[Federal Register Volume 61, Number 143 (Wednesday, July 24, 1996)]
[Rules and Regulations]
[Pages 38395-38399]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18537]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES
42 CFR Parts 431, 433, 440, 441, 447, and 456

[MB-099-F]
RIN 0938-AH31


Medicaid Program; Medicaid Eligibility Quality Control, 
Progressive Reductions in Federal Financial Participation for FYs 1982-
1984, Payment for Physician Billing for Clinical Laboratory Services, 
and Utilization Control of Skilled Nursing Facility Services: Removal 
of Obsolete Requirements

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

ACTION: Final rule.

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SUMMARY: This final rule removes several obsolete sections of the 
Medicaid regulations that specify rules and procedures for disallowing 
Federal financial participation for erroneous medical assistance 
payments due to eligibility and beneficiary liability errors as 
detected through the Medicaid eligibility quality control program for 
assessment periods from 1980 through June 1990. The Medicaid 
regulations that contain the rules and procedures for the progressive 
reductions in Federal financial participation in medical assistance 
expenditures made to the States for fiscal years 1982 through 1984 are 
removed to reflect the repeal of the statutory bases for the 
reductions. The Medicaid regulations that provide for physician billing 
for clinical laboratory services that a physician bills or pays for but 
did not personally perform or supervise are removed to reflect the 
statutory repeal of this provision. In addition, the rule removes 
obsolete regulations that prescribe requirements concerning utilization 
control of Medicaid services furnished in skilled nursing facilities.
    This rule is part of the Department's initiative to reinvent health 
care regulations and eliminate obsolete requirements.

EFFECTIVE DATE: These regulations are effective on August 23, 1996.

FOR FURTHER INFORMATION CONTACT:

Mary Linda Morgan (410) 786-2011, Medicaid Eligibility Quality Control 
and Reductions in FFP for FYs 1982-1984 Issues
Linda Peltz (410) 786-3399, Utilization Control of Skilled Nursing 
Facilities Issues
Robert Weaver (410) 786-5914, Laboratory Services Issues.

SUPPLEMENTARY INFORMATION:

I. Reinventing Regulations Effort

    Last year, the Department began an initiative to assist in meeting 
the Administration's commitment to reinventing government regulations. 
As part of this effort, we began to examine the requirements contained 
in regulations issued by HCFA governing the Medicare and Medicaid 
programs to determine which requirements could be reduced or eliminated 
while assuring that we continually improve the quality of services to 
Medicaid and Medicare beneficiaries. This rule is a result of part of 
our efforts in this regard to eliminate obsolete and burdensome 
requirements.

II. Medicaid Eligibility Quality Control Program

    Under the Medicaid program, States are required to operate a 
Medicaid eligibility quality control (MEQC) program. The program is 
designed to reduce erroneous expenditures in medical assistance 
payments by monitoring eligibility determinations. Under the MEQC 
program, States are required to select a sample of cases every month 
and review them for eligibility errors. HCFA annually calculates each 
States' error rate on the basis of State review findings. Federal 
financial participation (FFP) in State medical assistance expenditures 
is

[[Page 38396]]

disallowed to the extent that a State has a Medicaid eligibility 
quality control payment error rate that is above a statutorily 
specified target error rate or national standard. HCFA may waive all or 
part of the disallowance under specific circumstances.
    The current statutory authority for disallowances of payments in 
erroneous State medical assistance expenditures and for consideration 
of waiver requests is contained in section 1903(u) of the Social 
Security Act (the Act). The authority for disallowance determinations 
and the specified national target error rate have changed over the 
years since the original legislation was enacted in 1978. The HCFA 
regulations that contain the conditions under which disallowances are 
taken for erroneous State medical assistance expenditures if errors 
exceed the national error rate standards are contained in 42 CFR 
431.861 through 431.865. Because the legislation governing the national 
target error rates and how disallowances are taken has changed 
frequently over the years, the existing regulations contain conditions 
and requirements for specified periods, that is, the period prior to 
September 1980 (Sec. 431.861); interim periods of October 1, 1980 
through September 30, 1982 (Sec. 431.862), April 1 through December 31, 
1983 (Sec. 431.863), and January 1, 1984 through June 30, 1990 
(Sec. 431.864); and the period effective beginning July 1, 1990 
(Sec. 431.865). We found it was necessary in the past to retain the 
regulatory provisions for periods prior to July 1, 1990, because of 
pending reconsiderations of proposed disallowances for State medical 
assistance expenditures based on expenditure reports for these prior 
periods and the processing of waiver requests related to these prior 
periods. The pre-July 1, 1990 provisions are now obsolete and we are 
therefore deleting them from the Code of Federal Regulations (CFR). We 
are deleting Secs. 431.861 through 431.864.

III. Progressive Reductions in FFP for Fiscal Years 1982 Through 1984

    Sections 1903 (s) and (t) of the Act (as enacted by sections 
2161(a) and (b) of the Medicare and Medicaid Amendments of 1981 (Pub. 
L. 97-35)) provided for progressive reductions in total Federal 
payments to the States for medical assistance expenditures to which 
they were entitled for fiscal years 1982 through 1984. The reductions 
applied only to the 49 States with Medicaid programs in operation under 
State plans approved by HCFA as of July 1, 1981, and to the District of 
Columbia. The provisions in section 1903(s) of the Act were effective 
August 13, 1981, and repealed by the same enacting legislation, 
effective for calendar quarters beginning on or after October 1, 1984. 
The provisions in section 1903(t) of the Act were effective August 13, 
1981, and repealed by the same enacting legislation, effective after 
payments for the first quarter of fiscal year 1985.
    Sections 433.8 and subpart E of part 433 (Secs. 433.201 through 
433.217) implemented sections 1903 (s) and (t) of the Act. We are 
deleting these regulations to reflect the repeal of sections 1903 (s) 
and (t) of the Act by section 2161(c) of the Medicare and Medicaid 
Amendments of 1981.

IV. Payment for Physician Billing for Clinical Laboratory Services

    Section 1902(a)(32) of the Act prohibits Medicaid payments to 
anyone other than the provider of services, except in specified 
circumstances. This restriction is commonly referred to as the direct 
payment provision and is implemented in Sec. 447.10. From 1980 to 1984, 
section 1902(a)(43) of the Act provided an exception for physician 
billing of laboratory services which a physician did not personally 
perform or supervise. Specifically, section 1902(a)(43) of the Act 
provided that, if the State plan provides for payment to a physician 
for laboratory services for which the physician (or any other physician 
with whom he shares his practice) did not personally perform or 
supervise, the plan must include a provision to ensure that payment for 
such laboratory services does not exceed the payment authorized for 
such services under Medicare. Section 2303(g)(1)(B) of the Deficit 
Reduction Act of 1984 (DRA '84) (Pub. L. 98-369) deleted section 
1902(a)(43) of the Act.
    Sections 447.10(g)(1) and 447.342 implemented section 1902(a)(43) 
of the Act. Section 447.10(g)(1) provides that payment may be made to a 
physician who bills for outside laboratory services that the physician 
orders and pays for, but that he or she did not personally perform or 
supervise, or which were not performed or supervised by another 
physician with whom he or she shares a practice. Section 447.342 
specifies that if a State plan provides for payment to a physician who 
bills for clinical laboratory services performed by an outside 
laboratory, the State plan must provide that the agency will not pay 
the physician more than the amount that would be authorized under 
Medicare.
    We are deleting Secs. 447.10(g)(1) and 447.342 to reflect the 
deletion of section 1902(a)(43) of the Act by DRA '84.

V. Utilization Control: Skilled Nursing Facilities

    Section 1902(a)(30) of the Act requires each State Medicaid agency 
to have methods and procedures to safeguard against unnecessary 
utilization of care and services. In addition to this general 
provision, State Medicaid agencies are required to meet a number of 
specific requirements for certain institutional providers. The 
utilization control requirements are set forth in the regulations at 42 
CFR part 456.
    Prior to the implementation of the Omnibus Budget and 
Reconciliation Act of 1987 (OBRA '87) (Pub. L. 100-203), the Medicaid 
statute made a distinction between skilled nursing facility (SNF) and 
intermediate care facility (ICF) services. The Medicaid statute 
contained separate certification requirements for facilities providing 
each type of long-term care. Section 1905(a)(4) of the Act authorized 
coverage of inpatient services furnished in facilities that met the SNF 
requirements. Section 1905(a)(15) of the Act provided for coverage of 
inpatient services in facilities certified to provide ICF services.
    OBRA '87 significantly revised the Medicaid requirements for long-
term care facility services. The legislation created a new Medicaid 
benefit category called ``nursing facility (NF) services'' that, 
effective October 1, 1990, replaced the Medicaid SNF and ICF benefits. 
NFs participating in the Medicaid program must now meet certain 
requirements specified in section 1919 of the Act. Among the reform 
provisions was an entirely new process, called preadmission screening 
and annual resident review (PASARR), which requires States to determine 
the need for admitting or retaining individuals with mental illness or 
mental retardation who are applicants to or residents of NFs, and to 
determine whether these persons require specialized services. The NF 
requirements are codified in the regulations at 42 CFR part 483, 
subparts B and D, and part 488. The PASARR requirements are codified in 
the regulations at 42 CFR part 483, subparts C and E.
    The utilization control regulations relating to SNF services at 42 
CFR part 456 are obsolete because they implement the utilization 
control process that was in effect before the implementation of the 
nursing home reform provisions in OBRA '87. Formerly, sections 1902(a) 
(30), (31), and (44), 1903(g)(1), and 1903(i)(4) of the Act contained 
requirements for monitoring and controlling utilization of SNF 
services. Specifically, section

[[Page 38397]]

1902(a)(30)(A) of the Act required each State to have methods and 
procedures relating to utilization of care and services and further 
required State procedures to include facility-based utilization review 
plans for SNF services as described in section 1903(i)(4) of the Act. 
Furthermore, section 1902(a)(30)(B) of the Act required SNFs to screen 
each admission and precluded certain medical and other professional 
personnel from establishing criteria for utilization review in SNFs. 
Section 1902(a)(31) (formerly in section 1902(a)(26)) of the Act 
required States to establish medical review programs for SNF services. 
State medical review programs had to (1) ensure that SNF services were 
furnished in accordance with a written plan of care and be periodically 
reviewed, and (2) provide for on-site inspections of the care being 
provided to Medicaid patients in each SNF by State inspection teams who 
would report their findings to the State Medicaid agency. Section 
1902(a)(44) of the Act required the medical necessity of a Medicaid 
patient's initial placement and continued stay to be certified by a 
physician, a nurse practitioner, or clinical nurse specialist. Section 
1903(g)(1) of the Act provided for a reduction in Federal matching 
funds for extended inpatient stays unless the State Medicaid agency 
could satisfactorily demonstrate that it had an effective program of 
medical review for SNF services. Section 1903(i)(4) of the Act 
precluded Federal matching payments for inpatient services provided by 
a SNF unless its utilization review plan met the Medicare standards.
    All of the utilization control provisions mentioned above that 
applied to SNF services were stricken from the Medicaid statute by OBRA 
'87. Specifically, OBRA '87 made the following deletions to the Act:
     The utilization review requirements in sections 
1902(a)(30)(B) and 1903(i)(4) of the Act were deleted by sections 
4211(h)(3) and 4211(i) of OBRA '87, respectively.
     The medical review requirements in section 1902(a)(31) of 
the Act were deleted by section 4212(d)(2) of OBRA '87.
     The certification and recertification of need requirements 
in section 1902(a)(44) of the Act were deleted by section 4212(e)(1)(A) 
of OBRA '87.
     The reduction in Federal matching funds provision in 
section 1903(g) of the Act was deleted by 4212(d)(1) of OBRA '87.
    We are removing all of the regulations that contain utilization 
control requirements for SNFs to reflect the elimination of those 
provisions from the Medicaid statute made by OBRA '87.

VI. Other Technical Changes

    In conjunction with the deletions discussed above in this preamble, 
we are making the following technical changes:
     We are deleting references to section 1902(a)(43) of the 
Act and Secs. 447.10 and 447.342 associated with payment for physician 
billing for clinical laboratory services in Secs. 440.1, 447.10(a), and 
447.300.
     We are deleting references associated with utilization 
control of SNFs in parts 441 and 456 of the regulations.

VII. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite prior public comment on proposed rules. The 
notice of proposed rulemaking includes a reference to the legal 
authority under which the rule is proposed, and describes the terms and 
substances of the proposed rule and the subjects and issues involved. 
This procedure can be waived, however, if an agency finds good cause 
that notice-and-public-comment rulemaking is impracticable, 
unnecessary, or contrary to the public interest and incorporates a 
statement of the finding and its reasons in the rule issued.
    This final rule merely removes regulations that contain obsolete 
provisions and regulations implementing parts of the Social Security 
Act that have been repealed. This final rule also makes related 
technical corrections. Therefore, we find good cause to waive the 
notice of proposed rulemaking procedures as impracticable and 
unnecessary and to issue this rule in final form.

VIII. Collection of Information Requirements

    This document does not impose information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995.

IX. Regulatory Impact Statement

    Consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 
through 612), we prepare a regulatory flexibility analysis unless we 
certify that a rule will not have a significant economic impact on a 
substantial number of small entities. For purposes of the RFA, all 
health care providers and facilities are considered to be small 
entities. Individuals and States are not included in the definition of 
a small entity.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. Such 
an analysis must conform to the provisions of section 604 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 of a Metropolitan 
Statistical Area and has fewer than 50 beds.
    In keeping with the Administration's commitment to reinvent 
government regulations, this final rule merely removes regulations that 
contain obsolete provisions and makes related technical corrections. 
For these reasons, we are not preparing analyses for either the RFA or 
section 1102(b) of the Act because we have determined, and we certify, 
that this final rule will not have a significant economic impact on a 
substantial number of small entities or a significant impact on the 
operations of a substantial number of 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 Pub. L. 104-121, we have determined that 
this rule is not a major rule.

List of Subjects

42 CFR Part 431

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

42 CFR Part 433

    Administrative practice and procedure, Child support, Claims, Grant 
programs-health, Medicaid, Reporting and recordkeeping requirements.

42 CFR Part 440

    Grant programs-health, Medicaid.

42 CFR Part 441

    Family planning, Grant programs-health, Infants and children, 
Medicaid, Penalties, Reporting and recordkeeping requirements.

42 CFR Part 447

    Accounting, Administrative practice and procedure, Drugs, Grant 
programs-health, Health facilities, Health professions, Medicaid, 
Reporting and recordkeeping requirements, Rural areas.

[[Page 38398]]

42 CFR Part 456

    Administrative practice and procedure, Grant programs-health, 
Health facilities, Medicaid, Reporting and recordkeeping requirements.
    42 CFR chapter IV is amended as set forth below:
    A. Part 431 is amended as follows:

PART 431--STATE ORGANIZATION AND GENERAL ADMINISTRATION

    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).


Secs. 431.861, 431.862, 431.863, and 431.864  [Removed and reserved]

    2. Sections 431.861, 431.862, 431.863, and 431.864 are removed and 
reserved.


Sec. 431.865  [Amended]

    3. In paragraph (d)(8) of Sec. 431.865, the parenthetical phrase 
``(See Sec. 431.863(d)(8) for an example of a disallowance 
computation)'' is removed.
    B. Part 433 is amended as follows:

PART 433--STATE FISCAL ADMINISTRATION

    1. The authority citation for part 433 continues to read as 
follows:

    Authority: Secs. 1102, 1137, 1902(a)(4), 1902(a)(18), 
1902(a)(25), 1902(a)(45), 1902(t), 1903(a)(3), 1903(d)(2), 
1903(d)(5), 1903(i), 1903(o), 1903(p), 1903(r), 1903(w), 1912, 1917, 
and 1919(e) of the Social Security Act (42 U.S.C. 1302, 1320b-7, 
1396a(a)(4), 1396a(a)(18), 1396a(a)(25), 1396a(a)(45), 1396a(t), 
1396b(a)(3), 1396b(d)(2), 1396b(d)(5), 1396b(i), 1396b(o), 1396b(p), 
1396b(r), 1396b(w), 1396k and 1396(p)).


Sec. 433.8  [Removed and reserved]

    2. Section 433.8 is removed and reserved.


Secs. 433.201--433.217 (Subpart E)  [Removed and reserved]

    3. In part 433, subpart E consisting of Secs. 433.201 through 
433.217 is removed and reserved.
    C. Part 440 is amended as follows:

PART 440--SERVICES: GENERAL PROVISIONS

    1. The authority citation for part 440 continues to read as 
follows:

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


Sec. 440.1  [Amended]

    2. In Sec. 440.1, the reference that reads ``1902(a)(43) Laboratory 
services. (See also Secs. 447.10 and 447.342 for related provisions on 
laboratory services.)'' is removed.
    D. Part 441 is amended as follows:

PART 441--SERVICES: REQUIREMENTS AND LIMITS APPLICABLE TO SPECIFIC 
SERVICES

    1. The authority citation for part 441 continues to read as 
follows:

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


Sec. 441.152  [Amended]

    2. In Sec. 441.152(b), the reference ``456.260,'' is removed.


Sec. 441.155  [Amended]

    3. Section 441.155 is amended as follows:
    a. In paragraph (a), the phrase ``in accordance with Secs. 456.180-
456.181, and 456.280-456.281 of this subchapter,'' is revised to read 
``in accordance with Secs. 456.180 and 456.181 of this chapter,''.
    b. In paragraph (d), the references ``456.260(b),'' and 
``456.280,'' are removed.
    E. Part 447 is amended as follows:

PART 447--PAYMENTS FOR SERVICES

    1. The authority citation for part 447 continues to read as 
follows:

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

    2. In Sec. 447.10, paragraph (a) is revised, paragraph (g)(1) is 
removed, and paragraphs (g)(2) through (g)(4) are redesignated as 
paragraphs (g)(1) through (g)(3). The revision reads as follows:


Sec. 447.10  Prohibition against reassignment of provider claims.

    (a) Basis and purpose. This section implements section 1902(a)(32) 
of the Act which prohibits State payments for Medicaid services to 
anyone other than a provider or recipient, except in specified 
circumstances.
* * * * *


Sec. 447.300  [Amended]

    3. In Sec. 447.300, the second sentence that reads ``Section 
447.342 of this subpart implements section 1902(a)(43) of the Act, 
which permits the State plan to provide for payment to a physician for 
laboratory services which the physician did not personally perform or 
supervise.'' is removed.

Subpart F--[Amended]

    4. In subpart F, the undesignated center heading that reads 
``CLINICAL LABORATORY SERVICES'' is removed.


Sec. 447.342  [Removed and reserved]

    5. Section 447.342 is removed and reserved.
    F. Part 456 is amended as follows:

PART 456--UTILIZATION CONTROL

    1. The authority citation for part 456 continues to read as 
follows:

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


Sec. 456.1  [Amended]

    2. Section 456.1 is amended as follows:
    a. In paragraph (b)(2), the phrase ``skilled nursing facilities 
(SNF's),'' is removed.
    b. In paragraph (b)(2)(iv), the phrase ``skilled nursing and'' is 
removed.
    c. In paragraph (b)(3), the phrases ``skilled nursing facilities 
and'' and ``SNF or'' are removed.
    d. In paragraph (b)(5), the word ``SNF's,'' is removed.
    e. In paragraph (b)(6), the phrase ``hospital, mental hospital, or 
SNF services'' is revised to read ``hospital or mental hospital 
services''.
    f. In Table 1, remove from the first and second columns the 
following:

------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
Subpart E--Utilization Control: Skilled                                 
 Nursing Facilities                                                     
    Certification of need for care.....  1903(g)(1)(A)                  
    Medical evaluation and admission     1902(a)(26)(A)                 
     review.                             1903(g)(1)(C)                  
    Plan of care.......................  1902(a)(26)(A)                 
                                         1903(g)(1)(B)                  
Utilization review plan................  1902(a)(30)                    
                                         1903(g)(1)(C) 1903(i)(4)       
Discharge plan.........................  1902(a)(30).                   
------------------------------------------------------------------------

    g. In Table 1, in column 1, subparts H and I are revised to read as 
follows:

                                 Table 1                                
 [This table relates the regulations in this part to the sections of the
                      Act on which they are based.]                     
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
                                                                        
                  *        *        *        *        *                 
Subpart H--Utilization Review Plans: FFP, Waivers,                      
 and Variances for Hospitals and Mental Hospitals.              *  *  * 
Subpart I--Inspections of Care in Intermediate Care                     
 Facilities and Institutions for Mental Diseases.               *  *  * 
                                                                        
                 *        *        *        *          *                
------------------------------------------------------------------------

Sec. 456.5  [Amended]

    3. Section 456.5 is amended as follows:

[[Page 38399]]

    a. The phrase ``hospitals, mental hospitals, and SNFs.'' is revised 
to read ``hospitals and mental hospitals.''
    b. The phrase ``Sec. 456.232 of subpart D; and Sec. 456.332 of 
subpart E.'' is revised to read ``and Sec. 456.232 of subpart D.''


Secs. 456.250 through 456.348 (Subpart E)  [Removed and reserved]

    4. In part 456, subpart E consisting of Secs. 456.250 through 
456.348 is removed and reserved.


Sec. 456.480  [Amended]

    5. In Sec. 456.480, the phrase ``skilled nursing facilities,'' is 
removed.


Secs. 456.481, 456.482, and 456.652  [Amended]

    6. In part 456, remove the references ``456.260,'' ``456.270,'' and 
``456.280,'' wherever they appear, in the following places:
    a. Sections 456.481 (a) and (b);
    b. Section 456.482; and
    c. Sections 456.652 (a)(1), (a)(2), and (a)(4).

Subpart H--[Amended]

    7. In the heading of subpart H, the phrase ``Hospitals, Mental 
Hospitals, and Skilled Nursing Facilities'' is revised to read 
``Hospitals and Mental Hospitals.''


Sec. 456.500  [Amended]

    8. In Sec. 456.500, in the introductory text, the phrase 
``hospitals, mental hospitals and SNFs,'' is revised to read 
``hospitals and mental hospitals,''


Sec. 456.501  [Amended]

    9. Section 456.501 is amended as follows:
    a. In paragraph (a), the phrase ``hospital, mental hospital, or 
SNF'' is revised to read ``hospital or mental hospital''
    b. In paragraph (c), the phrase ``in subpart C, D, or E of this 
part,'' is revised to read ``in subpart C or D of this part,''


Sec. 456.505  [Amended]

    10. Section 456.505 is amended as follows:
    a. In the introductory text, the phrase ``subpart C, D, or E of 
this part,'' is revised to read ``subpart C or D of this part,''
    b. In the introductory text, the phrase, ``Sec. 456.206 of subpart 
D, and Sec. 456.306 of subpart E,'' is revised to read ``and 
Sec. 456.206 of subpart D,''
    c. In paragraph (b), the phrase ``under subpart C, D, or E.'' is 
revised to read ``under subpart C or D of this part.''


Sec. 456.506  [Amended]

    11. Section 456.506 is amended as follows:
    a. In paragraph (b), the phrase ``hospital, mental hospital, or 
SNF'' is revised to read ``hospital or mental hospital''
    b. In paragraph (b), the phrase ``under subpart C, D, or E of this 
part.'' is revised to read ``under subpart C or D of this part.''


Sec. 456.508  [Amended]

    12. Section 456.508 is amended as follows:
    a. In paragraph (a), the phrase ``under subpart C, D, or E.'' and, 
in paragraph (b), the phrase ``under subpart C, D, or E of this part.'' 
are revised to read ``under subpart C or D of this part.''
    b. In paragraph (b), the phrase ``hospital, mental hospital, or 
SNF'' is revised to read ``hospital or mental hospital.''


Sec. 456.520  [Amended]

    13. Section 456.520 is amended as follows:
    a. In paragraph (b), the phrase ``Sec. 456.207 of subpart D; or 
Sec. 456.307 of subpart E;'' is revised to read ``or Sec. 456.207 of 
subpart D;''
    b. In paragraph (c), in the definition of Remote facility, the 
phrase ``under subpart C, D, or E of this part,'' is revised to read 
``under subparts C or D of this part,''
    c. In paragraph (c), in the definition of Variance, the phrase 
``Sec. 456.238 of subpart D; and Secs. 456.333, 456.334, and 456.336 of 
subpart E.'' is revised to read ``and Sec. 456.238 of subpart D.''


Sec. 456.522  [Amended]

    14. Section 456.522 is amended as follows:
    a. In paragraph (d), the word ``SNF,'' is removed.
    b. In paragraph (i), the phrase ``subpart C, D, or E of this 
part;'' and, in paragraph (j), the phrase ``subpart C, D, or E of this 
part;'' are revised to read ``subpart C or D of this part;''
    15. In the heading of subpart I, the phrase ``Skilled Nursing and'' 
is removed.


Sec. 456.600   [Amended]

    16. In Sec. 456.600, the phrase ``in skilled nursing facilities 
(SNF's),'' is removed.


Sec. 456.601  [Amended]

    17. Section 456.601 is amended as follows:
    a. In the definition of Facility, the phrase ``a skilled nursing 
facility,'' is removed.
    b. In the definition of Institution for mental diseases, the phrase 
``skilled nursing or'' is removed.


Sec. 456.603  [Amended]

    18. In Sec. 456.603, paragraph (a)(1) is removed and reserved.


Sec. 456.608  [Amended]

    19. In Sec. 456.608(a) introductory text, remove the words ``SNFs 
and.''


Sec. 456.610  [Amended]

    20. In Sec. 456.610(b)(1), remove the word ``SNFs,''.


Sec. 456.651  [Amended]

    21. In Sec. 456.651, in the definition of Level of care, the phrase 
``skilled nursing facility,'' is removed.


Sec. 456.654  [Amended]

    22. Section 456.654 is amended as follows:
    a. In paragraph (a)(2), the phrase ``skilled nursing facilities,'' 
is removed.
    b. In paragraph (a)(7), the phrase ``skilled nursing or'' is 
removed.
    c. In paragraph (a)(8), the phrase ``or skilled nursing facility'' 
is removed.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program)

    Dated: May 28, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
    Dated: July 11, 1996.
Donna E. Shalala,
Secretary.
[FR Doc. 96-18537 Filed 7-23-96; 8:45 am]
BILLING CODE 4120-01-P