[Federal Register Volume 59, Number 28 (Thursday, February 10, 1994)]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-3098]
[[Page Unknown]]
[Federal Register: February 10, 1994]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Part 489
[BPD-748-P]
RIN 0938-AG03
Medicare Program; Change in Provider Agreement Regulations
Related to Federal Employee Health Benefits
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would amend current Medicare regulations to
require that payment for inpatient hospital services furnished to
retired Federal workers age 65 and older who are enrolled in a Federal
Employee Health Benefits (FEHB) plan but who are not entitled to
receive hospital benefits under Medicare Part A (Hospital Insurance)
may not exceed the hospital payments established for Medicare purposes
for inpatient hospital services. The rule would also amend current
Medicare regulations to authorize HCFA to consider termination or
nonrenewal of a hospital's Medicare provider agreement for knowingly
and willfully failing to accept, on a repeated basis, the Medicare rate
as payment in full from an FEHB plan. This proposed rule would
implement section 7002(f) of the Omnibus Budget Reconciliation Act of
1990, enacted on November 5, 1990.
DATES: Comments will be considered if we receive them at the
appropriate address, as provided below, no later than 5 p.m. on April
11, 1994.
ADDRESSES: Mail written comments to the following address:
Health Care Financing Administration, Department of Health and Human
Services, Attention: BPD-748-P, P.O. Box 26676, Baltimore, MD 21207.
If you prefer, you may deliver your written comments to one of the
following addresses:
Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201, or
Room 132, East High Rise Building, 6325 Security Boulevard, Baltimore,
MD 21207.
Due to staffing and resource limitations, we cannot accept comments
by facsimile (FAX) transmission. In commenting, please refer to file
code BPD-748-P. 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 309-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).
Copies: To order copies of the Federal Register containing this
document, send your request to: Superintendent of Documents, U.S.
Government Printing Office, ATTN: New Order, P.O. Box 371954,
Pittsburgh, PA 15250-7954.
Specify the date of the issue requested and enclose a check or
money order payable to the Superintendent of Documents, or enclose your
Visa or Master Card number and expiration date. Credit card orders can
also be placed by calling the order desk at (202) 783-3238 or by faxing
to (202) 512-2250. The cost for each copy is $4.50. In addition, you
may view and photocopy the Federal Register document at most libraries
designated as U.S. Government Depository Libraries and at many other
public and academic libraries throughout the country that receive the
Federal Register. The order desk operator will be able to tell you the
location of U.S. Government Depositories.
FOR FURTHER INFORMATION CONTACT: Mel Lewis, (410) 966-4615.
SUPPLEMENTARY INFORMATION:
I. Background
The Office of Personnel Management (OPM) administers Federal
Employee Health Benefit (FEHB) plans. These plans provide a variety of
health services packages to current Federal employees and their
families as well as to retired Federal workers and any eligible
dependents. Most retired Federal employees age 65 and older are
eligible to receive hospital insurance benefits under Medicare Part A
(Hospital Insurance), one of two insurance programs created by the
Social Security Amendments of 1965 when the Medicare program was
established by the addition of title XVIII to the Social Security Act
(the Act). There are, however, some retired Federal workers age 65 and
older who are not entitled to receive hospital insurance benefits under
Medicare Part A.
Present Medicare conditions of participation (requirements that
hospitals must meet to qualify for participation in the Medicare
program) mandate that a provider not charge a beneficiary for services
for which the beneficiary is entitled to have payment made under
Medicare. A provider is defined in 42 CFR 400.202 as a hospital, a
skilled nursing facility (SNF), a comprehensive outpatient
rehabilitation facility (CORF), a home health agency (HHA), or,
effective November 1, 1983 through September 30, 1986, a hospice that
has in effect an agreement to participate in Medicare, or a clinic, a
rehabilitation agency, or a public health agency that has a similar
agreement but only to furnish outpatient physical therapy or speech
pathology services. Under the requirement not to charge a beneficiary
for services for which the beneficiary is entitled to have payment made
under Medicare, the provider agrees to accept Medicare payment in full
for services covered under Medicare and furnished by the provider.
Existing Medicare conditions of participation and provider agreements
do not require that hospitals accept the Medicare prospective payment
system (PPS) rate as payment in full when issued by an FEHB plan for an
enrollee not entitled to Medicare Part A.
Reforms in the Health Benefits Program under section 7002(f) of the
Omnibus Budget Reconciliation Act of 1990 (Pub. L. 101-508, enacted on
November 5, 1990) require that FEHB plans limit their inpatient payment
for retired FEHB enrollees who are age 65 and older but who are not
entitled to receive hospital insurance benefits under Medicare to rates
that would have been paid by Medicare under the inpatient hospital
prospective payment system. The prospective payment system is a system
of payment for acute inpatient hospital stays under Medicare Part A
based on prospectively set rates. Under this system, Medicare payment
is made at a predetermined, specific rate for each hospital discharge.
Section 7002(f) of Public Law 101-508 also requires that the OPM
notify the Secretary of Health and Human Services (the Secretary) of
incidents when a hospital knowingly and willfully attempts to collect,
on a repeated basis, the difference between the Medicare payment rates
and the hospital's charge, less any deductible or coinsurance
obligation. The Secretary may consider these incidents as violations of
the Medicare provider agreement and may consider termination or
nonrenewal of the agreement. A Medicare provider agreement is an
agreement between HCFA and one of the providers specified in
Sec. 489.2(b) to furnish services to Medicare beneficiaries and to
comply with section 1886 of the Act, which establishes hospital
payments. HCFA may terminate a provider agreement if any of the
failings listed in Sec. 489.53(a), which sets forth the basis for
HCFA's termination of an agreement with any provider, is attributable
to a provider.
The committee and conference reports accompanying Public Law 101-
508 support the implementation of the changes in the provider agreement
regulations. The Report of the Committee on the Budget of the House of
Representatives (H.R. Rep. No. 881, 101st Cong., 2d Sess. 177 (1990))
accompanying Public Law 101-508 explains that section 8002(d) of the
House bill:
* * * Requires the Office of Personnel Management, in
consultation with the Department of Health and Human Services, to
develop and implement a system through which health benefits plan
carriers will be able to identify Medicare-eligible FEHBP
annuitants. Establishment of this system will ensure that payments
under coordination of benefits with Medicare do not exceed the
present or future statutory maximum which physicians may charge
Medicare beneficiaries.
The Conference Report to Accompany H.R. 5835 (H.R. Rep. No. 964,
101st Cong., 2d Sess. 976 (1990)) states that section 8002 of the House
bill:
* * * Requires improved coordination between the Office of
Personnel Management and the Department of Health and Human Services
in order to ensure that Medicare's payments and limits can be
correctly applied when the FEHBP carriers make a secondary payment.
The Conference Report also points out that:
Section 8005 of the Senate amendment applies Medicare part A
hospital payment limits to payments to providers of services to
FEHBP annuitant enrollees who are age 65 and older but not eligible
for Medicare.
The report states that the Conference agreement encompasses the
House and Senate provisions, including a requirement for:
* * * Improved coordination between the Office of Personnel
Management and the Department of Health and Human Services in order
to ensure that Medicare's payment and limits can be correctly
applied * * * and the Senate provision which applies Medicare
hospital payment limits to payments to providers of services to
FEHBP annuitant enrollees who are age 65 and older but not eligible
for Medicare.
II. Provisions of the Proposed Regulations
We are proposing to revise the following regulations to implement
section 7002(f) of Public Law 101-508:
We would amend Sec. 489.21, which sets forth specific limitations
on charges under Medicare provider agreements, by revising the
introductory text to make the limitations for inpatient hospital
services applicable to retired FEHB plan enrollees age 65 or older who
are not entitled to Medicare benefits. We would also add a new
paragraph (i) under Sec. 489.21 to require that the provider not charge
for inpatient hospital services that are in excess of the hospital
payments, after applicable copayments have been satisfied, established
for Medicare purposes for inpatient hospital services under section
1886 of the Act furnished to a retired Federal employee age 65 or older
who is enrolled in an FEHB plan and who is not entitled to receive
hospital benefits under Medicare Part A.
We would amend Sec. 489.53, which sets forth the basis for
termination of provider agreements by HCFA. We would add to Sec. 489.53
a new paragraph (a)(13) stating that we may terminate the agreement
with any provider if we find that the provider knowingly and willfully
charges, on a repeated basis, more than the hospital payments, after
applicable copayments have been satisfied, established for Medicare
purposes for inpatient hospital services under section 1886 of the Act.
III. Regulatory Impact Statement
We generally prepare a regulatory flexibility analysis that is
consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
through 612) unless the Secretary certifies that a proposed rule would
not have a significant economic impact on a substantial number of small
entities. For purposes of the RFA, all hospitals are considered to be
small entities.
Also, section 1102(b) of the Act requires the Secretary to prepare
a regulatory impact analysis if a proposed rule may have a significant
impact on the operations of a substantial number of small rural
hospitals. This analysis must conform to the provisions of section 603
of the RFA. For purposes of section 1102(b) of the Act, we define a
small rural hospital as a hospital that is located outside of a
Metropolitan Statistical Area and has fewer than 100 beds.
This proposed rule would add a new paragraph (i) under Sec. 489.21
to require that payment for inpatient hospital services furnished to
retired Federal workers age 65 or older who are enrolled in an FEHB
plan but who are not entitled to receive hospital benefits under
Medicare Part A may not exceed the hospital payments established for
Medicare purposes for inpatient hospital services.
In addition, we may terminate the Medicare agreement with any
provider if the provider knowingly and willfully charges, on a repeated
basis, an amount in excess of the hospital payments, after applicable
copayments have been satisfied, established for Medicare purposes for
inpatient hospital services under section 1886 of the Act.
Prospective payment rates tend to be substantially below the rates
most hospitals charge most private insurers, including those private
insurers participating in the Federal Employee Health Benefit Program.
This new requirement will therefore result in substantial savings to
the FEHBP. The requirement became effective January 1, 1992, without
rulemaking. Hospitals have been notified of their obligations through
OPM administrative procedures, savings will accrue directly through the
OPM program, and compliance will be obtained and monitored by OPM.
HCFA is involved only because the Congress required that we
establish a sanction mechanism in case any hospitals knowingly and
willfully violate the requirement on a repeated basis. These sanction
procedures would come into play only after an OPM determination of a
problem and notification to HCFA. Hospitals that do not charge more
than the hospital payments established for Medicare purposes would not
be affected by this rule. We do not believe that any hospitals would
knowingly refuse to comply, or that any hospital would lose provider
status. Therefore, this proposed rule would have negligible economic
effects.
For these reasons, we are not preparing analyses for either the RFA
or section 1102(b) of the Act since we have determined, and the
Secretary certifies, that this proposed rule would not result in a
significant economic impact on a substantial number of small entities
and would not have a significant economic impact on the operations of a
substantial number of small rural hospitals.
In accordance with the provisions of Executive Order 12866 this
proposed rule was not reviewed by the Office of Management and Budget.
IV. Other Required Information
A. Paperwork Reduction Act
This proposed rule contains no information collection requirements.
Consequently, this rule need not be reviewed by the Office of
Management and Budget under the authority of the Paperwork Reduction
Act (44 U.S.C. 3501 et seq.).
B. Response to Comments
Because of the large number of items of correspondence we normally
receive on a proposed rule, we are not able to acknowledge or respond
to them individually. However, we will consider all comments that we
receive by the date and time specified in the ``DATES'' section of this
preamble, and when we proceed with the final rule, we will respond to
the comments in the preamble to the final rule.
List of Subjects in 42 CFR Part 489
Health facilities, Medicare, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, 42 CFR chapter IV,
subchapter E, part 489 is proposed to be amended as set forth below:
PART 489--PROVIDER AND SUPPLIER AGREEMENTS
1. The authority citation for part 489 continues to read as
follows:
Authority: Secs. 1102, 1861, 1864(m), 1866, and 1871 of the
Social Security Act (42 U.S.C. 1302, 1395x, 1395aa(m), 1395cc, and
1395hh).
Subpart B--Essentials of Provider Agreements
2. Section 489.21 is amended by revising the introductory text of
the section and by adding a new paragraph (i) to read as follows:
Sec. 489.21 Specific limitations on charges.
Except as specified in subpart C of this part, the provider agrees
not to charge a beneficiary for any of the services enumerated in this
section, or in the instance of a retired Federal Employee Health
Benefit (FEHB) plan enrollee age 65 or older not entitled to Medicare
benefits, other than a prepayment enrollee, for those services listed
exclusively in paragraph (i) of this section.
* * * * *
(i) Inpatient hospital services that are in excess of the hospital
payments, after applicable copayments have been satisfied, established
for Medicare purposes for inpatient hospital services under section
1886 of the Act furnished to a retired Federal employee age 65 or older
who is enrolled in an FEHB plan, other than a prepayment plan, and who
is not entitled to receive hospital benefits under Medicare Part A.
Subpart E--Termination of Agreement and Reinstatement After
Termination
3. In Sec. 489.53, the introductory text to paragraph (a) is
republished and a new paragraph (a)(13) is added to read as follows:
Sec. 489.53 Termination by HCFA.
(a) Basis for termination of agreement with any provider. HCFA may
terminate the agreement with any provider if HCFA finds that any of the
following failings is attributable to that provider:
* * * * *
(13) It knowingly and willfully charges, on a repeated basis, more
than the hospital payments, after applicable copayments have been
satisfied, established for Medicare purposes for inpatient hospital
services under section 1886 of the Act.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance)
Dated: October 13, 1993.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
Approved: December 1, 1993.
Donna E. Shalala,
Secretary.
[FR Doc. 94-3098 Filed 2-9-94; 8:45 am]
BILLING CODE 4120-01-P