Privacy Act of 1974; Report of a New System of Records

AGENCY:

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

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 SOR titled, “Medicare Retiree Drug Subsidy Program (RDSP), System No. 09-70-0550.” Under section 1860D-22 of the Social Security Act (the Act), employers and unions who continue to offer prescription drug coverage to their qualifying covered retirees are eligible to receive a tax-free subsidy for allowable drug costs. This amended provision of the Act is mandated by section 101 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173). A qualifying covered retiree is a Part D eligible individual who is a participant or the spouse or dependent of a participant; covered under employment-based retiree health coverage that qualifies as a qualified retiree prescription drug plan; and not enrolled in a Part D plan. Employment-Based Retiree Health Coverage is defined as coverage of health care costs under a group health plan based on an individual's status as a retired participant in the plan, or as the spouse or dependent of a retired participant. The term includes coverage provided by voluntary insurance coverage as a result of a statutory or contractual obligation. The Medicare prescription drug benefit and retiree drug subsidy represent additional funding sources that can help employers and unions continue to provide high quality drug coverage for their retirees.

The purpose of this system is to collect and maintain information on individuals who are qualifying covered retirees so that accurate and timely subsidy payments may be made to plan sponsors who continue to offer actuarially equivalent prescription drug coverage to the qualifying covered retirees. Information retrieved from this system will also be disclosed to: (1) Support regulatory, reimbursement, and policy functions performed within the agency, or by a contractor or consultant; (2) support constituent requests made to a congressional representative; (3) support litigation involving the agency; and (4) combat fraud and abuse in certain health benefits programs. We have provided background information about the modified system in the “Supplementary Information” section below. Although the Privacy Act requires only that CMS provide an opportunity for interested persons to comment on the proposed routine uses, CMS invites comments on all portions of this notice. See “Effective Dates” section for comment period.

EFFECTIVE DATE:

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 Governmental Affairs, and the Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB) on 07/13/2005. We will not disclose any information under a routine use until 30 days after publication. We may defer implementation of this SOR 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 comment to the CMS Privacy Officer, 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:

Brian Maloney, Health Insurance Specialist, Employer Policy & Operations Group, Centers for Beneficiary Choices, CMS, Mail Stop C1-22-06, 7500 Security Boulevard, Baltimore, Maryland 21244-1849. He can be reached at (410) 786-0226, or contact via e-mail at Brian.Maloney@cms.hhs.gov.

SUPPLEMENTARY INFORMATION:

The intent of the Medicare Retiree Drug Subsidy Program is to offer qualified retiree prescription drug plans financial assistance with a portion of their prescription drug costs and thereby “help employers retain and enhance their prescription drug coverage so that the current erosion in coverage would plateau or even improve.” By making a tax-free subsidy for 28 percent of allowable prescription drug costs available to qualified retiree prescription drug plans, the Medicare Retiree Drug Subsidy Program significantly reduces financial liabilities associated with employers' retiree drug coverage and encourages employers to continue assisting their retirees with prescription drug coverage.

A Qualified Retiree Prescription Drug Plan is defined as an employment-based retiree health coverage of a Part D eligible individual who is a participant or beneficiary under such coverage. The sponsor of the plan must provide to the Secretary, annually, an attestation that the actuarial value of the prescription drug coverage under the plan is at least equal to the actuarial value of standard prescription drug coverage.

The term Sponsor is defined as a plan sponsor in relation to a group health plan, except that, in the case of a plan maintained jointly by one employer and an employee organization and with respect to which the employer is the primary source of financing. A Group Health Plan include the following: (1) Federal and State Governmental Plans, a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality; (2) Collectively Bargained Plans, a plan established or maintained under or pursuant to one or more collective bargaining agreement; (3) Church Plan, a plan established and maintained for its employees, or their beneficiaries, by a church or by a convention or association of churches which is exempt from tax under section 501 of the Internal Revenue Code of 1986; or (4) Health Reimbursement Arrangement (HRA), a health Flexible Spending Arrangement (FSA), a health savings account (HSA), or an Archer MSA.

I. Description of the Proposed System of Records

A. Statutory and Regulatory Basis for SOR

Authority for maintenance of this system is given under section 1860D-22 of the Act (Title 42 United States Code (U.S.C.) 1302, 1395w-101 through 1395w-152, and 1395hh.) These provisions of the Act are amended by section 101 of the MMA and its implementing regulations codified at Title 42 Code of Federal Regulations (CFR) Part 423, Subpart R.

B. Collection and Maintenance of Data in the System

Information in this system is maintained on qualifying covered retirees who are Part D eligible individuals covered under a qualified retiree prescription drug plan. Information maintained in this system include, but are not limited to, standard data for identification such as Plan Sponsor Identification Number, Application Identification Number, Benefit Option Identifier, Coverage Effective Date, Coverage Termination Date, Health Insurance Claim Number (HICN), Social Security Number (SSN), gender, first name, last name, middle initial, date of birth, relationship to member and Medicare eligibility and enrollment status.

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 RDSP 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 RDSP. CMS has the following policies and procedures concerning disclosures of information that will be maintained in the system. Disclosure of information from the SOR 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 assist in the proper subsidy payments to sponsors of a qualifying covered retiree prescription drug plan;

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:

1. To agency contractors or consultants who have been engaged by the agency to assist in the performance of an activity related to this system and who need to have access to the records in order to perform the activity.

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 function relating to purposes for this system.

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

2. To a 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.

Beneficiaries sometimes request the help of a member of congress in resolving an 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.

3. To 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, and occasionally when another party is involved in litigation and CMS' 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.

4. To a CMS contractor (including, but not necessarily limited to fiscal intermediaries and carriers) that assists in the administration of a CMS-administered health benefits program, 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.

5. To 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 RDSP information for the purpose of combating fraud and abuse in such Federally-funded programs.

B. Additional Provisions Affecting Routine Use Disclosures

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, 65 FR 82462 (12-28-00), subparts A and E. Disclosures of PHI 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.”

In addition, our policy will be to prohibit release even of 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 include 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; 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 (see item IV above) 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 information relating to individuals.

System No. 09-70-0550.

System Name:

“Medicare Retiree Drug Subsidy Program (RDSP), HHS/CMS/CBC.”

Security Classification:

Level Three Privacy Act Sensitive Data.

System Location:

Group Health Incorporated, 441 Ninth Avenue, New York, NY 10001-1681, and Centers for Medicare & Medicaid Services (CMS) Data Center, 7500 Security Boulevard, North Building, First Floor, Baltimore, Maryland 21244-1850.

Categories of Individuals Covered By the System:

Information in this system is maintained on qualifying covered retirees who are Medicare Part D eligible individuals covered under a qualified retiree prescription drug plan.

Categories of Records in the System:

Information maintained in this system include, but are not limited to, standard data for identification such as Plan Sponsor Identification Number, Application Identification Number, Benefit Option Identifier, Coverage Effective Date, Coverage Termination Date, Health Insurance Claim Number (HICN), Social Security Number (SSN), gender, first name, last name, middle initial, date of birth, relationship to member and Medicare eligibility and enrollment status.

Authority for Maintenance of the System:

Authority for maintenance of this system is given under section 1860D-22 of the Act (Title 42 United States Code (U.S.C.) 1302, 1395w-101 through 1395w-152, and 1395hh.) These provisions of the Act are amended by section 101 of the MMA and its implementing regulations codified at Title 42 Code of Federal Regulations (CFR) Part 423, Subpart R.

Purpose(s) of the System:

The purpose of this system is to collect and maintain information on individuals who are qualifying covered retirees so that accurate and timely subsidy payments may be made to plan sponsors who continue to offer actuarially equivalent prescription drug coverage to the qualifying covered retirees. Information retrieved from this system will also be disclosed to: (1) Support regulatory, reimbursement, and policy functions performed within the agency, or by a contractor or consultant; (2) support constituent requests made to a congressional representative; (3) support litigation involving the agency; and (4) 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.” We are proposing to establish the following routine use disclosures of information maintained in the system. Information will be disclosed:

1. To agency contractors or consultants who have been engaged by the agency to assist in the performance of a service related to this system and who need to have access to the records in order to perform the activity.

2. To a 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.

3. To 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.

4. To a CMS contractor (including, but not necessarily limited to fiscal intermediaries and carriers) that assists in the administration of a CMS-administered health benefits program, 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.

5. To 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. This system contains Protected Health Information as defined by Department of Health and Human Services (HHS) regulation “Standards for Privacy of Individually Identifiable Health Information” (45 CFR Parts 160 and 164, 65 Fed. Reg. 82462 (12-28-00), Subparts A and E). Disclosures of Protected Health Information 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.”

In addition, our policy will be to prohibit release even of 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 complaint population is so small that individuals who are familiar with the complainants could, because of the small size, use this information to deduce the identity of the complainant).

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

Storage:

All records are stored electronically.

Retrievability:

Information is retrievable by Plan Sponsor identification number, Benefit Option Identifier, and Health Insurance Claim Number or Social Security Number.

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 implements 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 include 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; HHS Information Systems Program Handbook and the CMS Information Security Handbook.

Retention and Disposal:

Records are maintained in the active files for a period of 15 years. The records are then retired to archival files maintained at the Health Care Data Center. All claims-related records are encompassed by the document preservation order and will be retained until notification is received from the Department of Justice.

System Manager and Address:

Director, Employer Policy & Operations Group, CMS, Room C1-22-06, 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, HICN, address, date of birth, and gender, and for verification purposes, the subject individual's name (woman's maiden name, if applicable), and SSN. Furnishing the SSN is voluntary, but it may make searching for a record easier and prevent delay.

Record Access Procedure:

For the purpose of access, use the same procedures outlines 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).

Contesting Records Procedures:

The subject individual should contact the system manager named above and reasonably identify the records 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:

Records maintained in this system will be derived from Medicare Beneficiary Database system of records and from medical plans and plan sponsors.

Systems Exempted from Certain Provisions of the Act:

None.