E6-7393. Privacy Act of 1974; Report of a New System of Records

AGENCY:

Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS).

ACTION:

Notice of a New System of Records (SOR).

SUMMARY:

In accordance with the requirements of the Privacy Act of 1974, we are proposing to establish a new system titled, “Medicaid Program and State Children's Health Insurance Program (SCHIP) Payment Error Rate Measurement (PERM), System No. 09-70-0578.” The Improper Payments Information Act (IPIA) of 2002 (Pub. L. 107-300) requires heads of Federal agencies to annually estimate and report to the Congress national error rates for the programs they oversee. The Medicaid and SCHIP programs were identified by the Office of Management and Budget (OMB) as programs at risk for significant erroneous payments. OMB has directed HHS to report the estimated error rate for the Medicaid and SCHIP programs to OMB. Since Medicaid and SCHIP are administered by state agencies according to each state's unique program characteristics, state assistance in estimating improper payments is critical and continues to be necessary and important for the Secretary to comply with the requirements of the IPIA. CMS will use a national contracting strategy to calculate a state-by-state, comprehensive error rate for both the Medicaid and SCHIP programs. Implementing regulations set forth state requirements to: (1) Provide claims information to CMS for the purposes of estimating improper payment in Medicaid and SCHIP; and (2) measure improper payments in the Medicaid and SCHIP based on eligibility errors.

The primary purpose of this system is to collect and maintain individually identifiable claims information to calculate payment error rates for Medicaid and SCHIP programs. Information in this system will also be used to: (1) Support regulatory and policy functions performed within the Agency or by a contractor, consultant or grantee; (2) assist another Federal or state agency in the proper administration of the Medicare program, enable such agency to administer a Federal health benefits program, and/or assist Federal/state Medicaid programs within the state; (3) support constituent requests made to a Congressional representative; (4) to support litigation involving the Agency related to this system; and (5) combat fraud and abuse in certain health benefits programs. We have provided background information about the proposed system in the SUPPLEMENTARY INFORMATION section below. Although the Privacy Act requires only that the “routine use” portion of the system be published for comment, CMS invites comments on all portions of this notice. See “Effective Dates” section for comment period.

EFFECTIVE DATES:

CMS filed a new SOR report with the Chair of the House Committee on Government Reform and Oversight, the Chair of the Senate Committee on Homeland Security & Governmental Affairs, and the Administrator, Office of Information and Regulatory Affairs, OMB on May 9, 2006. To ensure that all parties have adequate time in which to comment, the new system will become effective 30 days from the publication of the notice, or 40 days from the date it was submitted to OMB and the Congress, whichever is later. We may defer implementation of this system or one or more of the routine use statements listed below if we receive comments that persuade us to defer implementation.

ADDRESSES:

The public should address comments to: CMS Privacy Officer, Division of Privacy Compliance Data Development, CMS, Mail Stop N2-04-27, 7500 Security Boulevard, Baltimore, Maryland 21244-1850. Comments received will be available for review at this location, by appointment, during regular business hours, Monday through Friday from 9 a.m.-3 p.m., eastern daylight time.

FOR FURTHER INFORMATION CONTACT:

Catherine Pesto, Division of Analysis and Evaluation, Program Integrity Group, Office of Financial Management, CMS, Mail Stop C3-02-16, 7500 Security Boulevard, Baltimore, Maryland 21244-1850. Her telephone number is 410-786-3492, or e-mail at [e-mail].

SUPPLEMENTARY INFORMATION:

The Improper Payments Information Act of 2002 (IPIA), Public Law 107-300, enacted on November 26, 2002, requires the heads of Federal agencies to review annually programs they oversee that are susceptible to significant erroneous payments, to estimate the amount of improper payments, to report those estimates to the Congress, and to submit a report on actions the agency is taking to reduce erroneous expenditures. The IPIA directed OMB to provide subsequent guidance. OMB defines significant erroneous payments as annual erroneous payments in the program exceeding both 2.5 percent of program payments and $10 million (OMB M-03-13, 05/21/03). For those programs with significant erroneous payments, Federal agencies must provide the estimated amount of improper payments and report on what actions the agency is taking to reduce them, including setting targets for future erroneous payment levels and a timeline by which the targets will be reached.

In the report to the Congress, Federal agencies must include: (1) The estimate of the annual amount of erroneous payments; (2) a discussion of the causes of the errors and actions taken to correct those causes; (3) a discussion of the amount of actual erroneous payments the agency expects to recover; and (4) limitations that prevent the agency from reducing the erroneous payment levels, that is, resources or legal barriers.

There currently is no systematic means of measuring payment errors at the state and national levels for Medicaid and SCHIP. Through the Payment Accuracy Measurement (PAM) and Payment Error Rate Measurement (PERM) pilot projects that operated in Fiscal Years (FYs) 2002 through 2005, we determined that it is feasible to estimate improper payments for Medicaid and SCHIP and refined a review methodology. This methodology was designed to estimate state-specific payment error rates within ±3 percent of the true population error rate with 95 percent confidence. Moreover, through weighted aggregation, the state-specific estimates can be used to make national level error rate estimates for Medicaid and SCHIP that meet OMB's confidence and precision requirements.

I. Description of the Proposed System of Records

A. Statutory and Regulatory Basis for the System

Authority for this system is given under provisions of the Improper Payments Information Act of 2002 (Pub. L. 107-300), sections 1102, 1902(a)(6), 1902(a)(27), and 2107(b)(1) of the Social Security Act.

B. Collection and Maintenance of Data in the System

Information in this system is collected on eligibility and claims information included in the annual random sample to measure Medicaid and SCHIP payment error rates. Information collected for this system will include, but is not limited to, name, Medicaid and SCHIP identification number, Medicaid and SCHIP claims data, provider's medical records, claim numbers, managed care capitation payment data, and eligibility-related information on the Medicaid and SCHIP beneficiaries included in the eligibility sample.

II. Agency Policies, Procedures, and Restrictions on the Routine Use

A. Agency Policies, Procedures, and Restrictions on the Routine Use

The Privacy Act permits us to disclose information without an individual's consent if the information is to be used for a purpose that is compatible with the purpose(s) for which the information was collected. Any such disclosure of data is known as a “routine use.” The government will only release PERM information that can be associated with an individual as provided for under “Section III. Proposed Routine Use Disclosures of Data in the System.” Both identifiable and non-identifiable data may be disclosed under a routine use.

We will only collect the minimum personal data necessary to achieve the purpose of PERM. CMS has the following policies and procedures concerning disclosures of information that will be maintained in the system. Disclosure of information from the system will be approved only to the extent necessary to accomplish the purpose of the disclosure and only after CMS:

1. Determines that the use or disclosure is consistent with the reason that the data is being collected, e.g., to collect and maintain individually identifiable claims information to calculate payment error rates for Medicaid and SCHIP programs.

2. Determines that:

a. The purpose for which the disclosure is to be made can only be accomplished if the record is provided in individually identifiable form;

b. The purpose for which the disclosure is to be made is of sufficient importance to warrant the effect and/or risk on the privacy of the individual that additional exposure of the record might bring; and

c. There is a strong probability that the proposed use of the data would in fact accomplish the stated purpose(s).

3. Requires the information recipient to:

a. Establish administrative, technical, and physical safeguards to prevent unauthorized use of disclosure of the record;

b. Remove or destroy at the earliest time all patient-identifiable information; and

c. Agree to not use or disclose the information for any purpose other than the stated purpose under which the information was disclosed.

4. Determines that the data are valid and reliable.

III. Proposed Routine Use Disclosures of Data in the System

A. The Privacy Act allows us to disclose information without an individual's consent if the information is to be used for a purpose that is compatible with the purpose(s) for which the information was collected. Any such compatible use of data is known as a “routine use.” The proposed routine uses in this system meet the compatibility requirement of the Privacy Act. We are proposing to establish the following routine use disclosures of information maintained in the system to:

1. Agency contractors, consultants or grantees who have been contracted by the Agency to assist in accomplishment of a CMS function relating to the purposes for this system and who need to have access to the records in order to assist CMS.

We contemplate disclosing information under this routine use only in situations in which CMS may enter into a contractual or similar agreement with a third party to assist in accomplishing CMS functions relating to purposes for this system. CMS occasionally contracts out certain of its functions when this would contribute to effective and efficient operations. CMS must be able to give contractors, consultants or grantees whatever information is necessary for the contractors, consultants or grantees to fulfill its duties. In these situations, safeguards are provided in the contract prohibiting the contractors, consultants or grantees from using or disclosing the information for any purpose other than that described in the contract and to return or destroy all information at the completion of the contract.

2. Another Federal or state agency to:

a. Contribute to the accuracy of CMS's proper administration of the Medicare program,

b. Enable such agency to administer a Federal health benefits program, or as necessary to enable such agency to fulfill a requirement of a Federal statute or regulation that implements a health benefits program funded in whole or in part with Federal funds, and/or

c. Assist Federal/state Medicaid and/or SCHIP programs within the state.

Other Federal or state agencies in their administration of a Federal or state health program may require PERM information in order to collect information on Medicaid and SCHIP beneficiaries to ensure that claims are processed in an orderly and consistent manner.

3. Member of Congress or to a Congressional staff member in response to an inquiry of the Congressional office made at the written request of the constituent about whom the record is maintained.

Individuals sometimes request the help of a Member of Congress in resolving some issue relating to a matter before CMS. The Member of Congress then writes CMS, and CMS must be able to give sufficient information to be responsive to the inquiry.

4. The Department of Justice (DOJ), court or adjudicatory body when

a. The Agency or any component thereof; or

b. Any employee of the Agency in his or her official capacity; or

c. Any employee of the Agency in his or her individual capacity where the DOJ has agreed to represent the employee; or

d. The United States Government is a party to litigation or has an interest in such litigation, and by careful review, CMS determines that the records are both relevant and necessary to the litigation and that the use of such records by the DOJ, court or adjudicatory body is compatible with the purpose for which the agency collected the records.

Whenever CMS is involved in litigation, or occasionally when another party is involved in litigation and CMS's policies or operations could be affected by the outcome of the litigation, CMS would be able to disclose information to the DOJ, court or adjudicatory body involved. A determination would be made in each instance that, under the circumstances involved, the purposes served by the use of the information in the particular litigation is compatible with a purpose for which CMS collects the information.

5. A CMS contractor (including, but not necessarily limited to Federal contractors engaged by CMS to develop and calculate Medicaid and SCHIP payment and eligibility error rates) that assists in the administration of a CMS-administered program to measure payment error rates in the Medicaid and SCHIP programs, or to a grantee of a CMS-administered grant program, when disclosure is deemed reasonably necessary by CMS to prevent, deter, discover, detect, investigate, examine, prosecute, sue with respect to, defend against, correct, remedy, or otherwise combat fraud or abuse in such program.

We contemplate disclosing information under this routine use only in situations in which CMS may enter into a contractual relationship or grant with a third party to assist in accomplishing CMS functions relating to the purpose of combating fraud and abuse.

CMS occasionally contracts out certain of its functions and makes grants when doing so would contribute to effective and efficient operations. CMS must be able to give a contractor or grantee whatever information is necessary for the contractor or grantee to fulfill its duties. In these situations, safeguards are provided in the contract prohibiting the contractor or grantee from using or disclosing the information for any purpose other than that described in the contract and requiring the contractor or grantee to return or destroy all information at the direction of CMS.

6. Another Federal agency or to an instrumentality of any governmental jurisdiction within or under the control of the United States (including any state or local governmental agency), that administers, or that has the authority to investigate potential fraud or abuse in, a health benefits program funded in whole or in part by Federal funds, when disclosure is deemed reasonably necessary by CMS to prevent, deter, discover, detect, investigate, examine, prosecute, sue with respect to, defend against, correct, remedy, or otherwise combat fraud or abuse in such programs.

Other agencies may require PERM information for the purpose of combating fraud and abuse in such Federally-funded programs.

B. Additional Provisions Affecting Routine Use Disclosures

To the extent this system contains Protected Health Information (PHI) as defined by HHS regulation “Standards for Privacy of Individually Identifiable Health Information” (45 CFR parts 160 and 164, subparts A and E) 65 FR 82462 (12-28-00). Disclosures of such PHI that are otherwise authorized by these routine uses may only be made if, and as, permitted or required by the “Standards for Privacy of Individually Identifiable Health Information.” (See 45 CFR 164.512(a)(1)).

In addition, our policy will be to prohibit release even of data not directly identifiable, except pursuant to one of the routine uses or if required by law, if we determine there is a possibility that an individual can be identified through implicit deduction based on small cell sizes (instances where the patient population is so small that individuals who are familiar with the enrollees could, because of the small size, use this information to deduce the identity of the beneficiary).

IV. Safeguards

CMS has safeguards in place for authorized users and monitors such users to ensure against excessive or unauthorized use. Personnel having access to the system have been trained in the Privacy Act and information security requirements. Employees who maintain records in this system are instructed not to release data until the intended recipient agrees to implement appropriate management, operational and technical safeguards sufficient to protect the confidentiality, integrity and availability of the information and information systems and to prevent unauthorized access.

This system will conform to all applicable Federal laws and regulations and Federal, HHS, and CMS policies and standards as they relate to information security and data privacy. These laws and regulations may apply but are not limited to: The Privacy Act of 1974; the Federal Information Security Management Act of 2002; the Computer Fraud and Abuse Act of 1986; the Health Insurance Portability and Accountability Act of 1996; the E-Government Act of 2002, the Clinger-Cohen Act of 1996; the Medicare Modernization Act of 2003, and the corresponding implementing regulations. OMB Circular A-130, Management of Federal Resources, Appendix III, Security of Federal Automated Information Resources also applies. Federal, HHS, and CMS policies and standards include but are not limited to: All pertinent National Institute of Standards and Technology publications; the HHS Information Systems Program Handbook and the CMS Information Security Handbook.

V. Effects of the Proposed System of Records on Individual Rights

CMS proposes to establish this system in accordance with the principles and requirements of the Privacy Act and will collect, use, and disseminate information only as prescribed therein. Data in this system will be subject to the authorized releases in accordance with the routine uses identified in this system of records.

CMS will take precautionary measures to minimize the risks of unauthorized access to the records and the potential harm to individual privacy or other personal or property rights of patients whose data are maintained in the system. CMS will collect only that information necessary to perform the system's functions. In addition, CMS will make disclosure from the proposed system only with consent of the subject individual, or his/her legal representative, or in accordance with an applicable exception provision of the Privacy Act. CMS, therefore, does not anticipate an unfavorable effect on individual privacy as a result of the disclosure of information relating to individuals.

Dated: May 8, 2006.

Charlene Frizzera,

Acting Chief Operating Officer, Centers for Medicare & Medicaid Services.

System No.: 09-70-0578.

System Name:

“Medicaid Program and State Children's Health Insurance Program Payment Error Rate Measurement (PERM)”.

Security Classification:

Level 3 Privacy Act Sensitive.

System Location:

Centers for Medicare & Medicaid Services (CMS), 7500 Security Boulevard, Baltimore, Maryland 21244-1850; and at various contractor location.

Categories of Individuals Covered by the System:

Information in this system is collected on eligibility and claims information included in the annual random sample to measure Medicaid and SCHIP payment error rates.

Categories of Records in the System:

Information collected for this system will include, but is not limited to, name, Medicaid and SCHIP identification number, Medicaid and SCHIP claims data, provider's medical records, claim numbers, managed care capitation payment data, and eligibility-related information on the Medicaid and SCHIP beneficiaries included in the eligibility sample.

Authority for Maintenance of the System:

Authority for this system is given under provisions of the Improper Payments Information Act of 2002 (Pub. L. 107-300), sections 1102, 1902(a)(6), 1902(a)(27), and 2107(b)(1) of the Social Security Act.

Purpose(s) of the System:

The primary purpose of this system is to collect and maintain individually identifiable claims information to calculate payment error rates for Medicaid and SCHIP programs. Information in this system will also be used to: (1) Support regulatory and policy functions performed within the Agency or by a contractor, consultant or grantee; (2) assist another Federal or state agency in the proper administration of the Medicare program, enable such agency to administer a Federal health benefits program, and/or assist Federal/state Medicaid programs within the state; (3) support constituent requests made to a Congressional representative; (4) to support litigation involving the Agency related to this system; and (5) combat fraud and abuse in certain health benefits programs.

Routine Uses of Records Maintained in the System, Including Categories or Users and the Purposes of Such Uses:

A. The Privacy Act allows us to disclose information without an individual's consent if the information is to be used for a purpose that is compatible with the purpose(s) for which the information was collected. Any such compatible use of data is known as a “routine use.” The proposed routine uses in this system meet the compatibility requirement of the Privacy Act. We are proposing to establish the following routine use disclosures of information maintained in the system to:

1. Agency contractors, consultants or grantees who have been contracted by the Agency to assist in accomplishment of a CMS function relating to the purposes for this system and who need to have access to the records in order to assist CMS.

2. Another Federal or state agency to:

a. Contribute to the accuracy of CMS's proper administration of the Medicare program,

b. Enable such agency to administer a Federal health benefits program, or as necessary to enable such agency to fulfill a requirement of a Federal statute or regulation that implements a health benefits program funded in whole or in part with Federal funds, and/or

c. Assist Federal/state Medicaid and/or SCHIP programs within the state.

3. Member of Congress or to a Congressional staff member in response to an inquiry of the Congressional office made at the written request of the constituent about whom the record is maintained.

4. The Department of Justice (DOJ), court or adjudicatory body when

a. The Agency or any component thereof; or

b. Any employee of the Agency in his or her official capacity; or

c. Any employee of the Agency in his or her individual capacity where the DOJ has agreed to represent the employee; or

d. The United States Government is a party to litigation or has an interest in such litigation, and by careful review, CMS determines that the records are both relevant and necessary to the litigation and that the use of such records by the DOJ, court or adjudicatory body is compatible with the purpose for which the agency collected the records.

5. A CMS contractor (including, but not necessarily limited to Federal contractors engaged by CMS to develop and calculate Medicaid and SCHIP payment and eligibility error rates) that assists in the administration of a CMS-administered program to measure payment error rates in the Medicaid and SCHIP programs, or to a grantee of a CMS-administered grant program, when disclosure is deemed reasonably necessary by CMS to prevent, deter, discover, detect, investigate, examine, prosecute, sue with respect to, defend against, correct, remedy, or otherwise combat fraud or abuse in such program.

6. Another Federal agency or to an instrumentality of any governmental jurisdiction within or under the control of the United States (including any state or local governmental agency), that administers, or that has the authority to investigate potential fraud or abuse in, a health benefits program funded in whole or in part by Federal funds, when disclosure is deemed reasonably necessary by CMS to prevent, deter, discover, detect, investigate, examine, prosecute, sue with respect to, defend against, correct, remedy, or otherwise combat fraud or abuse in such programs.

B. Additional Provisions Affecting Routine Use Disclosures. To the extent this system contains Protected Health Information (PHI) as defined by HHS regulation “Standards for Privacy of Individually Identifiable Health Information” (45 CFR parts 160 and 164, subparts A and E) 65 FR 82462 (12-28-00). Disclosures of such PHI that are otherwise authorized by these routine uses may only be made if, and as, permitted or required by the “Standards for Privacy of Individually Identifiable Health Information.” (See 45 CFR 164.512(a)(1)).

In addition, our policy will be to prohibit release even of data not directly identifiable, except pursuant to one of the routine uses or if required by law, if we determine there is a possibility that an individual can be identified through implicit deduction based on small cell sizes (instances where the patient population is so small that individuals who are familiar with the enrollees could, because of the small size, use this information to deduce the identity of the beneficiary).

Policies and Practices for Storing, Retrieving, Accessing, Retaining, and Disposing of Records in the System:

Storage:

All records are stored on electronic and/or hard copy media.

Retrievability:

Information can be retrieved by provider name, beneficiary name, claim number, Medicaid or SCHIP identification number, or other identifying variables.

Safeguards:

CMS has safeguards in place for authorized users and monitors such users to ensure against excessive or unauthorized use. Personnel having access to the system have been trained in the Privacy Act and information security requirements. Employees who maintain records in this system are instructed not to release data until the intended recipient agrees to implement appropriate management, operational and technical safeguards sufficient to protect the confidentiality, integrity and availability of the information and information systems and to prevent unauthorized access.

This system will conform to all applicable Federal laws and regulations and Federal, HHS, and CMS policies and standards as they relate to information security and data privacy. These laws and regulations may apply but are not limited to: The Privacy Act of 1974; the Federal Information Security Management Act of 2002; the Computer Fraud and Abuse Act of 1986; the Health Insurance Portability and Accountability Act of 1996; the E-Government Act of 2002, the Clinger-Cohen Act of 1996; the Medicare Modernization Act of 2003, and the corresponding implementing regulations. OMB Circular A-130, Management of Federal Resources, Appendix III, Security of Federal Automated Information Resources also applies. Federal, HHS, and CMS policies and standards include but are not limited to: All pertinent National Institute of Standards and Technology publications; the HHS Information Systems Program Handbook and the CMS Information Security Handbook.

Retention and Disposal:

CMS will retain information for a total period of 6 years and 3 months. All claims-related records are encompassed by the document preservation order and will be retained until notification is received from DOJ.

System Manager and Address:

Director, Division of Analysis and Evaluation, Program Integrity Group, Office of Financial Management, CMS, Mail Stop C3-02-16, 7500 Security Boulevard, Baltimore, Maryland, 21244-1850.

Notification Procedure:

For purpose of access, the subject individual should write to the system manager who will require the system name, Medicaid Identification number, national provider number, and for verification purposes, the subject individual's name (woman's maiden name, if applicable), and Social Security Number (SSN) (furnishing the SSN is voluntary, but it may make searching for a record easier and prevent delay).

Record Access Procedure:

For purpose of access, use the same procedures outlined in Notification Procedures above. Requestors should also reasonably specify the record contents being sought. (These procedures are in accordance with Department regulation 45 CFR 5b.5 (a) (2)).

Contesting Record Procedures:

The subject individual should contact the system manager named above, and reasonably identify the record and specify the information to be contested. State the corrective action sought and the reasons for the correction with supporting justification. (These procedures are in accordance with Department regulation 45 CFR 5b.7).

Record Source Categories:

Sources of information contained in this records system include data collected from claims submitted by providers participating in the Medicaid and SCHIP programs, provider's medical records, and information collected on individuals to establish their eligibility for these programs.

Systems Exempted from Certain Provisions of the Act:

None.