[Federal Register Volume 61, Number 142 (Tuesday, July 23, 1996)]
[Notices]
[Pages 38207-38212]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18709]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
[BPD-849-PN]


Medicare Program; Recognition of the Ambulatory Surgical Center 
Standards of the Joint Commission on the Accreditation of Healthcare 
Organizations and the Accreditation Association for Ambulatory Health 
Care

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

ACTION: Proposed notice.

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SUMMARY: This notice proposes to grant deeming authority to two 
organizations, the Joint Commission on the Accreditation of Healthcare 
Organizations (JCAHO) and the Accreditation Association for Ambulatory 
Health Care (AAAHC), for their member ambulatory surgical centers 
(ASCs) that request Medicare certification. We believe that 
accreditation of ASCs by both organizations would demonstrate that all 
Medicare ASC conditions are met or exceeded, and, thus, we would grant 
deeming authority to each organization.

DATES: Comments will be considered if we receive them at the 
appropriate address, as provided below, no later than 5 p.m. on August 
22, 1996.

ADDRESSES: Mail written comments (1 original and 3 copies) to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: BPD-849-PN, P.O. Box 7519, 
Baltimore, MD 21207-0519.
    If you prefer, you may deliver your written comments (1 original 
and 3 copies) to one of the following addresses: Room 309-G, Hubert H. 
Humphrey Building, 200 Independence Avenue, SW., Washington, D.C. 
20201, or 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-849-PN. 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 
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FOR FURTHER INFORMATION CONTACT: Bob Cereghino, (410) 786-4645.

SUPPLEMENTARY INFORMATION:

I. Background

A. Determining Compliance of Ambulatory Surgical Centers--Surveys and 
Deeming

    In order to participate in the Medicare program, ambulatory 
surgical centers (ASCs) must meet conditions for coverage specified in 
regulations that implement title XVIII of the Social Security Act (the 
Act). ASCs enter into a Medicare participation agreement but generally 
only after they are certified by a State survey agency as complying 
with the ASC conditions for coverage set forth in the Act and 
regulations. ASCs are subject to regular surveys by State agencies to 
determine whether they continue to meet these requirements; an ASC that 
does not meet these requirements is considered out of compliance and 
risks having its participation in the Medicare program terminated.
    Section 1865 of the Act includes a provision that permits ASCs to 
be exempt from routine surveys by the State survey agencies to 
determine compliance with the Medicare conditions for coverage. (Under 
our regulations at 42 CFR 416.40 (``Condition for coverage--Compliance 
with State licensure law''), an ASC must still meet the State's 
licensure requirements, however.) Specifically, section 1865(b) of the 
Act provides that if we find that accreditation of a provider entity by 
a national accreditation body demonstrates that all Medicare conditions 
or requirements are met or exceeded, we would (for certain providers, 
including ASCs) ``deem'' these entities as meeting the applicable 
Medicare conditions.
    In making our finding as to whether the accreditation body makes 
this demonstration, we consider factors such as the accrediting body's 
accreditation requirements, its survey procedures, its ability to 
provide adequate resources for conducting required surveys and 
supplying information for use in enforcement activities, its monitoring 
procedures for provider entities found to be out of compliance with the 
conditions or requirements, and its ability to provide us with 
necessary data for validation. If we find that the accreditation of an 
ASC by the national accreditation body demonstrates that the Medicare 
conditions imposed on ASCs are met, we would treat the accredited ASCs 
as meeting those conditions. ASCs as suppliers are included by 
definition of provider entity in section 1865(b)(4) of the Act. Thus, 
if we were to recognize an ASC

[[Page 38208]]

accrediting organization's program as demonstrating that all the 
Medicare ASC conditions are met, the ASCs it accredits would be 
considered, or ``deemed,'' to meet the same conditions for which the 
accreditation standards have been recognized. The Joint Commission on 
the Accreditation of Healthcare Organizations (JCAHO) and the 
Accreditation Association for Ambulatory Health Care (AAAHC) are the 
first two organizations to which we have considered granting deemed 
status.

B. Deeming Authority Process

    On November 23, 1993, we published a final rule (58 FR 61816) that 
set forth the procedure that we would use to review and approve 
national accrediting organizations that wish to be recognized as 
providing reasonable assurance that Medicare conditions are met 
(Sec. 488.4, ``Application and reapplication procedures for 
accreditation organizations''). A national accreditation organization 
applying for approval of deeming authority must furnish to us 
information and materials listed in our regulations at Sec. 488.4. Our 
regulations at Sec. 488.8 (``Federal review of accreditation 
organizations'') detail the Federal review and approval process of 
applications for deeming authority. On April 26, 1996, however, new 
legislation entitled Making Appropriations for Fiscal Year 1996 To Make 
a Further Downpayment Toward a Balanced Budget and for Other Purposes 
(Public Law 104-134) was enacted. Section 516 of Public Law 104-134 
amended section 1865 of the Act in a number of ways. The legislation 
removed the requirement that accrediting organizations provide 
reasonable assurance that entities accredited by them would meet 
Medicare conditions or requirements. It now, in revised section 
1865(b)(1) of the Act, requires organizations to demonstrate that their 
accredited entities would meet or exceed all of the applicable Medicare 
conditions. The legislation now also defines, in section 1865(b)(4) of 
the Act, the provider entities that we may consider for deemed status 
to include ASCs as suppliers. We are now required to publish an initial 
notice in the Federal Register 60 days after the receipt of a written 
request for a finding that accreditation by a national accreditation 
body demonstrates that the Medicare conditions or requirements are met.
    This particular notice, however, is unique in that an expanded 
proposed draft had been developed along the lines of our requirements 
in the statute and regulations that were in effect before the enactment 
of section 516 of Public Law 104-134. We had received and accepted 
applications from JCAHO and AAAHC, two national accrediting bodies, 
long before the enactment of section 516 of Public Law 104-134. 
Therefore, this initial notice, unlike future deeming notices, contains 
material beyond the scope of the new legislative deeming requirements.
    In this notice, we identify the national accreditation bodies 
making the deeming request, describe the nature of the request, and 
allow at least a 30-day public comment period. We received applications 
from JCAHO and AAAHC before the April 26, 1996 enactment of Public Law 
104-134. Therefore, the timeframes imposed by the new legislation are 
not applicable to the processing of these two organizations' 
applications. However, AAAHC wrote to us on May 23, 1996 requesting 
that we process its application under the new timeframes. In order to 
comply with the requirement in revised section 1865(b)(3)(A) of the Act 
that we publish an initial notice identifying the national 
accreditation body making the request not later than 60 days after the 
date of receipt of that request, we must publish the notice by July 22, 
1996. Likewise, in order to comply with the requirement that we publish 
an approval notice of our findings within 210 days after we receive an 
organization's deeming application, we must publish the approval notice 
by December 19, 1996. Since both applications had been submitted and 
considered before the enactment of Public Law 104-134, despite these 
timeframes, we will make every effort to publish the approval notice by 
November 22, 1996, which is 210 days after the date of the enactment of 
the new legislation.
    Under revised section 1865(b)(2) of the Act and our regulations at 
Sec. 488.8 (``Federal review of accreditation organizations''), our 
review and evaluation of a national accreditation organization is 
conducted in accordance with, but is not necessarily limited to, the 
following factors:
     The equivalency of an accreditation organization's 
requirements for an entity to our comparable requirements for the 
entity.
     The organization's survey process to determine the 
following:
    + The composition of the survey team, surveyor qualifications, and 
the ability of the organization to provide continuing surveyor 
training.
    The comparability of its process to that of State agencies, 
including survey frequency, and the ability to investigate and respond 
appropriately to complaints against accredited facilities.
    The organization's procedures for monitoring providers or suppliers 
found by the organization to be out of compliance with program 
requirements. These monitoring procedures are used only when the 
organization identifies noncompliance. If noncompliance is identified 
through validation reviews, the survey agency monitors corrections as 
specified at Sec. 488.7(b)(2).
    The ability of the organization to report deficiencies to the 
surveyed facilities and respond to the facility's plan of correction in 
a timely manner.
    The ability of the organization to provide us with electronic data 
in ASCII comparable code and reports necessary for effective validation 
and assessment of the organization's survey process.
    The adequacy of staff and other resources.
    The organization's ability to provide adequate funding for 
performing required surveys.
    The organization's policies with respect to whether surveys are 
announced or unannounced.
     The accreditation organization's agreement to provide us 
with a copy of the most current accreditation survey together with any 
other information related to the survey as we may require (including 
corrective action plans).

C. Ambulatory Surgical Center Conditions of Coverage and Requirements

    The regulations specifying the Medicare conditions of coverage for 
ASCs are located in 42 CFR part 416. These conditions implement section 
1832(a)(2)(F)(i) of the Act, which provides for Medicare Part B 
coverage of facility services furnished in connection with surgical 
procedures specified by us under section 1833(i)(1) of the Act.

II. Proposed Approval of the Ambulatory Surgical Center Accreditation 
Standards of the Joint Commission of the Accreditation of Healthcare 
Organizations and the Accreditation Association for Ambulatory Health 
Care

    The purpose of this notice is to propose that we recognize the 
accreditation programs of JCAHO and AAAHC, two national accrediting 
organizations, but only to the extent that they accredit ASCs. Based on 
a thorough examination of the standards, accrediting programs, and 
survey processes of both organizations, we believe that both JCAHO and 
AAAHC demonstrate that ASCs accredited by them meet Medicare 
conditions, and we, therefore, invite comments on our proposal to grant 
ASC deeming

[[Page 38209]]

authority to these two national organizations.
    Section 1865(b)(3)(A) of the Act, as amended by section 516 of 
Public Law 104-134, states that a Federal Register approval notice 
granting deeming to accreditation organizations will follow no later 
than 210 days after the date of receipt of a written request or 
documentation necessary to make a determination on the request for 
deeming authority. We received applications from JCAHO and AAAHC before 
the April 26, 1996 enactment of Public Law 104-134. Therefore, the 
timeframes imposed by the new legislation are not applicable to the 
processing of these two organizations' applications. However, AAAHC 
wrote to us on May 23, 1996 requesting that we process its application 
under the new timeframes. In order to comply with the requirement in 
revised section 1865(b)(3)(A) of the Act that we publish an initial 
notice identifying the national accreditation body making the request 
not later than 60 days after the date of receipt of that request, we 
must publish the notice by July 22, 1996. Likewise, in order to comply 
with the requirement that we publish an approval notice of our findings 
within 210 days after we receive an organization's deeming application, 
we must publish the approval notice by December 19, 1996. Since both 
applications had been submitted and considered before the enactment of 
Public Law 104-134, despite these timeframes, we will make every effort 
to publish the approval notice by November 22, 1996, which is 210 days 
after the date of the enactment of the new legislation. The approval 
notice will specify the effective date of the deeming authority and the 
term of approval, which will not exceed 6 years.
    Based on our initial review of each organization's standards and 
survey procedures contained in their individual applications and after 
our comparison of both organizations' standards to the Medicare ASC 
conditions and survey procedures, we contacted both JCAHO and AAAHC to 
discuss the differences between Medicare conditions and their 
standards.
    We met separately with representatives from both organizations. The 
representatives responded to our concerns by proposing to change their 
standards for their member ASCs seeking Medicare certification. We 
subsequently received, from each organization, revised scoring 
guidelines with amended standards for their member ASCs requesting 
Medicare certification.
    In evaluating the accreditation standards and survey processes of 
JCAHO and AAAHC to determine if they demonstrated that their accredited 
facilities meet Medicare conditions, we did a standard by standard 
comparison of the applicable conditions or requirements to determine 
which of them met or exceeded Medicare requirements. We outline below 
the differences between the Medicare requirements and the standards of 
the JCAHO and AAAHC and why we have concluded that they demonstrated 
that our requirements are met by their respective accreditation 
processes.
    Before doing so, however, it is important to address the methods 
accreditation organizations and Medicare use to determine compliance. 
Information gathered during on-site surveys is the basis of an 
organization's accreditation decision. A surveyor or team of surveyors 
evaluates the ASC's level of compliance with applicable standards. 
Surveyors assess compliance in a variety of ways, including interviews, 
observations, and documentation reviews.
    We refer frequently to the scoring guidelines that accompany each 
organization's standards. The scoring guidelines express parameters or 
common situations that the organizations' surveyors use to make 
judgments and assign scores to key requirements. Although scoring 
guidelines are not standards, they set forth the intent of the standard 
and describe the organizations' expectations as to how a particular 
standard must be met. These guidelines are consistently used by both 
organizations' surveyors in determining the score that will be applied 
to assess compliance with each standard.
    When a surveyor evaluates a standard as having partial, minimal, or 
noncompliance, that is, when the scoring guideline has not been met or 
has been only partially met, a written recommendation results.
    For example, an organization may use a 5-point scale to indicate an 
ASC's level of compliance with a standard. An ASC score of 1 or 2 for a 
particular accreditation standard corresponds to our determination of 
substantial compliance. A score of 3, 4, or 5 corresponds to our 
determination of noncompliance, which requires the ASC to submit an 
acceptable plan of correction. The facility's improvement will be 
monitored through a focused survey and/or written progress report. A 
written progress report assigned to address these deficiencies is 
normally due within either 1, 4, or 6 months from the date the 
accreditation is final. The plan of correction is monitored by the 
State Agency.

A. Differences Between the Joint Commission of the Accreditation of 
Healthcare Organizations and Medicare Conditions and Survey 
Requirements

    We compared the standards contained in the JCAHO 1994 (and 
subsequent 1996) Accreditation Manual for Ambulatory Health Care and 
its survey procedures to the Medicare ASC conditions and survey 
procedures. We note that JCAHO standards exceed our conditions for 
coverage in some areas such as patient rights, education of patients 
and family, and continuity of care. In the following seven areas, 
however, Medicare conditions exceeded JCAHO standards as they existed 
before our discussions with JCAHO. As explained below, however, JCAHO 
now demonstrates that it meets our conditions in these areas.
Standards
    Medicare ASC exclusivity requirement--Under our regulations at 
Sec. 416.2 (``Definitions''), a Medicare ASC operates exclusively for 
the purpose of furnishing surgical services to patients not requiring 
hospitalization. JCAHO has no comparable surgical exclusivity 
requirement; however, for its member ASCs seeking Medicare 
certification, JCAHO has included a statement on ASC surgical 
exclusivity as an integral part of its application package. This 
statement by the ASC attests that the facility meets our requirements 
as to exclusivity and JCAHO would verify this attestation. Thus, JCAHO 
has taken adequate steps to match our exclusivity requirement.
    Medicare requirement of ASC use of Medicare approved laboratory and 
radiological facilities--Section 416.49 (``Condition for coverage--
Laboratory and radiologic services'') requires the use of Medicare-
approved laboratory and radiologic facilities for ASCs while JCAHO 
requires only that laboratory and radiologic services be 
``appropriate.'' JCAHO, however, has stated in its April 8, 1994 
correspondence that an ASC seeking to use its accreditation for 
Medicare certification will be required, as an integral part of its 
application, to attest that, if it is not certified to perform its own 
laboratory services, it will obtain the services from a laboratory with 
certification under part 493 (``Laboratory Requirements''). The 
applicant ASC must also attest that it has procedures for obtaining 
radiologic services from a Medicare-approved facility to meet the needs 
of its patients. The ASC agrees to undergo JCAHO verification of these 
attestations before a

[[Page 38210]]

Joint Commission determination that the ASC qualifies for deemed status 
recognition. With this standard also, JCAHO has raised its requirements 
to an equivalency with our conditions.
    Medicare requirement of separate recovery and waiting areas--Our 
regulations at paragraph (a)(2) of Sec. 416.44 (``Condition for 
coverage--Environment'') require that Medicare ASCs have separate 
recovery and waiting areas. JCAHO has no requirement comparable to this 
Medicare condition for coverage. JCAHO in its revised 1996 
Accreditation Manual for Ambulatory Health Care under the environmental 
care standard scoring guideline (EC.4.2) has included the Medicare 
requirement of separate recovery and waiting areas and will require 
compliance from its member ASCs seeking Medicare certification.
    Medicare requirement relating to emergency equipment--Paragraph (c) 
of Sec. 416.44 (``Condition for coverage--Environment'') requires that 
Medicare ASCs have specific equipment available to operating rooms. 
This equipment must include at least the following: emergency call 
systems, oxygen, mechanical ventilatory assistance equipment, cardiac 
defibrillator, cardiac monitoring equipment, tracheostomy set, 
laryngoscopes, endotracheal tubes, suction equipment, and emergency 
medical equipment and supplies specified by the medical staff. In its 
1996 manual revision, JCAHO has amended its environmental care standard 
scoring guideline (EC.4.2) and enumerated the emergency equipment 
required by Sec. 416.44(c). JCAHO's member ASCs requesting Medicare 
certification will comply with this requirement.
    Patient care responsibilities for all nursing services personnel--
Our regulations at Sec. 416.46 (``Condition for coverage--Nursing 
services'') require that ASC nursing services be directed and staffed 
to assure that the nursing needs of all patients are met. Patient care 
responsibilities must be delineated for all nursing service personnel. 
Nursing services must be furnished in accordance with recognized 
standards of practice. Further, a registered nurse must be available 
for emergency treatment whenever there is a patient in the ASC. There 
was no comparable JCAHO requirement that patient care responsibilities 
be delineated for all nursing personnel. However, JCAHO has included, 
among its 1996 leadership standard scoring guidelines (LD.2.1 through 
LD.2.6), patient care responsibilities for nursing service personnel 
and requires compliance with this Medicare requirement for ASCs 
requesting Medicare certification.
    Administration of drugs, drug prescriptions, and the administration 
of blood products--Our regulations at Sec. 416.48 (``Condition for 
coverage--Pharmaceutical services'') are specific in their requirements 
regarding the administration of drugs, written drug administration, and 
follow-ups on oral prescriptions. JCAHO had no explicit standards 
comparable to these Medicare requirements.
    JCAHO has included in its ``Management of Information'' standard 
scoring guidelines (IM.7 through IM.7.2) and ``Care of Patients'' 
standard scoring guideline (TX.5.3) revised procedures for obtaining 
blood and blood components to satisfy Medicare requirements. For 
example, in IM.7 through IM.7.2, orders given orally for drugs and 
biologicals must be followed by a written order signed by the 
prescribing physician and in TX.5.3, only physicians or registered 
nurses may administer blood and blood products.
Procedural Issue
    Medicare requirement of unannounced surveys and frequency of 
surveys--JCAHO surveys of ASCs are announced, in contrast to the 
Medicare practice of conducting unannounced surveys. We believe that 
the findings on an announced survey are not comparable to those an 
unannounced survey may find when the facility is in its normal routine. 
JCAHO has agreed that it will conduct unannounced surveys of ASCs 
requesting to use their JCAHO accreditation for Medicare certification 
purposes.
    JCAHO resurveys its ASCs every 3 years. Our original requirement 
was to survey ASCs every year. In practice, our resurveys have been 
averaging almost 3 years. Therefore, we accept JCAHO's 3-year resurvey 
cycle as comparable to ours.
    We propose to make approval of JCAHO's accreditation program 
contingent on its continued agreement to implement the above seven 
changes in its standards and survey requirements. We believe that these 
changes bring JCAHO's accreditation program to a level at least 
equivalent to ours. JCAHO has thus demonstrated to our satisfaction 
that all of our applicable conditions or requirements are met or 
exceeded.

B. Differences Between the Accreditation Association for Ambulatory 
Health Care and Medicare Conditions and Survey Requirements

    We compared the standards contained in the 1994 through 1995 (and 
subsequent 1996 through 1997) AAAHC Accreditation Handbook for 
Ambulatory Health Care and its survey procedures to the Medicare ASC 
conditions and survey procedures. We note that AAAHC standards exceed 
our conditions for coverage in some areas such as patient rights, 
radiation oncology treatment services, and occupational health 
services. In the following nine areas, however, Medicare conditions 
exceeded AAAHC standards, as they existed before our discussions with 
AAAHC. As explained below, however, AAAHC now demonstrates that it 
meets our conditions in these areas.
Standards
    Medicare exclusivity requirement--Our regulations at Sec. 416.2 
(``Definitions'') define an ASC as a distinct entity operating 
exclusively for the purpose of furnishing surgical services to patients 
not requiring hospitalization. AAAHC had no comparable requirement.
    AAAHC has supplemented its surgical services standard to include 
the Medicare exclusivity requirement for its ASCs that want to apply 
their AAAHC accreditation for Medicare certification purposes.
    Medicare separate recordkeeping and staffing requirement--An ASC 
must be a separately identifiable entity, physically, administratively, 
and financially independent and distinct from other operations. Thus, 
an ASC maintains separate staff and keeps exclusive records. AAAHC had 
no comparable requirement but has supplemented its Chapter 10, 
``Surgical Services'' section, to include requirements on exclusivity 
(that is, separate space, the nonmixing of functions, and separate 
recordkeeping and staffing).
    Medicare requirement of separate recovery and waiting areas--
Paragraph (a)(2) of Sec. 416.44 (``Condition for coverage--
Environment'') requires that Medicare ASCs have separate recovery and 
waiting areas. AAAHC does not require accredited facilities to have 
separate recovery room and waiting areas. AAAHC has included this 
requirement in its supplement to Chapter 8, ``Facilities and 
Environment,'' for ASCs interested in Medicare certification.
    Adherence to the Life Safety Code of the National Fire Protection

[[Page 38211]]

Association--Under our regulations at paragraph (b) of Sec. 416.44 
(``Condition for coverage--Environment''), ASCs are generally required 
to comply with the provisions of the 1985 edition of the Life Safety 
Code of the National Fire Protection Association. While AAAHC standards 
contain a number of provisions related to ensuring patient and facility 
safety in the event of fire, AAAHC had not previously mandated 
compliance with the provisions of the National Fire Protection 
Association Life Safety Code but required compliance with applicable 
local or State safety codes.
    Nevertheless, in its supplementary standard to Chapter 8, 
``Facilities and Environment,'' AAAHC requires an ASC requesting 
Medicare certification to comply with the provisions of the National 
Fire Protection Association Life Safety Code. More specifically, the 
Life Safety Code is incorporated by reference into the AAAHC standard.
    Specific Medicare requirements relating to pharmaceutical 
services--Medicare has specific requirements regarding adverse patient 
reaction to drugs, the administration of blood products and written/
oral orders for drugs and biologicals (Sec. 416.48, ``Condition for 
coverage--Pharmaceutical services''). AAAHC requirements did not 
address these concerns.
    AAAHC has stated in its supplement to Chapter 15, ``Pharmaceutical 
Services,'' that adverse drug reactions will be reported to the 
responsible physician and will be documented in the written record. 
Blood and blood products will only be administered by physicians and 
registered nurses. Further, orders given orally for drugs and 
biologicals will be followed by a written order, signed by the 
prescribing physician. We believe AAAHC's adoption of these practices 
ensures compliance with our requirement.
    Medicare requirement relating to laboratory services--Medicare 
requires that physicians and other suppliers performing laboratory 
services meet the requirements of part 493 of our regulations 
(``Laboratory Requirements'').
    AAAHC did not have this requirement but has included it in the 
supplement to Chapter 16, ``Pathology and Medical Laboratory 
Services.'' Specifically, an ASC that performs laboratory services must 
meet the requirements of part 493 of our regulations; if an ASC does 
not provide its own laboratory services, it must have procedures for 
obtaining routine and emergency laboratory services from a certified 
laboratory in accordance with part 493 of our regulations. AAAHC 
further adds that this revised standard will be applicable to all 
organizations surveyed by AAAHC regardless of Medicare ASC status.
    Medicare requirement on radiologic services--Medicare ASCs are 
required to obtain radiologic services from Medicare-approved 
facilities as outlined in our regulations at Sec. 416.49 (``Condition 
for coverage--Laboratory and radiologic services''). The ASC must have 
procedures for obtaining radiologic services from a Medicare-approved 
facility to meet the needs of patients. AAAHC states in its supplement 
to Chapter 17, ``Diagnostic Imaging Services,'' that ASCs desiring 
Medicare certification must have arrangements with providers/suppliers 
of radiology services meeting Medicare conditions. This action, we 
believe, ensures that AAAHC's member ASCs seeking Medicare 
certification will comply with this requirement.
    Hospitalization--Medicare requires ASCs to have procedures for 
transfer to a hospital of patients requiring emergency medical care 
beyond the ASC's capabilities. Medicare requires the hospital to be a 
local, Medicare-participating hospital, or a local, nonparticipating 
hospital that meets the requirements for payment for emergency services 
under Federal regulations. AAAHC required procedures for transfer to a 
nearby hospital but did not specify that it must be a Medicare 
participating hospital or a nonparticipating hospital meeting Federal 
emergency payment requirements. AAAHC has included this Medicare 
requirement in its supplement to Chapter 10, ``Surgical Services,'' for 
ASCs seeking Medicare certification.
Procedural Issue
    Medicare requirement of unannounced surveys and resurvey 
frequency--AAAHC surveys of ASCs are announced in contrast to the 
Medicare practice of conducting unannounced surveys. In its handbook 
section, ``Accreditation Policies and Procedures,'' AAAHC has altered 
its original position and has stated that it will conduct unannounced 
surveys for ASCs seeking Medicare certification. AAAHC resurveys ASCS 
every 3 years. Our original requirement was to survey ASCs every year. 
In practice, our resurveys have been averaging almost 3 years. We 
therefore believe AAAHC's 3-year resurvey cycle meets Medicare 
requirements.
    We propose to make our approval of AAAHC's accreditation program 
contingent on its continued agreement to implement the above nine 
changes to its standards and requirements. We believe that these 
changes bring AAAHC's accreditation program to a level at least 
equivalent to ours. AAAHC has thus demonstrated to our satisfaction 
that it meets or exceeds all Medicare applicable conditions or 
requirements.
    After we evaluate public comments on this initial notice, we will 
issue an approval notice in accordance with section 516 of Public Law 
104-134 and our regulations at Sec. 488.12 (``Effect of survey agency 
certification''). Once this approval notice is approved and published 
in the Federal Register, ASCs would inform their respective State 
Agencies of their accreditation status with either the JCAHO or AAAHC. 
The State Agencies in turn, would inform their respective HCFA Regional 
Offices. The Regional Offices collect this information and put the 
information into the HCFA Online Survey and Certification Automated 
system.

C. Proposed Stipulations Relating to Accreditation by the Joint 
Commission on the Accreditation of Healthcare Organizations and the 
Accreditation Association for Ambulatory Health Care

    According to our regulations at Sec. 488.8 (``Federal review of 
accreditation organizations''), to ensure continuing comparability, an 
accreditation organization granted deeming authority is subject to 
continuing Federal oversight, which includes comparability reviews and 
validation reviews. Section 488.8 lists reapplication procedures, which 
may be no later than every 6 years. We propose to recognize as meeting 
Medicare's ASC conditions those ASCs accredited under JCAHO's and 
AAAHC's accreditation programs with the following restrictions included 
in Sec. 488.8(e):
     We would reserve the right to withdraw deemed status from 
all JCAHO-accredited or AAAHC-accredited ASCs should either 
organization revise its standards or accreditation policies and 
procedures in a manner in which it fails to demonstrate that its ASCs 
continue to meet Medicare conditions.
     We also would reserve the right to withdraw deemed status 
from all JCAHO-accredited or AAAHC-accredited ASCs if we should change 
ASC conditions in a manner in which, after a time allowance specified 
in Sec. 488.8(e), JCAHO or AAAHC standards or accreditation policies 
would not demonstrate that the revised Medicare ASC conditions are met.
     We would reserve the right to withdraw deemed status from 
all JCAHO or AAAHC accredited ASCs if a validation review or a public 
complaint

[[Page 38212]]

review reveals widespread, systematic, and unresolvable problems with 
the JCAHO or AAAHC accreditation process with respect to these ASC 
programs. These problems would provide evidence that JCAHO or AAAHC 
ASCs cease to demonstrate that they meet Medicare conditions.

D. Conclusion

    For the reasons stated above, we believe that the JCAHO and AAAHC 
accreditation standards and survey processes, subject to the 
stipulations described, demonstrate that Medicare conditions or 
requirements have been met or exceeded. We therefore propose to deem 
ASCs accredited by JCAHO and AAAHC to be in compliance with the 
Medicare conditions for ASCs in accordance with the authority provided 
in section 1865 of the Act.

III. Paperwork Reduction Act

    The burden reflected in this notice is referenced in the currently 
approved regulation entitled ``Granting and Withdrawal of Deeming 
Authority to National Accreditation Organizations (HSQ-159-F).'' The 
paperwork burden referenced in this regulation has been submitted to 
the Office of Management and Budget for review and approval under HCFA 
form number ``HCFA-R-191.'' Persons can reference the supporting 
statement for this paperwork collection (HCFA-R-191) on the INTERNET at 
http://www.hcfa.gov until the Office of Management and Budget's 
approval has been obtained.

IV. Response to Comments

    Because of the large number of items of correspondence we normally 
receive on Federal Register documents published for comment, we are not 
able to acknowledge or respond to them individually. We will consider 
all comments 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.

V. Impact Regulatory Statement

    In fiscal year 1993, there were 1,657 certified ASCs participating 
in the Medicare/Medicaid programs. We conducted 141 initial, 549 
recertification (both at a cost of $537,312), and 18 complaint surveys. 
In fiscal year 1994, there were 1,855 certified ASCs. This was an 
increase of 198 facilities. We conducted 213 initial, 492 
recertification (both at a cost of $555,068), and 24 complaint surveys. 
In fiscal year 1995, there were 2,105 ASCs. This was an increase of 250 
Medicare/Medicaid certified ASCs. We conducted 211 initial, 288 
recertification (both at a cost of $714,069), and 24 complaint surveys. 
As the data above indicate, the number of ASCs and the cost for 
conducting ASC surveys are increasing; however, the number of surveys 
conducted is decreasing. We contacted several Regional Offices to 
determine the number of pending ASC initial surveys, which number 
approximately 200 to 300. These pending initial surveys are not 
uniformly dispersed among the Regional Offices, so there would be a 
significant impact on some Regional Offices.
    For the current fiscal year, the appropriation for survey 
activities has not increased over the levels granted for fiscal years 
1994 and 1995. Yet, the numbers of participating providers and 
suppliers continue to increase. As indicated above, there was a 22 
percent increase in ASCs within 3 years (fiscal years 1993 through 
1995). In an effort to guarantee the continued health, safety, and 
services of beneficiaries in facilities already certified, as well as 
provide relief in this time of tight fiscal restraints, we are 
proposing to deem ASCs accredited by the JCAHO and AAAHC as meeting 
Medicare requirements. Thus we continue our focus on assuring the 
health and safety of services by providers and suppliers already 
certified for participation in a cost effective manner.
    In accordance with the provisions of Executive Order 12866, this 
notice was not reviewed by the Office of Management and Budget.

    Authority: Section 1865 of the Social Security Act (42 U.S.C. 
1395bb).

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

    Dated: June 28, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.

    Dated: July 18, 1996.
Donna E. Shalala,
Secretary.
[FR Doc. 96-18709 Filed 7-22-96; 8:45 am]
BILLING CODE 4120-01-P