[Federal Register Volume 59, Number 46 (Wednesday, March 9, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-5315]


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[Federal Register: March 9, 1994]

BILLING CODE 6820-24-F
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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 412

[BPD-769-FC]
RIN 0938-AG34

 

Medicare Program; Changes to the Requirement for Annual Physician 
Acknowledgement of Physician Attestation Responsibilities

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

ACTION: Final rule with comment period.

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SUMMARY: Existing Medicare regulations require a hospital to obtain, on 
an annual basis, from each attending physician, a signed 
acknowledgement that the physician understands the penalty for 
misrepresenting the information on an attestation statement relating to 
principal and secondary diagnoses and major procedures performed on 
patients. This final rule with comment period eliminates the 
requirement for an annual acknowledgement statement and instead 
requires that a physician sign an acknowledgement statement only upon 
being granted admitting privileges at a hospital. The purpose of this 
change is to reduce the paperwork burden associated with processing 
claims under Medicare.

DATES: Effective Date: This final rule is effective on April 18, 1994.
    Comment Date: Comments will be considered if we receive them at the 
appropriate address, as provided below, no later than 5 p.m. on May 9, 
1994.

ADDRESSES: Mail written comments (an original and three copies) to the 
following Administration, Department of Health and Human Services, 
Attention: BPD-769-FC, P.O. Box 7517, Baltimore, MD 21207-0517.

    If you prefer, you may deliver your written comments (an original 
and three copies) to one of the following addresses:

Room 309-, Hubert H. Humphrey Building, 200 Independence Avenue, 
SW., Washington, DC 20201, or
Room 132, East High Rise Building, 6325 Security Boulevard, 
Baltimore, MD 21207.

    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code BPD-769-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 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).
    For comments that relate to information collection requirements 
mail a copy of comments to:

Allison Herron Eydt, HCFA Desk Officer, Office of Information and 
Regulatory Affairs, room 3002, New Executive Office Building, 
Washington, DC 20503.

    Copies: To order copies of the Federal Register containing this 
document, send your request to: New Orders, Superintendent of 
Documents, 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) 275-
6802. The cost for each copy is $4.50. As an alternative, you can view 
and photocopy the Federal Register document at most libraries 
designated as Federal Depository Libraries and at many other public and 
academic libraries throughout the country that receive the Federal 
Register.

FOR FURTHER INFORMATION CONTACT:Beverly Christian, (410) 966-4616.

SUPPLEMENTARY INFORMATION:

I. Background

    Sections 1886 (d) and (g) of the Social Security Act (the Act) 
establish prospective payment systems for payment of the operating and 
capital-related costs of acute hospital inpatient stays under Medicare 
part A (Hospital Insurance). Under these prospective payment systems, 
payment for the operating and capital-related costs of inpatient 
hospital services furnished by hospitals subject to the systems 
(generally, short-term, acute-care hospitals) is made on the basis of 
prospectively determined rates and applied on a per discharge basis. 
All discharges are classified according to a list of diagnosis-related 
groups (DRGs). The regulations governing the inpatient hospital 
prospective payment systems are located in 42 CFR part 412. Subpart C 
of part 412 sets forth certain conditions that must be met for a 
hospital to receive payment under the prospective payment systems.
    Under section 1866(a)(1)(F) of the Act, in order to receive payment 
under the Medicare program, a hospital must enter into an agreement 
with the Utilization and Quality Control Peer Review Organization (PRO) 
in the hospital's area, for the peer review of Medicare services 
furnished by the hospital. PROs are independent Statewide physician 
organizations that are required under section 1153 of the Act, among 
other contractual responsibilities, to review services provided, or 
proposed to be provided, to Medicare beneficiaries. The purpose of the 
review is to ensure that Medicare payment is made only for services 
that are medically necessary, are provided in the most appropriate 
setting, and meet professionally accepted standards of quality. Section 
1866(a)(1)(F)(i) of the Act requires PROs to validate the diagnostic 
information provided by hospitals.
    The regulations concerning the review of the validity of diagnostic 
information are set forth at 42 CFR 412.46. Section 412.46(a) requires 
that the patient's attending physician must attest in writing to the 
diagnostic and procedural information to be reviewed by the PROs before 
a claim is submitted. The physician's attestation is part of the 
medical record and includes a signed and dated statement in which the 
physician certifies that the narrative descriptions of the principal 
and secondary diagnoses made, and procedures performed, are accurate 
and complete. This requirement is designed to ensure that the 
diagnostic and treatment information used for claims payment is 
correct.
    Section 412.46(c) requires physician acknowledgement of the 
attestation responsibilities. Specifically, Sec. 412.46(c) now requires 
that, when a claim is submitted, the hospital has on file a current 
signed and dated acknowledgement statement from the attending physician 
that the physician has received a notice from the hospital stating the 
consequences of misrepresenting, falsifying, or concealing essential 
information required for payment. This acknowledgement must have been 
completed within the year prior to the submission of the claim. The 
physician acknowledgement requirement is designed to ensure that, if a 
physician is prosecuted for attesting to false information, the 
government can prove that the physician had notice that false 
attestation is a criminal action. If the hospital does not have such a 
document on file, Medicare payment may be denied. Section 412.46(d) 
requires that, at least every 3 months, the PRO review a random sample 
of discharges during the period since the last review to verify that 
the diagnostic and procedural coding, used by the hospital for DRG 
assignment, is substantiated by the corresponding medical records.
    As part of the validation of DRG assignments, PROs are responsible 
for reviewing attestation and acknowledgement statements. The review of 
attestation statements is administratively simple. As described above, 
hospitals submit attestation statements with each medical record. 
Therefore, PROs generally review the statement at the same time that 
they validate diagnostic and procedural information. Under 42 CFR 
466.85, PROs have final and binding authority to issue determinations 
or changes as a result of DRG validation.
    The present method for maintaining and validating acknowledgement 
statements is much more complicated administratively. Under current 
HCFA enforcement procedures, which are listed in an attachment to the 
PRO Scope of Work (SOW), PROs verify if a hospital has on file a 
current signed physician acknowledgement statement for each physician 
who has privileges at that hospital. The instructure we have developed 
for this PRO review are an attempt to strike a balance between our 
desire to pay for medical care provided by hospitals and our need to 
ensure compliance by physicians and hospitals with regulations that 
serve as the basis for payment of Medicare trust fund dollars under the 
prospective payment systems.
    Annually, each PRO examines a sample of acknowledgement statements 
from each hospital under its review to determine whether a current 
signed and dated acknowledgement is on file for each physician sampled. 
Depending on the percentage of errors (that is, acknowledgement 
statements that are missing, incomplete, incorrect or noncurrent) that 
the PRO finds, it may take a variety of actions. These actions include:
     Reviewing the hospital's complete file of acknowledgement 
statements.
     Giving the hospital a limited period of time in which to 
obtain an appropriate acknowledgement statement.
     Issuing denials but reopening cases for which the hospital 
has a reasonable explanation.
     Denying claims associated with acknowledgement statements 
that are missing or unacceptable.
    The PRO considers the hospital's past history when determining 
which action is appropriate to take.

II. Provisions of the Final Rule With Comment Period

    Under the current regulations, physicians and hospitals have 
experienced difficulties in meeting the physician acknowledgement 
requirements. Physicians have expressed concern that the requirement 
produces unnecessary paperwork, increases costs, and is time consuming.
    Hospitals have found that the maintenance of acknowledgement 
statements for annual inspection by the PRO presents an administrative 
problem of great complexity. Only the smallest facilities are able to 
have all of their physicians sign the statement on the same day each 
year. For all others, a window of opportunity must be afforded. This 
means that gaps in the signing of the statement are almost certain to 
occur. For example, if a hospital informs its physicians that they must 
sign the statement between November 15 and December 31 (a reasonable 
period of time for a large facility), and the physicians comply, there 
would be 47 days on which the statements could actually be signed. For 
the hospital, that would mean up to 47 different dates on which those 
statements would expire. Tracking these dates, and ensuring compliance 
for the next year, becomes a problem of extensive complexity and 
expense, especially given the limited resources of most hospital 
medical records departments.
    Hospitals have objected to this administrative responsibility of 
ensuring that the annual acknowledgements are signed prior to the 
expiration of the previous year's statements. Also, hospitals are 
concerned about the possibility of the loss of revenues for cases in 
which they have provided appropriate care to patients, but have failed 
to get new statements signed on a timely basis, a process they view as 
a technicality. In addition, smaller hospitals have faced possible 
closure because of the fiscal impact of failing to comply with the 
requirement for annual signatures.
    PRO have had two major problems with the validation of 
acknowledgement statements. First, the review process itself is 
burdensome in terms of the time and resources it consumes, particularly 
when a PRO must examine a hospital's complete file. In addition, the 
process has the potential of causing the denial of seemingly inordinate 
sums of money. The funds denied have the potential to close the doors 
of some smaller hospitals, thus denying needed access to care for 
Medicare beneficiaries.
    The review of acknowledgement statements is, particularly in larger 
hospitals, a detailed, lengthy activity. Moreover, since PRO reviewers 
are professionally trained health care personnel, requiring them to 
perform acknowledgement review (a clerical task) is a misuse of 
resources.
    The PROs are extremely reluctant to deny significant funds to a 
hospital for failure to meet a paperwork requirement. Lack of correct 
acknowledgement statements does not, in and of itself, mean that a 
hospital gives poor care or that it has utilization or DRG problems. 
Specifically, it does not imply that improper diagnostic and procedural 
coding to achieve incorrect DRG assignment and payment has occurred 
during the periods of missing, incorrect, or incomplete acknowledgement 
statements.
    Our objective in making a change to the regulations is to reduce 
the ``hassle factor'' relating to the paperwork burden associated with 
processing claims under Medicare. We believe that the regulations 
should be revised to assure the validity of diagnostic information in a 
manner that is less burdensome to hospitals, physicians, and PROs, and 
that avoids the necessity of imposing sometimes substantial fiscal 
penalties in cases where diagnostic information is accurate, and the 
medical record has the necessary physician attestation, but the 
acknowledgement statement is out of date.
    In 1992, the DHHS Advisory Committee on Medicare-Physician 
Relationships (Gary Committee) recommended that the annual physician 
acknowledgement requirement be discontinued and that we modify the 
requirement to provide that: (1) A one-time acknowledgement signature 
be submitted when a physician is granted admitting privileges at a 
hospital; (2) the signature be kept on file by the hospital; and (3) 
existing acknowledgements signed by physicians already on staff would 
be considered to be in effect permanently.
    We have considered both the Gary Committee's recommendation and 
several other options to ameliorate the present problems with 
acknowledgement statements. These include:
     Eliminating the statement altogether. This would eliminate 
all problems with compliance, but would not provide evidence that the 
physician was made aware of the penalties involved in misrepresenting, 
falsifying, or concealing the required information.
     Lengthening the period of time between statement updates. 
This would solve some of the procedural problems but could exacerbate 
the problem of inordinate penalties by greatly increasing the number of 
claims liable to denial.
     Placing the acknowledgement statement with the attestation 
statement. This is an administratively simple approach, and in fact was 
our policy for a short period of time a the outset of the 
implementation of the prospective payment system. However, it proved to 
be extremely unpopular with the physician community and was replaced 
with the current requirement in our August 31, 1984, final rule (49 FR 
34759.)
     Shifting the monitoring requirement to the fiscal 
intermediaries. This would place a claims processing requirement with 
the entity that processes the claims and would prevent the accumulation 
of large numbers of claims liable to denial. It would not alleviate the 
hospitals' problems in acquiring signatures, but would alert the 
hospital immediately if a signature had expired.
    After considering all of these options, we have decided to remove 
the requirement that the acknowledgement be completed within the year 
prior to the submission of the claim and replace it with the 
requirement that the acknowledgement be completed by the physician at 
the time he or she is granted admitting privileges at that particular 
hospital or before or at the time the physician admits his or her first 
patient. The hospital must continue to keep these signatures on file. 
Acknowledgements currently on file are considered to be in effect as 
long as the physician has admitting privileges in the hospital. 
Accordingly, the PRO review of acknowledgement statements will be 
reduced to physicians granted new admitting privileges.
    We are recommending this change because our years of experience 
with this provision have revealed continuing physician discontent with 
the procedures, a time-consuming annual burden on hospitals in 
obtaining timely statements, and a significant administrative burden on 
PROs that validate them. There is evidence that this essentially 
``paper'' requirement is sometimes enforced inconsistently, and we know 
from experience that inadvertent administrative lapses could cause 
significant financial burdens for hospitals that have provided 
medically necessary and appropriate care to the patients whose claims 
are subject to denial based on lack of an appropriately executed 
acknowledgement statement. We believe that this requirement's current 
level of burden to physicians, hospitals, and PROs can be substantially 
reduced without significantly impairing the effectiveness of the 
warning or its usefulness in cases where prosecution is necessary.
    Although we are requiring that the statements be completed by a 
physician only once for each hospital at which the physician has 
admitting privileges, we intend to remind physicians annually of the 
penalties attached to misrepresentation, falsification, and concealment 
of information required for the payment of Federal funds. The vehicle 
for this reminder is under consideration.

III. Impact Statement

    Unless the Secretary certifies that a final rule will not have a 
significant economic impact on a substantial number of small entities, 
we generally prepare a regulatory flexibility analysis that is 
consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 
through 612).
    The changes we are making to the regulations will reduce both 
hospital and PRO administrative costs. Hospitals will be relieved of a 
time-consuming annual burden in obtaining timely statements, and the 
possibility of significant financial burdens caused by inadvertent 
administrative lapses due to claims subject to denial based on lack of 
an appropriately executed acknowledgement statement. Under the present 
system, we estimate that a typical hospital spends several hundred 
hours a year tracking and chasing down missing physician signatures, 
and that PROs spend many hours in each hospital checking for signatures 
and dealing with gaps and missing signatures. Currently, there are over 
6,000 hospitals participating in the Medicare prospective payment 
system, and some 300,000 physicians whose signatures must be tracked 
and updated each year, so total costs to the economy may well be in the 
range of $10 million to $20 million a year for the annual 
acknowledgment requirement. Under the revised system, PRO review will 
be significantly reduced to only those physicians granted new staff 
privileges. Also, since we anticipate fewer instances of hospital 
noncompliance under the revised requirements, we anticipate that PROs 
rarely, if ever, will need to intensify review of 100 percent of 
acknowledgements in hospitals, or take actions to deny payment, based 
on violations of the physician attestation requirement.
    While the effects of this rule are a small fraction of 
administrative costs in each hospital, the elimination of the 
requirement for annual physician acknowledgements represents a 
significant reduction in governmental ``red tape'' for hospitals, 
physicians, and PROs. We have determined, and the Secretary certifies, 
that this final rule will not have a significant economic effect on a 
substantial number of small entities; thus, we are not preparing an 
analysis for the RFA.
    Also, section 1102(b) of the Act requires the Secretary to prepare 
a regulatory impact statement if a final rule will have a significant 
economic impact on the operations of a substantial number of small 
rural hospitals. Such an analysis must conform to the provisions of 
section 603 of the FRA. 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 50 beds.
    We have not prepared a rural impact statement since we have 
determined, and the Secretary certifies, that this final rule will not 
have a significant economic effect on the operations of a substantial 
number of small rural hospitals.
    In accordance with the provisions of Executive Order 12866 this 
regulation was reviewed by the Office of Management and Budget.

IV. Other Required Information

A. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite prior public comment on proposed rules. The 
notice of proposed rulemaking includes a reference to the legal 
authority under which the rule is proposed, and the terms and 
substances of the proposed rule or a description of the subjects and 
issues involved. This procedure can be waived, however, if an agency 
finds good cause that a notice-and-comment procedure is impracticable, 
unnecessary, or contrary to the public interest and incorporates a 
statement of the finding and its reasons in the rule issued. We believe 
that this final rule with comment period will alleviate the time-
consuming annual burden on hospitals to obtain updated physician 
acknowledgement statements, the administrative burden on PROs to 
validate them, and the physician discontent with the procedures. 
Moreover, we believe that this requirement's current level of burden to 
physicians, hospitals, and PROs can be substantially reduced without 
significantly impairing the effectiveness of the warning or its 
usefulness in cases where prosecution is necessary. This rule reduces 
rather than imposes burdens, and we believe that the individuals and 
organizations being affected by these changes are best served by 
immediate action. We believe that notice and comment is both 
unnecessary and contrary to the public interest.
    Therefore, we find good cause to waive the notice of proposed 
rulemaking and to issue a final rule in this instance. We are providing 
a 60-day period for public comment on this rule.

B. Information Collection Requirements

    Regulations at Sec. 412.46(c) contain information collection or 
recordkeeping requirements that are subject to review by the Office of 
Management and Budget under the Paperwork Reduction Act of 1980 (44 
U.S.C. 3501 et seq.). Current Sec. 412.46(c) requires that, when a 
claim is submitted, hospitals have on file a current signed and dated 
acknowledgment from each attending physician that the physician has 
received a notice from the hospital that explains the physician 
attestation requirement and the penalties applicable for 
misrepresenting, falsifying, or concealing essential information 
required for payment. Hospitals must ensure that physician 
acknowledgements are completed within 1 year prior to the submission of 
the claim. This requirement has imposed substantial annual paperwork 
costs on hospitals, which must repeatedly check signature dates and 
secure timely physician signatures on acknowledgement statements to 
ensure that, for payment purposes, no part of a year is unaccounted for 
by each physician's acknowledgment statement.
    Under this final rule, we are requiring under revised 
Sec. 412.46(c) that the acknowledgment statements be signed only at the 
time that the physician is granted admitting privileges at a particular 
hospital, or before or at the time the physician admits his or her 
first patient, rather than on an annual basis. Unlike the current 
requirement, we estimate that the residual system will impose on 
physicians and hospitals a shared one-time burden of only 5 minutes per 
acknowledgement for each physician that gains admitting privileges. The 
hospital must continue to keep these signatures on file. Since 
acknowledgements currently on file are considered to be in effect as 
long as the physician has admitting privileges in the hospital, the 
burden on PROs to review acknowledgement statements also will be 
reduced substantially to cover only physicians that are newly granted 
admitting privileges.
    Organizations and individuals desiring to submit comments on the 
information collection and recordkeeping requirements should direct 
them to the OMB official whose name appears in the ``ADDRESSES'' 
section of this preamble.

C. Public Comments

    Because of the large number of items of correspondence we normally 
receive, 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 if we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

List of Subjects in 42 CFR Part 412

    Administrative practice and procedure, Health facilities, Medicare, 
Puerto Rico, Reporting and recordkeeping requirements.

    42 CFR chapter IV, part 412, is amended as follows:

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL 
SERVICES

    A. The authority citation for part 412 continues to read as 
follows:

    Authority: Secs. 1102, 1815(e), 1871, and 1886 of the Social 
Security Act (42 U.S.C. 1302, 1395g(e), 1395hh, and 1395ww).

Subpart C--[Amended]

    B. In Sec. 412.46, paragraph (c) is revised to read as follows:


Sec. 412.46  Medical review requirements; DRG validation.

* * * * *
    (c) Physician acknowledgement. (1) In addition, when the claim is 
submitted, the hospital must have on file a signed and dated 
acknowledgement from the attending physician that the physician has 
received the following notice:

    Notice to Physicians: Medicare payment to hospitals is based in 
part on each patient's principal and secondary diagnoses and the 
major procedures performed on the patient, as attested to by the 
patient's attending physician by virtue of his or her signature in 
the medical record. Anyone who misrepresents, falsifies, or conceals 
essential information required for payment of Federal funds, may be 
subject to fine, imprisonment, or civil penalty under applicable 
Federal laws.

    (2) The acknowledgement must be completed by the physician at the 
time that the physician is granted admitting privileges at the 
hospital, or before or at the time the physician admits his or her 
first patient. Existing acknowledgements signed by physicians already 
on staff remain in effect as long as the physician has admitting 
privileges at the hospital.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: June 16, 1993.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
    Approved: December 3, 1993.
Donna E. Shalala,
Secretary.
[FR Doc. 94-5315 Filed 3-7-94; 8:45 am]
BILLING CODE 4120-01-P