[Federal Register Volume 59, Number 64 (Monday, April 4, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7727]
[[Page Unknown]]
[Federal Register: April 4, 1994]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Public Health Service
42 CFR Part 124
RIN 0905-AE06
Medical Facility Construction and Modernization; Requirements for
Provision of Services to Persons Unable To Pay
AGENCY: Public Health Service, DHHS.
ACTION: Proposed rule.
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SUMMARY: This notice proposes revisions to the rules currently
governing how certain health care facilities, assisted under titles VI
and XVI of the Public Health Service Act, fulfill the assurance given
in their applications for assistance that they would provide a
reasonable volume of services to persons unable to pay. Public comment
on the current rules and operational experience with them have
indicated the need to revise the current requirements with respect to
nursing homes, many of which are unable under current requirements to
meet their obligation to provide such services. The intended effect of
this action is to permit qualified facilities to satisfy their
uncompensated services assurance.
DATES: Comments must be received on or before June 3, 1994.
ADDRESSES: Written comments may be sent to Mrs. Charlotte G. Pascoe,
Director, Division of Facilities Compliance, BHRD, HRSA, 5600 Fishers
Lane, room 11-19, Rockville, Maryland 20857.
Comments will be available for public inspection during normal
business hours at this address: PHS will take appropriate steps, where
necessary, to afford individuals with disabilities an equal opportunity
to comment.
FOR FURTHER INFORMATION CONTACT: Mrs. Eulas Dortch, 301-443-5656.
SUPPLEMENTARY INFORMATION: The Secretary of Health and Human Services
proposes an amendment to the rules governing what is popularly known as
the Hill-Burton uncompensated services program. Health care facilities
covered by the program received construction assistance under two
titles of the Public Health Service Act, title VI (the ``Hill-Burton
Act,'' 42 U.S.C. 291, et seq.) and title XVI (42 U.S.C. 300q, et seq.).
Under both titles, facilities receiving such construction assistance
have been required, as a condition of receiving the construction
assistance, to provide an assurance that ``there will be available in
the facility or portion thereof to be constructed or modernized a
reasonable volume of services to persons unable to pay therefor * *
*.'' 42 U.S.C. 291c(e). See also 42 U.S.C. 300s-1(b)(1)(K)(ii). This
assurance is known as the ``uncompensated services assurance.''
Regulations governing compliance with the uncompensated services
assurance were first issued in 1947, and have been revised several
times. On May 18, 1979, comprehensive regulations governing compliance
with the assurance were issued at 44 FR 29372. Among other things, the
1979 regulations: Established a minimum level of uncompensated services
which facilities were required to provide; set an annual compliance
level of uncompensated services to be provided and required facilities
to make up any deficit in meeting the annual compliance level through
provision of more uncompensated services in later years; required
facilities to allocate their uncompensated services either under a plan
meeting certain requirements or on a first-requested, first-served
basis; required facilities to notify the public of the existence of
their uncompensated services programs through public notice and
provision of personal notice to individuals served by the facilities;
and required facilities to keep records documenting compliance and to
periodically report concerning compliance. The 1979 regulations also
for the first time established national eligibility criteria, based on
income: Individuals whose annual income was at or below the poverty
level (known as ``Category A individuals'') were automatically eligible
for uncompensated services; individuals whose annual income was at or
below two times the poverty level (known as ``Category B individuals'')
were also eligible for uncompensated services, unless the facility
decided to limit its services to Category A individuals only. The 1979
regulations also provided that amounts to which an individual was
entitled under a third-party insurance or governmental program could
not be credited towards a facility's uncompensated services quota.
On December 3, 1987, the Secretary revised the 1979 regulations at
52 FR 46022. As pertinent here, the 1987 regulations effected a
technical revision of the 1979 regulations, making explicit what had
formerly been implicit in those regulations; i.e., that coverage of an
indigent under a third-party insurance or governmental program
precludes eligibility for uncompensated services. 42 CFR 124.505(a)(1)
(1988). This policy simply reflects the long-standing Department view
of the uncompensated services program as a program of last resort,
designed to serve persons who have no source of payment, such as
Medicaid or private insurance, for medical care.
This policy has created major compliance problems for many Hill-
Burton-obligated nursing homes. HHS has determined that, of the 287
nursing homes with outstanding uncompensated services obligations under
the general compliance standards of the regulations, 243 have deficits;
the majority of these have received no uncompensated services credit.
These deficits persist despite many attempts by HHS to provide
technical assistance to nursing homes to bring them into compliance.
The fundamental problem is that, in most of these nursing homes, the
only individuals who meet the income-eligibility requirements for
receipt of uncompensated services are also covered by their State's
Medicaid program; hence, they are by definition ineligible for
uncompensated services under Sec. 124.505(a)(1). Thus, in States in
which the Medicaid eligibility limits exceed the Hill-Burton
eligibility limits and which cover most or all medical services,
nursing homes are in the unenviable position of being chronically
unable to fulfill their uncompensated services obligations.
HHS has been aware of this structural problem for some time, and
established a task force to analyze nursing home compliance issues and
develop strategies for dealing with compliance problems. The task force
found that facilities in States which have comprehensive Medicaid
coverage for nursing home services have the most difficulty finding
eligible individuals to whom they can provide uncompensated services.
Thus, the task force recommended increasing the eligibility limit for
uncompensated services to three times the poverty level to increase the
pool of individuals potentially eligible for uncompensated services.
HHS then surveyed the regional offices of the Health Care Financing
Administration, which administers the Medicaid program, to determine
whether such a change in income eligibility would permit more nursing
homes to meet their uncompensated services obligations by setting Hill-
Burton income eligibility limits above Medicaid income eligibility
limits. This survey indicated that 31 States and the District of
Columbia have medically needy programs under which Medicaid covers all
individuals who have annual incomes that are less than the cost of the
nursing home services received and less than the Medicaid resource
eligibility limits (usually, $2,000). Based on an average annual
nursing home cost of $31,000 in 1992, an increase in the Hill-Burton
income eligibility limit to three times the poverty level (to about
$20,000) will not significantly increase the opportunity for facilities
in these States to meet their uncompensated services obligations, since
patient income is irrelevant unless it exceeds nursing home costs.
However, even in these States, to the extent nursing home patients
receive services not covered by Medicaid or are ineligible for Medicaid
because they have resources exceeding the Medicaid limits, raising the
Hill-Burton income eligibility limit would increase the pool of
individuals eligible for uncompensated services. Moreover, in 16 of the
remaining 19 States, a raise in the Hill-Burton individual income
eligibility limit from the current $13,940 (double the poverty level)
to the proposed $20,910 would result in a Hill-Burton income
eligibility limit substantially above the Medicaid income eligibility
limit of $15,192 that applies in these States. An increase in the
income eligibility limit to three times the poverty level for nursing
home services would thus greatly increase the pool of Hill-Burton
eligibles in those States, and it seems likely that such a change would
accordingly increase the opportunity to fulfill the Hill-Burton
obligation for all 69 nursing homes in those States. While the
remaining three States have Medicaid income eligibility limits that are
below the current upper Hill-Burton individual income eligibility limit
of $13,940, such a change would obviously increase the pool of Hill-
Burton eligible individuals in those States as well. Thus, to the
extent the compliance problems of nursing homes in those States are a
function of a lack of eligible patients, an increase in the income
eligibility limit to three times the poverty level for nursing home
services would similarly assist them.
The rules proposed below accordingly would establish a third income
eligibility level (Category C) for nursing home services only. See,
proposed Sec. 124.505(a)(2)(iii). Category C individuals would be those
individuals whose annual incomes are greater than two times, but do not
exceed three times, the poverty level. The regulations already define
which facilities are ``nursing homes'' within the scope of the
regulation. See, Sec. 124.502(h).
HHS has considered, but rejected, even higher income eligibility
limits. The higher that income eligibility limits are raised, the
farther the program gets from targeting services to persons unable to
pay. On the other hand, given the usual cost of nursing home care, it
is apparent that individuals in need of such care are still unable to
pay for the cost of that care, even if they have annual incomes of
three times the poverty level. Thus, HHS believes that the proposed
regulation represents a reasonable approach to reducing compliance
problems for nursing homes and retaining the program's traditional
focus on persons unable to pay.
While HHS recognizes that this proposal on its face does not
resolve all nursing home compliance problems, it also does not expect
the proposed change to operate in a vacuum. Rather, HHS currently has
under consideration another compliance alternative, published in the
Federal Register on November 4, 1993, as a Notice of Proposed
Rulemaking, designed in part to help alleviate the compliance problems
of certain private, nonprofit nursing homes. The proposed compliance
alternative would exempt qualifying facilities from the procedural
requirements of the general regulations. Qualifying facilities are
those private, nonprofit facilities that either receive substantial
philanthropic support and provide free or reduced cost services, or do
not collect monies directly from persons unable to pay. The combination
of these two proposed rules should allow all of the 287 Hill-Burton
obligated nursing homes to satisfy their uncompensated services
obligations and reduce their uncompensated services deficits more
easily. In light of this, it appears prudent to minimize the change in
the underlying program until it is seen what effect the two program
alterations currently under consideration have in resolving the
compliance problems of nursing homes.
The rules proposed below also set out technical and conforming
amendments to other sections. The only one of note is proposed
Sec. 124.506(a)(1)(v). That section would provide that if a nursing
home provides services on a reduced charge basis to both Category B and
Category C individuals, it may not employ a discount method that gives
Category C individuals greater discounts than those given to Category B
individuals. This policy is simply a logical extension of a similar
policy that already exists with respect to Category A and Category B
individuals.
The Secretary solicits comments on the viability and advisability
of the above proposal. If there are suggestions for alternative
approaches to addressing the problems of nursing home compliance, the
Secretary is interested in receiving those as well.
Economic Impact
Executive Order 12866 requires that all regulations reflect
consideration of alternatives, of costs, of benefits, of incentives, of
equity, and of available information. Regulations must meet certain
standards, such as avoiding unnecessary burden. Regulations which are
``significant'' because of cost, adverse effects on the economy,
inconsistency with other agency actions, effects on the budget, or
novel legal or policy issues, require special analysis. The Regulatory
Flexibility Act requires that we analyze regulatory proposals to
determine whether they create a significant impact on a substantial
number of small entities (for purposes of the Act, all nursing home are
categorized by HHS as small entities).
The Department believes that the proposed rule change in this
regulation is beneficial. This regulation does not have an impact that
exceeds $100 million for nursing homes. While it will allow nursing
homes to qualify more individuals for uncompensated services and thus
reduce facility deficits, it will not alter existing procedural and
reporting requirements for obligated facilities. For these reasons, we
do not believe this rule necessitates an economic analysis. Therefore,
in accordance with the Regulatory Flexibility Act of 1980, the
Secretary certifies that this regulation will not have a significant
impact on a substantial number of small entities.
Pursuant to Executive Order 12866, the Office of Management and
Budget (OMB) has reviewed this rule. The Department requests comments
on whether there are any aspects of this proposed rule which can be
improved to make nursing home compliance more effective, more
equitable, or less costly.
Paperwork Reduction Act of 1980
This proposed rule contains no information collection or reporting
requirements which are subject to review by OMB under the Paperwork
Reduction Act of 1980. Although this rule discusses the requirement for
developing and submitting affirmative action plans, the requirement is
not new and has been previously approved under OMB control number 0915-
0077.
List of Subjects in 42 CFR Part 124
Grant programs--health; Health facilities; Loan programs--health;
Low income persons.
Dated: November 12, 1993.
Philip R. Lee,
Assistant Secretary for Health.
Approved: February 22, 1994.
Donna E. Shalala,
Secretary.
For reasons set out in the preamble, subpart F of 42 CFR part 124
is proposed to be amended as follows:
Subpart F--Reasonable Volume of Uncompensated Services to Persons
Unable To Pay
1. The authority citation for 42 CFR part 124, subpart F, continues
to read as follows:
Authority: 42 U.S.C. 216; 42 U.S.C. 300s(3).
2. The first two sentences of Sec. 124.503(b)(4) are revised to
read as follows:
Sec. 124.503 Compliance level.
* * * * *
(b) * * *
(4) Affirmative action plan for precluding future deficits. Except
where a facility reports to the Secretary in accordance with
Sec. 124.509(a)(2)(iii) that it was financially unable to provide
uncompensated services at the annual compliance level, a facility that
fails to meet its annual compliance level in any fiscal year shall, in
the following year, develop and implement a plan of action that can
reasonably be expected to enable the facility to meet its annual
compliance level. Such actions may include special notice to the
community through newspaper, radio, and television, or expansion of
service to Category B, or, with respect to nursing homes, Category C,
persons. * * *
* * * * *
3. Section 124.505 is amended by revising paragraph (a)(2)(ii) and
by adding paragraph (a)(2)(iii) to read as follows:
Sec. 124.505 Eligibility criteria.
(a) * * *
(2) * * *
(ii) Category B--A person whose annual individual or family income,
as applicable, is greater than, but not more than twice, the poverty
line issued by the Secretary pursuant to 42 U.S.C. 9902 that applies to
the individual or family. If persons in Category B are included in the
allocation plan, the facility shall provide uncompensated services to
these persons without charge, or in accordance with a schedule of
charges as specified in the allocation plan.
(iii) Category C--With respect only to persons seeking or receiving
nursing home services, a person whose annual or family income, as
applicable, is more than twice but not greater than three times the
poverty line issued by the Secretary pursuant to 42 U.S.C. 9902 that
applies to the individual or family. If persons in Category C are
included in the allocation plan, the facility shall provide
uncompensated services to these persons without charge, or in
accordance with a schedule of charges as specified in the allocation
plan; and
* * * * *
4. Section 124.506 is amended by revising paragraph (a)(1)(iii)
through (a)(1)(v) and the first sentence of paragraph (b)(2) and by
adding paragraph (a)(1)(vi) to read as follows:
Sec. 124.506 Allocation of services; plan requirement.
(a)(1) * * *
(iii) State whether Category B or, in the case of nursing homes
only, Category C persons will be provided uncompensated services, and
if so, whether the services will be available without charge or at a
reduced charge;
(iv) If services will be made available to Category B persons at a
reduced charge, specify the method for reducing charges, and provide
that the method will be applicable to all persons in Category B;
(v) With respect to nursing homes only, if services will be made
available to Category C persons at a reduced charge, specify the method
for reducing charges, provided that such method may not result in
greater reductions than those afforded to Category B persons, and
provide that this method will be applicable to all persons in Category
C; and
(vi) Provide that the facility will provide uncompensated services
to all persons eligible under the plan who request uncompensated
services.
(b)(1) * * *
(2) If no plan was previously published in accordance with
paragraph (a)(2) of this section, the facility must provide
uncompensated services without charge to all applicants in Category A
and Category B, and, with respect to nursing homes, Category C, who
request uncompensated services in the facility.
* * * * *
[FR Doc. 94-7727 Filed 4-1-94; 8:45 am]
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