Medicare Program; Medicare Part D Data, 61445-61455 [06-8750]

Agencies

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

[Federal Register Volume 71, Number 201 (Wednesday, October 18, 2006)]
[Proposed Rules]
[Pages 61445-61455]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-8750]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 423

[CMS-4119-P]
RIN  0938-AO58


Medicare Program; Medicare Part D Data

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would allow the Secretary to use the claims 
information that is now being collected for Part D payment purposes for 
other research, analysis, reporting, and public health functions. The 
Secretary needs to use this data because other publicly available data 
are not, in and of themselves, sufficient for the studies and 
operations that the Secretary needs to undertake as part of the 
Department of Health and Human Service's obligation to oversee the 
Medicare program, protect the public health, and respond to 
Congressional mandates.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on December 18, 
2006.

ADDRESSES: In commenting, please refer to file code CMS-4119-P. 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-4119-P, P.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 &

[[Page 61446]]

Medicaid Services, Department of Health and Human Services, Attention: 
CMS-4119-P, 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 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: Alissa DeBoy, (410) 786-6041; Nancy 
DeLew, (202) 690-7351.

SUPPLEMENTARY INFORMATION:
    Submitting Comments: We welcome comments from the public on all 
issues set forth in this proposed rule to assist us in fully 
considering issues and developing policies. You can assist us by 
referencing the file code CMS-4119-P 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 also 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 1-800-743-3951.

I. Background

A. Introduction

    Under the Social Security Act (the Act), the Secretary has the 
authority to include in Part D sponsor contracts any terms or 
conditions the Secretary deems necessary and appropriate, including 
requiring the organization to provide the Secretary with such 
information as the Secretary may find necessary and appropriate. (See 
section 1857(e)(1) of the Act as incorporated into Part D through 
section 1860D-12(b)(3)(D) of the Act.)
    We propose to implement section 1860D-12(b)(3)(D) of the Act to 
allow the Secretary to collect the same claims information now 
collected under the authority of section 1860D-15 of the Act for 
research, internal analysis, oversight, and public health purposes. 
While the purposes underlying such collection are discussed in more 
detail under this proposed rule, they include evaluating the new 
prescription drug benefit, including its effectiveness and impact on 
health outcomes, performing Congressionally mandated or other 
demonstration projects and studies, reporting to Congress and the 
public regarding expenditures and other statistics involving the new 
Medicare prescription drug benefit, studying and reporting on the 
Medicare program as a whole, and creating a research resource for the 
evaluation of utilization and outcomes associated with the use of 
prescription drugs.
    We note that because this proposed rule would apply to all Part D 
sponsors, it would apply to any entity offering a Part D plan, 
including both prescription drug plan sponsors and Medicare Advantage 
organizations offering qualified prescription drug coverage. We further 
note that the Part D prescription drug event payment data (hereinafter 
referred to as ``claims data'') will include data relating to any 
covered Part D drug, which per 42 CFR 423.100, includes not only drugs, 
but insulin, biologic products, certain medical supplies and vaccines.

B. Statutory Basis

    On December 8, 2003, Congress enacted the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-
173). Title I of the MMA amended the Act to establish a new Part D in 
title XVIII of the Act and established a new voluntary prescription 
drug benefit program. As we stated in the preamble to the January 28, 
2005 final rule (70 FR 4197), implementing the new prescription drug 
benefit, we believe that the addition of outpatient prescription drug 
coverage to the Medicare program is the most significant change to the 
Medicare program since its inception in 1965.
    Unlike Parts A and B of the Medicare program, where Medicare acts 
as the payer and insurer and generally pays for items and services on a 
fee-for-service basis, the prescription drug benefit is based on a 
private market model. Under this model, CMS contracts with private 
entities--prescription drug plans (PDPs), Medicare Advantage (MA) 
plans, as well as other types of Medicare health plans--who then act as 
the payers and insurers for prescription drug benefits. These private 
entities generally are referred to as ``Part D sponsors'' in our rules. 
Section 1860D-12 of the Act contains the majority of provisions 
governing the contracts CMS enters into with the Part D sponsors. That 
section, entitled, ``Requirements for and contracts with prescription 
drug plan (PDP) sponsors,'' incorporates by reference many of the 
contract requirements that previously were applicable to 
Medicare+Choice (now Medicare Advantage) plans.
    One of the incorporated provisions at section 1860D-12(b)(3)(D)of 
the Act is section 1857(e)(1) of the Act, which provides broad 
authority for the Secretary to add terms to its contracts with Part D 
sponsors, including terms that require the sponsor to provide the 
Secretary ``with such information * * * as the Secretary may find 
necessary and appropriate.'' We believe that the broad authority of 
section 1860D-12(b)(3)(D) of the Act authorizes us to collect much of 
the information CMS is already collecting in order to properly pay 
sponsors under the statute. However because, as discussed below, the 
statutory section governing CMS's payment of Part D sponsors (section 
1860D-15 of the Act) contains provisions that might be viewed as 
limiting such collection, we are engaging in this rulemaking in order 
to resolve the statutory ambiguity, as well as to explain how we plan 
to implement the broad authority of section 1860D-12(b)(3)(D) of the 
Act.
    Most of the payment provisions with respect to Part D sponsors are 
found in

[[Page 61447]]

section 1860D-15 of the Act.\1\ Sections 1860D-15(d) and (f) of the Act 
authorize the Secretary to collect any information he needs to carry 
out that section; however, those subsections also state that 
``information disclosed or obtained pursuant to [the provisions of 
section 1860D-15 of the Act] may be used by officers, employees, and 
contractors of the Department of Health and Human Services only for the 
purposes of, and to the extent necessary in, carrying out [section 
1860D-15 of the Act].'' (sections 1860D-15(d)(2)(B) and (f)(2) of the 
Act).
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    \1\ We note that there are other provisions outside of section 
1860D-15 that also contain payment provisions. For example, section 
1860D-14 discusses how CMS pays low-income subsidy.
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    In the January 28, 2005 Medicare prescription drug benefit final 
rule (70 FR 4399), we stated that the section 1860D-15 of the Act 
restriction applies only in cases where section 1860D-15 of the Act is 
the authority for collecting the information. Where information is 
collected under an independent authority (even if the collected 
information duplicates the data collected under section 1860D-15 of the 
Act) no restriction would apply. Thus, for example, we noted that 
quality improvement organizations (QIOs) have independent authority to 
collect Part D claims data in order to evaluate the quality of services 
provided by Part D sponsors and would not be barred from collecting 
such data despite the restrictions of section 1860D-15 of the Act. In 
the January 28, 2005 final rule (70 FR 4399) we stated the following:

[W]e interpret sections 1860D-15(d) and (f) of the Act as limiting 
the use of information collected under the authority of that 
section. If information is collected under some other authority, 
however, we do not believe that section 1860D-15 of the Act would 
limit its use-because the information would not be collected 
``pursuant to the provisions'' of section 1860D-15 of the Act. QIOs 
have independent authority to collect data, and to fulfill their 
responsibilities. To the extent QIOs need access to data from the 
transactions between pharmacies and Part D sponsors, these data 
could be extracted from the claims data submitted to us.

    Similar to the statutory provisions authorizing QIOs to collect the 
information they need to perform their statutory duties, section 1860D-
12(b)(3)(D) of the Act recognizes that the Secretary will need to 
collect a broad array of data in order to properly carry out his 
responsibilities as Secretary of the Department of Health and Human 
Services. Thus, if the Secretary determines it is necessary and 
appropriate for him to collect Part D data in order to carry out 
responsibilities outside section 1860D-15 of the Act, then section 
1860D-15 of the Act would not serve as an impediment to such 
collections.
    We also do not believe that language in sections 1860D-12(b)(3)(D) 
and 1857(e)(1) of the Act noting that the authority to collect 
information exists only ``except as otherwise provided,'' and in a 
manner that is ``not inconsistent with this Part,'' would serve as a 
hindrance to the independent collection of Part D claims. Again, this 
is due to the clear language of section 1860D-15 of the Act, which, on 
its face, restricts the use of information only when such information 
is collected under the authority of that section. Thus, nothing in 
section 1860D-15 of the Act will conflict with or be inconsistent with 
claims information collected under the authority of section 1860D-
12(b)(3)(D) of the Act.
    Most likely Congress included the broad grant of authority in 
section 1860D-15 of the Act in order to ensure that the Secretary--
without engaging in any rulemaking--would have the legislative 
authority to collect any necessary data in order to pay Part D sponsors 
correctly. However, we do not believe that the Congress intended to 
restrict the Secretary when the Secretary otherwise has independent 
authority to collect identical information to that collected under 
section 1860D-15 of the Act. For example, the Secretary will need to 
evaluate Part D claims information in order to determine how access to 
Part D drug benefits affects beneficiary utilization of services under 
Parts A and B of the Medicare program. When Congress enacted the MMA, 
one of the stated reasons was to ensure that ``by lowering the cost of 
critical prescription drugs, seniors will better be able to manage 
their health care, and ultimately live longer, healthier lives.'' Press 
Release, House Ways and Means Committee, Seniors' Wait for Affordable 
Rx Drugs Comes to an End. President Bush Signs Historic Medicare Bill 
into Law (December 8, 2003) (available at https://
waysandmeans.house.gov/news.asp). In order to determine whether 
lowering the costs of prescription drugs actually reduces health 
expenditures or improves health outcomes for seniors, however, the 
Secretary will need to match individual level Parts A and B data with 
Part D claims data. In this way, the Secretary will be able to evaluate 
the effectiveness and efficiency of the Part D benefit and report to 
Congress and others on the progress of the program.
    Similarly, we do not believe that section 1860D-15 of the Act was 
intended to prohibit the Secretary from reporting to both the public 
and to the Congress. For example, we are required to report to the 
Congress regarding whether mandated disease management demonstrations 
are budget neutral and whether beneficiaries in these demonstrations 
are on the appropriate medications. Part D claims data are needed for 
these budget neutrality calculations as well as quality measures 
assessing appropriate use of medications. We may also need to make 
reports under the Part D program, for example, the publication of 
statistics detailing aggregate Medicare and beneficiary spending by 
class of drug, average number of drugs used by beneficiaries, total 
Medicare program spending, and other similar statistics. In order to 
derive such statistics, we would need to collect Part D claims data. 
These examples demonstrate that in a wide variety of situations it will 
be ``necessary and appropriate'' for CMS to evaluate the same 
information collected under section 1860D-15 of the Act, even though 
such information would not be used to implement section 1860D-15 of the 
Act. In these situations, we believe the clear language of section 
1860D-12(b)(3)(D) of the Act provides the authority to collect the 
necessary information, and nothing about such collection will be 
inconsistent or in conflict with any other part of the statute.

II. Provisions of the Proposed Rule

A. Information To Be Collected

    [If you choose to comment on issues in this section, please 
include the caption ``Information to be collected'' at the beginning 
of your comments.]

    We would be collecting the same claims information collected under 
section 1860D-15 of the Act. We note that although section 1860D-
12(b)(3)(D) of the Act would permit us to independently collect claims 
data from Part D sponsors, in order to ensure that Part D sponsors 
would not have to submit the claims information twice, we propose to 
access the claims data submitted under section 1860D-15 of the Act. 
This access avoids Part D sponsors engaging in duplicative efforts. 
Thus throughout this preamble, we may refer to ``accessing'' rather 
than ``collecting'' Part D data. The claims data for 2006 includes 37 
data elements. We refer readers to the Prescription Drug Event data 
instructions which can be accessed at https://www.cms.hhs.gov/
DrugCoverageClaimsData/01_PDEGuidance.asp#TopOfPage for a full 
description of this information. These instructions define each data 
element and its specific potential use for

[[Page 61448]]

CMS's payment process. Generally stated, these data elements include 
the following:
     Identification of the Part D sponsor and Part D plan 
through contract number and plan benefit package identification number.
     Health insurance claim number, which identifies the 
particular beneficiary receiving the prescription.
     Patient date of birth and gender.
     Date of service.
     Date paid by the plan.
     Identification of pharmacy where the prescription was 
filled.
     Identification of prescribing health care professional.
     Identification of dispensed product using national drug 
code (NDC) number.
     Indication of whether drug was compounded or mixed.
     Indication of prescriber's instruction regarding 
substitution of generic equivalents or order to ``dispense as 
written.''
     Quantity dispensed (for example, number of tablets, grams, 
milliliters, or other unit).
     Days supply.
     Fill number.
     Dispensing status and whether the full quantity is 
dispensed at one time, or the quantity is partially filled.
     Identification of coverage status, such as whether the 
product dispensed is covered under the plan benefit package or under 
Part D or both. This code also identifies whether the drug is being 
covered as part of a Part D supplemental benefit.
     Indication of whether unique pricing rules apply, for 
example because of an out-of-network or Medicare as Secondary Payer 
services.
     Indication of whether beneficiary has reached the 
catastrophic coverage threshold--which triggers reduced beneficiary 
cost-sharing and reinsurance payments.
     Ingredient cost of the product dispensed.
     Dispensing fee paid to pharmacy.
     Sales tax.
     Amount paid on the claim that is both below and above the 
catastrophic coverage threshold.
     Amount paid by patient and not reimbursed by a third party 
(such as copayments, coinsurance, or deductibles).
     Amount of third party payment that would count toward a 
beneficiary's ``out of pocket'' costs in meeting the catastrophic 
coverage threshold, such as payments on behalf of a beneficiary by a 
qualifying State Pharmacy Assistance Program (SPAP).
     Low income cost sharing subsidy amount (if any).
     Reduction in patient liability due to other payers paying 
on behalf of the beneficiary. This would exclude payers whose payments 
count toward a beneficiary's out of pocket costs, such as SPAPs.
     Amount paid by the plan for standard benefits, such as 
amounts paid for supplemental Part D benefits.

B. Purpose of CMS Collecting Information

    [If you choose to comment on issues in this section, please 
include the caption ``Purpose of CMS Collecting Information'' at the 
beginning of your comments.]

    We need to use Medicare Part D prescription drug related data for a 
wide variety of statutory and other purposes including--
     Reporting to the Congress and the public on the overall 
statistics associated with the operation of the Medicare prescription 
drug benefit;
     Conducting evaluations of the Medicare program;
     Making legislative proposals with respect to the programs 
we administer, including the Medicare, Medicaid, and the State 
Children's Health Insurance Program; and
     Conducting demonstration projects and making 
recommendations for improving the economy, efficiency, or effectiveness 
of the Medicare program.
    When the Congress passed the MMA in December 2003, allowing 
coverage of outpatient prescription drugs under the new Medicare Part D 
benefit, this addition, we believe, was the most fundamental change to 
the Medicare program since its inception in 1965. With this fundamental 
change to the program, it is critical that the Secretary maintain the 
ability to evaluate and oversee the progress of the new benefit and how 
it affects other parts of the Medicare, Medicaid, and State Children's 
Health Insurance programs.
    We have discussed in a variety of public settings, including an 
open door forum on this topic in the summer of 2005, the critical 
importance of the new Medicare Part D prescription drug event data--
hereafter referred to as ``claims'' data--for studies on the impact of 
drug coverage on Medicare beneficiaries, spending for other Medicare 
health care services, efforts to improve the quality of health care 
services for Medicare beneficiaries with chronic illnesses, efforts to 
address health disparities by understanding how drugs are being used 
and how well they work in minority populations and in other populations 
which are often not studied in clinical trials (for example, older 
patients, patients with multiple co-morbid diseases, people with a 
disability), providing protection against adverse drug events through 
effective post-market surveillance on the safety of drugs for Medicare 
beneficiaries, and other studies to improve public health. Part D 
claims data must be linked at the individual beneficiary level to Parts 
A and B claims data to facilitate these studies. Individually 
identifiable data are required to link data across files, over time and 
to conduct multivariate analyses. As we discuss in greater detail in 
section II.C.2 of this preamble, CMS is developing a chronic care 
database that will link these Medicare Parts A, B, and D claims at the 
beneficiary level. This database will be an important new tool to 
facilitate our research, on a wide variety of topics that focus on 
improving the quality of and reducing the cost of health care services.
    As discussed in greater detail in section II.C. of this preamble, 
we believe that when information is collected under the auspices of 
section 1860D-12(b)(3)(D) of the Act, the restrictions of section 
1860D-15 of the Act would not apply to such collections. Thus, any 
information collected for Part D purposes under this proposed rule 
would no longer be subject to the section 1860D-15 of Act limitations 
and could be shared outside of CMS as appropriate. Thus, for example, 
to the extent otherwise permitted by law, we would be able to share the 
data we collect under section 1860D-12(b)(3)(D) of the Act with 
entities outside of CMS including, for example, the Food and Drug 
Administration (in order to oversee the safety and effectiveness of 
prescription drugs and conduct post-market surveillance), as well as 
the Agency for Healthcare Quality and Research (AHRQ), in order to 
analyze comparative clinical effectiveness. Moreover, when we share 
such data, we do not believe any restrictions included in section 
1860D-15 of the Act would apply.
    In section II.C. of this preamble, we provide a detailed 
explanation of a number of purposes for which the Part D data collected 
under the section 1860D-12(b)(3)(D) authority would be used. We also 
request comments on whether there should be any limitations on data 
when shared for purposes other than fulfilling CMS's responsibility to 
administer the Part D program.
1. Public Reporting (Proposed Sec.  423.505(b)(8) and (f)(3)(i))
    We believe we need the Part D claims information in order to report 
to the Congress and the public on overall statistics associated with 
the Part D program. For example, we need to preserve the ability to 
report on the

[[Page 61449]]

performance of the Part D benefit program. We note that Congress 
specifically amended title XVIII of the Act to address reporting on all 
aspects of that title, including Part D.\2\ We anticipate we may wish 
to report statistics on issues such as the experience of Medicaid 
beneficiaries as their pharmacy coverage changes from the Medicaid to 
the Medicare program. In order to analyze this information, we will 
need to have access to identifying beneficiary information (such as HIC 
number), information about the drug dispensed (including NDC, quantity 
and days supply), information about the amount paid by the beneficiary 
(including amounts paid on the claim, reimbursed by third parties, 
counting toward TROOP, low-income cost sharing subsidy, amount paid for 
standard benefits, and amount paid for non standard benefits). We 
anticipate potentially using this information to report statistics to 
Congress or the public or both with respect to the drug utilization of 
this unique population and whether they continue to receive the same 
mix of prescriptions as previously. We might also use such information 
to evaluate and report on this population's cost-sharing and whether 
there were any changes in their out-of-pocket costs vis-a-vis Medicaid 
coverage of prescription drugs.
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    \2\ Section 101(e) of the MMA specifically extended the study 
authority in section 1875(b) to include the prescription drug 
program under Title XVIII. Section 1875 now states in pertinent part 
that the Secretary ``shall make a continuing study of the operation 
and administration of this title * * * and shall transmit to the 
Congress annually a report concerning the operation of such 
programs.''
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    Another example of an issue on which we may want to report would 
include Medicare beneficiary utilization under the new drug benefit by 
class of drug. For example, we may want to report statistics on what 
classes of drugs are most utilized by the Medicare population, and 
whether there has been variation in such utilization across gender, 
age, and year. This would require access to such information as HIC 
number, date of birth and gender, date of service, and information 
about the drug itself (such as NDC, quantity and supply).
    We may also want to include in its national program statistics 
publications information about the Part D program that would require 
drug claims data. Such statistics include aggregate Medicare and 
beneficiary spending by class of drug, the total number of 
prescriptions by class of drug, average beneficiary cost-sharing 
amounts, catastrophic coverage utilization, geographic variation in 
utilization and pricing, third party payers paying on behalf of 
beneficiaries, whether drugs being dispensed are covered by plans, the 
average number of drugs used by beneficiaries, and other similar 
statistics. In order for us to be able to produce these types of 
program statistics, the following claims information are necessary:
     Ingredient cost of the product dispensed.
     Dispensing fee paid.
     Sales tax.
     Amount paid on the claim that is both below and above the 
catastrophic coverage threshold.
     Amount paid by a patient and not reimbursed by a third 
party.
     Amount of third party payment that would count toward a 
beneficiary's out-of-pocket costs in meeting the catastrophic 
threshold.
     Low income cost sharing subsidy amount, if any.
     Reduction in patient liability due to other payers paying 
on behalf of the beneficiary.
     Amount paid by the plan for standard benefits.
     Amount paid by the plan for nonstandard benefits.
     Identification of coverage status.
     Identification of dispensed product using the national 
drug code number.
     Identification of whether the drug was compounded or 
mixed.
     Identification of prescriber's instruction regarding 
substitution of generic equivalents or order to ``dispense as 
written''.
     Quantity dispensed.
     Days supply.
     Fill number.
     Dispensing status and whether the full quantity is 
dispensed at one time, or the quantity is partially filled; (for 
example, to calculate utilization by drug classes).
     Health insurance claim number--
    ++ Patient date of birth and gender,
    ++ Identification of whether unique pricing rules apply; and
    ++ Identification of whether a beneficiary has triggered the 
catastrophic threshold (for example, to calculate average beneficiary 
cost-sharing, amounts and average number of drugs purchased).
2. Evaluations of the Medicare Program (Proposed Sec.  423.505(b)(8) 
and (f)(3)(ii))
    We also anticipate that we would need to collect prescription drug 
claims information in order to conduct evaluations of the Medicare 
prescription drug program, including evaluations and oversight of the 
plans themselves. For example, we anticipate that in some cases, in 
order to evaluate the effectiveness of a plan's utilization management 
techniques we may need access to the claims information for a 
particular plan. For example, we have already announced on our Web site 
in frequently asked question 4483, (https://questions.cms.hhs.gov/), 
that in certain cases, plans could cover over-the-counter medications 
as part of a cost-reduction strategy. We stated that in certain cases 
nonprescription drugs (for example, Prilosec OTC[supreg] and 
Claritin[supreg]) were available by prescription when first marketed. 
Once off-prescription, these products may offer significantly less 
expensive alternatives to branded prescription medications, and work 
just as well for most patients. Therefore stated that plans could 
provide such over-the-counter drugs as part of a cost-effective drug 
utilization management (for example, step therapy) program. In cases 
where a plan offered coverage of such over-the-counter drugs, we wish 
to preserve the ability to monitor whether: (1) The over-the-counter 
drugs are in fact being accessed and (2) whether it appears the step-
therapy is saving money. Such evaluation, we believe, would require 
access to information on the claim identifying the Part D sponsor and 
plan, information with respect to the drug prescribed, as well as 
information about beneficiary and plan payment. In this way we would be 
able to compare the amount spent on the over-the-counter drug against 
what would have been spent if a beneficiary had utilized a prescription 
drug on the plan's formulary. We would likely need to review 
alternatives to the nonprescription drug and determine the average plan 
payments for such nonprescription drugs. We believe we would need to 
aggregate such information to determine whether the plan decreased its 
overall spending by offering the step-therapy protocol.
    Furthermore, in order for us to evaluate the Medicare program 
overall, it is necessary to evaluate how the prescription drug benefit 
interacts with benefits provided under Parts A, B, and C, as well as 
Medicaid and the SCHIP program. It will be important to determine how 
the Part D benefit affects these programs. For example, it will be 
important to determine if the provision of the Part D benefit decreases 
spending under Medicare Parts A and B because patients are more readily 
able to obtain necessary medications while living in the community, 
which may help them comply with drug regimens and avoid more expensive 
inpatient care. Part D data could be used to determine the impact of 
the Part D benefit on reducing medical complications and as a result

[[Page 61450]]

reducing costs incurred in other parts of the Medicare program, for 
example, by reducing hospitalizations and procedures. In order to 
evaluate the effect of Part D on Part C and other programs' spending, 
we would likely need to evaluate aggregated and nonaggregated claims 
data, including elements relating to health insurance claim number, 
date of service, date of birth, gender, the drug dispensed, its 
quantity, whether it was compounded or mixed and other information 
relating to the drug coverage received by the beneficiary.
3. Legislative Proposals
    We also believe that we would need to collect claims data to 
support legislative proposals offered to Congress relating to programs 
administered by CMS, including the Medicare, Medicaid and State 
Children's Health Insurance programs. Claims information could be used 
to derive statistics that would illustrate why certain changes to the 
Medicare statute should be considered, or why certain research and 
demonstration projects should be funded. For example, if we were to 
develop a proposal to move coverage of some drugs now covered under 
Part B to Part D or vice versa, we would need access to claims data to 
derive statistics to assess the cost impact of such a proposal.
    Thus, we would likely need to access claims data relating to the 
drug dispensed as well as the cost incurred under Part D. To analyze 
the cost incurred under Part D, we would need to see the amount paid by 
the plan (for example, ingredient cost, dispensing fee and sales tax) 
as well as whether we were required to pay reinsurance on the claim 
(for example, amount incurred above and below catastrophic), whether we 
paid a low income subsidy for the claim, the amount of beneficiary cost 
sharing, whether the drug was part of a basic supplemental benefit, and 
whether the drug was covered by the plan. This would allow us to assess 
costs involved with moving coverage from one part of the program to 
another.
4. Demonstration Projects and Research Studies
    We would also need the various elements of the Part D claims data 
to conduct demonstration projects and make recommendations for 
improving the economy, efficiency, or effectiveness of the Medicare 
program. Conducting demonstration projects and making recommendations 
for improving the Medicare program based on the evaluation of the 
effect of prescription drug coverage on health outcomes, safety or 
Medicare spending should positively affect patient care and provider 
satisfaction, as well as aid us in administering the various programs 
under our charge. Below, we describe the categories of data elements on 
the prescription drug claims and explain why our studies and projects 
require collection of such elements. It is also important to note that 
this proposed rule would permit retrospective studies of the 
administrative records (prescription drug event data) of Part D 
services for analysis after the services have already been provided. As 
such, research using Part D claims data is not comparable to clinical 
trials which are more prospective in nature and involve patients who 
may have access to certain drugs and other patients who may not have 
access to those drugs. We note that while we currently have studies 
underway that will require these collections, we anticipate that other 
similar studies will be conducted in the future that would also require 
collections of the data elements included on the Part D claims.
    An illustrative list of the studies currently underway is attached 
to this proposed rule as Appendix A. The categories of these elements 
are as follows:
(a) Drug Plan Identifiers (Such as the Part D Sponsor and Benefit 
Package Identifier)
    In our follow-up analysis on beneficiaries who participated in the 
replacement drug demonstration (section 641 of the MMA), we will be 
evaluating how enrollment in Part D affects the cost sharing and 
utilization of these beneficiaries. We would need plan identifiers in 
order to compare how utilization and cost sharing of this population 
varies plan by plan and to analyze such variation according to the 
design of the plan selected. Without plan identifiers, we could not tie 
particular cost sharing or utilization to a plan and determine whether 
certain plan design features minimized beneficiary cost-sharing. 
Moreover, in evaluating other managed care and fee for service 
demonstrations, we will sometimes need plan identifiers in order to 
compare enrollees in demonstration plans to enrollees in other MA plans 
and fee-for-service beneficiaries in the same geographic area. Drug 
plan identifiers will assist in matching beneficiaries to specific Part 
D prescription plan coverage.
(b) Beneficiary Identifiers (Such as Health Insurance Claim Number, 
Date of Birth, and Gender)
    Our current and future research, demonstration and evaluation 
projects will require collection of beneficiary identifiers in order to 
link Part D claims with Parts A and B claims at the beneficiary level. 
For example, in order to link Parts A and B data with Part D claims 
data, we would need to know the beneficiary's HIC number, name, and 
date of birth, in order to match claims appropriately. Once the data 
are linked they will be used in studies that evaluate drug utilization 
and its impact on other health care services, studies that measure the 
impact of the new drug benefit on improvements to beneficiary access to 
needed medications, and studies that link beneficiary characteristics, 
for example, age, race, sex, with drug data. For example, in the 
Medicare chronic condition data warehouse, we will use beneficiary 
identifiers such as HIC number, name, age, race and sex, in order to 
develop the public database under section 723 of the MMA which links 
data at the beneficiary level. The purpose of the database is to permit 
studies of chronic illness in the Medicare population to improve 
quality of health care and reduce the cost of health care services. 
Similarly, in all of our demonstration projects that use Part D claims 
data as part of the budget neutrality test, beneficiary identifiers are 
needed to link Parts A, B, and D claims data to examine the total cost 
of the demonstration intervention group compared to the control group.
(c) Information About the Drug Dispensed (Such as NDC Code, Days 
Supply, Quantity, Generic Identification, Compounding, Refills, and 
Dispensing Status)
    We are engaged in a number of projects and studies which will 
require collection of information with respect to the specific drug 
that is dispensed to enrollees. For example, in the mandated 
chiropractic demonstration (section 651 of the MMA), we will need to 
collect information on the drug dispensed to determine whether the use 
of chiropractic services reduces the use of pain medication. The 
purpose of the demonstration is to test whether the expanded coverage 
of chiropractic services results in offsetting decreases in other 
covered services such as pain medications, since the demonstration is 
required to be budget neutral. Therefore, we will need to study the use 
of pain medications in the demonstration and control groups to 
determine if the

[[Page 61451]]

demonstration appears to be causing a reduction in the use of pain 
medications.
    We will also use drug dispensed in the Chronic Condition Warehouse 
(section 723 of the MMA) to refine identification of beneficiaries with 
chronic conditions (for example, insulin use and diabetes), to 
facilitate analysis of medication usage for beneficiaries with chronic 
illness, and to analyze the effectiveness of different treatment 
modalities. We also anticipate that we will engage in future studies 
and analyses that measure and examine quality of services or patient 
outcomes by utilization of certain types of medication. For example, we 
may conduct a study to determine whether access to beta blockers 
reduces the risk of heart attacks.
    In addition, we may perform studies that examine medication 
adherence and persistence patterns, which in turn can be used as 
control factors in outcomes research or to examine, for example, how 
specific medication therapy management programs under Part D affected 
medication adherence and persistence.
(d) Prescriber Identification
    We need to know who prescribed the drug for studies that assess 
appropriate prescribing practices such as those that would link 
physician payment to quality measures. We are exploring value-based 
purchasing initiatives, in which we may collect data on the extent to 
which physicians are appropriately prescribing needed medications.
(e) Payment Amounts
    We need to know payment amounts, including dispensing fee, amount 
paid below and above the catastrophic threshold, amount paid by patient 
and other third parties, sales tax, and low income subsidies for a 
variety of studies that assess the impact of the drug benefit on 
beneficiary cost-sharing, Medicare program payments, and total drug 
spending. In our demonstration evaluations, including disease 
management, physician group practice, chiropractor, and follow-up on 
the Medicare replacement drug demonstration, we will analyze the impact 
of the demonstration interventions on drug spending and utilization as 
well as total Medicare spending. Because these analyses often 
disaggregate the treatment group beneficiaries into categories based on 
characteristics identified as the analysis is underway (for example, 
source of referral into demonstration, disease, length of time in 
demonstration, interval between hospitalization and entry into 
demonstration, etc.), claims detail needs to be retained at the patient 
level so they can be included in any group or subgroup analysis into 
which a particular beneficiary falls in order to determine aggregate 
cost statistics for the particular grouping.
    We propose to revise Sec.  423.505(b)(8) by clarifying that Part D 
plan sponsors must comply with the disclosure and reporting 
requirements set forth by Sec.  423.505(f). Furthermore, we propose to 
add a new Sec.  423.505(f)(3) which would specify that, as part of the 
existing information disclosure, we would access the drug claims and 
related information that is already submitted to CMS for purposes the 
Secretary deems necessary and appropriate. These purposes would 
include, but not be limited to--
     Reporting to the Congress and the public or both on 
overall statistics associated with the operation of the Medicare 
prescription drug program;
     Conducting evaluations of the overall Medicare program, 
including the interaction between prescription drug coverage under Part 
D of title XVIII of the Act and the services and utilization under 
Parts A, B, and C of title XVIII of the Act, titles XIX, and XXI of the 
Act;
     Making legislative proposals to the Congress regarding 
Federal health care programs and related programs;
     Conducting demonstration projects and making 
recommendations for improving the economy, efficiency, or effectiveness 
of the Medicare program.

C. Sharing Data With Entities Outside of CMS (Proposed Sec.  
423.505(f)(5))

    [If you choose to comment on issues in this section, please 
include the caption ``Sharing Data with Entities Outside of CMS'' at 
the beginning of your comments.]

    In addition to collecting claims data for use in administering the 
Medicare Part D program under the authority of section 1860D-
12(b)(3)(D) of the Act, CMS also believes that it is in the interest of 
public health to share some of the information collected under that 
authority with entities outside of CMS. As stated above, when 
information is collected under the authority of section 1860D-
12(b)(3)(D) of the Act, we do not believe that the statutory language 
in section 1860D-15(d) and (f) of the Act (requiring the information 
collected under the authority of that section to be used only in 
implementing such section) would apply, since any initial collection 
would be effectuated outside of section 1860D-15 of the Act. Therefore, 
we are proposing to add Sec.  423.505(f)(5) that would specify that we 
could use and share the claims information we collect under Sec.  
423.505(f) with both outside entities and other government agencies, 
without regard to any restriction included in Sec.  423.322(b).
1. Other Government Agencies
    In particular, Department of Health and Human Services' public 
health agencies such as NIH, FDA, and AHRQ have researchers that would 
also need to use Medicare Part D prescription drug related data for 
studies to improve public health consistent with the missions of these 
agencies. These studies will assess outcomes, and investigate clinical 
effectiveness, appropriateness of health care items and services 
(including prescription drugs), and develop strategies for improving 
the efficiency and effectiveness of clinical care. In addition, we 
believe that oversight agencies, such as the OIG, GAO, and CBO would 
need access to both aggregated and nonaggregated claims data in order 
to conduct evaluations of the Part D program. The NIH would need access 
to Medicare Part D data, linked to data from Medicare Parts A and B, in 
order to address its mission of conducting and supporting research 
regarding the cause, diagnosis, prevention, and cure of human diseases 
in order to improve the health of the nation. A wealth of information 
about diseases and their treatments can potentially be obtained from 
observational studies of therapeutic drug usage in Medicare patients. 
Because drug usages can be used as a surrogate measure for the 
existence and severity of diseases, Medicare Part D data could be used 
to investigate the incidence and prevalence of particular diseases, 
disease progression, and the health outcomes of people with the 
diseases, trends in disease and their treatments, and even the relative 
effectiveness of alternative therapeutic approaches. Moreover, matching 
Part D claims data with the Surveillance Epidemiology and End Results 
(SEER) cancer registry would enable additional studies of cancer 
treatment and outcomes. Given the large number of patients involved, 
studies could also be designed to identify comorbidities that would be 
undetectable in conventional, prospective cohort studies. In addition, 
studies that correlate drug prescribing patterns with geography or 
patient demographics or examine trends over time could be used to 
identify differences and possible remediable problems with the health 
care system, to assess the magnitude of health disparities related to 
the delivery of care and indirectly assess the impact of new medical 
findings and other influences

[[Page 61452]]

on prescribing and other health care practices.
    We also propose to share the information collected under the 
authority of section 1860D-12(b)(3)(D) of the Act with the FDA. The 
FDA's mission includes a mandate to ensure the safety and efficacy of 
drugs for the American people. Patients age 65 and older are more 
likely to experience serious or fatal adverse drug events than younger 
individuals because of their generally poorer health and because they 
typically take multiple medications for chronic conditions, which 
increases their opportunity for experiencing adverse drug effects. Part 
D data could be used to monitor patterns of drug use in the elderly and 
the disabled with the goal of identifying unsafe or suboptimal patterns 
of use, either with respect to the particular types of drugs being used 
or with respect to the dose or duration of use of these drug products. 
Additionally, Part D data could be used to identify rare but serious 
complications that certain patients may have with drugs more quickly 
and effectively than is achieved with the current surveillance systems. 
Formal epidemiologic studies could also be performed, to examine the 
nature and magnitude of risk conferred by particular medications, to 
identify risk factors for adverse event occurrence, or to assess the 
effect of risk management programs intended to reduce prescription drug 
risks.
    A third agency we believe would need access to the Part D claims 
data is the Agency for Healthcare Research and Quality (AHRQ). AHRQ's 
mission to conduct health services and outcomes studies in assessing 
the effectiveness of health care items and services, improving the 
quality of health care, promoting efficiency and patient safety, and 
reducing medical error will be enhanced by access to Medicare Part D 
claims data. Section 1013 of the MMA requires AHRQ to conduct research, 
demonstrations, and evaluations designed to improve the quality, 
effectiveness, and efficiency of Medicare, Medicaid, and the State 
Children's Health Insurance Program. To implement section 1013 of MMA, 
AHRQ has established a new research initiative called the Effective 
Health Care (EHC) program. The EHC program supports research on the 
outcomes, comparative clinical effectiveness, and appropriateness of 
pharmaceuticals, devices, and health care services. Included in the EHC 
program is a research network of 13 centers with over 60 affiliated 
health scientists and the capacity to--(1) scientifically analyze 
administrative, survey, and clinical databases; (2) develop and apply 
new scientific methods, instruments, and methodologies; and (3) operate 
and analyze computerized surveillance and monitoring systems. The 
availability of Medicare Part D data, linked to data from Medicare 
Parts A and B, would greatly enhance the capacity of the EHC program to 
carry out research and program evaluations designed to improve the 
quality of CMS programs as mandated in section 1013 of the MMA.
    Other agencies within DHHS, such as the Centers for Disease Control 
and Prevention, the Health Resources and Services Administration 
(HRSA), or the Office of the Assistant Secretary for Planning and 
Evaluation, may also need the prescription drug data to perform 
evaluations or assess policies.
    We believe oversight agencies may also require access to the Part D 
claims data. These agencies would include the Office of the Inspector 
General (OIG), the Government Accountability Office (GAO), the 
Congressional Budget Office (CBO), and the Medicare Payment Advisory 
Commission (MedPAC). We believe these agencies may require access to 
data in order to evaluate the cost-effectiveness of various policies 
under the Part D program, to evaluate spending for various classes of 
drugs under such program, to analyze brand-name versus generic 
prescribing trends, and to conduct other oversight activities that are 
not specifically related to payment. For these reasons, we believe it 
would be appropriate to share some Part D data with these oversight 
agencies.
    Given these necessities, we propose to allow broad access for other 
agencies to our Part D claims data linked to our other claims data 
files. Other agencies, including the agencies listed above, would enter 
into a data use agreement, similar to what is used today (and described 
in greater detail in section II.C.2). This would allow the sharing of 
event level cost data, however, through a data use agreement we would 
protect confidentiality of beneficiary information and ensure that the 
use of Part D claims data serves a legitimate research purpose. We 
would also ensure that any system of records with respect to claims 
data is updated to reflect the most current uses of such data. We 
request comments on this proposed rule that would help us in our 
efforts to improve knowledge relevant to the public health. 
Specifically, we request guidance on how we can best serve the needs of 
other agencies through the sharing of information it collects under 
section 1860D-12(b)(3)(D) of the Act while at the same addressing the 
legitimate concerns of the public and of Part D plans that we 
appropriately guard against the potential misuse of data in ways that 
would undermine protections put in place to ensure confidentiality of 
beneficiary information, and the nondisclosure of proprietary data 
submitted by Part D plans.
2. External Researchers
    External researchers, such as those based in universities, 
regularly request and analyze Medicare data for their research studies, 
many of which are designed to address questions of clinical importance. 
We believe researchers who study a broad range of topics need access to 
the Part D claims linked to Parts A and B claims data as well. The 
research questions that have been previously addressed through analyses 
of Parts A and B claims have contributed to very significant 
improvements in the public health, have been critical in assessing the 
quality of care and costs of care for patients in the Medicare program, 
and have in many cases spurred other types of research. As such, we 
believe that a data source that includes Parts A and B claims as well 
as their attendant Part D claims would be used in a similarly 
constructive manner, such that greater knowledge on a range of topics, 
both clinical and economic, will be generated. This knowledge is 
expected to contribute positively to the evaluation and functioning of 
the Medicare program, and to improve the clinical care of 
beneficiaries.
    We will specifically address the needs of a segment of external 
researchers as part of our implementation of section 723 of the MMA, 
which requires the Secretary to develop a plan to ``improve the quality 
of care and reduce the cost of care for chronically ill Medicare 
beneficiaries.'' Congress specifically stated that the plan should 
provide for the collection of data in a data warehouse (see section 
723(b)(3) of the MMA). We will implement section 723 of the MMA by 
populating a chronic care condition data warehouse (CCW) which would be 
accessible by private researchers in order for such researchers to 
conduct studies related to improving quality and reducing costs of care 
for chronically ill Medicare beneficiaries. The CCW will include a 
beneficiary sample and will include Part D claims, in order to allow 
researchers to analyze prescription drug information. In this way, 
researchers would be able to receive a complete picture of a 
beneficiary's care, and determine whether the treatment of chronically 
ill beneficiaries (including Parts A, B and D treatment) is as 
effective and efficient as possible.

[[Page 61453]]

    In addition to the section 723 of the MMA data warehouse, we are 
planning to make available Medicare Part D claims data linked to other 
Medicare claims files to external researchers on the same terms as 
other Medicare Parts A and B data are released today, with appropriate 
protections for beneficiary confidentiality. These data would be 
disseminated under our standard data use agreement protocols. This 
means that each data request would be evaluated to determine whether--
     A legitimate research purpose is presented by a 
responsible party,
     The minimum data needed to conduct the study will be 
released, and
     The confidentiality of beneficiary information is 
protected.
    See our Agreement for Use of Centers for Medicare and Medicaid 
Services Data Containing Individual Specific Information at https://
www.resdac.umn.edu/docs/CMS-R-02352-v2-locked.doc. In addition, we 
would ensure that our system of records for claims data would permit 
these usages of the data.
    We request comments on the proposed use of the data for research 
purposes that would help CMS in its efforts to improve knowledge 
relevant to public health. We also ask for comments on whether we 
should consider additional regulatory limitations for external 
researchers beyond our existing data use agreement protocols in order 
to further guard against the potential misuse of data for non-research 
purposes, commercial purposes, or to ensure that proprietary plan data 
or confidential beneficiary data is not released.

D. Beneficiary Access to Part D Data

    [If you choose to comment on issues in this section, please 
include the caption ``Beneficiary Access to Part D Data'' at the 
beginning of your comments.]

    We are considering the use of Part D claims data for projects 
involving the development of personalized beneficiary medication 
history record that would be accessible by Medicare beneficiaries. We 
are requesting comments on this proposed use of Part D data collected 
under the authority of section 1860D-12(b)(3)(D) of the Act.

E. Applicability

    [If you choose to comment on issues in this section, please 
include the caption ``Applicability'' at the beginning of your 
comments.]

    The proposed revision does not affect the applicability of HIPAA to 
the Department or any other appropriate parties, nor does it affect the 
applicability of the Privacy Act (5 U.S.C. 552a and b) or the Trade 
Secrets Act (18 U.S.C. 1905).

F. Limitations

    [If you choose to comment on issues in this section, please 
include the caption ``Limitations'' at the beginning of your 
comments.]

    This proposed rule in no way affects or limits our already existing 
ability to collect data that is not identical to that collected under 
section 1860D-15 of the Act, such as enrollment, formulary, price 
comparison, quality assurance and utilization review data. Much of that 
data is already collected under other authorities in the statute. For 
example, section 1860D-1(c)(1) of the Act allows for data collection, 
such as price comparison data, to facilitate providing information to 
beneficiaries in order to allow informed decisions among the available 
choices for Part D coverage (see also Sec.  423.48). Similarly, section 
1860D-4(c) of the Act authorizes data collection to evaluate sponsors' 
utilization management, quality assurance, medication therapy 
management, and fraud, waste and abuse programs (see Sec.  
423.153(b)(3), (c)(5), and (d)(6)). Even in cases where data collection 
is not specifically mandated by statute, to the extent the collection 
is not identical to the data collected under section 1860D-15 of the 
Act, we do not believe it is necessary to resolve any statutory 
ambiguity, because the section 1860D-15 of the Act rules on using such 
information would not apply. Finally, this proposed rule does not 
address uses already permitted under section 1860D-15 of the Act, such 
as OIG or others conducting audits and evaluations necessary to ensure 
accurate and correct payment and to otherwise oversee Medicare 
reimbursement under Part D, price variation studies, risk score 
refinement studies including the mandated geographic variation in price 
and utilization study, the reinsurance demonstration evaluation, or 
other such uses.

III. Collection of Information Requirements

    This document does not impose new information collection 
requirements on Medicare Part D plans. Medicare Part D sponsors are 
already required to submit Medicare Part D claims information by virtue 
of section 1860D-15 of the Act.
    Consequently, since there are no new information collection 
requirements on Medicare Part D plans, this document will not require a 
review by the Office of Management and Budget under the authority of 
the Paperwork Reduction Act of 1995.

IV. 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.

V. Regulatory Impact Statement

    We have examined the impact of this rule as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), 
section 1102(b) of the Social Security Act, the Unfunded Mandates 
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
    Executive Order 12866 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). Neither plan 
sponsors nor pharmacies are required to perform any new task or 
purchase any new equipment or increase their labor force. This proposed 
rule does not reach the economic threshold and thus is not considered a 
major rule.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
$6 million to $29 million in any 1 year. Individuals and States are not 
included in the definition of a small entity. We are not preparing an 
analysis for the RFA because we have determined that this rule will not 
have a significant economic impact on a substantial number of small 
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 
analysis must conform to the provisions of section 603 of the RFA. This 
proposed rule impacts Part D sponsors, not small rural hospitals.

[[Page 61454]]

Therefore we are not preparing an analysis for section 1102(b) of the 
Act, because we have determined that this proposed rule will not have a 
significant impact on the operations of a substantial number of small 
rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. That threshold 
level is currently approximately $120 million. This proposed rule will 
have no consequential effect on State, local, or tribal governments or 
on the private sector.
    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 in 42 CFR Part 423

    Administrative practice and procedure, Medicare, Prescription 
Drugs, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services proposes to amend 42 CFR Chapter IV part 423 as 
follows:

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

    1. The authority citation for part 423 continues to read as 
follows:

    Authority: Secs. 1102, 1860D-1 through 1860D-42, and 1871 of the 
Social Security Act (42 U.S.C. 1302, 1395w-101 through 1395w-152 and 
1395hh).

Subpart K--Application Procedures and Cont