

ADDRESSES: In commenting, please refer to file code CMS-6272-IFC. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (no duplicates, 
please):
    1. Electronically. You may submit electronic comments on specific 
issues in this regulation to https://www.cms.hhs.gov/eRulemaking. Click 
on the link ``Submit electronic comments on CMS regulations with an 
open comment period.'' (Attachments should be in Microsoft Word, 
WordPerfect, or Excel; however, we prefer Microsoft Word.)
    2. By regular mail. You may mail written comments (one original and 
two copies) to the following address ONLY: Centers for Medicare & 
Medicaid Services, Department of Health and Human Services, Attention: 
CMS-6272-IFC, g1P.O. Box 8017, Baltimore, MD 21244-8017.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments (one 
original and two copies) to the following address ONLY: Centers for 
Medicare & Medicaid Services, Department of Health and Human Services, 
Attention: CMS-6272-IFC, Mail Stop C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments (one original and two copies) before the 
close of the comment period to one of the following addresses. If you 
intend to deliver your comments to the Baltimore address, please call 
telephone number (410) 786-7195 in advance to schedule your arrival 
with one of our staff members.
    Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, 
SW., Washington, DC 20201; or 7500 Security Boulevard, Baltimore, MD 
21244-1850.
    (Because access to the interior of the HHH Building is not readily 
available to persons without Federal Government identification, 
commenters are encouraged to leave their comments in

[[Page 9467]]

the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Suzanne Ripley, (410) 786-0970.

SUPPLEMENTARY INFORMATION: Submitting Comments: We welcome comments 
from the public on all issues set forth in this rule to assist us in 
fully considering issues and developing policies. You can assist us by 
referencing the file code CMS-6272-IFC and the specific ``issue 
identifier'' that precedes the section on which you choose to comment.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: https://
www.cms.hhs.gov/eRulemaking. Click on the link ``Electronic Comments on 
CMS Regulations'' on that Web site to view public comments.
    Comments received timely will be also 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 1-800-743-3951.

I. Background

    [If you choose to comment on issues in this section, please 
indicate the caption ``Background'' at the beginning of your comment.]
    Beginning in 1980, the Congress enacted a series of amendments to 
section 1862(b) of the Social Security Act (the Act) (hereafter 
referred to as the Medicare Secondary Payer (MSP) provisions) to 
protect the financial integrity of the Medicare program by making 
Medicare a secondary payer, rather than a primary payer of health care 
services, when certain types of other health care coverage are 
available. (Workers' compensation had already been primary to Medicare 
since the implementation of the original Medicare statute.) In enacting 
the MSP provisions, the Congress intended that the MSP provisions be 
construed to make Medicare a secondary payer to the maximum extent 
possible. These statutory provisions are set forth in regulations at 42 
CFR part 411, Exclusions From Medicare and Limitations on Medicare 
Payment.

II. MMA Amendments to the Medicare Secondary Payer (MSP) Provisions

    [If you choose to comment on issues in this section, please 
indicate the caption ``MMA Amendments to the Medicare Secondary Payer 
Provisions'' at the beginning of your comment.]
    The Congress later became aware that various parties were pressing 
several interpretations of the MSP provisions that would, if ultimately 
accepted, severely limit the applicability of the MSP provisions at 
considerable expense to the Medicare program. Many of these 
interpretations were presented in the context of Federal court 
litigation over the meaning of various MSP provisions. The Congress 
rejected these attempts to incorrectly limit the application and scope 
of the MSP statute. The Congress passed section 301 under Title III of 
the Medicare Prescription Drug, Improvement, and Modernization Act of 
2003 (MMA) (Pub. L. 108-173) on December 8, 2003 to clarify its 
original intent regarding the MSP provisions under section 1862(b) of 
the Act, thereby indicating that these interpretations were incorrect 
and that the Secretary's interpretations were accurate. These 
clarifications are effective as if enacted on the date of the original 
legislation.
    Section 301(a) of the MMA amends section 1862(b)(2)(A)(ii) of the 
Act to remove the term ``promptly.'' This amendment establishes that 
various parties were incorrect in their interpretation that section 
1862(b)(2)(A)(ii) of the Act applied only if the workers' compensation 
law or plan, liability insurance, or no-fault insurance has paid or 
could reasonably be expected to pay for services ``promptly.'' This 
amendment also adds language at section 1862(b)(2)(B) of the Act to 
clarify that the Secretary may make payment subject to reimbursement if 
the workers' compensation law or plan, liability insurance, or no-fault 
insurance has not paid or could not reasonably be expected to pay for 
services ``promptly.''
    Section 301(b)(1) of the MMA amends section 1862(b)(2)(A) of the 
Act to clarify the application of the term ``self-insured plan.'' It 
establishes that ``an entity that engages in a business, trade, or 
profession shall be deemed to have a self-insured plan if it carries 
its own risk (whether by a failure to obtain insurance, or otherwise) 
in whole or in part.''
    Section 301(b)(2)(A) of the MMA amends section 1862(b)(2)(B) of the 
Act to specify that a primary plan, and an entity that receives payment 
from a primary plan, shall reimburse the appropriate Trust Fund for any 
payment that the Secretary makes with respect to an item or service if 
it is demonstrated that the primary plan has or had a responsibility to 
make payment with respect to the item or service. It adds language 
establishing that a primary plan's responsibility for this payment 
``may be demonstrated by a judgment, a payment conditioned upon the 
recipient's compromise, waiver, or release (whether or not there is a 
determination or admission of liability) of payment for items or 
services included in a claim against the primary plan or the primary 
plan's insured, or by other means.''
    Section 301(b)(3) of the MMA amends section 1862(b)(2) of the Act 
to further delineate those entities (that is, ``primary payers'') from 
which the United States may seek reimbursement. It amends language 
specifying that the United States may bring an action against ``all 
entities that are or were required or responsible (directly, as an 
insurer or self-insurer, as a third-party administrator, as an employer 
that sponsors or contributes to a group health plan, or large group 
health plan, or otherwise) to make payment with respect to the same 
item or service (or any portion thereof) under a primary plan.'' This 
amendment specifies that the United States may recover double damages 
against these entities. Also, it amends language clarifying that the 
United States may recover payment from ``any entity that has received 
payment from a primary plan or from the proceeds of a primary plan's 
payment to any entity.''
    Under section 301(d) of the MMA, these provisions are effective as 
if enacted on the date of the original legislation to reflect the 
original MSP provisions and Congressional intent at issue. As we 
discuss in more detail below, this interim final rule with comment 
period amends 42 CFR part 411 and Sec.  489.20(i)(2)(ii) of our 
regulations to implement these MSP provisions.

[[Page 9468]]

III. Provisions of This Interim Final Rule With Comment Period

    [If you choose to comment on issues in this section, please 
indicate the caption ``Provisions of This Interim Final Rule with 
Comment Period'' at the beginning of your comment.]
    As is the case with group health plan and large group health plan 
insurance, Medicare may not make payment if payment with respect to the 
same item or service has been made or can reasonably be expected to be 
made under workers' compensation, no-fault, or liability insurance. 
However, Medicare may make a payment conditioned on reimbursement when 
the workers' compensation, no-fault, or liability insurance (including 
a self-insured plan) plan has not made or cannot reasonably be expected 
to make payment with respect to such item or service promptly. In 
accordance with section 301(a) of the MMA, we are removing the word 
``promptly'' from Sec.  411.20(a)(2), Sec.  411.40(b)(1)(i), and Sec.  
411.50(c)(1) and (c)(2) to clarify that these Medicare payments are 
conditional and must be reimbursed whenever a primary payer's 
responsibility to make payment is demonstrated.
    At Sec.  411.21, we are removing the definitions for ``third party 
payer'' and ``third party payment'' and replacing them with definitions 
for ``primary payer'' and ``primary payment.'' We are also providing a 
definition for ``primary plan.'' We are making these changes to conform 
to the statutory language under the MMA. Consistent with these changes, 
we are making nomenclature changes to replace the terms ``third party 
payer,'' ``third party payment,'' and ``third party plan'' with 
``primary payer,'' ``primary payment,'' or ``primary plan,'' 
respectively under part 411 throughout subparts B through H. At Sec.  
411.33(f)(4), we are replacing the term ``third party'' with ``primary 
payer.'' We are also amending Sec.  489.20(i)(2)(ii) to replace ``third 
party payment'' with ``primary payment.''
    In this interim final rule with comment period, we are also adding 
language to the definition of ``self-insured'' plan in Sec.  411.50(b) 
in accordance with section 301(b)(1) of the MMA. We are clarifying that 
an entity that engages in a business, trade, or profession is deemed to 
have a ``self-insured'' plan for liability insurance if it carries its 
own risk, in whole or in part. Any such entity's self-insured status 
may be demonstrated, among other ways, by the failure to obtain 
insurance.
    In accordance with section 301(b)(2)(A) of the MMA, we are adding a 
new Sec.  411.22 to clarify that a primary payer, and an entity that 
receives payment from a primary payer, become obligated to reimburse 
CMS if and when it is demonstrated that the primary payer has or had 
primary payment responsibility. This responsibility may be demonstrated 
by a judgment, a payment conditioned upon the recipient's compromise, 
waiver, or release (whether or not there is a determination or 
admission of liability) of payment for items and services included in a 
claim against the primary payer, or by other means, including but not 
limited to a settlement, award, or contractual obligation. This means 
that a primary payer may not extinguish its obligations under the MSP 
provisions by paying the wrong party--for example, by paying the 
Medicare beneficiary or the provider when it should have reimbursed the 
Medicare program. Primary payers are expected to reimburse CMS when it 
is demonstrated that they have or had payment responsibility.
    In accordance with section 301(b)(3) of the MMA, the definition of 
``primary payer'' in Sec.  411.21, the new Sec.  411.22, and the 
revised Sec.  411.24(e) also clarify that the Medicare program may seek 
reimbursement from a primary payer, or any or all the entities 
responsible or required to make payment as a primary payer. With 
respect to debts where a group health plan or large group health plan 
is the primary plan, the amendments make clear that all employers that 
sponsor or contribute to the group health plan or large group health 
plan are primary payers required to reimburse Medicare regardless of 
whether the group health plan or large group health plan was an insured 
plan (that is, the employer or other plan sponsor purchased insurance) 
or was self-insured by the employer or other plan sponsor. Medicare may 
also seek reimbursement from any entity that has received payment from 
a primary payer. Entities that receive payment include, but are not 
limited to beneficiaries, attorneys, and providers or suppliers 
(including physicians).
    Furthermore, in this interim final rule with comment period, we are 
revising Sec.  411.24(e) by adding language pertaining to Medicare's 
authority to recover conditional payments. Specifically, in accordance 
with section 301(b)(3) of the MMA, we specify at Sec.  411.24(e) that 
CMS has a direct right of action to recover from any primary payer. We 
are making a technical revision at Sec.  411.24(f)(2) to replace the 
words ``is primary'' with ``is a primary plan.''
    Consistent with section 301(b)(2)(A) of the MMA, this interim rule 
with comment period clarifies at Sec.  411.24(i)(1) that, like 
liability insurance and disputed claims under group health plans and 
no-fault insurance, workers' compensation insurance and plans must also 
reimburse Medicare, although it paid some other entity, if it knew or 
should have known that the claimant was a Medicare beneficiary. Where 
Medicare has already recovered payment from the entity, reimbursement 
to Medicare by the workers' compensation insurance or plan is not 
required. However, nothing in this interim final rule with comment 
period will be construed to require us to first pursue the entity which 
receives payment before it can pursue the primary payer. Also 
consistent with section 301(b)(2)(A) of the MMA, we are adding language 
to Sec.  411.45, Sec.  411.52, and Sec.  411.53 to specify that any 
conditional payment that Medicare makes is based upon the recovery 
rules under subpart B of part 411. In addition, at Sec.  411.52, we 
clarify the basis for which Medicare makes payment in liability cases. 
We are revising Sec.  411.53 by removing the terms ``, or the provider 
or supplier,'' in the existing paragraph (a) to clarify that it is the 
beneficiary's responsibility to file a claim for no-fault benefits.

III. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

IV. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite public comment on the proposed rule. The 
notice of proposed rulemaking includes a reference to the legal 
authority under which the rule is proposed, and the terms and 
substances of the proposed rule or a description of the subjects and 
issues involved. This procedure can be waived, however, if an agency 
finds good cause that a notice-and-comment procedure is impracticable, 
unnecessary, or contrary to the public interest and incorporates a 
statement of the finding and its reasons in the rule issued.
    We find it unnecessary to undertake notice and comment rulemaking

[[Page 9469]]

because this interim final rule with comment period merely conforms 
part 411 and Sec.  489.20(i)(2)(ii) of the regulations to statutory 
changes affected by section 301 of the MMA. Therefore, we find good 
cause to waive the notice of proposed rulemaking and to issue this 
final rule on an interim basis. We are providing a 60-day public 
comment period.

V. Collection of Information Requirements

    This document does not impose information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995.

VI. Regulatory Impact Statement

    [If you choose to comment on issues in this section, please 
indicate the caption ``Regulatory Impact'' at the beginning of your 
comment.]
    We have examined the impacts of this interim final rule with 
comment period as required by Executive Order 12866 (September 1993, 
Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) 
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social 
Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), 
and Executive Order 13132.
    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more in any 1 year). We have 
determined that the effect of this interim final rule with comment 
period on the economy and the Medicare program is not economically 
significant, since it merely clarifies certain MSP provisions to 
reflect original congressional intent and ratifies the manner in which 
we have implemented/administered the MSP provisions. If the technical 
and clarifying amendments had not been enacted, ``savings'' reflected 
in the table below would have been lost and Medicare expenditures would 
have increased.
    The table reflects the potential impact of a Fifth Circuit Court 
decision that held that the MSP liability provision did not apply when 
there was no liability insurance purchased or no formal plan of self-
insurance recognized under the Internal Revenue Code. This placed a 
small portion of future MSP liability savings at risk. It was assumed 
that over time, some U.S. Circuit Courts could have reached a similar 
conclusion so that the potential losses of future MSP liability savings 
would increase slowly over time in addition to the projected growth of 
Medicare benefits. It was further assumed that some individuals who 
repaid Medicare before 2003 would sue for refunds and that favorable 
decisions would be rendered in some, but not all, cases. It was also 
assumed that the refunds of past MSP liability savings would peak about 
2007. Lastly, it was assumed that MSP liability collections represent 
approximately 70 percent Part A claims payments and 30 percent Part B 
claims payments (which are based on historic MSP liability savings).

                        Medicare Savings Retained
                  [Rounded to the Nearest $10 Million]
------------------------------------------------------------------------
                                             Part A    Part B     Total
------------------------------------------------------------------------
2003......................................         0         0         0
2004......................................        10         0        10
2005......................................        10         0        10
2006......................................        10         0        10
2007......................................        20         0        20
2008......................................        10         0        10
2009......................................        20         0        20
2010......................................        20        10        30
2011......................................        20        10        30
2012......................................        20        10        30
2013......................................        20        10        30
2014......................................        20        10        30
2015......................................        20        10        30
------------------------------------------------------------------------

    Therefore, this interim final rule with comment period is not a 
major rule as defined in Title 5, United States Code, section 804(2) 
and is not an economically significant rule under Executive Order 
12866.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
$6 million to $29 million in any 1 year. Individuals and States are not 
included in the definition of a small entity. We have determined and we 
certify that this interim final rule with comment period will not have 
a significant economic impact on a substantial number of small entities 
because there is and will be no change in the administration of the MSP 
provisions. Therefore, we are not preparing an analysis for the RFA.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule or notice having the effect of a 
rule may have a significant impact on the operations of a substantial 
number of small rural hospitals. This analysis must conform to the 
provisions of section 604 of the RFA. For purposes of section 1102(b) 
of the Act, we define a small rural hospital as a hospital that is 
located outside of a Core-Based Statistical Area and has fewer than 100 
beds. We have determined that this interim final rule with comment 
period will not have a significant effect on the operations of a 
substantial number of small rural hospitals because there is and will 
be no change in the administration of the MSP provisions. Therefore, we 
are not preparing an analysis for section 1102(b) of the Act.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule or notice having the effect of a rule whose mandates 
require spending in any 1 year of $100 million in 1995 dollars, updated 
annually for inflation. That threshold level is currently approximately 
$120 million. This interim final rule with comment period has no 
consequential effect on State, local, or tribal governments or on the 
private sector because there is and will be no change in the 
administration of the MSP provisions.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. Since this regulation does not impose any costs on State 
or local governments, the requirements of E.O. 13132 are not 
applicable.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 411

    Kidney diseases, Medicare, Reporting and recordkeeping 
requirements.

42 CFR Part 489

    Health facilities, Medicare, Reporting and recordkeeping 
requirements.

0
For the reasons set forth in the preamble, the Centers for Medicare & 
Medicaid Services amends 42 CFR chapter IV as set forth below:

[[Page 9470]]

PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE 
PAYMENT

0
1. The authority citation for part 411 continues to read as follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).


Sec.  411.20  [Amended]

0
2. Section 411.20 is amended by removing the word ``promptly'' in 
paragraph (a)(2) introductory text.
0
3. Section 411.21 is amended by adding definitions of ``primary 
payer,'' ``primary payment,'' and ``primary plan'' and removing the 
definitions of ``third party payer'' and ``third party payment'' to 
read as follows:


Sec.  411.21  Definitions.

* * * * *
    Primary payer means, when used in the context in which Medicare is 
the secondary payer, any entity that is or was required or responsible 
to make payment with respect to an item or service (or any portion 
thereof) under a primary plan. These entities include, but are not 
limited to, insurers or self-insurers, third party administrators, and 
all employers that sponsor or contribute to group health plans or large 
group health plans.
    Primary payment means, when used in the context in which Medicare 
is the secondary payer, payment by a primary payer for services that 
are also covered under Medicare.
    Primary plan means, when used in the context in which Medicare is 
the secondary payer, a group health plan or large group health plan, a 
workers' compensation law or plan, an automobile or liability insurance 
policy or plan (including a self-insured plan), or no-fault insurance.
* * * * *

0
4. A new Sec.  411.22 is added to read as follows:


Sec.  411.22  Reimbursement obligations of primary payers and entities 
that received payment from primary payers.

    (a) A primary payer, and an entity that receives payment from a 
primary payer, must reimburse CMS for any payment if it is demonstrated 
that the primary payer has or had a responsibility to make payment.
    (b) A primary payer's responsibility for payment may be 
demonstrated by--
    (1) A judgment;
    (2) A payment conditioned upon the recipient's compromise, waiver, 
or release (whether or not there is a determination or admission of 
liability) of payment for items or services included in a claim against 
the primary payer or the primary payer's insured; or
    (3) By other means, including but not limited to a settlement, 
award, or contractual obligation.


Sec.  411.24  [Amended]

0
5. Section 411.24 is amended by--
0
A. Revising paragraph (e).
0
B. Removing the words ``is primary'' and adding in its place the phrase 
``is a primary plan'' in paragraph (f)(2).
0
C. Adding '', workers' compensation insurance or plan,'' after ``group 
health plans'' and before ``and'' in paragraph (i)(1).
    Revisions for paragraph (e) read as follows:


Sec.  411.24  Recovery of conditional payments.

* * * * *
    (e) Recovery from primary payers. CMS has a direct right of action 
to recover from any primary payer.
* * * * *

0
6. Section 411.33(f)(4) introductory text is revised to read as 
follows:


Sec.  411.33  Amount of Medicare secondary payment.

* * * * *
    (f) Examples: * * *
    (4) A hospital furnished 5 days of inpatient care in 1987 to a 
Medicare beneficiary. The provider's charges for Medicare-covered 
services were $4,000 and the gross amount payable was $3,500. The 
provider agreed to accept $3,000 from the primary payer as payment in 
full. The primary payer paid $2,900 due to a deductible requirement 
under the primary plan. Medicare considers the amount the provider is 
obligated to accept as full payment ($3,000) to be the provider 
charges. The Medicare secondary payment is the lowest of the following:
* * * * *


Sec.  411.40  [Amended]

0
7. Section 411.40 is amended by removing the word ``promptly'' in 
paragraph (b)(1)(i).
0
8. Section 411.45 is revised to read as follows:


Sec.  411.45  Basis for conditional Medicare payment in workers' 
compensation cases.

    (a) A conditional Medicare payment may be made under either of the 
following circumstances:
    (1) The beneficiary has filed a proper claim for workers' 
compensation benefits, but the intermediary or carrier determines that 
the workers' compensation carrier will not pay promptly. This includes 
cases in which a workers' compensation carrier has denied a claim.
    (2) The beneficiary, because of physical or mental capacity, failed 
to file a proper claim.
    (b) Any conditional payment that CMS makes is conditioned on 
reimbursement to CMS in accordance with subpart B of this part.


Sec.  411.50  [Amended]

0
9. Section 411.50 is amended by--
0
A. Revising the definition of ``self-insured plan'' in paragraph (b).
0
B. Removing the word ``promptly'' in paragraphs (c)(1) and (c)(2).
0
The revision reads as follows:


Sec.  411.50  General provisions.

* * * * *
    (b) Definitions.
* * * * *
    Self-insured plan means a plan under which an individual, or a 
private or governmental entity, carries its own risk instead of taking 
out insurance with a carrier. This term includes a plan of an 
individual or other entity engaged in a business, trade, or profession, 
a plan of a non-profit organization such as a social, fraternal, labor, 
educational, religious, or professional organization, and the plan 
established by the Federal government to pay liability claims under the 
Federal Tort Claims Act. An entity that engages in a business, trade, 
or profession is deemed to have a self-insured plan for purposes of 
liability insurance if it carries its own risk (whether by a failure to 
obtain insurance, or otherwise) in whole or in part.
* * * * *

0
10. Section 411.52 is revised to read as follows:


Sec.  411.52  Basis for conditional Medicare payment in liability 
cases.

    (a) A conditional Medicare payment may be made in liability cases 
under either of the following circumstances:
    (1) The beneficiary has filed a proper claim for liability 
insurance benefits but the intermediary or carrier determines that the 
liability insurer will not pay promptly for any reason other than the 
circumstances described in Sec.  411.32(a)(1). This includes cases in 
which the liability insurance carrier has denied the claim.
    (2) The beneficiary has not filed a claim for liability insurance 
benefits.
    (b) Any conditional payment that CMS makes is conditioned on 
reimbursement to CMS in accordance with subpart B of this part.

0
11. Section 411.53 is revised to read as follows:

[[Page 9471]]

Sec.  411.53  Basis for conditional Medicare payment in no-fault cases.

    (a) A conditional Medicare payment may be made in no-fault cases 
under either of the following circumstances:
    (1) The beneficiary has filed a proper claim for no-fault insurance 
benefits but the intermediary or carrier determines that the no-fault 
insurer will not pay promptly for any reason other than the 
circumstances described in Sec.  411.32(a)(1). This includes cases in 
which the no-fault insurance carrier has denied the claim.
    (2) The beneficiary, because of physical or mental incapacity, 
failed to meet a claim-filing requirement stipulated in the policy.
    (b) Any conditional payment that CMS makes is conditioned on 
reimbursement to CMS in accordance with subpart B of this part.

PART 411--[NOMENCLATURE CHANGE]

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12. In part 411, revise all references to ``third party payer'' to read 
``primary payer'; revise all references to ``third party payment'' to 
read ``primary payment'; and revise all references to ``third party 
plan'' to read ``primary plan''.

PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL

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1. The authority citation for part 489 continues to read as follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act.


Sec.  489.20  [Amended]

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2. Section Sec.  489.20(i)(2)(ii) introductory text is amended by 
removing the words ``third party payment'' and adding in its place the 
words ``primary payment''.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: February 8, 2006.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: November 14, 2005.
Michael O. Leavitt,
Secretary, Department of Health and Human Services.
[FR Doc. 06-1712 Filed 2-23-06; 8:45 am]
BILLING CODE 4120-01-P