[Federal Register Volume 61, Number 93 (Monday, May 13, 1996)]
[Rules and Regulations]
[Pages 21969-21973]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11990]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Part 412
[BPD-856-FC]
Medicare and Medicaid Program; Criteria for a Rural Hospital To
Be Designated as an Essential Access Community Hospital (EACH)
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule with comment period.
-----------------------------------------------------------------------
SUMMARY: This final rule revises the criteria that a rural hospital
must meet to be designated as an Essential Access Community Hospital
(EACH). The revised criteria permit HCFA to designate a hospital as an
EACH if the hospital cannot be designated as an EACH by the State only
because it has fewer than 75 beds and is located 35 miles or less from
another hospital. Hospitals in rural areas that are designated as EACHs
by HCFA are treated, for payment purposes, as sole community hospitals.
The revised criteria are designed to facilitate development of
network affiliations between rural EACHs and small rural facilities,
known as Rural Primary Care Hospitals (RPCHs). The revisions would
affect only hospitals located in rural areas of the States of
California, Colorado, Kansas, South Dakota, New York, West Virginia,
and North Carolina, or in an adjacent State.
DATES: Effective Date: This regulation is effective May 13, 1996.
Comment Period: Comments will be considered if received at the
appropriate address, as provided below, no later than 5 p.m. on July
12, 1996.
ADDRESSES: Mail written comments (one original and three copies) to the
following address: Health Care Financing Administration, Department of
Health and Human Services, Attention: BPD-856-FC, P.O. Box 7517,
Baltimore, MD 21207-0517.
If you prefer, you may deliver your written comments (one original
and three copies) to one of the following addresses:
Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue SW.,
Washington, DC 20201, or
Room C5-09-26, Central Building, 7500 Security Boulevard, Baltimore, MD
21244-1850.
Because of staffing and resource limitations, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code BPD-856-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: Health Care Financing Administration,
Office of Financial and Human Resources, Management Planning and
Analysis Staff, Room C2-26-17, 7500 Security Boulevard, Baltimore, MD
21244-1850.
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) 512-1800 or by faxing to (202) 512-
2250. The cost for each copy is $8.00. 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: George Morey, (410) 786-4653.
SUPPLEMENTARY INFORMATION:
I. Background
On May 26, 1993, we published in the Federal Register (58 FR 30630)
a final rule to implement the Essential Access Community Hospital
(EACH) Program. That program, which is authorized by
[[Page 21970]]
section 1820 of the Social Security Act (the Act), is intended to
promote regionalization of health services in rural areas, improve
access to hospital and other health services for rural residents, and
enhance the provision of emergency and other transportation services
related to health care. The program is not national in scope, but is
limited to the States (not to exceed seven) that have been given
Federal grants for their activities in support of it. The States that
have received such grants are California, Colorado, Kansas, South
Dakota, New York, West Virginia, and North Carolina.
An important component of the EACH program is the rural health
network, which is an organization made up of at least one Rural Primary
Care Hospital (RPCH), and at least one EACH, regional referral center,
or hospital located in an urban area that meets the criteria for
classification as a regional referral center. An RPCH is a small,
limited-service facility that is located in a rural area and furnishes
outpatient and short-term inpatient care needed to stabilize a patient
before discharge or transfer to another facility for further care. An
EACH is a larger, full-service hospital that has agreed to provide
emergency and medical backup services to the RPCH (or RPCHs)
participating in its network. Network membership is optional for RPCHs,
but a hospital cannot be designated as an EACH unless it has a network
agreement. EACHs in rural areas are treated for Medicare payment
purposes as sole community hospitals, which typically entitles the
facilities to a higher level of payment for their inpatient services
than they would otherwise receive.
As is the case with any other relationships between providers or
between providers and other persons or entities, any arrangements are
subject to the provisions of the Medicare and Medicaid anti-kickback
statute (section 1128B(b) of the Social Security Act, 42 U.S.C. 1320a-
7b(b)). That statute prohibits knowingly and willfully offering,
paying, soliciting or receiving remuneration in order to induce
business reimbursed under the Medicare, Medicaid or other State health
care programs. Prohibited conduct includes the transferring of anything
of value intended to induce referrals of patients, as well as
soliciting or receiving remuneration in return for the purchasing,
leasing, ordering or arranging for any good, facility, service or item
paid for by Medicare, Medicaid, or other State health care program.
II. Criteria for Designation of EACHs
Under section 1820(I)(1)(A) of the Act, HCFA can designate a
hospital as an EACH only if it meets specific requirements and is first
designated as such by the grant State. The criteria for State
designation are set forth in section 1820(e). Under these criteria, a
State may designate a rural facility as an EACH only if the hospital--
Is located in a rural area, as defined in section
1886(d)(2)(D);
Is located more than 35 miles from any hospital that--
+ Has been designated as an essential access community hospital;
+ Is classified by the Secretary as a rural referral center under
section 1886(d)(5)(C); or
+ Meets such other criteria relating to geographic location as the
State may impose with the approval of the Secretary;
Has at least 75 inpatient beds or is located more than 35
miles from any other hospital;
Has in effect an agreement to provide emergency and
medical backup services to rural primary care hospitals participating
in the rural health network of which it is a member and throughout its
service area;
Has in effect an agreement, with each rural primary care
hospital participating in the rural health network of which it is a
member, to accept patients transferred from such primary care hospital,
to receive data from and transmit data to such primary care hospital,
and to provide staff privileges to physicians providing care at such
primary care hospital; and
Meets any other requirements imposed by the State with the
approval of the Secretary.
Section 1820 also contains a provision that allows the Secretary
some flexibility in designating hospitals as EACHs even though they do
not meet the general bed size and geographic location criteria. Section
1820(i)(1)(B) of the Act allows the Secretary to designate a hospital
as an EACH if it is not eligible for designation by the State only
because it does not have 75 or more beds, or is not located more than
35 miles from another hospital. While we were preparing the final rule
published May 26, 1993 (58 FR 30629), we received comments suggesting
that we use this authority to designate facilities as EACHs, even
though they do not meet the bed size and geographic criteria specified
in section 1820(e)(2). We considered these comments carefully but
decided to exercise the authority only with respect to hospitals that
have fewer than 75 beds and are located within 35 miles of another
hospital, but are not located within 35 miles of any hospital having 75
or more beds. Where such hospitals meet other applicable criteria and
are recommended by the State as the EACH member of a proposed network,
HCFA will designate them as EACHs. Regulations permitting such
designations are set forth at 42 CFR 412.109(c)(2) (ii) and (iii).
Based on our further experience in administering the EACH program,
we now believe that in order to increase access to hospital services in
rural areas, there may be other circumstances in which it would be
appropriate to exercise our section 1820(i)(1)(B) authority for rural
hospitals. For example, a full-service hospital that meets other
requirements to be the EACH member of a network may be located within
35 miles of another hospital that has 75 or more beds. In this
situation the hospital could not, under existing regulations, be
designated as an EACH, even if it is the only hospital that is willing
and able to furnish the rural health network emergency and medical
backup services available from EACHs that might be needed to permit a
third facility to operate successfully as an RPCH, thus preserving
access to care in its area. Under these circumstances, section
1820(i)(1)(B) authority may appropriately be exercised to permit
designation of an EACH, thus allowing the small facility to be
converted successfully to an RPCH and to continue providing services to
its patients.
To allow for designation of facilities as EACHs in these
circumstances while not defeating the purpose of the basic statutory
requirements for EACH designations, we are revising Sec. 412.109(c) of
our regulations to specify additional criteria under which designations
by HCFA will be made. As revised, the regulations allow a hospital
located 35 miles or less from another hospital to be designated as an
EACH only if--
The hospital is not eligible for State designation as an
EACH solely because it has fewer than 75 beds and is located 35 miles
or less from any other hospital; and
The hospital is located more than 35 miles from the
nearest hospital having 75 or more beds, and is recommended by the
State for designation as the EACH member of a proposed network; or
The following criteria are met--
--The hospital seeking EACH designation has entered into a network
agreement under 42 CFR
[[Page 21971]]
485.603 with a facility that the State has designated as an RPCH, and
the hospital designated as an RPCH by the State does not have a network
agreement with any existing EACH;
--The facility that the State has designated as an RPCH, and that has
entered into the network agreement described above, is located more
than 35 miles from any other hospital having 75 or more inpatient beds;
--The distance between the facility that the State has designated as an
RPCH and the hospital seeking designation as an EACH is less than the
distance between the facility that the State has designated as an RPCH
and the nearest hospital that has 75 or more inpatient beds or is
designated as an EACH; and
--The State certifies to HCFA that--
+ The rural health network emergency and medical backup services
actually being provided by the hospital seeking EACH designation are
essential to the continued existence of the facility as an RPCH; and
+ The existence of the facility as an RPCH is needed to ensure
access to health care services in the area of the State served by the
facility that the State has designated as an RPCH.
The criteria described above are designed to ensure that the
section 1820(i)(1)(B) authority is exercised only in appropriate cases.
First, there must be a network agreement in effect between the hospital
seeking EACH designation and a particular facility that the State has
designated an RPCH, and the RPCH must not have entered into any network
agreement with any other hospital that is currently an EACH. This
criterion is needed to ensure that there is a valid network agreement
linking the two facilities, and that only one hospital is able to
achieve EACH designation based on its agreement with a particular RPCH.
In addition, a prospective EACH will not be able to qualify if the RPCH
with which it has entered into a network agreement is within 35 miles
of any other hospital having 75 or more inpatient beds or is designated
as an EACH. We also are requiring that the hospital seeking designation
as an EACH under these criteria be closer to the RPCH than the nearest
hospital that has 75 or more beds or is designated as an EACH. We are
including these provisions because we do not wish to encourage EACH
designations that are inappropriate in terms of the location of the
EACH or RPCH relative to other facilities.
In applying these criteria, we will consider only a hospital's
location relative to other facilities that participate in Medicare as
general hospitals (that is, under the criteria in 42 CFR 482.1 through
482.57). We will not take into account the location of nonparticipating
hospitals or of those that participate in Medicare as psychiatric
hospitals, since those hospitals would not be appropriate referral
sites for most Medicare patients following care at an RPCH.
In addition, we require that the State make certain certifications
to HCFA. These are--
That the rural health network and emergency medical backup
services actually being provided by the hospital seeking EACH
designation are essential to the continued existence of the facility as
an RPCH; and
That the RPCH is needed to ensure access to health care
services in its service area.
We have decided not to prescribe specific criteria for the State to
follow in determining what constitutes a desirable level of patient
access to care in rural areas, or whether the assistance of the EACH is
needed to help ensure that a certain level of access is maintained. We
believe each State should develop its own criteria and procedures for
making these determinations, based on local and Statewide
characteristics such as population density, travel conditions, existing
referral patterns, availability of health care professionals, and other
factors that affect access.
We are including a requirement under which EACH designation made
under our revised regulation will remain in effect only as long as the
criteria in Sec. 412.109(c)(2)(D)(ii) continue to be met. Thus, for
EACH designation to continue, the EACH must continue to carry out its
network responsibilities with respect to the RPCH, and the continued
existence of the facility as an RPCH must remain necessary to ensure
patient access to care in the facility's service area. If we determine
that these criteria are no longer met (because, for example, another
source of care becomes available to patients in the area of the RPCH),
or if a false certification was made, we will terminate the EACH status
of the hospital prospectively, effective with discharges occurring on
or after 30 days after the date of the determination. We are
redesignating Sec. 412.109(f) as new paragraph (g), and adding a new
paragraph (f) that specifies this requirement.
Although we expect that States will notify us promptly of any
changes in hospitals' activities and will not make false or inaccurate
certifications, we reserve the right to review any information that
calls the accuracy of a certification into question, and to terminate a
hospital's EACH designation if we find factual information sufficient
to convince us that the designation is no longer appropriate. The
hospital's Medicare participation would not be affected by this change
but, as of the effective date of the change, it would no longer be paid
by Medicare as a sole community hospital. As in the case of any other
determination that the hospital does not meet the criteria for EACH
designation or that a hospital's EACH designation should be terminated,
the determination would be subject to review under the provider appeals
regulations at 42 CFR Part 405, Subpart R.
We note that a separate provision of the law and regulations allows
a hospital to be designated as an EACH only if it has in effect an
agreement for acceptance of patients and sharing of patient data with
each RPCH in the network of which it is a member (section 1820(e)(4) of
the Act and the implementing regulations at 42 CFR 412.109(d)(3)).
Since an agreement of this kind can be made only with a facility
participating in Medicare as an RPCH, the effect of this requirement is
to allow EACH status for any hospital to be effective no earlier than
the first date of participation of an affiliated RPCH. This provision
is not subject to waiver under section 1820(I)(1)(B), and thus is not
affected by this final rule.
III. Other Required Information
A. Paperwork Reduction Act
Under the Paperwork Reduction Act of 1995, agencies are required to
provide 60 days' notice in the Federal Register to solicit public
comments before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3504(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment in the following issues:
Whether the information collection is necessary and useful
to carry out the proper functions of the agency;
The accuracy of the agency's estimate of the information
collection burden;
The quality, utility, and clarity of the information to be
collected; and
Recommendation to minimize the information collection
burden on the affected public, including automated collection
technique.
Following is a discussion of these requirements:
Under Sec. 412.109(c), a hospital can be considered for HCFA
designation as an
[[Page 21972]]
EACH, even though it does not meet the requirements for State
designation as set forth in Sec. 412.109(d), if the State makes certain
certifications to HCFA. These include the importance of the EACH to the
continued existence of the facility as an RPCH, by providing emergency
and medical backup services with respect to the RPCH under its network
agreement, and the importance of RPCH ongoing operation to access to
care for residents of its service area. While the regulations do not
require direct reporting of information to HCFA, we expect that as a
practical matter the prospective EACH will be required to furnish the
State with some information in order to support the second item of the
certification, and that the prospective RPCH will need to supply the
State with information in support of the other items.
Public reporting burden for this collection of information is
estimated to be 2 hours for the hospital's first year of operation as
an EACH and one hour for each subsequent year of operation as an EACH.
Existing regulations require EACHs to furnish HCFA with information
regarding their agreements with RPCHs, and we believe very little
additional time will be required to supply the State with similar
information.
Public reporting burden for the RPCH for this collection of
information is estimated to be 6 hours for the hospital's first year of
operation as an RPCH and 2 hours for each subsequent year of operation
as an RPCH. These information collection and record keeping
requirements are not effective until they have been approved by OMB. A
notice will be published in the Federal Register when approval is
obtained. Organizations and individuals desiring to submit comments on
these information collection and record keeping requirements should
direct them to the Health Care Financing Administration, Office of
Financial and Human Resources, Management Planning and Analysis Staff,
Room C2-26-17, 7500 Security Boulevard, Baltimore, MD 21244-1850.
B. Regulatory Flexibility Analysis
We generally prepare an initial regulatory flexibility analysis
that is consistent with the Regulatory Flexibility Act (RFA)(5 U.S.C.
601 through 612) unless the we certify that the final rule will not
have a significant economic impact on a substantial number of small
entities. For purposes of the RFA, we consider all hospitals to be
small entities. Individuals and States are not included in the
definition of a small entity.
Also, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis for any final rule that may have a
significant impact on a substantial number of small rural hospitals.
Such an 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 a Metropolitan
Statistical Area and has fewer than 50 beds.
We have determined, and certify, that these regulations will not
have a significant impact on a substantial number of small rural
hospitals. As noted earlier, EACH designation is available only in
seven States and in the States adjacent to those seven States.
Moreover, only a few prospective EACHs would be so located relative to
other hospitals that they would be affected by the changes in this
rule. Therefore, we have not prepared a regulatory flexibility analysis
or an analysis of the effect on small rural hospitals.
In accordance with the provisions of Executive Order 12866, this
regulation was not reviewed by the Office of Management and Budget.
Under the provisions of Public Law 104-121, we have determined that
the rule is not a major rule.
C. Waiver of Notice of Proposed Rulemaking and 30-Day Delay in the
Effective Date
We ordinarily publish a notice of proposed rulemaking for a rule to
provide a period for public comment. However, we may waive that
procedure if we find good cause that prior notice and comment are
impractical, unnecessary, or contrary to public interest. We find good
cause to implement this rule as a final rule because the delay involved
in prior notice and comment procedures for the new provisions of this
rule would be contrary to the public interest.
This rule does not impose an additional burden or obligation on any
hospital or community; on the contrary, it relaxes a restriction on the
designation of certain rural hospitals as EACHs. We expect that the
resulting assistance will enable the small facilities to avoid closure
and to continue to provide needed services to their communities. In
view of the precarious financial status of many small rural hospitals,
and in consideration of the likelihood that Medicare beneficiaries and
other patients served by these facilities would be left without access
to care if they closed, we believe it is necessary to implement this
change as soon as possible. Thus, we find that the delay involved in
prior notice and comment would be contrary to the public interest. We
have concluded that it is appropriate to implement the revisions to
Sec. 412.109 as final in this instance.
We also normally provide a delay of 30 days in the effective date
of a regulation. However, if adherence to this procedure would be
impractical, unnecessary, or contrary to public interest, we may waive
the delay in the effective date. We may also waive the delay in the
case of a rule that grants an exemption or relieves a restriction. We
find good cause to waive the usual 30-day delay in this instance. As
explained above, it is in the public interest for the transition from
hospital to RPCH to be made by many small facilities as soon as
possible, so as to avert insolvency and complete closure. A 30-day
delay in the effective date would only postpone unnecessarily the start
of the transition for many facilities, and place them at greater risk.
Therefore, we believe that a 30-day delay in the effective date for
this provision would be contrary to the public interest, and we find
good cause to waive the usual 30-day delay in the effective date.
List of Subjects in 42 CFR Part 412
Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, Reporting and record keeping requirements.
42 CFR part 412 is amended as set forth below:
PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
1. The authority citation for part 412 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
Subpart G--Special Treatment of Certain Facilities Under the
Prospective Payment System for Inpatient Operating Costs
2. In Sec. 412.109, paragraph (c) is revised, paragraph (f) is
redesignated as paragraph (g), and a new paragraph (f) is added to read
as follows:
Sec. 412.109 Special treatment: Essential access community hospitals
(EACHs).
* * * * *
(c) Criteria for HCFA designation.
(1) HCFA designates a hospital as an EACH if the hospital is
located in a State that has received a grant under section 1820(a)(1)
of the Act or in an adjacent State and is designated as an
[[Page 21973]]
EACH by the State that has received the grant.
(2) HCFA designates a hospital as an EACH if--
(i) The hospital--
(A) Is not eligible for State designation as an EACH solely because
the hospital has fewer than 75 inpatient beds and is located 35 miles
or less from any other hospital; and
(B) Is located more than 35 miles from the nearest hospital having
75 or more inpatient beds, and is recommended by the State for
designation as the EACH member of a proposed network; or
(ii) The following criteria are met--
(A) The hospital seeking EACH designation has entered into a
network agreement under Sec. 485.603 of this chapter with a facility
that the State has designated as an RPCH, and the hospital designated
as an RPCH by the State does not have a network agreement with any
existing EACH;
(B) The facility that the State has designated as an RPCH, and that
has entered into the network agreement described in paragraph
(c)(2)(ii)(A) of this section, is located more than 35 miles from any
other hospital having 75 or more inpatient beds;
(C) The distance between the facility that the State has designated
as an RPCH and the hospital seeking designation as an EACH is less than
the distance between the facility that the State has designated as an
RPCH and the nearest hospital that has 75 or more inpatient beds or is
designated as an EACH;
(D) The State certifies to HCFA that--
(1) The rural health network emergency and medical backup services
actually being provided by the hospital seeking EACH designation are
essential to the continued existence of the facility as a RPCH; and
(2) The existence of the facility as an RPCH is needed to ensure
access to health care services in the area of the State served by the
RPCH.
For purposes of this paragraph (c)(2)(ii), the location of a
hospital will not be considered unless the hospital participates in
Medicare under Secs. 482.1 through 482.57 of this chapter.
* * * * *
(f) Termination of EACH designation under paragraph (c)(2)(ii)(D).
If HCFA determines that the criteria in paragraph (c)(2)(ii)(D) of this
section are no longer met with respect to a hospital HCFA has
designated as an EACH under that paragraph, HCFA will terminate the
EACH designation of the hospital, effective with discharges occurring
on or after 30 days after the date of the determination.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance, and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: May 6, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
Dated: May 8, 1996.
Donna E. Shalala,
Secretary.
[FR Doc. 96-11990 Filed 5-9-96; 10:26 am]
BILLING CODE 4120-01-P