[Federal Register Volume 61, Number 122 (Monday, June 24, 1996)]
[Rules and Regulations]
[Pages 32346-32351]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-13521]



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[[Page 32347]]

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 405, 417, 431, 473, and 498

[BPD-704-FC]


Medicare and Medicaid Programs; Provider Appeals: Technical 
Amendments

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

ACTION: Final rule with comment period.

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SUMMARY: This rule amends the HCFA regulations pertaining to appeals 
procedures available to providers and suppliers dissatisfied with 
determinations that affect their participation in Medicare or Medicaid.
    These are technical amendments that simplify, clarify, and update 
existing rules without substantive change.

DATES: Effective date: July 24, 1996.
    Comment date: August 23, 1996.

ADDRESSES: Please mail written comments (an original and three copies) 
to the following address: Health Care Financing Administration, 
Department of Health and Human Services, Attention: BPD-704-FC, P.O. 
Box 26676, Baltimore, MD 21207,
    If you prefer, you may deliver your comments (original and three 
copies) to either of the following addresses:

 Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW, 
Washington, DC 20201
Room C5-09-26 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-704-FC. Comments received timely will be available for 
public inspection as they are received, generally beginning 
approximately 3 weeks after publication of the document, in Room 309-G 
of the Department's offices at 200 Independence Avenue, SW., 
Washington, DC, Monday through Friday of each week from 8:30 a.m. to 5 
p.m. (phone: (202) 690-7890).

FOR FURTHER INFORMATION CONTACT: Luisa V. Iglesias, (202) 690-6383.

SUPPLEMENTARY INFORMATION:

A. Background

    Part 498 of the HCFA regulations sets forth the rules for 
administrative and judicial review of Federal determinations that 
affect participation in Medicare and, in some instances, in Medicaid. 
Part 431 of those regulations sets forth the appeals procedures for 
State determinations that affect participation in Medicaid.
    A final rule identified as HSQ-156-F (Survey, Certification, and 
Enforcement for Skilled Nursing Facilities and Nursing Facilities), 
published on November 10, 1994 (59 FR 56116) amended both of those 
parts. The changes made by HSQ-156-F implement statutory amendments 
which provide that, for long-term care facilities with deficiencies, 
the State must establish remedies to be imposed in lieu of, or in 
addition to, termination of the facility's provider agreement.

B. Provisions of This Rule

    This rule makes the following technical and editorial changes:
    1. Makes nomenclature changes throughout chapter IV to reflect the 
fact that review of a hearing decision is now the responsibility of the 
Departmental Appeals Board, not the Appeals Council.
    2. Simplifies and clarifies Secs. 431.151 and 431.153 of the 
Medicaid appeals regulations, primarily by putting related content 
together and by providing descriptive headings for more paragraphs and 
paragraph subdivisions.
    3. Updates Sec. 498.1 (Statutory basis) to conform to changes in 
the applicable statutory provisions (for example, section 1866(h) 
rather than 1869(c), and section 1128A instead of previously specified 
subsections of section 1866(b)(2)). This requires removal of paragraph 
(e). Paragraph (f) is removed because there have been changes in 
delegations of authority and, since those changes are likely to 
continue, it is not possible to ensure that the paragraph could always 
be kept up to date.
    4. Amends Sec. 498.2 (Definitions) to substitute a definition of 
``Departmental Appeals Board'' for the definition of ``Appeals 
Council'', make the conforming nomenclature changes, and amend the 
definition of ``provider'' to remove reference to ``a nursing facility 
(NF) or intermediate care facility for the mentally retarded (ICF/
MR)''. These Medicaid providers are not subject to all part 498 
provisions and are appropriately covered in the Medicaid rules and as 
indicated under items 6 and 7, below.
    5. Expands Sec. 498.3 (Scope and applicability) to identify and 
give the location of other rules that make the part 498 provisions 
applicable to certain determinations that do not affect participation 
in Medicare.
    6. Amends Sec. 498.5 (Appeal rights) to specify the appeal rights 
of NFs.
    7. Amends Secs. 498.60 (Conduct of hearing) and 498.61 (Evidence) 
to make clear that limits on the scope of review in appeals from civil 
money penalties affect the conduct of the hearing.
    8. Amends Sec. 498.74 (Administrative Law Judge's decision) to make 
the nomenclature changes and to specify that, for civil money 
penalties, judicial review must be sought in a United States Court of 
Appeals (rather than in a United States District Court, as is the case 
for other alternative sanctions).
    9. Revises Sec. 498.90 (Effect of Departmental Appeals Board 
decision) to simplify and clarify the policy. This requires 
reorganization and moving recently added content to a more appropriate 
location, the section on appeal rights, specifically current paragraph 
(c) and new paragraph (k) of Sec. 498.5.

C. Waiver of Proposed Rulemaking

    The changes made by this rule are technical and editorial in 
nature. They simplify, clarify, and update certain existing regulations 
without substantive change. They have no impact on program costs.
    Accordingly, we find that prior notice and opportunity for public 
comment are unnecessary and contrary to the public interest, and that, 
therefore, there is good cause to waive proposed rulemaking procedures.
    However, as previously indicated, we will consider timely comments 
from anyone who believes that, in making the technical and editorial 
changes, we have unintentionally altered the substance. Although we 
cannot respond to comments individually, if we change these rules as a 
result of comments, we will discuss all timely comments in the preamble 
to the revised rules.

D. Paperwork Reduction Act

    This rule contains no information collection requirements subject 
to review by the Office of Management and Budget under the Paperwork 
Reduction Act.

E. Regulatory Impact Statement

    Consistent with the Regulatory Flexibility Act (RFA) and section 
1102(b) of the Social Security Act, we prepare a regulatory flexibility 
analysis for each regulation unless we can certify that the particular 
regulation will not have a significant economic impact on a substantial 
number of small entities, or a significant impact on the operation of a 
substantial number of small rural hospitals.
    The RFA defines ``small entity'' as a small business, a nonprofit 
enterprise, or a governmental jurisdiction (such as

[[Page 32348]]

a county, city, or township) with a population of less than 50,000. We 
also consider all providers and suppliers of services to be small 
entities. For purposes of section 1102(b) of the Act, we define small 
rural hospital as a hospital that has fewer than 50 beds, and is not 
located in a Metropolitan Statistical Area.
    We have not prepared a regulatory flexibility analysis because we 
have determined, and we certify, that this rule will not have a 
significant impact on a substantial number of small entities or a 
significant impact on the operation of a substantial number of small 
rural hospitals.
    In accordance with the provisions of Executive Order 12866, this 
rule was not reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 405

    Administrative practice and procedure, Health facilities, Health 
professions, Kidney diseases, Medicare, Reporting and record keeping 
requirements, Rural areas, X-rays

42 CFR Part 417

    Administrative practice and procedure, Grant programs--health, 
Health care, Health facilities Health insurance, Health maintenance 
organizations(HMOs), Loan programs--health, Medicare, Reporting and 
record keeping requirements.

42 CFR Part 431

    Grant programs--health, Health facilities, Medicaid, Privacy, 
Reporting and recordkeeping requirements.

42 CFR Part 473

    Administrative practice and procedure, Health care, Health 
professions, Peer review organizations,(PROs), Reporting and record 
keeping requirements.

42 CFR Part 498

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

    42 CFR Chapter IV is amended as set forth below.

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

    A. Part 405, subpart G is amended as set forth below.
    1. The authority citation for subpart G is revised to read as 
follows:

    Authority: Secs. 1102, 1155, 1869(b), 1871, 1872, and 1879 of 
the Social Security Act (42 U.S.C. 1302, 1320c-4, 1395ff(b), 1395hh, 
1395ii, and 1395pp).


Secs. 405.718a, 405.718c, 405.718e, 405.724, 405.730, 
405.750  [Amended]

    2. In the following sections, ``Appeals Council'' is revised to 
read ``Departmental Appeals Board'' each time it appears: Secs. 405.718 
introductory text, 405.718a(b)(4), 405.718c(a)(2)(ii), 405.718e, 
405.724, 405.730, and 405.750 heading and paragraph (b) introductory 
text.
    B. Part 405, subpart H is amended as set forth below.
    1. The authority citation for subpart H continues to read as 
follows:
    Authority: Secs 1102, 1842(b)(3)(C), 1869(b), and 1871 of the 
Social Security Act (42 U.S.C. 1302, 1395u(b)(3)(C), 1395ff(b), and 
1395hh).


Sec. 405.815  [Amended]

    2. In Sec. 405.815, ``Appeals Council'' is revised to read 
``Departmental Appeals Board''.

PART 417--HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL 
PLANS, AND HEALTH CARE PREPAYMENT PLANS

    C. Part 417 is amended as set forth below.
    1. The authority citation for part 417 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh), Title XIII of the Public Health Service Act 
(42 U.S.C. 300e through 300e-17), and 31 U.S.C. 9701, unless 
otherwise noted.


Secs. 417.634, 417.636, 417.638, 417.830, 417.840  [Amended]

    2. In the following sections, ``Appeals Council'' is revised to 
read ``Departmental Appeals Board'': Secs. 417.634 heading and text, 
417.636 paragraphs (a)(1), and (b) heading and introductory text, 
417.638, 417.830, and 417.840.

PART 431--STATE ORGANIZATION AND GENERAL ADMINISTRATION

    D. Part 431 is amended as set forth below.
    1. The authority citation for part 431 continues to read as 
follows:

    Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 
1302).


Sec. 431.151  [Revised]

    2. Section 431.151 is revised to read as follows:

Subpart D--Appeals Process


Sec. 431.151  Scope and applicability.

    (a) General rules. This subpart sets forth the appeals procedures 
that a State must make available as follows:
    (1) To a nursing facility (NF) that is dissatisfied with a State's 
finding of noncompliance that has resulted in one of the following 
adverse actions:
    (i) Denial or termination of its provider agreement.
    (ii) Imposition of a civil money penalty or other alternative 
remedy.
    (2) To an intermediate care facility for the mentally retarded 
(ICF/MR) that is dissatisfied with a State's finding of noncompliance 
that has resulted in the denial, termination, or nonrenewal of its 
provider agreement.
    (b) Special rules. This subpart also sets forth the special rules 
that apply in particular circumstances, the limitations on the grounds 
for appeal, and the scope of review during a hearing.


Sec. 431.152  [Amended]

    3. In Sec. 431.152, ``Secs. 431.153 through 431.154'' is revised to 
read ``Secs. 431.153 and 431.154''.
    4. Section 431.153 is revised to read as follows:


Sec. 431.153  Evidentiary hearing.

    (a) Right to hearing. Except as provided in paragraph (b) of this 
section, and subject to the provisions of paragraphs (c) through (j) of 
this section, the State must give the facility a full evidentiary 
hearing for any of the actions specified in Sec. 431.151.
    (b) Limit on grounds for appeal. The following are not subject to 
appeal:
    (1) The choice of sanction or remedy.
    (2) The State monitoring remedy.
    (3) The loss of approval for a nurse-aide training program.
    (4) The level of noncompliance found by a State except when a 
favorable final administrative review decision would affect the range 
of civil money penalty amounts the State could collect.
    (c) Notice of deficiencies and impending remedies. The State must 
give the facility a written notice that includes:
    (1) The basis for the decision; and
    (2) A statement of the deficiencies on which the decision was 
based.
    (d) Request for hearing. The facility or its legal representative 
or other authorized official must file written request for hearing 
within 60 days of receipt of the notice of adverse action.
    (e) Special rules: Denial, termination or nonrenewal of provider 
agreement. (1) Appeal by an ICF/MR. If an ICF/MR requests a hearing on 
denial, termination, or nonrenewal of its provider agreement--
    (i) The evidentiary hearing must be completed either before, or 
within 120 days after, the effective date of the adverse action; and
    (ii) If the hearing is made available only after the effective date 
of the

[[Page 32349]]

action, the State must, before that date, offer the ICF/MR an informal 
reconsideration that meets the requirements of Sec. 431.154.
    (2) Appeal by an NF. If an NF requests a hearing on the denial or 
termination of its provider agreement, the request does not delay the 
adverse action and the hearing need not be completed before the 
effective date of the action.
    (f) Special rules: Imposition of remedies. If a State imposes a 
civil money penalty or other remedies on an NF, the following rules 
apply:
    (1) Basic rule. Except as provided in paragraph (f)(2) of this 
section (and notwithstanding any provision of State law), the State 
must impose all remedies timely on the NF, even if the NF requests a 
hearing.
    (2) Exception. The State may not collect a civil money penalty 
until after the 60-day period for request of hearing has elapsed or, if 
the NF requests a hearing, until issuance of a final administrative 
decision that supports imposition of the penalty.
    (g) Special rules: Dually participating facilities. If an NF is 
also participating or seeking to participate in Medicare as an SNF, and 
the basis for the State's denial or termination of participation in 
Medicaid is also a basis for denial or termination of participation in 
Medicare, the State must advise the facility that--
    (1) The appeals procedures specified for Medicare facilities in 
part 498 of this chapter apply; and
    (2) A final decision entered under the Medicare appeals procedures 
is binding for both programs.
    (h) Special rules: Adverse action by HCFA. If HCFA finds that an NF 
is not in substantial compliance and either terminates the NF's 
Medicaid provider agreement or imposes alternative remedies on the NF 
(because HCFA's findings and proposed remedies prevail over those of 
the State in accordance with Sec. 488.452 of this chapter), the NF is 
entitled only to the appeals procedures set forth in part 498 of this 
chapter, instead of the procedures specified in this subpart.
    (i) Required elements of hearing. The hearing must include at least 
the following:
    (1) Opportunity for the facility--
    (i) To appear before an impartial decision-maker to refute the 
finding of noncompliance on which the adverse action was based;
    (ii) To be represented by counsel or other representative; and
    (iii) To be heard directly or through its representative, to call 
witnesses, and to present documentary evidence.
    (2) A written decision by the impartial decision-maker, setting 
forth the reasons for the decision and the evidence on which the 
decision is based.
    (j) Limits on scope of review: Civil money penalty cases. In civil 
money penalty cases--
    (1) The State's finding as to a NF's level of noncompliance must be 
upheld unless it is clearly erroneous; and
    (2) The scope of review is as set forth in Sec. 488.438(e) of this 
chapter.


Sec. 431.154  [Amended]

    5. In Sec. 431.154, the following changes are made:
    a. Paragraph (a) and the designation ``(b)'' are removed.
    b. Paragraphs (b)(1), (b)(2), and (b)(3) are redesignated as 
paragraphs (a), (b), and (c), respectively.

PART 473--RECONSIDERATIONS AND APPEALS

    E. Part 473 is amended as set forth below.
    1. The authority citation for part 473 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

Secs. 473.22, 473.46, 473.48  [Amended]

    2. In the following sections, ``Appeals Council'' is revised to 
read ``Departmental Appeals Board'' each time it appears: 
Secs. 473.22(b)(5), 473.46 heading and paragraphs (a) and (b), 473.48 
paragraphs (b) heading and text, and (c).

PART 498--APPEALS PROCEDURES FOR DETERMINATIONS THAT AFFECT 
PARTICIPATION IN MEDICARE AND FOR DETERMINATIONS THAT AFFECT 
PARTICIPATION OF ICFs/MR AND CERTAIN NFs IN MEDICAID

    F. Part 498 is amended as set forth below.
    1. The authority citation for part 498 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

    2. Nomenclature change.
    a. In the following locations, ``Appeals Council'' is revised to 
read ``Departmental Appeals Board'' wherever it appears:
    498.10(b).
    498.15.
    498.17 heading and paragraph (a).
    498.44 paragraphs (a), (b), and (c).
    498.45(c)(2).
    498.71(b).
    498.76 heading.
    Subpart E heading.
    498.80 heading and text.
    498.82 heading and paragraphs (a)(1) and (a)(2).
    498.83 heading and paragraphs (a) and (c).
    498.85 heading and text.
    498.86 (a).
    498.88 heading and paragraph (a).
    498.95(a).
    Subpart F heading.
    498.100 paragraphs (a), (b)(1), and (b)(2).
    498.102 paragraphs (a) introductory text, and (b)(1), and (b)(2).
    498.103 paragraphs (a), (b)(1), and (b)(2) heading.
    b. In the following locations, ``Council'' is revised to read 
``Board'' wherever it appears:
    498.17 paragraph (b)(1).
    498.76 paragraphs (a) and (c).
    498.82 paragraph (a)(2).
    498.83 paragraph (b) introductory text and paragraphs (b)(4) and 
(d).
    498.86 paragraphs (a), (b), and (d).
    498.88 paragraphs (a) through (e) and paragraph (f) introductory 
text and (f)(1)(i).
    498.95 paragraphs (a) through (c).
    498.100 heading and paragraph (a).
    498.102 paragraph (a)(2)(ii).
    498.103 paragraphs (a) and (b)(2).
    c. In Sec. 498.88(f)(1) introductory text and (f)(2), and in 
Sec. 498.95(a), ``Council's'' is revised to read ``Board's''.
    d. In Sec. 498.17(b)(2), ``council'' is revised to read ``Board''.


Sec. 498.1  [Amended]

    3. In Sec. 498.1, the following changes are made:
    a. In paragraph (a), ``1869(c)'' is revised to read ``1866(h)''.
    b. In paragraph (c), ``section'' is revised to read ``sections'', 
the period is removed, and ``and section 1128(f) provides for hearing 
and judicial review for exclusions.'' is added at the end.
    c. Paragraphs (e) and (f) are removed and reserved.
    d. Paragraphs (g) and (h) are revised, and paragraphs (i), (j) and 
(k) are added, to read as set forth below.


Sec. 498.1 Statutory basis.

* * * * *
    (g) Although Sec. 1866(h) of the Act is silent regarding appeal 
rights for suppliers and practitioners, the rules in this part include 
procedures for review of determinations that affect those two groups.
    (h) Section 1128A(c)(2) of the Act provides that the Secretary may 
not collect a civil money penalty until the affected entity has had 
notice and opportunity for a hearing.
    (i) Section 1819(h) of the Act--
    (l) Provides that, for SNFs found to be out of compliance with the

[[Page 32350]]

requirements for participation, specified remedies may be imposed 
instead of, or in addition to, termination of the facility's Medicare 
provider agreement; and
    (2) Makes certain provisions of section 1128A of the Act applicable 
to civil money penalties imposed on SNFs.
    (j) Section 1891(e) of the Act provides that, for home health 
agencies (HHAs) found to be out of compliance with the conditions of 
participation, specified remedies may be imposed instead of, or in 
addition to, termination of the HHA's Medicare provider agreement.
    (k) Section 1891(f) of the Act--
    (1) Requires the Secretary to develop a range of such remedies; and
    (2) Makes certain provisions of section 1128A of the Act applicable 
to civil money penalties imposed on HHAs.


Sec. 498.2  [Amended]

    4. In Sec. 498.2, the following changes are made:
    a. The definition of ``Appeals Council'' is removed.
    b. A definition of ``Departmental Appeals Board'' is added, in 
alphabetical order, to read as set forth below.
    c. In the definition of ``provider'', the words ``a nursing 
facility (NF) or intermediate care facility for the mentally retarded 
(ICF/MR)'' are removed.


Sec. 498.2  Definitions.

* * * * *
    Departmental Appeals Board or Board means a Board established in 
the Office of the Secretary to provide impartial review of disputed 
decisions made by the operating components of the Department.
* * * * *
    5. In Sec. 498.3, the introductory text of paragraph (b) is 
republished; paragraphs (a), (b)(4), (b)(7), (b)(8), (b)(12), (b)(13), 
(d) introductory text and (d)(1) are revised, paragraphs (d)(10) 
through (d)(12) are redesignated as paragraphs (d)(10)(i) through 
(d)(10)(iii), newly designated paragraph (d)(10) is revised, a new 
paragraph (d)(11) is added, and paragraphs (d)(13) and (d)(14) are 
redesignated as paragraphs (d)(12) and (d)(13) respectively, to read as 
follows:


Sec. 498.3  Scope and applicability.

    (a) Scope. (1) This part sets forth procedures for reviewing 
initial determinations that HCFA makes with respect to the matters 
specified in paragraph (b) of this section and that the OIG makes with 
respect to the matters specified in paragraph (c) of this section.
    (2) The determinations listed in this section affect participation 
in the Medicare program. Many of the procedures of this part also apply 
to other determinations that do not affect participation in Medicare. 
Examples are:
    (i) HCFA's determination to terminate an NF's Medicaid provider 
agreement;
    (ii) HCFA's determination to cancel the approval of an intermediate 
care facility for the mentally retarded (ICF/MR) under section 1910(b) 
of the Act; and
    (iii) HCFA's determination, under the Clinical Laboratory 
Improvement Act (CLIA), to impose alternative sanctions or to suspend, 
limit, or revoke the certificate of a laboratory even though it does 
not participate in Medicare.
    (3) The following parts of this chapter specify the applicability 
of the provisions of this part 498 to sanctions or remedies imposed on 
the indicated entities:
    (i) Part 431, subpart D--for nursing facilities (NFs).
    (ii) Part 488, subpart E (Sec. 488.330(e)--for SNFs and NFs.
    (iii) Part 493, subpart R (Sec. 493.1844)--for laboratories.
    (b) Initial determinations by HCFA. HCFA makes initial 
determinations with respect to the following matters:
* * * * *
    (4) Whether a prospective supplier meets the conditions for 
coverage of its services as those conditions are set forth elsewhere in 
this chapter.
* * * * *
    (7) The termination of a provider agreement in accordance with 
Sec. 489.53 of this chapter, or the termination of a rural health 
clinic agreement in accordance with Sec. 405.2404 of this chapter, or 
the termination of a Federally qualified health center agreement in 
accordance with Sec. 405.2436 of this chapter.
    (8) HCFA's cancellation, under section 1910(b) of the Act, of an 
ICF/MR's approval to participate in Medicaid.
* * * * *
    (12) With respect to an SNF or NF, a finding of noncompliance that 
results in the imposition of a remedy specified in Sec. 488.406 of this 
chapter, except the State monitoring remedy, and the loss of the 
approval for a nurse-aide training program.
    (13) The level of noncompliance found by HCFA in an SNF or NF but 
only if a successful challenge on this issue would affect the range of 
civil money penalty amounts that HCFA could collect. (The scope of 
review during a hearing on imposition of a civil money penalty is set 
forth in Sec. 488.438(e) of this chapter.)
* * * * *
    (d) Administrative actions that are not initial determinations. 
Administrative actions that are not initial determinations include but 
are not limited to the following:
    (1) The finding that a provider or supplier determined to be in 
compliance with the conditions or requirements for participation or for 
coverage has deficiencies.
* * * * *
    (10) With respect to an SNF or NF-(i) The finding that the SNF's or 
NF's deficiencies pose immediate jeopardy to the health or safety of 
its residents;
    (ii) Except as provided in paragraph (b)(13) of this section, a 
determination by HCFA as to the facility's level of noncompliance; and
    (iii) The imposition of State monitoring or the loss of the 
approval for a nurse-aide training program.
    (11) The choice of alternative sanction or remedy to be imposed on 
a provider or supplier.
* * * * *
    6. Section 498.5 is amended to revise paragraph (c) and to add a 
new paragraph (k), to read as follows:


Sec. 498.5  Appeal rights.

* * * * *
    (c) Appeal rights of providers and prospective providers. Any 
provider or prospective provider dissatisfied with a hearing decision 
may request Departmental Appeals Board review, and has a right to seek 
judicial review of the Board's decision.
* * * * *
    (k) Appeal rights of NFs. Under the circumstances specified in 
Sec. 431.153 (g) and (h) of this chapter, an NF has a right to a 
hearing before an ALJ, to request Board review of the hearing decision, 
and to seek judicial review of the Board's decision.
    7. Section 498.60 is amended to add a new paragraph (c), to read as 
follows:


Sec. 498.60  Conduct of hearing.

* * * * *
    (c) Scope of review: Civil money penalty. In civil money penalty 
cases--
    (1) The scope of review is as specified in Sec. 488.438(e) of this 
chapter; and
    (2) HCFA's determination as to the level of noncompliance of an SNF 
or NF must be upheld unless it is clearly erroneous.


Sec. 498.61  [Amended]

    8. In Sec. 498.61, the designation ``(a)'' and paragraph (b) are 
removed.

[[Page 32351]]

Sec. 498.74   [Amended]

    9. In Sec. 498.74, the following changes are made:
    a. In paragraph (b)(1), ``within the stated time period'' is 
revised to read ``within the time period specified in Sec. 498.82''.
    b. In paragraphs (b)(1), (b)(2), and (b)(3), ``Appeals Council'' is 
revised to read ``Departmental Appeals Board'' in paragraphs (b)(1) and 
(b)(4), ``Council'' revised to read ``Board'',
    c. In paragraph (b)(2), ``in a Federal district court;'' is revised 
to read ``in a United States District Court or, in the case of a civil 
money penalty, in a United States Court of Appeals;''.
    10. Section 498.90 is revised to read as follows:


Sec. 498.90   Effect of Departmental Appeals Board Decision

    (a) General rule. The Board's decision is binding unless--
    (1) The affected party has a right to judicial review and timely 
files a civil action in a United States District Court or, in the case 
of a civil money penalty, in a United States Court of Appeals; or
    (2) The Board reopens and revises its decision in accordance with 
Sec. 498.102.
    (b) Right to judicial review. Section 498.5 specifies the 
circumstances under which an affected party has a right to seek 
judicial review.
    (c) Special rules: Civil money penalty.
    (1) Finality of Board's decision. When HCFA imposes a civil money 
penalty, notice of the Board's decision (or denial of review) is the 
final administrative action that initiates the 60-day period for 
seeking judicial review.
    (2) Timing for collection of civil money penalty. For SNFs and NFs, 
the rules that apply are those set forth in subpart F of part 488 of 
this chapter.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance; Program No. 93.773, Medicare--Hospital Insurance; 
Program No. 93.774, Medicare--Supplementary Medical Insurance)

    Dated: May 16, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 96-13521 Filed 6-21-96; 8:45 am]
BILLING CODE 4120-01-P