[Federal Register Volume 61, Number 245 (Thursday, December 19, 1996)]
[Notices]
[Pages 67041-67047]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32194]


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


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: Final notice.

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

EFFECTIVE DATE: The provisions of this notice are effective beginning 
on December 19, 1996 through December 19, 2002.
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Government Printing Office. Free public access is available on

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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. Specifically, 
section 1865(b) of the Act provides that if we find that accreditation 
of a provider entity by a national accrediting 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. 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.
    In making our finding as to whether the accreditation body 
demonstrates all Medicare conditions or requirements, we consider 
factors such as the 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.
    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 
accreditation 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 that we grant deemed status for ASCs.
    It has been brought to our attention that some ASCs are under the 
mistaken impression that once deemed authority is granted by HCFA to an 
accreditation body, then ASCs must be accredited by that body to 
receive Medicare certification. accreditation by an organization is 
voluntary and not required by HCFA for Medicare certification.

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 accreditation 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 
accreditation organizations provide reasonable assurance that entities 
accredited by them would meet Medicare conditions or requirements. In 
revised section 1865(b)(1) of the Act, organizations are now required 
to demonstrate that their accredited entities would meet or exceed all 
of the applicable Medicare conditions. Section 1865(b)(4) includes 
suppliers (e.g., ASCs) under the provider entities that we may consider 
for deemed status. We are required to publish an initial notice in the 
Federal Register 60 days after the receipt of a written request for 
deemed status by a national accreditation body. After review of the 
national accreditation body's application we are required to publish a 
notice of our findings within 210 days after we receive an 
organization's deeming application.
    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. We view this letter as triggering the schedule set forth in 
the new law, and we published the initial notice within 60 days of the 
May 23, 1996 letter from AAAHC. 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.

C. Ambulatory Surgical Center Conditions for Coverage and Requirements

    The regulations specifying the Medicare conditions for 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. Provisions of the Proposed Notice

    The initial notice proposed to recognize the accreditation programs 
of JCAHO and AAAHC, two national accrediting organizations, but only to 
the extent that they accredited ASCs.
    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 was 
conducted in accordance with, but was not necessarily limited to, the 
following factors:
     The equivalency of an accreditation organization's 
requirements for an entity

[[Page 67043]]

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.)
    We met separately with representatives from each organization. In 
evaluating the accreditation standards and survey processes of JCAHO 
and AAAHC to determine if they demonstrated that their accredited 
facilities met 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. 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.

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. In seven areas, JCAHO has made the following revisions:
     Exclusivity requirement--JCAHO has included a statement on 
ASC surgical exclusivity as an integral part of its application 
package.
     Use of Medicare approved laboratory and radiological 
facilities--An accredited 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 
a certification under part 493 (``Laboratory Requirements''). The 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 Joint Commission determination that the ASC 
qualifies for deemed status recognition.
     Separate recovery and waiting areas--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 accredited ASCs seeking Medicare 
certification based on their accreditation.
     Emergency Equipment--In its 1996 manual revision, JCAHO 
has amended its environmental care standard scoring guideline (EC.4.2) 
and enumerated the emergency equipment required by 42 CFR 
Sec. 416.44(c).
     Patient care responsibilities for all nursing services 
personnel--JCAHO has included, in 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 based on their 
accreditation.
     Administration of drugs, drug prescriptions, and the 
administration of blood products--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.
     Unannounced surveys and frequency of surveys--JCAHO has 
agreed that it will conduct unannounced surveys of ASCs requesting to 
use their JCAHO accreditation for Medicare certification purposes.
    JCAHO resurveys its ASC every 3 years. Our original requirement was 
to survey ASCs every year. In practice, our resurveys has been 
averaging almost 3 years. Therefore, we accept JCAHO's 3-year resurvey 
cycle as comparable to ours.

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. In nine areas, AAAHC has made the 
following changes:
     Exclusivity requirement--AAAHC has supplemented its 
surgical services standard to include the Medicare exclusivity 
requirement for its accredited ASCs that want to apply AAAHC 
accreditation for Medicare certification purposes.
     Separate recordkeeping and staffing requirement--AAAHC 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).
     Separate recovery and waiting areas--AAAHC has included 
this requirement in its supplement to Chapter 8, ``Facilities and 
Environment,'' separate recovery and waiting areas for ASCs interested 
in Medicare certification based on AAAHC accreditation.
     Life Safety Code of the National Fire Protection 
Association--AAAHC supplementary standard to Chapter 8, ``Facilities 
and Environment,'' requires an ASC requesting Medicare certification, 
based on accreditation, 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.
     Requirements relating to pharmaceutical services--AAAHC 
states in its supplement to Chapter 15, ``Pharmaceutical Services,'' 
that adverse

[[Page 67044]]

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.
     Requirement relating to laboratory services--AAAHC did not 
have this requirement but has included it in the supplement to Chapter 
16, ``Pathology and Medical Laboratory Services.'' Specifically, as 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.
     Radiologic services--AAAHC states in its supplement to 
Chapter 17, ``Diagnostic Imaging Services,'' that ASCs desiring 
Medicare certification based on their accreditation must have 
arrangements with a Medicare approved providers/suppliers of radiology 
services to meet the needs of patients.
     Hospitalization--AAAHC has included the Medicare 
requirement in its supplement to Chapter 10, ``Surgical Services,'' for 
ASCs seeking Medicare certification based on AAAHC accreditation to 
transfer to a hospital a patient requiring emergency medical care 
beyond the ASC's capabilities. If further requires that the hospital be 
a local, Medicare-participating hospital, or a local, nonparticipating 
hospital that meets the requirements for payment for emergency services 
under Federal regulations.
     Unannounced surveys and resurvey frequency--AAAHC handbook 
section, ``Accreditation Policies and Procedures,'' has stated that it 
will conduct unannounced surveys for ASCs seeking Medicare 
certification based on AAAHC accreditation.
    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. Therefore AAAHC's 3-year resurvey cycle meets Medicare 
requirements.

C. Proposed Stipulations Relating to Accreditation by the Joint 
Commission on the Accreditation of Health Care 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 grant 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 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(d):
     We 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 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(d), JCAHO or AAAHC standards or accreditation policies would 
not demonstrate that the revised Medicare ASC conditions are met.
     We reserve the right to withdraw deemed status from all 
JCAHO or AAAHC accredited ASCs if a validation review or a public 
complaint review or a public complaint 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 cease to 
demonstrate that they meet Medicare conditions.
    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 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. The provisions of this notice are 
effective beginning on December 19, 1996 through December 19, 2002.

D. Analysis and Responses to Public Comments

    We receive 86 comments to our July 23, 1996 notice. Of these, 63 
were from ASCs or medical centers, 11 from M.D.s, 1 from a dentist, 10 
from professional medical associations an 1 from a State government. 
Seventy-eight (78) commenters favored deeming for JCAHO and AAAHC, 6 
approved deeming with reservations and 1 opposed it. A summary of these 
comments and our responses are discussed as follows:
     Comment: Seventy-eight (78) commenters, most of whom are 
ASCs, expressed strong support for our approval of the JCAHO's and 
AAAHC's applications for deemed status. Commenters stated that the two 
organizations are leaders in the development of outpatient oriented 
health care delivery and have developed standards of care and survey 
process that accrue the highest possible quality health care in the 
ambulatory setting.
     Response: We acknowledge the support shown and have 
developed an approval notice consistent with the provisions contained 
in our initial notice.
     Comment: One commenter suggested that since AAAHC's 
application for deeming was filed prior to the enactment of the new 
deeming legislation (Public Law 104-134), AAAHC's application should be 
considered filed the date Public Law 104-134 was enacted (April 26, 
1996).
    Response: As we stated in the initial notice, we do not believe the 
timeframe set forth in the new deeming legislation is applicable to 
deeming applications filed prior to its enactment. We viewed the letter 
that AAAHC wrote to us on May 23, 1996, requesting that we process its 
application under the new timeframes, as triggering the new timeframes. 
In order to comply with the requirements 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 the request, we placed our initial 
notice on public display July 19, 1996, and it appeared in the July 23, 
1996 issue of the Federal Register. Likewise, in order to comply with 
the requirement that we publish an approval notice of our findings 
within 210 days after we received an approved notice by December 19, 
1996.
    Comment: One commenter stated that AAAHC's ASC ``accreditees'' are 
not ``members'' of AAAHC.
    Response: We accept this comment and will refrain from referring to 
AAAHC accredited ASCs as members of AAAHC.
    Comment: Five commenters stated that if a national accreditation 
organization has its deeming authority

[[Page 67045]]

withdrawn by HCFA, this change should not affect ASCs already granted 
deemed status based on the organization's accreditation. In the same 
vein, three other commenters expressed concern about possible 
consequences to an ASC if the ASC's accreditation organization lost its 
deeming authority. One commenter argued that HCFA would not revoke 
Medicare certification of an ASC certified by a State surveyor if HCFA 
changed the conditions for coverage, or if the State surveying agency 
changed its survey procedures. The commenter stated that HCFA should 
conduct a facility by facility review to determine which facilities 
continue to satisfy Medicare conditions.
    Response: Our procedures have been well established in regulations 
and we must follow them in this notice. In accordance with 42 CFR 488.8 
(f)(7), should we rescind an accreditation organization's deeming 
authority, we will publish a notice in the Federal Register detailing 
the reasons for such action. Accreditation organizations are required 
to notify all accredited ASCs within 10 days of our withdrawal of their 
deeming authority.
    Under 42 CFR 488.8(f)(8) an affected ASC retains its deemed status 
for 60 days after notification and it can be extended an additional 60 
days if we determine that the ASC submitted an application within the 
initial 60-days timeframe to another approved accreditation 
organization or to us so that compliance with Medicare conditions can 
be determined. An ASC's failure to do so will jeopardize its 
participation in the Medicare program.
    Comment: One commenter requested that HCFA address the issue of an 
ASC applying to a deemed accreditation organization for Medicare 
certification based on its accreditation when the ASC is exempted by 
its State from licensure requirements. The commenter gave the example 
of an entity qualifying as a physician's office which is exempt from 
licensure under State law. In this case, the commenter concluded the 
accreditation organization would request that the ASC procedure either 
a license or evidence of exemption from licensure.
    Response: Section 416.26(a)(2) requires that facilities seeking 
Medicare certification as ASCs based on their accreditation by either 
JCAHO or AAAHC comply with State licensure requirements where 
applicable. Therefore, in the example cited, the commenter is correct 
in stating that the accreditation organization would request a license 
or evidence of exemption if the State permits a physician's office to 
operate as an ASC.
    Comment: One commenter questioned if deemed status will apply to 
physicians' offices that meet the standards set by AAAHC for ASCs but 
do not otherwise qualify as ASCs as defined by State laws.
    Response: As previously stated, if State law requires a license for 
a facility to operate in that State as an ASC, such requirement must be 
met before an entity such as a physician's office accredited by the 
JCAHO or AAAHC under its ASC accreditation program can be granted 
deemed status for Medicare certification as an ASC.
    Comment: Two commenters asked how deemed status affects ASCs that 
were Medicare certified through State survey and accredited by either 
JCAHO or AAAHC prior to HCFA's approval of deemed status for these 
accreditation organizations. One of the commenters also asked if there 
is a deadline by which a currently certified ASC should notify HCFA 
that it is accredited by a deemed organization.
    Response: After this approval notice is published in the Federal 
Register, ASCs accredited by either JCAHO or AAAHC, and already 
Medicare certified, are considered deemed for Medicare certification. 
When this status change is executed 42 CFR 488.7(a) discharges the 
State agencies from ongoing responsibility for conducting periodic 
surveys in deemed ASCs unless the ASC is selected for a sample 
validation survey or there is a substantial allegation of 
noncompliance. If the ASC is selected for a sample validation survey, 
the ASC will be notified by the State agency before the survey is 
conducted. In accordance with 42 CFR 488.7, State surveyors will 
determine if the ASC is out of compliance with a condition of coverage. 
If the ASC is found to be out of compliance, the ASC will no longer be 
deemed to meet the Medicare conditions and will be subject to full 
review by the State agency. Likewise, if there is a substantial 
allegation of noncompliance and the State agency conducts a compliance 
survey and finds a condition for coverage out of compliance, the ASC 
will be subject to full review by the State agency.
    Comment: Another commenter asked that we explain the procedure that 
new ASCs would follow to become Medicare certified after we grant deem 
status to JCAHO and AAAHC.
    Response: First, Medicare certification based on accreditation is 
strictly voluntary. ASCs seeking Medicare certification, have the 
option of determining whether they would prefer certification based on 
(1) a State agency survey or (2) accreditation by one of the deemed 
organizations. If the ASC chooses the first option, it would apply 
directly to the State survey agency in its area with which we have a 
survey agreement. After the survey is completed the State agency would 
forward its recommendation for Medicare certification to the 
appropriate regional office for processing. Our regional office would 
notify both the ASC and the State agency of the ASC's eligibility to 
participate in the Medicare program.
    If the ASC elects the second option, the accreditation organization 
would send a notice to our applicable regional office indicating the 
ASC's accreditation status and whether the ASC is deemed or not deemed 
for Medicare certification. The accrediting organization should also 
send a courtesy copy of such notification to the appropriate State 
agency. One receipt of such notification, the regional office will 
advise both the ASC and appropriate State agency of the ASC's Medicare 
certification status.
    Comment: One commenter believed it should remain the sole entity 
within the State responsible for determining facilities' Medicare 
certification for outpatient surgery since it believed surgical 
procedures could eventually be attempted in settings inappropriate for 
surgery. The commenter stated that all such facilities should be 
licensed by the State department of public health.
    Response: We have no reason to believe that granting deeming 
authority to either JCAHO or AAAHC will result in outpatient surgery 
being performed in inappropriate settings. Based on our review of each 
accreditation organization's standards and survey policies and 
procedures, we have determined that they both demonstrate the ASCs 
accredited by them would meet or exceed HCFA conditions. Furthermore, 
in this notice we reserve the right to revoke deemed status for all 
JCAHO-accredited or AAAHC-accredited ASCs should either organization 
revise its standards or accreditation policies and procedures in a 
manner which fails to demonstrate that its ASCs continue to meet 
Medicare conditions; or if a validation review or a public complaint 
review reveals widespread, systematic, and unresolved problems with 
either organization's accreditation process for ASCs; or if we 
determine that either organization has failed to sufficiently revise 
its standards to the extend necessary to demonstrate that revised 
Medicare conditions are met and enforced. Moreover, each State has the 
option to establish more stringent licensure requirements or

[[Page 67046]]

monitoring procedures to safeguard the quality of surgery performed in 
an ASC.
    Comment: One commenter believes that both JCAHO's and AAAHC's 
anesthesia requirements are not equivalent to Medicare's anesthesia 
conditions since neither organization currently requires physician 
supervision of non-physician administration of anesthesia and since 
JCAHO's standards contain no provision as to the identity or 
supervision of the actual anesthesia provider.
    Response: We believe that the commenter may be referring to these 
organizations' anesthesia standards as stated prior to each 
organization's most recent handbook editions. JCAHO's 1996 
Comprehensive Accreditation Manual for Ambulatory Care Section 2 
Leadership (LD), standard LD 1.9-2.6 and AAAHC's 1996-1997 
Accreditation Handbook for Ambulatory Health Care (Chapter 9) 
supplement their previous requirements in order to meet Medicare's 
anesthesia conditions. We have examined both organizations' 
supplemental anesthesia standards and are satisfied that both 
organizations demonstrate they meet our requirements for physician 
supervision of non-physician administration of anesthesia and 
identification of the anesthesia provider under 42 CFR 416.42(b) 
Standard: Administration of Anesthesia.
    Comment: One commenter advocated eliminating HCFA's requirement 
that physicians supervise certified registered nurse anesthetists. The 
commenter stated that HCFA seemed receptive to this recommendation when 
considering revisions of its hospital conditions of participation.
    Response: We cannot accept this comment. The issue raised is not 
the subject of this notice, which is limited to the approval of ASC 
deeming authority for JCAHO and AAAHC.
    Comment: One commenter expressed concern about the dominating 
presence of physicians on each of the governing bodies for JCAHO and 
AAAHC. The commenter believed that these organizations should have 
representatives on their governing bodies that reflect broad community 
interest.
    Response: Revised section 1865(b)(1) of the Act requires us to 
determine whether accreditation by a national accreditation 
organization demonstrates that Medicare conditions are met. We have 
determined that accreditation by JCAHO and AAAHC demonstrate that 
Medicare conditions for ASCs are met. Because there are no statutory or 
regulatory requirements for broad community representation on the 
governing or advisory boards or committees of private accreditation 
organizations, we are not in a position to require either JCAHO or 
AAAHC to include any specific groups on its boards or committees. Our 
primary concern is the content and application of the accreditation 
standards and procedures.
    Comment: One commenter stated that HCFA should be aware that the 
private creation of patient care standards is fraught with peril by 
virtue of the thrust of the federal antitrust laws. The comment read: 
``Simply stated, it cannot be routinely expected that private standard-
setting bodies will make legitimate patient safety considerations 
paramount when confronted with the threat of antitrust legislation, a 
threat which HCFA does not face.''
    Response: HCFA, in its process of granting deemed authority, is not 
fostering the creation of private patient care standards. We have our 
own conditions for coverage and the organizations requesting deemed 
authority must have their standards meet these conditions. Therefore, 
since outside groups are not acting together to create private care 
standards, we do not anticipate antitrust implications.
    Comment: One commenter proposes that we modify our regulations to 
allow AAAHC to perform ``unannounced inspections'' rather than 
``unannounced surveys'' to assess an ASC's compliance with Medicare 
conditions. The commenter suggests that unannounced inspections for 
compliance be conducted in conjunction with regularly scheduled tri-
annual full surveys. The commenter contends that ``the time and cost 
(disruption) associated with a full survey is quite high.'' The 
commenter argues that inspections would be less disruptive and require 
fewer staff resources.
    Response: We believe the commenter has assumed that mandated use of 
unannounced surveys for ASCs seeking Medicare certification based on 
their AAAHC accreditation would necessitate two separate survey 
processes for such ASCs, i.e., an announced survey to accredit an ASC 
plus an unannounced survey to determine if the ASC meets our Medicare 
conditions. We have no intention of imposing such survey requirements 
on either AAAHC or ASCs. Instead, the required use of unannounced 
surveys simply means that AAAHC would conduct full triennial surveys on 
ASCS seeking deemed status without advising them in advance that such a 
survey is forthcoming on a specific date.
    Comment: One commenter asked for a definition of an ``unannounced'' 
survey. Specifically, the commenter wanted to know if JCAHO would still 
send a notice of intent to survey prior to conducting the survey.
    Response: As a matter of policy, we interpret unannounced surveys 
to mean the accreditation organization will not send a notice of intent 
to survey an ASC prior to conducting the survey for those ASCs that 
want their accreditation to count for Medicare certification. We 
understand that unannounced surveys may result in some minor survey 
problems; therefore, under section 2700 (``The Survey Process'') of our 
State Operations Manual, facilities may be given advanced notice (no 
more than two working days) if the following two criteria are met:
     The facility is inaccessible via conventional travel means 
and making special or extraordinary travel arrangements are necessary; 
and
     There is a high probability that the staff essential to 
the survey process will be absent or the facility will be closed unless 
the survey is announced.
    Both accrediting organizations have agreed to the unannounced 
survey process for those ASCs that wish to be deemed to meet Medicare 
conditions for coverage based on their accreditation. Hence, the ASCs 
that are deemed to meet Medicare conditions for coverage based on 
accreditation will not be sent a notice of intent to survey, unless 
both of the above criteria are met.
    Comment: One commenter said it is unclear from our initial notice 
whether we have made an attempt to assess the ability of JCAHO and 
AAAHC to monitor Life Safety Code application. The commenter was not 
aware of any ongoing capability to survey and assess the compliance 
with Life Safety Code requirements.
    Response: In our initial notice, we discussed specific areas in 
which our Medicare conditions for ASCs exceeded accreditation standards 
for both JCAHO and AAAHC as they existed prior to discussions with both 
organizations and before their submittal of amendments or supplements 
to their standards, survey procedures are scoring guidelines were 
submitted to comply with Medicare ASC conditions. On examination, we 
found no disparity between our Life Safety Code condition and JCAHO's 
standard. However, as stated in our initial notice, examination 
revealed that AAHC had not previously mandated compliance with the 
provisions of the National Fire Protection Association Life Safety Code 
as we require for ASCs. Instead, AAAHC had heretofore required 
compliance with applicable local or State safety codes to ensure 
patient and facility safety in the event of fire. We advised in our 
initial notice

[[Page 67047]]

that AAAHC had developed a supplementary standard to Chapter 8, 
``Facilities and Environment'', that requires an ASC requesting 
Medicare certification to comply with the provisions of the National 
Fire Protection Association Life Safety Code. Furthermore, AAAHC has 
incorporated the Life Safety Code by reference into the AAAHC standard. 
Therefore, we have no reason to believe these two organizations lack 
the ability to monitor Life Safety Code application.
    Comment: One commenter asked how State agencies would monitor plans 
of corrections for deficiencies or violations cited by JCAHO or AAAHC 
as proposed on page 61 FR 38209 of our initial notice. The commenter 
also asked how State agencies would obtain such violations in a timely 
manner; how State surveys would be trained to survey against the deemed 
organization's standards; and how this monitoring activity would be 
funded.
    Response: Thank you for indicating a discrepancy in our discussion 
on page 61 FR 38209 about monitoring an ASC's plan of correction. The 
discussion pertains to the use of an accreditation organization's 
scoring guidelines to assess an ASC's level of compliance with its 
standards. In that discussion, we incorrectly stated that the State 
agency would monitor an ASC's plan of correction if the ASC received 
from the organization a score of 3, 4, or 5, which corresponds to our 
determination of noncompliance. We should have instead stated that in 
such cases the accreditation organization, not the State agency, would 
monitor the ASC's correction plan.
    Comment: One commenter expressed concern about the ability of JCAHO 
and AAAHC to investigate individual complaints about a specific 
provider it accredits.
    Response: Our evaluation of the accreditation programs for both 
JCAHO and AAAHC did not detect any indications that either of these 
organizations would be incapable of investigating individual complaints 
about any ASC either organization accredits.

III. Paperwork Reduction Act

    The public reporting and recordkeeping 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 HSQ-159-F is currently approved by the Office of 
Management and Budget (OMB), under OMB approval number 0938-0690, with 
an expiration date of 8/31/99.

IV. Regulatory Impact 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. 
In fiscal year 1996, there were 2,219 ASCs. This was an increase of 114 
Medicare/Medicaid certified ASCs. We conducted 180 initial, 115 
recertification (both at a cost of $848,125) and one complaint survey. 
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 during 
fiscal year 1996 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.
    While the fiscal year 1997 appropriation for survey activities has 
been substantially increased (by seven percent) for the first time in 
four years, the increase is insufficient to meet the survey demand. The 
numbers of participating providers and suppliers continue to increase. 
As indicated above, there was a 25 percent increase in ASCs within 4 
years (fiscal years 1993 through 1996). 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 approving deeming for 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 provision 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: December 6, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
    Dated: December 13, 1996.
Donna E. Shalala,
Secretary.
[FR Doc. 96-32194 Filed 12-18-96; 8:45 am]
BILLING CODE 4120-01-P