Medicare Program; Suggestion Program on Methods to Improve Medicare Efficiency

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 420

[HCFA-4000-FC]

RIN 0938-AJ30

Medicare Program; Suggestion Program on Methods to Improve

Medicare Efficiency

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Final rule with comment period.

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SUMMARY: This final rule with comment period establishes a program to

encourage individuals to submit suggestions that could improve the

efficiency of the Medicare program. The rule implements section 203(c)

of the Health Insurance Portability and Accountability Act of 1996. The

intent of this rule is to encourage suggestions and to award, if we

deem appropriate, monetary payments to individuals for suggestions that

improve efficiency and produce monetary savings to the Medicare

program.

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DATES: Effective date: This final rule is effective December 27, 1999.

Comment date: Comments will be considered if we receive them at the

appropriate address, as provided below, no later than 5 p.m. eastern

time on January 25, 2000.

ADDRESSES: Mail written comments (1 original and 3 copies) to the

following address: Health Care Financing Administration, Department of

Health and Human Services, Attention: HCFA-4000-FC, P.O. Box 26688,

Baltimore, MD 21207-0488.

If you prefer, you may deliver your written comments (1 original

and 3 copies) to one of the following addresses:

Room 443-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,

Washington, DC 20201, or

Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-1850.

Comments may also be submitted electronically to the following e-

mail address: [email protected]. E-mail comments must include the

full name and address of the sender and must be submitted to the

referenced address to be considered. All comments must be incorporated

in the e-mail message because we may not be able to access attachments.

Electronically submitted comments will be available for public

inspection at the Independence Avenue address below.

Because of staffing and resource limitations, we cannot accept

comments by facsimile (FAX) transmission. In commenting, please refer

to file code HCFA-4000-FC. Comments received timely will be available

for public inspection as they are received, generally beginning

approximately 3 weeks after publication of a document, in Room 443-G of

the Department's offices at 200 Independence Avenue, SW., Washington,

DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m.

(phone: (202) 690-7890).

FOR FURTHER INFORMATION CONTACT: Sam Della Vecchia, (410) 786-4481.

SUPPLEMENTARY INFORMATION:

I. Background

A. Establishment of a Program to Collect Suggestions for Improving

Medicare Program Efficiency and to Reward Suggesters for Monetary

Savings

It has long been our policy to encourage the use of incentive

awards to recognize and reward individuals who directly contribute to

the economy, efficiency, and effectiveness of government programs. For

example, recognition of Federal employee suggestions and rewards for

individuals whose adopted ideas benefit the government motivate Federal

employees to increase productivity and creativity.

With the August 1996 enactment of the Health Insurance Portability

and Accountability Act of 1996 (HIPPA) (Public Law 104-191), the

Congress recognized that the public at large, especially the

beneficiaries, physicians, and suppliers actively involved in the

delivery and utilization of Medicare health care services, may be in a

position to suggest ideas that might contribute directly to improving

Medicare program efficiency. By enacting section 203(c) of HIPPA, the

Congress has required us to establish a program that encourages

individuals to submit suggestions on methods that might improve the

efficiency of the Medicare program. This legislation gives us the

discretion to make a payment to a suggester, in an amount that we

consider appropriate, as a reward for, and in recognition of, a

suggestion we adopt that improves efficiency and results in monetary

savings to the Medicare program.

B. Provisions of This Final Rule

As required by section 203(c), this final rule establishes a

program that will provide a vehicle to submit suggestions on methods

that could improve the efficiency of the Medicare program. Therefore,

we are adding a new Sec. 420.410 to subpart E of part 420,

``Establishment of a program to collect suggestions for improving

Medicare program efficiency and to reward suggesters for monetary

savings,'' that sets forth procedures and requirements for the public

to submit suggestions, for us to evaluate them and, if appropriate, to

reward the suggester whose suggestion we adopt.

In Sec. 420.410(a), we define a ``suggestion program'' to mean the

specific procedures and requirements established by us for receiving

suggestions, evaluating the suggestions, and, if appropriate, paying a

reward to the suggester for an adopted suggestion that improves

efficiency and produces monetary savings to the Medicare program. We

define ``suggester'' as an individual, a group of individuals, or a

legal entity, such as a corporation, partnership, or professional

association, not otherwise excluded under Sec. 420.410(d), who submits

a suggestion under this section.

We specify that ``suggestion'' used in this context means an

original idea submitted in writing. We specify that ``payment'' means a

monetary award given to the suggester in recognition of, and as a

reward for, a suggestion we adopt that improves the efficiency of the

Medicare program and results in monetary savings. We define ``savings''

to mean the monetary value of the net benefits the Medicare program

derives from implementing the suggestion.

In Sec. 420.410(b), we specify that, as a general rule, we may make

a payment to the suggester for suggestions we have adopted that

increase efficiency and result in monetary savings to the Medicare

program. However, in order to ensure that the suggestion program does

not duplicate other Government incentive programs, we specify that we

may make a monetary award only in instances in which an award is not

otherwise provided by law. That is, if the suggestion furnished by the

suggester qualifies for an award under another Government program, the

suggester is not entitled to an award under this program.

This paragraph also specifies that we have the sole discretion to

determine whether it is appropriate and desirable for us to adopt a

particular suggestion, to make monetary payment for any adopted

suggestion, and to select the method by which we will calculate the

payment award.

We believe that the Congress intended that any individual, group of

individuals or legal entity would be eligible to submit suggestions

that improve Medicare program efficiency. For the reasons discussed

below, we have chosen to exclude suggesters who have one of the

relationships with the Federal Government described in Sec. 420.410(d).

Therefore, in Sec. 420.410(c), we provide that, except as specified in

Sec. 420.410(d), any individual, group of individuals or legal entity

is eligible to submit suggestions under this suggestion program and to

be considered for a reward if the suggester submits the information in

the prescribed manner discussed in Sec. 420.410(e).

In Sec. 420.410(d), we list who is ineligible to receive a reward

under this suggestion program. Specifically, we provide that Medicare

contractors, their officers and employees, individuals who work for

Federal agencies under a contract, employees of Federally-sponsored

research and demonstration projects, Federal officers and employees,

and immediate family members of any of these groups of individuals, are

not eligible for a reward under this suggestion program. The purpose of

the exclusion is to prevent Federal employees, contractors, or grantees

from personally profiting from information gained while doing public

business. Suggestions made by Federal employees are covered under the

Office

[[Page 66398]]

of Personnel Management policies and requirements for administering

incentive award programs, which are set forth at 5 CFR Part 451. If,

after the suggester receives an award, we later find that the suggester

was ineligible, the recipient must refund the reward money.

To discourage submission of frivolous suggestions, we indicate in

Sec. 420.410(e) that suggesters must mail all suggestions in writing to

us. This allows us to make a thorough and fair evaluation of all the

relevant facts, to have an adequate record of the suggester's idea, to

document the date the idea was sent to us, and to identify any

redundancy or overlap with previously submitted suggestions. We will

not accept oral suggestions because we could misconstrue them or have

difficulty evaluating them. In addition, while we do not plan to

develop a standardized format for submitting suggestions, we specify

that written suggestions must include the following pertinent

information:

(1) A description of an existing problem or need;

(2) A suggested method for solving the problem or filling the need;

and

(3) If known, an estimate of the savings potential that could

result from implementing the suggestion.

This information will enable us to evaluate suggestions

expeditiously, fairly, and uniformly. Suggestions that do not contain

the above information will not be considered under this program. All

suggestions must be mailed to Health Care Financing Administration,

Suggestion Program, 7500 Security Blvd., Baltimore, Maryland 21224-

1850.

In Sec. 420.410(e), we also specify that any suggester wishing to

receive an award for submitting a suggestion must provide us with a

name, address, telephone number, and any other identifying information

we request so that we can contact the suggester if we need additional

information and, in appropriate cases, so that we can mail the reward

payment. We also require all of the names constituting a group of

suggesters, or the name of a legal entity and its representative. For

example, when we deem it appropriate to pay a reward, we must request,

for income tax purposes, the suggester's social security number or tax

identification number.

We specify in Sec. 420.410(f) that we evaluate all suggestions, as

presented by the suggester, on the basis of originality, accuracy,

feasibility, nature and complexity, estimated potential monetary

savings to the Medicare program, the extent to which Medicare program

efficiency would be improved if we were to adopt the suggestion, and

any other factors that appear to us to be relevant to a particular

situation. If, in the final evaluation, we determine that the

suggestion is likely to improve efficiency and result in monetary

savings to the Medicare program, we will decide whether, all factors

considered, it would be appropriate for us to adopt the suggestion. One

of the major factors may be budget constraints at the time we complete

our review of a suggestion. This constraint could preclude us from

adopting the suggestion if it requires a significant outlay of funds to

implement, even though it may be demonstrated that the Medicare program

would realize savings in the long run. Also, we may choose to adopt a

suggestion in part. We may adopt and reward a suggestion in part if the

program would realize verifiable monetary savings from a partial

adoption.

While it is our intention to evaluate suggestions as quickly as

possible, some suggestions may require more processing time than

others. The complexity of the suggestion, consideration of the

feasibility of various implementation strategies, and our workload or

manpower constraints make it difficult to specify how long it will take

us to evaluate a suggestion. Therefore, we specify that the evaluation

process will be concluded in a reasonable amount of time, not to exceed

2 years from the date we receive a suggestion, taking into

consideration the complexity of the suggestion, the number of possible

implementation strategies, and our current workload.

We indicate in Sec. 420.410(g) that, should we choose to adopt a

suggestion in its entirety, or a part of a suggestion, and issue

monetary payment as a reward, the payment amount will be determined

based either on the actual first-year net savings, or the average

annual net savings expected to be realized over a period of not more

than 3 years. In either case, (as we discuss later in

Sec. 420.410(h)(2)), we will not make the reward payment until the

suggestion has been in operation for 1 year. We use the average annual

net savings to calculate a reward payment if we expect that an

improvement is likely to yield monetary savings for more than 1 year

and implementation involves substantial costs, or we believe that

monetary savings will be negligible in the first year but we expect

them to substantially increase in subsequent years. We have the sole

discretion in selecting the methodology for calculating net savings. In

accordance with Sec. 420.410(g)(2), the reward payment amount will be

calculated as follows:

Net savings from $1,000 to $10,000--10 percent of the

savings, with a minimum award amount of $100 (that is, we will only pay

awards that amount to $100 or more).

Net savings of $10,001 to $100,000--$1,000 for the first

$10,000 of savings, plus 3 percent of the savings over $10,000.

Net savings of more than $100,000, $3,700 for the first

$100,000 of savings, plus 0.5 percent of the savings over $100,000, not

to exceed $25,000.

Because we have successfully used this same payment calculation

methodology to determine award amounts for Federal employees whose

suggestions have resulted in monetary savings to the Medicare program,

we have chosen to adopt this same process for this program.

In accordance with section 203(c) of HIPPA and as noted above in

our discussion of Sec. 420.410(b), we specify in Sec. 420.410(h)(1)

that we determine whether it would be appropriate and desirable for us

to adopt or to reward a particular suggestion. If we receive the same

or an overlapping suggestion from two or more unrelated parties, we

will consider a reward only for the suggestion we received first, if

the suggestion or overlapping part of the suggestion are identical, and

we have adopted that part. If the suggestions are not identical, we

will consider rewarding the suggestion we received first, if it is

feasible and we have been able to adopt and implement the suggestion.

If the first suggestion cannot be implemented, we may consider

rewarding the suggestion we received next, even if it is similar,

provided we can adopt and implement the suggestion.

We specify in Sec. 420.410(h)(2) that payment will be mailed only

after the suggestion has been in operation for 1 year.

We specify in Sec. 420.410(i) that if a group of individuals

submits a suggestion that we deem appropriate to reward, individuals in

the group will receive an equal share of the award. If the suggestion

is submitted by an organization, such as a corporation, partnership, or

professional association, we will make a single reward payment to that

organization.

We specify in Sec. 420.410(j) that it is the suggester's

responsibility to notify us of any change in the information required

in Sec. 420.410(e) above. If our mailed award is returned to us as

``undeliverable'' or ``address unknown,'' the suggester has up to 1

year from the date of our notification letter to claim

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the award. We have set this 1-year limitation to minimize the

administrative burden associated with this program. We believe 1 year

is a reasonable period of time to claim a monetary award that has been

returned to us. In addition, the 1-year limitation protects the

Government from the administrative and fiscal burden that would be

associated with maintaining claims for a longer or indefinite period.

Awards not claimed within 1 year from the date they were first mailed

to the suggester will not be awarded. Also, no interest will be paid on

awards for any reason.

We specify in Sec. 420.410(k), that, if the suggester has become

incapacitated or has died, an executor, administrator, or other legal

representative may claim the award payment on behalf of the suggester

or the suggester's estate. In order to protect participants from being

defrauded by individuals falsely claiming to be their legal

representatives, we state that the claimant must submit certified

copies of letters testamentary, letters of administration, or other

similar evidence to show his or her authority to claim the award

payment. We also specify that the payment must be claimed within 1 year

from the date on which we first mailed the award.

Finally, in Sec. 420.410(l), we indicate that all records related

to the administration of this suggestion program are retained in

accordance with the regulations of the National Archives and Records

Administration (36 CFR Part 1228). We state that no information

submitted under this suggestion program will be disclosed, except as

required by law.

II. Response to Comments

Because of the large number of items of correspondence we normally

receive on Federal Register documents published for comment, 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, if we proceed with a subsequent

document, we will respond to the comments in the preamble to that

document.

III. Regulatory Impact Analysis

A. Introduction

We have examined the impact of this final rule as required by

Executive Order 12866 and the Regulatory Flexibility Act (RFA) (Pub. L.

96-354). Executive Order 12866 directs agencies to assess all costs and

benefits of available regulatory alternatives and, when regulation is

necessary, to select regulatory approaches that maximize net benefits

(including potential economic, environmental, public health and safety

effects, distributive impacts, and equity). 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 governmental agencies. Most hospitals and most other

providers and suppliers are small entities, either by nonprofit status

or by having revenues of $5 million or less annually. Individuals are

not considered to be small entities.

Section 1102(b) of the Social Security Act requires us to prepare a

regulatory impact analysis for any proposed rule that 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), we define a

small rural hospital as a hospital that is located outside a

Metropolitan Statistical Area and has fewer than 50 beds.

The Unfunded Mandates Reform Act of 1995 also requires (in section

202) that agencies prepare an assessment of anticipated costs and

benefits before proposing any rule that may mandate an annual

expenditure by State, local, or Tribal governments, in the aggregate,

or by the private sector, of $100 million or more. We believe that this

proposed rule does not mandate such expenditures.

B. Summary of the Final Rule

The final rule establishes a suggestion program as a means of (1)

encouraging the submission of suggestions for improving the efficiency

of the Medicare program and (2) rewarding those who make suggestions

when we deem that it is appropriate and when a reward is not otherwise

provided by law or prohibited by this program. The rule describes the

program, lists information requirements and eligibility criteria,

establishes a lower and an upper limit for payments, and outlines the

process and time limitations we must follow in issuing a reward.

C. Discussion of Impact

This rule is expected to affect beneficiaries and their personal

representatives and advocates, providers, physicians, other suppliers,

and managed care plans. Taxpayers, small rural hospitals, and the

Medicare Trust Fund could also be impacted by this rule.

Beneficiaries as a group are expected to be impacted by this

regulation in several ways. First, beneficiaries are often the first to

recognize and question provider and program practices. This knowledge

may stimulate the formation of ideas for improvement in our program

operations. This regulation encourages these individuals to share

program improvement suggestions with us by (1) providing a clearly

defined process for submitting information to the appropriate source

and, (2) in appropriate cases, offering a monetary incentive to support

the effort.

Advocates for beneficiaries and other private sector organizations

have often shared ideas with agency components for improving the

Medicare program. Some of these have been related to specific

activities like proposed rulemaking and the development of program

guidelines, and special committee recommendations. This regulation

expands the opportunity for these individuals or their organizations to

apply their creative energies to any and all aspects of the Medicare

program for potential improvement. It is also likely that advocacy

groups and other beneficiary representatives will view this regulation

as supporting their efforts to identify areas for program improvement

and bring their suggestions to our attention.

We expect a similar potential impact on business entities,

providers, other suppliers, managed care organizations, small rural

hospitals, and others. Overall we expect that all of these groups could

benefit qualitatively from this rule. Many of these individuals and

entities and the associations representing them have contributed ideas

to us over the years in much the same way as the beneficiary advocacy

groups. We believe that they are a valuable source of ideas about how

to make the Medicare program more efficient, and the suggestion program

provides them with a specific, ongoing mechanism for submitting these

ideas to us. In addition, these groups could receive a monetary award

for their suggestions.

Because this is a new program, we cannot predict at this time what

effect any particular suggestion might have on a specific individual or

entity; we have no way of knowing what kinds of suggestions we will

receive or whether we will achieve any results if we adopt them. Also,

this rule does not address the substance of any particular suggestions

we may receive in the future; it simply describes the process by which

individuals or entities can submit their ideas. Therefore, we cannot in

any way predict the aggregate economic impact of any suggestions in

which this rulemaking may result on any particular individual or

entity, including small business entities, nor

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can we estimate the savings to the Medicare Trust Fund, or the

taxpayer. However, we anticipate that establishing the program

described in this rulemaking will itself have a minimal economic

impact.

D. Conclusion

We conclude that this final rule could ultimately lead to program

improvements and money saved, and could help extend the solvency of the

Medicare Trust Fund. Because the Medicare program is continually

becoming more complex, we recognize the value of objective critiques by

those who are most affected by the myriad of Medicare statutes,

provisions, and guidelines.

Based on the above analysis we have determined and certify that

this final rule would not have a significant economic impact on a

substantial number of small entities. We also have determined and

certify that this final rule would not have a significant impact on the

operations of a substantial number of small rural hospitals. We are,

however, inviting comments on whether this rule would have a

significant impact on any of the groups listed in this section.

IV. Federalism

We have reviewed this notice under the threshold criteria of

Executive Order 13132, Federalism. We have determined that it does not

significantly affect the States rights, roles, and responsibilities.

V. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995 (PRA), we are required to

provide 60-day notice in the Federal Register and solicit public

comment before a collection of information requirement is submitted to

the Office of Management and Budget (OMB) for review and approval. In

order to fairly evaluate whether an information collection should be

approved by OMB, section 3506(c)(2)(A) of the PRA requires that we

solicit comment on the following issues:

The need for the information collection and its usefulness

in carrying out the proper functions of our agency.

The accuracy of our estimate of the information collection

burden.

The quality, utility, and clarity of the information to be

collected.

Recommendations to minimize the information collection

burden on the affected public, including automated collection

techniques.

Therefore, we are soliciting public comment on each of these issues

for the information collection requirement discussed below.

Section 420.410 Establishment of a program to collect suggestions for

improving Medicare program efficiency and to reward suggesters for

monetary savings

Section 420.410 establishes a program to collect suggestions for

improving Medicare program efficiency and to reward some suggesters for

monetary savings. The ``respondents'' for the collection of information

described in these regulations will be self-selected individuals and

entities that choose to submit suggestions.

Section 420.410(e) states that in order to be considered, the

suggestion must be in writing, mailed to us and must include the

following information:

(1) A description of an existing problem or need;

(2) A suggested method for solving the problem or filling the need;

and

(3) If known, an estimate of the savings potential that could

result from implementing the suggestion. Any suggester interested in

receiving a reward must provide us with a name, address, telephone

number, and any other identifying information we may need to contact

the suggester, if we require additional information and, where

applicable, to mail the reward.

The burden associated with this requirement is the time and effort

for the suggester to submit to us the information described above. It

is estimated that this requirement will take each suggester 20 minutes.

We anticipate 400 suggestions for a total of 134 burden hours.

Section 420.410(j) states that it is the suggester's responsibility

to notify HCFA of any change of address or other relevant information.

We believe the above requirement is not subject to the PRA in

accordance with 5 CFR 1320.3(c)(4) since this requirement does not

collect information from ten or more persons on an annual basis. We

have submitted a copy of this final rule with comment to OMB for its

review of the information collection requirements described above.

These requirements are not effective until they have been approved by

OMB.

If you comment on any of these information collection and record

keeping requirements, please mail copies directly to the following:

Health Care Financing Administration, Office of Information Services,

Security and Standards Group, Division of HCFA Enterprise Standards,

Room N2-14-26, 7500 Security Boulevard, Baltimore, MD 21244-1850, Attn:

Louis Blank, HCFA-4000-FC, and

Office of Information and Regulatory Affairs, Office of Management and

Budget, Room 10235, New Executive Office Building, Washington, DC

20503, Attn: Allison Eydt, HCFA Desk Officer.

VI. 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 can be waived, however, if an agency

finds good cause that notice-and-comment procedures are contrary to the

public interest, and it incorporates a statement of the finding and its

reasons in the rule issued.

Publishing this final rule expeditiously to supplement activities

that identify and reduce the drain on the Medicare Trust Fund is in the

public interest. Specifically, we anticipate that the implementation of

this rule will encourage suggestions that will improve program

efficiency and result in savings to the Medicare program.

We find good cause to waive notice-and-comment procedures for this

final rule because it is in the public interest to establish this

suggestion program as soon as possible to afford the general public the

opportunity to submit their suggestions for program improvement. To

employ notice-and-comment procedures would only delay potential program

savings. We are providing a 60-day period for public comment.

In accordance with the provisions of Executive Order 12866, this

notice was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 420

Fraud, Health facilities, Health professions, Incentive programs,

Medicare.

For the reasons set forth in the preamble, 42 CFR part 420 is

amended as set forth below:

PART 420--PROGRAM INTEGRITY: MEDICARE

1. The authority citation for part 420 continues to read as

follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42

U.S.C. 1302 and 1395hh).

2. The heading of subpart E is revised to read as follows:

[[Page 66401]]

Subpart E--Rewards for Information Relating to Medicare Fraud and

Abuse, and Establishment of a Program to Collect Suggestions for

Improving Medicare Program Efficiency and to Reward Suggesters for

Monetary Savings

3. Section 420.400 is revised to read as follows:

Sec. 420.400 Basis and scope.

This subpart implements sections 203(b) and (c) of Public Law 104-

191, which require the establishment of programs to encourage

individuals to report suspected cases of fraud and abuse and submit

suggestions on methods to improve the efficiency of the Medicare

program. Sections 203(b) and (c) of Public Law 104-191 also provide the

authority for HCFA to reward individuals for reporting fraud and abuse

and for submitting suggestions that could improve the efficiency of the

Medicare program. This subpart sets forth procedures for rewarding

individuals.

4. New Sec. 420.410 is added to read as follows:

Sec. 420.410 Establishment of a program to collect suggestions for

improving Medicare program efficiency and to reward suggesters for

monetary savings.

(a) Definitions. As used in this section, the following definitions

apply:

Payment means a monetary award given to a suggester in recognition

of, and as a reward for, a suggestion adopted by HCFA that improves the

efficiency of, and results in monetary savings to, the Medicare

program.

Savings means the monetary value of the net benefits the Medicare

program derives from implementing the suggestion.

Suggester means an individual, a group of individuals, or a legal

entity such as a corporation, partnership, or professional association,

not otherwise excluded under Sec. 420.410(d), who submits a suggestion

under this section.

Suggestion means an original idea submitted in writing.

Suggestion program means the specific procedures and requirements

established by HCFA for receiving suggestions from the suggester on

methods to improve the efficiency of the Medicare program, evaluating

the suggestions and, if appropriate, paying a reward to the suggester

for adopted suggestions that result in improved efficiency and produce

monetary savings to the Medicare program.

(b) General rule. HCFA may make payment for adopted suggestions

that increase the efficiency of the Medicare program and result in

monetary savings. HCFA only makes payment for suggestions in instances

in which a reward is not otherwise provided by law. The determination

to adopt a suggestion, to reward the suggester, and the method of

calculating a reward are at the sole discretion of HCFA.

(c) Eligibility. Except as specified in paragraph (d) of this

section, any individual, group of individuals or legal entity, such as

a corporation, partnership or professional association, is eligible to

submit a suggestion and be considered for a reward under this

suggestion program if the suggestion is submitted to HCFA in the manner

set forth in paragraph (e) of this section.

(d) Exclusions. Medicare contractors, their officers and employees,

individuals who work for Federal agencies under a contract, employees

of Federally-sponsored research and demonstration projects, Federal

officers and employees, and immediate family members of these

individuals, are excluded from receiving payment under the suggestion

program. If, after the suggester receives a reward payment, HCFA

determines that the suggester was ineligible to receive the reward,

HCFA is not liable for the reward payment and the suggester must refund

all monies received.

(e) Requirements for submitting suggestions--(1) To be considered,

the suggestion must be in writing, mailed to HCFA, and must include the

following information:

(i) A description of an existing problem or need;

(ii) A suggested method for solving the problem or filling the

need; and

(iii) If known, an estimate of the savings potential that could

result from implementing the suggestion.

(2) Suggestions must be mailed to: Health Care Financing

Administration Suggestion Program, 7500 Security Blvd., Baltimore,

Maryland 21244-1850.

(3) Any suggesters interested in receiving a reward must provide

HCFA with the following information: An individual suggester must

provide his or her name, a group of suggesters must provide the names

of all the group members, and a legal entity must provide its name and

the name of its representative. All suggesters must provide an address,

telephone number, and any other identifying information that HCFA needs

to contact the suggester for additional information and, where

applicable, to mail the reward.

(f) Evaluation process--(1) Relevant factors. HCFA evaluates all

suggestions on the basis of the following factors:

(i) Originality of suggestion.

(ii) An estimate of potential monetary savings to the Medicare

program.

(iii) The extent to which Medicare program efficiency would be

improved if HCFA adopts the suggestion.

(iv) Accuracy of the information reflected in the suggestion.

(v) Feasibility of implementation.

(vi) Nature and complexity of the suggestion.

(vii) Any other factors that appear to be relevant.

(2) Evaluation time limit. HCFA concludes the evaluation process in

a reasonable amount of time, not to exceed 2 years from the receipt

date, taking into consideration the complexity of the suggestion, the

number of possible implementation strategies, and HCFA's current

workload.

(g) Basis for reward payment--(1) General rule. If HCFA determines

that it is appropriate to make a reward payment for a suggestion

adopted in whole or in part, that results in improved efficiency and

monetary savings to the Medicare program, the payment is based on--

(i) The actual first-year net savings to the Medicare program, or

(ii) The average annual net savings to the Medicare program

expected to be realized over a period of not more than 3 years if--

(A) An improvement is expected to yield monetary savings for more

than 1 year and implementation involves substantial costs; or

(B) Monetary savings are negligible in the first year but are

expected to substantially increase in subsequent years.

(2) Reward payment amount. HCFA determines the amount of a reward

payment using the following formula:

(i) Net savings from $1,000 to $10,000--10 percent of the savings,

with a minimum award amount of $100;

(ii) Net savings of $10,001 to $100,000--$1,000 for the first

$10,000 of savings, plus 3 percent of the net savings over $10,000;

(iii) Net savings of more than $100,000--$3,700 for the first

$100,000 of savings, plus 0.5 percent of savings over $100,000, with a

maximum award amount of $25,000.

(h) Adoption of suggestion and issuance of reward payment--(1)

Adoption. Upon completing its evaluation, HCFA decides whether to adopt

a suggestion. If HCFA receives the same or an overlapping suggestion

from two or more unrelated parties, HCFA will consider a reward only

for the suggestion HCFA received first, if the suggestion or

overlapping part of the suggestion are identical, and HCFA has adopted

that part. If the suggestions are

[[Page 66402]]

not identical, HCFA will consider rewarding the suggestion received

first, if it is feasible and HCFA is able to adopt and implement the

suggestion. If the first suggestion cannot be implemented, HCFA may

consider rewarding the suggestion received next, even if it is similar,

provided HCFA can adopt and implement the suggestion.

(2) Issuance of reward payment. After the reward payment amount is

determined, as described in paragraph (g) of this section, HCFA mails

payment to the suggester (or to the legal representatives referenced in

paragraph (k) of this section) only after the suggestion has been in

operation for 1 year.

(i) Group suggestions. When HCFA deems that a reward payment is

appropriate for a suggestion submitted by a group of individuals, HCFA

pays an equal share of the reward to each of the individuals identified

in the group. If an organization such as a corporation, partnership, or

professional association submits a suggestion, HCFA makes a single

reward payment to that organization.

(j) Change in name or address. It is the suggester's responsibility

to notify HCFA of any change of address or other relevant information.

If the suggester fails to update HCFA on any change in this

information, and the reward payment mailed to the suggester is returned

to HCFA, the suggester must claim the reward payment by contacting HCFA

within 1 year from the date HCFA first mailed the reward payment to the

suggester. HCFA does not pay interest on rewards that, for any reason,

are delayed or are not immediately claimed.

(k) Incapacitated or deceased suggester. If the suggester is

incapacitated or has died, an executor, administrator, or other legal

representative may claim the reward on behalf of the suggester or the

suggester's estate. The claimant must submit certified copies of the

letters testamentary, letters of administration, or other similar

evidence to HCFA showing his or her authority to claim the reward. The

claim must be filed within 1 year from the date on which HCFA first

attempted to pay the reward to the individual who submitted the

suggestion.

(l) Maintenance of records--(1) HCFA retains records related to the

administration of the suggestion program in accordance with 36 CFR part

1228 (the regulations for the National Archives and Records

Administration).

(2) HCFA does not disclose information submitted under the

suggestion program, except as required by law.

(Catalog of Federal Domestic Assistance Program No. 93.774,

Medicare--Supplementary Medical Insurance Program)

Dated: April 30, 1999.

Nancy-Ann Min DeParle,

Administrator, Health Care Financing Administration.

Dated: May 25, 1999.

Donna E. Shalala,

Secretary.

[FR Doc. 99-30678 Filed 11-24-99; 8:45 am]

BILLING CODE 4120-01-P