[Federal Register Volume 62, Number 244 (Friday, December 19, 1997)]
[Proposed Rules]
[Pages 66726-66763]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32793]



[[Page 66725]]

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Part II





Department of Health and Human Services





_______________________________________________________________________



Health Care Financing Administration



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42 CFR Parts 416, 482, 485, and 489



Medicare and Medicaid Programs; Hospital Conditions of Participation; 
Provider Agreements and Supplier Approval; Proposed Rule

  Federal Register / Vol. 62, No. 244 / Friday, December 19, 1997 / 
Proposed Rules  

[[Page 66726]]



DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 416, 482, 485, and 489

[HCFA-3745-P]
RIN 0938-AG79


Medicare and Medicaid Programs; Hospital Conditions of 
Participation; Provider Agreements and Supplier Approval

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

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would revise the requirements that 
hospitals must meet to participate in the Medicare and Medicaid 
programs. The revised requirements focus on patient care and the 
outcomes of that care, reflect a cross-functional view of patient 
treatment, encourage flexibility in meeting quality standards, and 
eliminate unnecessary procedural requirements. These changes are 
necessary to reflect advances in patient care delivery and quality 
assessment practices since the requirements were last revised in 1986. 
They are also an integral part of the Administration's efforts to 
achieve broad-based improvements in the quality of care furnished 
through Federal programs and in the measurement of that care, while at 
the same time reducing procedural burdens on providers. In addition, in 
an effort to increase the number of organ donations, we are proposing 
changes in the interaction between hospitals and organ procurement 
organizations. The proposed rule also would specify that HCFA may 
terminate the participation agreement of a hospital, skilled nursing 
facility, home health agency, or other provider if the provider refuses 
to allow access to its facilities, or examination of its operations or 
records, by or on behalf of HCFA, as necessary to verify that it is 
complying with the Medicare law and regulations and the terms of its 
provider agreement.

DATES: Comments will be considered if received at the appropriate 
address, as provided below, no later than 5 p.m. on February 17, 1998.

ADDRESSES: Mail written comments (one original and three copies) to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: HCFA-3745-P, P.O. Box 7517, 
Baltimore, MD 21207-0517.
    If you prefer, you may deliver your written comments (one original 
and three copies) to one of the following addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW, 
Washington, DC 20201, or
Room C5-09-26, Central Building, 7500 Security Boulevard, Baltimore, MD 
21244-1850.

    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code HCFA-3745-P. Comments received timely will be available 
for public inspection as they are received, generally beginning 
approximately 3 weeks after publication of a document, in Room 309-G of 
the Department's offices at 200 Independence Avenue, SW, Washington, 
DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m. 
(phone: (202) 690-7890).
    For comments that relate to information collection requirements, 
mail a copy of comments to: Office of Information and Regulatory 
Affairs, Office of Management and Budget, Room 10235, New Executive 
Office Building, Washington, DC 20503, Attn: Allison Herron Eydt, HCFA 
Desk Officer.
    Copies: To order copies of the Federal Register containing this 
document, send your request to: New Orders, Superintendent of 
Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date 
of the issue requested and enclose a check or money order payable to 
the Superintendent of Documents, or enclose your Visa or Master Card 
number and expiration date. Credit card orders can also be placed by 
calling the order desk at (202) 512-1530 or by faxing to (202) 512-
2250. The cost for each copy is $8.00. As an alternative, you can view 
and photocopy the Federal Register document at most libraries 
designated as Federal Depository Libraries and at many other public and 
academic libraries throughout the country that receive the Federal 
Register.

FOR FURTHER INFORMATION CONTACT: Frank Emerson, (410) 786-4656, Doris 
Jackson, RN, (410) 786-0095, Rachael Weinstein, RN, (410) 786-6775.

SUPPLEMENTARY INFORMATION:

I. Introduction

    As part of the President's and Vice President's regulatory reform 
initiative, the Health Care Financing Administration (HCFA) is 
committed to changing current regulations that focus largely on 
requirements for measuring procedural standards. One of HCFA's key 
initiatives in Reinventing Government (REGO) is to revise many of its 
conditions of participation (COPs) to focus on outcomes of care and to 
eliminate unnecessary procedural requirements. HCFA is working in 
partnership with the rest of the health care community to institute 
better, more commonsense ways of operating. On March 10, 1997 we 
published a proposed rule (62 FR 11004) that includes revisions for 
COPs for HHAs. Within the coming year, HCFA plans to propose revisions 
to the COPs for hospitals and end stage renal disease (ESRD) facilities 
and also to mount additional research in the area of ESRD to provide 
the basis for future changes.
    What these efforts have in common is--
1. Reinventing Government (REGO) Initiative
    To meet our REGO commitment, we are focusing on an approach for all 
sets of COPs that are:
     Transitional toward a patient outcome based system.
     Intended to stimulate improvements in processes, outcomes 
of care, and patient satisfaction.
     Patient centered.
     Supported by patient outcomes data.
     Interdisciplinary in the approach to care delivery, 
reflecting the team approach to health care delivery.
    The COPs generally adhere to these basic requirements, varying in 
some degree due to the unique environment and patient case mix of the 
provider type.
2. Transitional Framework
    The transitional framework for each set of COPs--
     Begins shifting the oversight focus toward patient health 
outcomes and away from burdensome and costly procedural requirements, 
restructures the traditional COPs along essential conditions centered 
on patient care, and reflects an interdisciplinary team approach to 
patient care.
     Prepares the foundation for provider adoption and use of 
more detailed patient outcome measures developed through private sector 
experience and research.
     Provides a flexible framework for incorporating better 
measures as they are developed and tested.
    3. Structure
    The basic structure of all of the COP follows the Joint Commission 
on Accreditation of Healthcare Organizations' (JCAHOs) ``Agenda for 
Change.'' This structure involves reducing the number of conditions; 
focusing on comprehensive assessment and patient outcomes; and 
deleting,

[[Page 66727]]

where possible, process requirements that are not specifically mandated 
by the statute or believed likely to produce outcomes vital to the 
protection of patient safety.
    Each set of COPs has the same essential four conditions that 
reflect the cycle of patient-centered care. The essential four 
conditions are:
     Patient rights.
     Patient assessment.
     Care planning and coordination of services.
     Quality assessment and performance improvement.
    Each of the sets of COP requirements are tailored to specific 
statutory requirements, the historical context of the provider type, 
and the unique form of care delivery and patient case mix.
4. Professional Input
    For each set of COP, national meetings of provider and practitioner 
groups and beneficiary representatives were held. Our partners in State 
survey agencies were also consulted about our approach and provided 
comments. Each proposed set of COP reflects extensive consultation with 
these groups. We recognize the importance of collaboration and 
communication with the industry and invite further comment on the 
proposed COP and related rules.

II. Background

A. Statutory Basis

    Sections 1861(e) (1) through (8) of the Social Security Act (the 
Act) provide that a hospital participating in the Medicare program must 
meet certain specified requirements. Section 1861(e)(9) of the Act 
specifies that a hospital also must meet such other requirements as the 
Secretary finds necessary in the interest of the health and safety of 
the hospital's patients. Under this authority, the Secretary has 
established the requirements that a hospital must meet to participate 
in Medicare in regulations at 42 CFR Part 482, Conditions of 
Participation for Hospitals.
    Section 1905(a) of the Act provides that Medicaid payments may be 
applied to hospital services. Under regulations at 42 CFR 
440.10(a)(3)(iii), hospitals generally are required to meet the 
Medicare conditions of participation in order to participate in 
Medicaid.
    The purposes of these conditions are to protect patient health and 
safety and to ensure that quality care is furnished to all patients in 
Medicare-participating hospitals. Surveyors use the conditions to 
determine whether a hospital qualifies for a provider agreement under 
Medicare and Medicaid. Under section 1865 of the Act and 42 CFR 488.5 
of the regulations, hospitals that are accredited by the Joint 
Commission on Accreditation of Healthcare Organizations (JCAHO) or the 
American Osteopathic Association (AOA) are not routinely surveyed for 
compliance with the conditions but are deemed to meet most of the 
requirements in the hospital conditions of participation based on their 
accreditation. (See 42 CFR part 488, Survey and Certification 
Procedures.)

B. Why Revise the Conditions of Participation

    The current conditions of participation (COPs) were adopted in 1986 
and for the most part have not been revised since that time. They are 
organized according to the types of services a hospital may offer, and 
include specific, process-oriented requirements for each hospital 
service or department. Since the current conditions were developed, 
however, significant innovations in hospital patient care delivery 
systems and quality assessment practices have emerged, as evidenced by 
the JCAHO's recent revision of its accreditation standards and redesign 
of its survey process.
    Moreover, as discussed above, the revision of the hospital 
requirements is part of a larger effort by HCFA to bring about 
improvements in the quality of care furnished to Federal beneficiaries 
through a new approach to our quality of care responsibilities. The 
existing hospital COPs do not provide patient-centered, outcome-
oriented standards, nor do they provide for the operation of a quality 
assessment and performance improvement program. Historically, we set 
requirements for participation in the Medicare program by establishing 
requirements that address the structures and processes of health care. 
These requirements are largely the result of professional consensus, 
since there are no data supporting the link between structure and 
process requirements and positive patient outcomes. The combination of 
process-oriented requirements with an enforcement approach that focuses 
on identifying providers that do not have the required structures and 
procedures in place no longer represents the best available method for 
assessing and improving hospital quality of care. Thus, we have 
concluded that significant revisions to the hospital conditions of 
participation are essential.

C. Transforming the Hospital Conditions of Participation

    We are committed to working with affected parties to implement 
revised COPs that impose the minimum burden on hospitals and allow 
hospitals maximum flexibility in meeting the Federal requirements 
necessary to fulfill our quality of care responsibilities. Thus, in 
developing revised conditions, we have solicited suggestions from 
organizations representing hospitals, practitioners, patients, and 
States, including distributing an informal, preliminary draft of the 
proposed hospital COPs to approximately 70 groups for comment. We have 
used those comments in the development of the revised COPs contained in 
this proposed rule.
    The fundamental principles that guided the development of the 
proposed COPs were the need to:
     Focus on the continuous, integrated care process that a 
patient experiences across all aspects of hospital services, centered 
around patient assessment, care planning, service delivery, and quality 
assessment and performance improvement.
     Adopt a patient-centered approach that recognizes the 
contributions of various skilled professionals and how they interact 
with each other to meet the patient's needs. Thus, we would eliminate 
requirements that encourage ``stovepipe'' administrative and 
enforcement structures.
     Stress quality improvements, incorporating to the greatest 
possible extent an outcome-oriented, data-driven quality assessment and 
performance improvement program. Thus, the new COPs would invest our 
principal expectations for performance in an overarching requirement 
that each hospital participate in its own quality assessment and 
performance improvement program.
     Facilitate flexibility in how a hospital meets our 
performance expectations, and eliminate process requirements unless 
there is consensus or evidence that they are predictive of desired 
outcomes for patients.
     Require that patient rights are assured.
    Based on these principles, we are proposing new hospital conditions 
of participation that revise or eliminate many existing requirements 
and incorporate critical requirements into four ``core conditions.'' 
These four COPs--Patient Rights; Patient Admission, Assessment, and 
Plan of Care; Patient Care; and Quality Assessment and Performance 
Improvement--would focus both

[[Page 66728]]

provider and surveyor efforts on the actual care delivered to the 
patient, the performance of the hospital as an organization, and the 
impact of the treatment furnished by the hospital on the health status 
of its patients. The first, Patient Rights, emphasizes a hospital's 
responsibility to respect and promote the rights of each hospital 
patient. The second proposed core COP, Patient Admission, Assessment, 
and Plan of Care, reflects the critical nature of a comprehensive 
assessment and a resulting plan of care in determining appropriate 
treatments and accomplishing desired health outcomes. It also would 
incorporate the need for a coordinated, team approach to planning care. 
The third proposed core COP, Patient Care, focuses on the actual 
delivery of care. Finally, the proposed Quality Assessment and 
Performance Improvement COP would charge each hospital with 
responsibility for carrying out a performance improvement program of 
its own design to effect continuing improvement in the quality of care 
furnished to its patients.
    In the revised COPs, we are proposing to include process-oriented 
requirements only where we believe they remain highly predictive of 
ensuring desired outcomes or are necessary to deter or prevent fraud 
and abuse (for example, the requirement for error-free medication 
administration under the pharmaceutical services COP). Far more 
frequently, however, we have eliminated process details from the 
existing requirements and instead included the related area of concern 
as a component that must be evaluated as part of the hospital's overall 
quality assessment and performance improvement responsibilities. For 
example, we would no longer specify that a hospital must make available 
to medical staff a written description of its laboratory services. 
However, we would continue to require that a hospital provide 
laboratory services needed to meet its patients' needs and would 
specify under the proposed quality assessment and performance 
improvement condition that a hospital's assessment and performance 
improvement program must include evaluation of its diagnostic services. 
The practical effect of this approach would be to stimulate the 
hospital to find its own performance problems, fix them, and 
continuously strive to improve patient outcomes and satisfaction, as 
well as efficiency and economy.
    We believe that the proposed COPs based on these principles reflect 
a fundamental change in HCFA's regulatory approach, a change that to a 
large extent establishes a shared commitment between HCFA and Medicare 
providers to achieve improvements in the quality of care furnished to 
their patients. The proposed COPs invest hospitals with internal 
responsibility for improving their performance, rather than relying on 
an externally-based approach in which prescriptive Federal requirements 
are enforced through the punitive aspects of the survey process. This 
change would enable HCFA and the States to focus more resources on 
joining with hospitals (in this case, principally non-accredited 
hospitals) in partnerships for improvement. It should result in fewer 
compliance surveys and the reduced need to threaten or take adverse 
actions that could jeopardize a hospital's reputation, financial 
viability, and participation in the Medicare and Medicaid programs.
    Yet these requirements provide the Secretary and State Medicaid 
agencies with more than adequate regulatory basis for compelling 
improved performance or termination of participation based on failure 
to correct seriously deficient performance that can or does threaten 
the health and safety of patients, or seriously impairs the hospital's 
capacity to provide needed care and services to patients. Under the 
current regulations, termination actions are initiated based on the 
evidence found during the survey. We foresee no changes in that regard 
in applying the new COPs.
    Thus, as with the current COPs, the enforceability of the proposed 
COPs will be rooted in the evidence found during the onsite survey when 
poor performance is identified and corrective action is not taken. We 
believe that if there is a need to seek a provider agreement 
termination based on the proposed COP, although a hospital may argue 
that its performance met the regulatory standards, HCFA will be 
successful at arguing that based on the evidence found during a survey 
the requirements of the regulation were not met. In fact, we believe 
the enforceability is strengthened by standards that establish outcome-
oriented performance expectations. When poor performance is documented 
from the evidence found during a survey and compared to the performance 
expectations embodied in these patient-centered, outcome-oriented COPs, 
we believe the contrast between the poor performance identified and the 
performance expectation of the COP will be clear.
    We recognize that an important part of the successful 
implementation of these proposed regulations will depend on how 
effectively State and Federal surveyors are able to learn and 
internalize this patient-centered, outcome-oriented approach and 
incorporate it into the survey process. The proposed approach embodied 
in these regulations, in fact, parallels the approach that we have 
taken in survey and certification, beginning as early as 1985 (for 
intermediate care facilities for the mentally retarded) and 1986 (for 
nursing homes). In concert with the States, we have trained surveyors 
to develop information from the survey process that leads to 
conclusions about how the provider's performance has impacted--
positively and negatively--on patients, especially in terms of what the 
patients actually experience. For example, for nearly a decade, nursing 
home surveyors have been trained to interview residents and family 
members, seeking information that contributes to their assessment of 
how the nursing home's performance is experienced by the residents and 
their families. Before the use of outcome-oriented surveys, surveyors 
focused almost exclusively on record reviews and observing care 
processes and organizational structures.
    These proposed regulations contain two critical improvements that 
support and extend the change to patient-centered, outcome-oriented 
surveys. First, the proposed regulations are designed to enable 
surveyors to focus explicitly on assessing outcomes of care, because 
the regulations would specify that each individual receive the care her 
or his assessed needs show is necessary, rather than requiring that 
certain services and processes be in place. Also, the addition of a 
strong, quality assessment and performance improvement requirement not 
only stimulates the provider to continuously monitor its performance 
and to find opportunities for improvement, it affords the surveyor the 
opportunity to assess how effectively the provider has pursued a 
continuous quality improvement agenda. All of these changes are 
directed toward improving outcomes of care and satisfaction for 
patients.
    We have already begun the process of identifying the tasks 
necessary to train surveyors and their supervisors and managers 
effectively in this refined, expanded approach. In addition, HCFA is 
implementing a new State survey agency quality improvement program that 
is designed to help State survey agencies increase their focus on 
improvement strategies in the survey and certification process. As more 
sources of performance data become available, we will be helping State 
survey agencies to learn how to use

[[Page 66729]]

these data effectively to target scarce survey resources and to 
identify and implement opportunities for improvement (e.g., reduction 
in falls or in nosocomial infection rates).
    The proposed COPs are designed to decrease the regulatory burden on 
hospitals and provide them with greatly enhanced flexibility. At the 
same time, the proposed requirement for a program of continuous quality 
assessment and performance improvement would increase performance 
expectations for hospitals in terms of achieving needed and desired 
outcomes for patients and increasing patient satisfaction with services 
provided. We invite public comment on this fundamental shift in our 
regulatory approach. We are especially interested in comments that 
address how HCFA could improve this approach, what additional 
flexibility could be provided, what process requirements are critical 
to patient care and safety and how well HCFA's investment in the 
hospital's participation in a strong continuous quality assessment and 
performance improvement program of their own design will achieve our 
intended goal of improving the efficiency, effectiveness and quality of 
patient outcomes and satisfaction.

D. Development of National Outcome-Based Performance Measures for 
Hospitals

    Before proceeding to a detailed discussion of the proposed 
requirements, we want to touch briefly on the prospects for standard 
outcome-based performance measures for hospital services. As mentioned 
above, HCFA is committed, through its Strategic Plan, to increasing the 
amount and quality of information about health care to beneficiaries, 
providers, plans, and the public at large. The purpose of this effort 
is to improve the ability of:
     Beneficiaries to make informed choices about their health 
care;
     Providers to improve the effectiveness and efficiency of 
their services, improve the outcomes of care they provide, and increase 
beneficiary satisfaction with their services;
     Organizations such as health maintenance organizations and 
insurance companies to choose providers, and evaluate and improve the 
performance of providers with which they contract; and
     The public to know more about the availability and quality 
of health care services in their communities.
    Through various initiatives, such as the Consumer Information 
Program's mammography screening initiative, HCFA is implementing its 
broad-based information strategy. A strong quality assessment and 
performance improvement (QAPI) requirement in the proposed hospital 
conditions of participation, as well as similar requirements in 
proposed HHA, hospice, and ESRD conditions, is intended to stimulate 
providers to develop and use a wide variety of information and data, 
from internal and external sources, to inform their improvement 
efforts. We go into more detail on this and industry efforts to 
implement QAPI later in the discussion on the QAPI conditions in 
section II.B.5 of the preamble.
    We have proposed requiring that HHAS and we are contemplating 
requiring that ESRD facilities report certain standard core data to 
HCFA to serve as the basis of a national performance measures data 
base, which could then be used for provider improvement, consumer 
information and other purposes. We are able to suggest this for HHAs 
and ESRD facilities because extensive work has been done on performance 
measures in both areas. However, with hospitals the challenge is 
greater and sufficient similar work has not been done on hospital 
measures, as described later in section II.B.5 of this preamble 
(Sec. 482.25), that could produce common agreement on measures that 
would be acceptable for use on a national basis.
    Therefore, we have decided not to include in the hospital COPs any 
requirement for hospitals to collect and report certain standard data 
items (for example, nosocomial infection rates, medication errors, 
reports of falls and other injuries, restraint use, various patient 
characteristic data elements, etc.) that could produce quality of care 
predictors in the future. Although we eventually intend to move in that 
direction in hospitals, we do not believe it is reasonable to establish 
any related requirements at this time, in view of the lack of any 
current consensus or science that could establish a reliable and valid 
set of measures.
    However, we invite comments from the public in response to the 
following questions:
    1. Should HCFA (either separately or in a public/private 
partnership of some sort) assume a leadership role in developing and 
implementing hospital-based performance measures that would serve as 
the basis of a national quality assessment and performance improvement 
data base?
    2. If so, how should HCFA proceed to develop and implement this 
system?
    3. If HCFA does not assume a leadership role in this area, 
individual hospitals invest in the development of multiple systems, and 
those systems are later superseded by a single required system, would 
the overall burden be greater than if a single system had been imposed 
at the outset?
    4. If HCFA does not assume a leadership role in this area and 
individual hospitals adopt multiple systems that produce 
nonstandardized data, to what extent would it be difficult or 
impossible to use these data to make comparisons between hospitals?
    5. Should HCFA require or encourage hospitals to use the 
standardized measures that some accredited hospitals are using? The 
advantage would be that hospitals using such standardized choices would 
not have to develop their own measures and their results could be 
compared to other hospitals with similar characteristics. Examples 
include: (1) Number of days from initial surgery to discharge for 
patients undergoing isolated coronary artery bypass graft procedures; 
and (2) time from the emergency department arrival to procedure for 
trauma patients undergoing specified abdominal surgical procedures.
    6. Would it be appropriate for HCFA to include any ``placeholder'' 
language in the revised COPs concerning the eventual need for hospitals 
to report relevant data, or is this premature?
    7. If HCFA should include placeholder language, what changes should 
we make to these proposed requirements to set the stage for the 
development and implementation of such a system?
    Even without a performance measure-based national system, we expect 
hospitals to develop and use their own measures and other available 
external information to inform their own quality assessment and 
improvement programs, and to participate in any external quality 
improvement programs (such as a national program to reduce the use of 
inappropriate psychoactive medications in hospitals) as the Secretary 
may direct.

II. Provisions of the Proposed Rule

A. Overview

    Under our proposal, the hospital conditions of participation would 
continue to be set forth in regulations under 42 CFR part 482. However, 
since the majority of the existing requirements in part 482 would be 
revised, consolidated with other requirements, or eliminated, we are 
proposing a complete overhaul of the organizational scheme. The most 
significant change would be our proposal to group together all COPs 
directly related to patient care in Subpart B, Patient Care Activities. 
Then, in Subpart C, Organizational

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Environment, we would group together those organizational activities 
the hospital must perform to support the delivery of patient care. We 
believe that this proposed format would embody the patient-centered 
focus of our proposed changes, emphasizing the continuous, integrated 
care processes that a patient experiences across all aspects of the 
hospital environment. Also, because functions and processes for 
delivering patient care often require interdisciplinary teamwork 
involving many hospital departments and services, the proposed 
regulations would incorporate a functional framework for the COPs 
rather than maintaining a stovepipe approach that gives the appearance 
that patient care activities can occur in isolation.
    The complete proposed new organizational format for part 482 is as 
follows:

PART 482--CONDITIONS OF PARTICIPATION FOR HOSPITALS

Subpart A--General Provisions

482.5  Basis and scope.
482.10  Condition of participation: Patient rights.

Subpart B--Patient Care Activities

482.15  Condition of participation: Patient admission, assessment, 
and plan of care.
482.20  Condition of participation: Patient care.
482.25  Condition of participation: Quality assessment and 
performance improvement.
482.30  Condition of participation: Diagnostic and therapeutic 
services or rehabilitative services.
482.35  Condition of participation: Pharmaceutical services.
482.40  Condition of participation: Nutritional services.
482.45  Condition of participation: Surgical and anesthesia 
services.
482.50  Condition of participation: Emergency services.
482.55  Condition of participation: Discharge planning.

Subpart C--Organizational Environment

482.110  Condition of participation: Administration of 
organizational environment.
482.115  Condition of participation: Infection control.
482.120  Condition of participation: Information management.
482.125  Condition of participation: Human resources.
482.130  Condition of participation: Physical environment.
482.135  Condition of participation: Life safety from fire.
482.140  Condition of participation: Blood and blood product 
transfusions.
482.145  Condition of participation: Potentially infectious blood 
and blood products.
482.150  Condition of participation: Utilization review.

Subpart D--Requirements for Specialty Hospitals

482.155  Special provisions applying to psychiatric hospitals.
482.160  Condition of participation: Special medical record 
requirement for psychiatric hospitals.
482.165  Condition of participation: Special staff requirements for 
psychiatric hospitals.
482.170  Special requirements for hospital providers of long-term 
care services (``swing-beds'').

    We note that although we are proposing no changes to the 
requirements for specialty hospitals, the existing requirements would 
be redesignated numerically to accommodate the proposed changes to the 
preceding COPs.

B. Discussion of Proposed Conditions

1. Basis and Scope (Sec. 482.1)
    We are proposing to add a new paragraph (a)(6) to the statutory 
basis section for part 482 that sets forth, under section 1138 of the 
Act, requirements for hospital protocols for organ procurement and 
standards for organ procurement agencies' agreements with hospitals for 
organ procurements. This provision will further the authority governing 
organ procurements.
2. Patient Rights (Sec. 482.10)
    Under section 1861(e)(9) of the Act, an institution may be 
recognized by Medicare as a hospital only if, in addition to meeting 
the specific requirements in the preceding sections of that provision, 
it meets such other requirements as the Secretary finds necessary in 
the interest of patient health and safety. In our view, patient health 
and safety cannot be protected simply by avoiding obvious risk factors 
such as poor infection control practices or inadequate nurse staffing 
(as documented in recent literature on the effects of Nursing on 
patient outcomes such as morbidity, mortality, length of stay, and 
cost--see Keeler, E., et al., ``Hospital Characteristics and Quality of 
Care,'' JAMA 268 (1992): 1709-1714.; and Krakauer, H., et al., 
``Evaluation of the HCFA for the Analysis of Mortality Following 
Hospitalization,'' Health Services Research 27 (1992): 317-335). 
Patient rights dealing with freedom from physical or verbal abuse, 
harassment, or inappropriate restraints are examples of direct 
protections of patients' physical and emotional health and safety. In 
addition, patients' successful recoveries from illness or injury depend 
on many factors related to their psychological and emotional health, 
including their general feeling of well-being. Because of the 
importance of these psychological and emotional factors, we believe 
patient health and safety can be protected adequately only if patient 
care is delivered in an atmosphere of respect for the individual 
patient's comfort, dignity, and privacy.
    This view is shared by other parties involved in the development of 
these conditions of participation, many of whom expressed strong 
support for the inclusion of specific provisions addressing patient 
rights. Therefore, we propose to set forth a new condition of 
participation that would recognize explicitly that a hospital must 
protect and promote certain patient rights.
    The proposed condition is composed of five standards. The first 
proposed standard would require that a hospital inform each patient of 
his or her rights in advance of furnishing care. It also would require 
that a hospital have a grievance process and must indicate who a 
patient should contact if he or she desires to express a grievance. We 
are not proposing a specific method as to how a hospital should notify 
each patient of his or her rights, or establishing structural or 
procedural expectations about how a hospital's patient grievance 
process should be set up. Instead, we believe each hospital should 
implement a patient rights policy that reflects its specific manner of 
operations and minimizes administrative burden, as long as the hospital 
meets the underlying expectation that it informs patients about their 
rights and about whom to contact when patients believe these rights 
have been violated.
    The remaining four proposed standards under the patient rights 
condition would establish a minimum set of required patient rights. In 
developing these provisions, we closely examined the regulations 
concerning patient rights for other provider types, such as nursing 
homes and HHAs. Because the nature of patient care varies among 
provider types, we are proposing only those patient rights that we 
believe are appropriate and necessary in the hospital setting. Based on 
the strong support from all parties involved in the development of 
these proposed hospital conditions, we are proposing that a patient 
should have the following rights:
     The right to be informed of his or her rights, to 
participate in the development and implementation of the individual's 
plan of care, and to make decisions regarding that care.

[[Page 66731]]

     The right to formulate advance directives and to have 
those directives followed.
     The right to privacy and to receive care in a safe 
setting.
     The right to be free from verbal or physical abuse or 
harassment.
     The right to confidentiality of his or her clinical 
records.
     The right to access information contained in his or her 
clinical records within a reasonable time.
     The right to be free from the use of seclusion and 
restraints as a means of coercion, convenience, or retaliation by 
staff. If seclusion or restraints are used (including 
psychopharmacological drugs used as restraints) they must be used in 
accordance with a patient's plan of care and may be used only as a last 
resort and in the least restrictive manner possible, to protect the 
patient or others from harm. Restraints must be removed or seclusion 
ended at the earliest possible time.
    We believe these proposed patient rights are clearly necessary in 
the interest of patient health and safety and are for the most part 
self-explanatory. We note that the rights concerning advance directives 
are tied directly to the statute (section 1866(f) of the Act), and the 
hospital's responsibilities in these areas are more fully described in 
other sections of the regulations (see existing Sec. 489.102). However, 
we believe it is appropriate to reference advance directives in the 
proposed patient rights section, consistent with the reference to 
advance directives in the patient rights sections of the existing 
regulations for both nursing homes and HHAs.
    We considered proposing a specific time period within which a 
hospital would be required to provide access to requested medical 
records under proposed Sec. 482.10(d)(2), but concluded that the 
proposed requirement that a hospital provide access to such information 
within a ``reasonable'' time is more feasible. If a former patient 
requests access to 3-year-old closed medical records, which could be in 
storage, a ``reasonable'' time to retrieve them likely would be longer 
than if the spouse (with appropriate power of attorney) of an inpatient 
requests to see the medical records of her or his spouse who is still 
in the hospital. In the former case, a ``reasonable'' time might be 
measured in days, whereas it could be hours in the latter example. 
Thus, we believe that ``reasonable'' must be defined in terms of the 
individual circumstances. Most important, we believe that 
``reasonable'' means that the hospital will not frustrate the 
legitimate efforts of individuals to gain access to their own medical 
records and will actively seek to meet those requests as quickly as its 
recordkeeping system permits. If a hospital receives complaints from 
patients or their legal representatives about delays in gaining access 
to properly requested records, we would expect that the hospital would 
both respond quickly to resolve the complaints and consider the 
complaints as an opportunity for improvement as part of its quality 
assessment and performance improvement program. In summary, we believe 
that the use of the word ``reasonable'' sets the proper performance 
standard for the hospital without imposing an arbitrary burden, while 
at the same time enabling surveyors to take action if a hospital is 
systematically frustrating legitimate efforts to gain access to medical 
records. We welcome comments on the appropriateness of our decision not 
to propose any specific timeframe for providing access to a patient's 
records.
    We also strongly considered expanding the proposed patient rights 
provisions (or establishing separate requirements) to provide further 
detail related to a patient's right to be free from seclusion or 
restraints. We recognize that the use of restraints or seclusion has 
the potential to produce serious consequences for a patient's health 
and safety, such as physical and psychological harm, loss of dignity, 
violation of civil rights, and even death. Thus, our expectation is 
that a hospital would impose restraints or seclusion only when 
absolutely necessary to prevent immediate injury to the patient or 
others and when no alternative means are sufficient to accomplish this 
purpose. We also expect that when restraints or seclusion are used, the 
plan of care should address how and when such practices are to be 
employed, and patients placed under restraints or in seclusion would be 
released as soon as they no longer pose an immediate threat of injury 
to themselves or others. Although we have built these expectations into 
the proposed patient rights provisions, the question remains whether it 
would be advisable to add further, more prescriptive requirements 
concerning the use of seclusion or restraints. One possibility would be 
to incorporate into the regulations a series of specific requirements 
governing the use of restraints and seclusion, as detailed below:
     Seclusion or restraints may only be used to the extent 
authorized by the signed order of a physician. Written authorization 
must include the date and time of the order, and the reason for 
seclusion or restraint. For restraint, the order must include the type 
of restraint(s) and the number of restraint points.
     Each order for seclusion or restraints must be in writing, 
must be time-limited and specify start and end times. Implementing a 
time-limited order does not require applying the intervention for the 
entire period if the patient demonstrates a reduction or change in the 
behavior that led to being placed in restraint or seclusion.
     A renewal order may be issued if the physician clinically 
assesses the patient face to face and determines that seclusion or 
restraint continues to be necessary to prevent injury to self or 
others, and there is no less restrictive method of preventing the 
injurious behavior.
     Orders for seclusion or restraint must never be written on 
a standing or as needed basis.
     Written orders for restraint and seclusion for adults must 
be valid for no more than 6 hours; written orders for restraint and 
seclusion for children and adolescents must be valid for no more than 2 
hours.
     A patient in seclusion or restraint must be checked by a 
person trained in the use of restraints and seclusion at least every 15 
minutes for comfort, body alignment, circulation, hydration, feeding, 
and toilet needs. A patient in seclusion or restraint must have vital 
signs checked a minimum of every 2 hours. Written documentation of 
checks must include, at a minimum, the name of the person doing the 
check, the date and time of the check, and the patient's condition.
    For purposes of this proposed rule, we have opted not to set forth 
these kinds of detailed requirements in the regulations but instead to 
require that a hospital achieve the intended outcome that restraints or 
seclusion are never imposed inappropriately, without limiting a 
hospital's flexibility in how it meets this requirement. However, we 
welcome comments on the prevalence of the use of restraints and 
seclusion in the hospital setting and whether the above standards, or 
alternative requirements, are needed to ensure patient health and 
safety.

Subpart B--Patient Care Activities

3. Patient Admission, Assessment, and Plan of Care (Sec. 482.15)
    The first proposed condition under proposed Subpart B, Patient Care 
Activities, would combine the requirements for patient admission, 
assessment, and care plan development in a single condition, which 
would be followed by a separate condition on patient care. We believe 
this

[[Page 66732]]

organization is in keeping with the patient centered orientation of 
these regulations and would help illustrate our view that patient 
assessment and planning is a prerequisite for the delivery of high 
quality care.
    The underlying requirements of this COP would be first that a 
hospital ensure that each patient receives a comprehensive assessment 
of his or her care needs, including an initial estimate of posthospital 
needs, if any, and then that the hospital establish a coordinated plan 
for how all relevant hospital disciplines will meet those needs. A 
comprehensive assessment of patient care needs is critical for planning 
patient care and achieving desired health care outcomes. Because 
patient assessment activities are performed by various disciplines 
within the hospital setting, coordination of the information obtained 
during patient assessment activities is vital to assuring a well-
developed plan for meeting the patient's identified care needs. 
Moreover, a coordinated plan for care delivery is increasingly 
important in a health care environment where payment incentives 
encourage shorter hospital stays. We note for an assessment to be truly 
``comprehensive,'' it must address all of a patient's anticipated care 
needs; thus, we believe it is appropriate to include a reference to 
posthospital needs under the proposed assessment COP. The inclusion of 
posthospital needs in a comprehensive assessment does not constitute an 
added burden on hospitals but simply reflects current, accepted 
practice in patient assessment activities. For example, in conducting a 
comprehensive assessment on a 17-year-old male with no history of 
medical problems who will undergo surgery to repair a fractured femur 
resulting from a football injury, it would be appropriate to gather 
information on who will be available to assist the patient at home, who 
is available to take the patient to follow-up medical appointments, and 
necessary instructions for posthospital needs (e.g., crutch walking, 
body positioning, medication administration, etc). (We note that, in 
accordance with section 1861(ee) of the Act, the proposed COPs would 
continue to address separately the formal discharge planning procedures 
required to ensure that patients receive appropriate posthospital care 
and services. As explained in further detail later in this preamble, we 
are proposing to retain the existing discharge planning COP (now 
codified at Sec. 482.43) and redesignate it as proposed Sec. 482.55.)
    Under the first proposed standard, ``Admission and comprehensive 
assessment'' (proposed Sec. 482.15(a)), we propose to retain the 
current flexible requirement (at existing Sec. 482.12(c)(2)) under 
which patients can be admitted to the hospital by any licensed 
practitioner allowed by the State to do so. Then, with respect to 
assessment, we would revise the requirement under existing 
Sec. 482.22(c)(5) that a physical examination and medical history be 
done no more than 7 days before or 48 hours after an admission. 
Instead, we propose to require that each patient receive a 
comprehensive assessment that identifies the patient's condition and 
care needs as well as an initial estimate of posthospital needs, if 
any, at the time of admission and is placed in the patient's medical 
record within 24 hours of admission.
    We propose to provide the hospital and medical staff the 
flexibility to define the content and activities of the comprehensive 
patient assessment. We recognize that to require, for example, that 
every patient have an evaluation of rehabilitation potential or 
nutritional status, is not necessarily appropriate. The information to 
be included in the comprehensive assessment would be determined by the 
hospital based on the characteristics and needs of the specific 
patient. For example, when the patient's condition or symptoms indicate 
possible alcohol or drug abuse, an alcohol or drug abuse assessment 
should be performed as part of a mental status assessment. Again, the 
performance expectation is that a hospital would ensure that each 
patient's assessment is comprehensive relative to the reason the 
patient is in the hospital. We do not believe it is appropriate to 
prescribe how a hospital meets this responsibility.
    We are proposing that the comprehensive assessment must be 
completed in a timely manner consistent with the patient's immediate 
needs and placed into a patient's medical record within 24 hours of 
admission. We believe that this proposed requirement sets a clear 
expectation for a close, effective relationship between assessment and 
care planning, a relationship that is essential to achieving desired 
health care outcomes. We view the maximum 24-hour timeframe for 
completion of the assessment as essential for adequate patient care and 
safety, since by definition a patient being admitted to a hospital is 
at a point of immediate need. The 24-hour timeframe should pose no 
burden for the well-managed hospital, since in all likelihood it would 
already be performing assessments within this timeframe for initial 
care planning and decision making purposes.
    We are also proposing a 12-hour timeframe for placement into the 
patient's medical record of any assessment information collected before 
admission to the hospital. For example, a patient may have had a health 
history and physical examination completed in the physician's office 
before admission. Allowing a copy of a previously completed health 
history and physical examination to be placed in the hospital records 
would eliminate duplication in the creation of these records, 
especially if the findings during the physician office visit were the 
basis of the admission to the hospital. Unlike under existing 
regulations, which permit use of a physical examination or medical 
history done within 7 days of a patient's admission, the proposed 
requirements would not establish an arbitrary limit on the use of such 
information. Instead, we would require that any comprehensive 
assessment information recorded before admission be updated to reflect 
the patient's condition on admission. That is, a hospital would be 
expected to reassess the necessity of the patient's admission to the 
hospital and document, as appropriate, any changes in the patient's 
condition at the time of admission. We believe this requirement would 
reduce the hospital's information collection burden without 
compromising patient health and safety. Because, in such a case, the 
history taking and physical examination activities essentially are 
completed before admission, we believe that 12 hours is a reasonable 
timeframe for placement of that assessment information into the medical 
record. That is, it should take the hospital less time to update the 
assessment information than the proposed 24-hour timeframe for a 
comprehensive assessment performed after admission.
    The second standard under this COP, proposed Sec. 482.15(b)(1), 
would require that each patient have an initial written plan of care 
that meets the needs identified in the comprehensive assessment and 
that the plan of care must be placed in the medical record within 24 
hours of admission. Thus, each patient would be assured of having a 
comprehensive assessment and an initial care plan within 24 hours of 
admission to the hospital. We believe that this 24-hour timeframe for 
care planning is both reasonable and necessary, given the continuing 
decreases in average lengths of stay in hospitals.
    Presently, responsibility for a patient's plan of care is addressed 
under various separate COPs, including governing body, medical staff, 
and nursing services. In place of this

[[Page 66733]]

fragmented approach, we would focus on the need for coordination in 
care planning for hospital patients by requiring that the plan include 
care to be delivered by all disciplines. We would not specify which 
disciplines must be involved in care planning; instead, the hospital 
would have the flexibility to determine which disciplines should be 
involved based on the nature of a patient's illness or injury. 
Similarly, we are not proposing to require that a hospital have a 
single care plan that documents interdisciplinary care planning needs, 
but only that care planning by all relevant disciplines be included in 
the medical record using whatever organizational structure or format 
the hospital believes is appropriate.
    Under proposed Sec. 482.15(b)(2), we would require that the 
patient's plan of care be modified to meet any changes in the patient's 
condition that affects the patient's needs. We believe this requirement 
is preferable to a mandate that reassessments be conducted at specified 
time intervals on all patients. Instead, each practitioner involved in 
a patient's care may perform reassessments and modify the plan of care, 
as needed.
    We welcome comments on whether the specific proposed timeframes in 
the regulation text are reasonable and consistent with current medical 
practice and whether the timeframes should be used as benchmarks to 
reflect patient health and safety concerns involving the timeliness of 
the assessment components.
4. Patient Care (Sec. 482.20)
    Patient care activities occur in all areas and departments of a 
hospital. These activities are carried out by a variety of staff and 
licensed practitioners from the medical, nursing, pharmacy, dietetics, 
rehabilitation, and other departments and services. Rather than 
describing distinct patient care responsibilities for each service or 
department, we have organized these regulations to reflect the 
integrated way in which a patient experiences care, by establishing a 
single, unified patient care condition. Thus, by consolidating patient 
care activities into one COP, the proposed regulations would no longer 
support a ``stovepipe'' approach to patient care and instead foster a 
hospital's efforts to integrate, coordinate, and evaluate patient care 
in the same way as the patient experiences care in a contemporary 
hospital setting.
    Overall, the proposed patient care COP would require that each 
Medicare patient be under the care of an appropriately qualified 
practitioner, and that the care provided to each patient be coordinated 
and based on the plan of care required under proposed Sec. 482.15. The 
first standard under the proposed patient care COP (Sec. 482.20(a)) 
concerns the assignment of a practitioner responsible for each Medicare 
patient's care. Under this standard, we would retain, with only minor 
editorial changes and one substantive change (discussed below) the 
current requirements in Sec. 482.12(c)(1), (3), and (4). These 
requirements, while specific and detailed, are needed to implement 
section 1861(e)(1) of the Act, which defines a hospital as an 
institution that provides services by or under the supervision of 
physicians, and section 1861(e)(4) of the Act, which requires that 
every Medicare patient be under the care of a physician. It is 
necessary to implement the latter requirement in a way that recognizes 
the many types of practitioners who are authorized by State scope of 
practice laws and hospital staff bylaws to treat patients in hospitals.
    Within this standard, the only substantive change from current 
requirements appears at proposed Sec. 482.20(a)(1)(vi), which would 
permit a clinical psychologist to admit and treat patients receiving 
qualified psychologist services (as defined in section 1861(ii) of the 
Act), to the extent this is permitted under State law. This change is 
needed to implement a change in section 1861(e)(4) of the Act that was 
made by section 104 of Public Law 103-432, the Social Security Act 
Amendments of 1994.
    Proposed paragraphs (a)(2) and (3) of this standard restate current 
requirements under Sec. 482.12(c)(3) and (4) concerning the presence of 
doctors and their responsibilities toward patients.
    The second proposed standard, delivery of patient care 
(Sec. 482.20(b)), would require that each patient be provided care and 
treatment interventions that are coordinated by all relevant 
disciplines and conform to the plan of care. We then would require a 
hospital to evaluate the patient's progress and adjust care when 
appropriate progress is not being achieved. That is, in keeping with 
the requirement under proposed Sec. 482.15(b)(2) that the plan of care 
be modified as needed, we believe it is essential to include under this 
COP the companion requirement that actual care provided also be changed 
as needed, thus establishing the essential linkage between evaluation 
of treatment results and care plan modification.
    We also propose that patient care services are provided only on the 
order of qualified practitioners with delineated clinical privileges. 
This proposed provision is in keeping with the overall approach of the 
patient care COP, that is, the focus on the integration and 
coordination of hospital services rather than the former ``stovepipe'' 
approach. Thus, rather than specifying under the nutrition services COP 
that therapeutic diets must be prescribed by the responsible 
practitioner (now required under Sec. 482.28(b)(1)), we intend that 
such department-specific requirements would be encompassed within the 
hospital's overall responsibility to ensure that all patient care 
services be provided in accordance with the orders of qualified 
practitioners. So, if a surveyor finds evidence that therapeutic diets 
were prescribed inappropriately, the hospital could then be cited for a 
deficiency under this standard and, if applicable, under proposed 
Sec. 482.40 (Nutrition services) if the outcome of this problem was 
that patients' nutritional needs were not met.
    Finally, if a hospital provides care to outpatients, it would be 
responsible for ensuring that outpatient care meets the same quality of 
care requirements as inpatient care and that inpatient and outpatient 
services are coordinated to promote continuity of care for patients who 
move between levels of care. Inpatient and outpatient care should be 
coordinated, so that a patient does not experience any disruption of 
care or duplication of services simply because of a change from 
inpatient to outpatient status, or vice versa. We recognize that some 
procedures can appropriately be done only on an inpatient basis, and we 
do not intend to require that every service be available on either an 
inpatient or outpatient basis. The intent of this proposed provision is 
to ensure that if a service is provided in both the inpatient and 
outpatient settings, the level of quality in each setting is the same, 
so that there is a uniform level of care throughout the hospital. For 
example, infection control procedures and practices should be followed 
uniformly throughout the hospital, not merely in inpatient areas, and 
we would expect a hospital to investigate adverse outcomes among 
outpatients as thoroughly as those among inpatients. Thus, as noted 
below, we would expect a hospital's quality assessment and performance 
improvement program to encompass outpatient services, if the hospital 
provides those services.
5. Quality Assessment and Performance Improvement (Sec. 482.25)
    The current quality assurance condition of participation 
(Sec. 482.21)

[[Page 66734]]

relies on a problem-focused approach to identify and correct problems 
in patient care delivery. During the last decade, the health care 
industry has moved beyond the problem-focused approach of quality 
assurance in favor of focusing on systemic quality improvements, as 
evidenced by the JCAHO's overhaul of its accreditation standards over 
the last few years. We propose to follow suit by requiring a Medicare-
participating hospital to participate in a continuous effort to improve 
its performance, incorporating to the greatest extent possible an 
approach that focuses on the hospital's performance in improving 
patient outcomes and satisfaction. Specifically, we are proposing a new 
COP that would require that each hospital develop, implement, maintain, 
and evaluate an effective data-driven quality assessment and 
performance improvement program.
    We do not propose to prescribe specific methodologies to achieve 
this objective, with the exception of retaining the current rule on 
autopsies (see below). Instead, we would specify that a hospital's 
quality assessment and performance improvement program should reflect 
the complexity of the hospital's organization and services. Thus, each 
hospital would be free to pursue quality improvement in a manner best 
suited to its individual characteristics and resources. However, every 
hospital would be responsible for implementing actions that result in 
performance improvements across the full range of the hospital's 
services to patients. Also, we would require that a hospital's quality 
assessment and performance improvement program must use objective 
measures that make it possible to track performance to ensure that 
improvements are sustained over time.
    The proposed quality assessment and performance improvement 
condition (Sec. 482.25) contains three standards, the first addressing 
the scope and direction of the performance improvement program, the 
second on responsibility for the program, and the third on autopsies. 
The first proposed standard would require that a hospital's quality 
assessment and performance improvement program include the use of 
objective measures to evaluate performance changes and would delineate 
the minimum items that must be included in the hospital's program. 
Specifically, we would require that a hospital objectively evaluate the 
following areas that we believe are critical to hospital performance: 
Access to care; patient satisfaction; staff, administrative, and 
practitioner performance; complaints and grievances; diagnostic and 
therapeutic services provided; medication error incidents, achievement 
of drug therapy goals, and incidents of adverse drug effects; 
nutritional services, including, if applicable, patient's responses to 
therapeutic diets and parenteral nutrition; surgery and anesthesia 
services; safety issues, including infection control and physical 
environment; emergency services (if provided); discharge planning 
activities; and the results of autopsies. We included the first 11 
items as the minimum elements of the performance improvement program 
because we believe they comprise the fundamental building blocks of a 
well-managed hospital, whose primary business is achieving desired 
outcomes for patients and ensuring their satisfaction. We are proposing 
the twelfth item, ``results of autopsies,'' because we believe that 
autopsies can be an important source of information to both individual 
practitioners and hospitals that can point to opportunities for 
improvement in both practitioner and hospital performance. We are 
asking for comments on the minimum content of the Quality Assessment 
and Improvement Program as well as the twelve elements that are part of 
the Whole Quality Assessment standard.
    The next standard (proposed Sec. 482.25(a)(2)) would then state 
that for each of the areas listed above, and any others the hospital 
includes, the hospital must measure, analyze, and track quality 
indicators or other aspects of performance that the hospital adopts or 
develops that reflect processes of care and hospital operations. These 
measures must be shown to be predictive of desired outcomes or be the 
outcomes themselves. As explained below, we also would require a 
hospital to use hospital-specific data, as well as Peer Review 
Organization (PRO) and other relevant data, in its quality assessment 
and performance improvement strategy.
    Again, when we use the word ``measure,'' we mean that the hospital 
must use objective means of tracking performance that enable a hospital 
(and a surveyor) to identify the differences in performance between two 
points in time. For example, we would not consider a hospital's 
subjective statement that it is ``doing better'' in a given performance 
area as a result of an improvement process to be an acceptable measure. 
There must be identifiable units of measure that any reasonably 
knowledgeable person would be able to distinguish as evidence of 
change. Not all objective measures must have been shown to be valid and 
reliable (that is, subjected to scientific development) to be useable 
in improvement projects, but they must at least identify a start point 
and end point stated in objective terms, most often, numbers, that 
actually relate directly to the objectives and expected/desired 
outcomes of the improvement project.
    We do not believe it is feasible at this time to propose that a 
specific set of quality indicators or objective performance measures be 
used. However, systematic collection and analysis of quality indicators 
or performance measures that each hospital identifies should foster the 
eventual development of a data-driven system of hospital indicators. 
Many hospitals are already very active in this area. We recognize that 
collection and analysis of clinical outcome data may represent an 
increased burden on some hospitals, particularly on the subset of 
hospitals that are routinely subject to HCFA's survey process. These 
non-accredited hospitals typically are smaller than JCAHO-accredited 
hospitals, are located in more sparsely populated areas, and may not 
have the resources for extensive data gathering and reporting. However, 
rather than mandating specific performance measures, we would allow 
each hospital the flexibility to identify its own measures of 
performance for the activities it identifies as priorities in its 
quality assessment and performance improvement strategy. With this in 
mind, we believe the proposed quality assessment and performance 
improvement condition would lay the foundation for specific hospital 
quality indicators that might be developed by consensus in the future.
    We anticipate that hospitals, both large and small, rural and 
urban, will or already use a variety of performance measures to inform 
their internal quality assessment and performance improvement programs. 
Some of these measures may be designed by the hospital itself, while 
others will be developed through research or by consensus groups or 
other sources outside the hospital. Regardless, HCFA intends, through 
its survey process, to assess the hospital's success in using 
performance measures principally in terms of whether the hospital can 
demonstrate with objective data that sustained improvements have taken 
place in: (1) Actual care outcomes, patient satisfaction levels, or 
other performance data, and/or (2) processes of care and hospital 
operations that are predictive of improved outcomes of care and 
satisfaction for patients. HCFA does not intend and would not be in a 
position to judge the measures themselves; instead, we would assess

[[Page 66735]]

their utility for the hospital in its own efforts to improve its 
performance.
    While we recognize that there is no single system available for the 
measurement of a hospital performance, we are also aware of efforts in 
the hospital industry to find ways to increase the use of intra- and 
inter-hospital performance measurement systems. For example, under 
programs called ORYX and ORYX PLUS JCAHO plans to require hospitals to 
use a defined number of performance measures that evaluate care to a 
percentage of patients in an initiative to integrate performance 
measures with the accreditation process. Initially, we understand these 
programs set forth an initial framework for evaluating a wide range of 
performance measurement systems. The specific attributes of the 
measurement systems that will be evaluated include: the performance 
measures and data elements (how they focus on processes and/or outcomes 
related to patient care and organizational performance); the 
construction of the database; the quality of the database; the extent 
of risk adjustment/stratification for patient factors; performance-
related feedback; and the relevance of the performance measurement 
system for accreditation.
    Under this proposed rule, we would require a hospital to engage in 
a quality assessment and performance improvement program that uses 
objective measures, but we are not proposing that a hospital be 
required to participate in a system of performance measurement with 
other hospitals. However, we intend to develop such a requirement for 
inclusion in our final rule, and welcome public comments addressing the 
appropriateness of such a requirement or how it could best be 
structured. For example, one possibility is that the final rule would 
set forth the requirement as suggested above, and would include the 
evaluation criteria for the system or systems the hospitals might use. 
We do not envision that we would require the use of a specific system. 
Again, we are not proposing any specific provisions at this time, but 
we invite comment on whether HCFA should require non-accredited 
hospitals to participate in one or more performance measurement systems 
as part of their overall quality assessment and performance improvement 
program (both internally and externally).
    Example of a quality improvement project. HCFA wants to assure 
hospitals, particularly smaller, more rural hospitals, that our 
expectations for the use of performance measures are commensurate with 
the size and resources available to the hospital. Powerful improvement 
programs can be and are often premised on simple, straightforward 
designs, using measures that are direct and uncomplicated. For example, 
a hospital might collect information on a routine, sampled basis about 
the rate of utilization of psychoactive medications that are initiated 
during a hospital stay, when none were used by the patient prior to 
hospitalization. This data collection could be a part of the hospital's 
quality assessment and performance improvement program associated with 
the proposed drug management requirements (proposed Sec. 482.35(b)). 
The data could be collected manually or electronically and could be 
analyzed by case mix, age, physician specific prescribing patterns, the 
shift most likely to request medication orders, etc. This data would 
fulfill our requirement that it be an ``objective measure'' because the 
unit of measure in this example is the number of patients for whom 
psychoactive medications are prescribed after admission. If this data 
is taken for 1 month as a start period, and taken again 6 months later 
as an end period, the differences in the number of patients for whom 
psychoactive medications were prescribed after admission (both increase 
and decrease) would inform the hospital staff responsible for this 
project how well (or poorly) their intervention plan worked.
    The hospital's quality assessment and performance improvement team 
could then use that data to design a specific improvement project, 
implement it, and continue to collect data to demonstrate, in a 
nonstatistical way change over time (for example, a steady reduction in 
orders for psychoactive medications during a hospital stay). The 
performance measures for a project like this are immediate and simple 
to collect, and well within the reach of any hospital. Hospitals that 
have more resources could be expected to produce more sophisticated 
measures that involve more complicated issues, but the key expectation 
of these requirements is that the hospital make an aggressive and 
continuous effort to improve its performance across the board. HCFA is 
more interested in the outcomes of such an effort than in the specific 
processes the hospital uses to achieve the performance improvements. We 
recognize that: (1) There is not yet a wide menu of available 
performance measures that have been shown to be reliable and valid that 
could be offered to a hospital to use to meet these requirements; (2) a 
hospital cannot control many related nonpatient care outcomes (such as 
substance abuse practices of the patient, or lack of adequate support 
systems to ensure lasting positive outcomes from the hospital stay, 
etc.); and (3) many hospitals will need more experience with data 
collection methods and in the design implementation and monitoring of 
improvement projects. However, experience in many hospitals, other 
health care providers, and business and industry in general has shown 
convincingly that creating an expectation for continuous improvement is 
a far more powerful performance incentive than maintaining a set of 
process and structural requirements.
    Therefore, we want to stress that our emphasis at this time is on 
the improvement of processes. The process of improvement entails: (1) 
Identification of an organization's critical patient care and services 
components; (2) application of performance measures that are predictive 
of quality outcomes that would result from delivery of the patient care 
and services; and (3) continuous use of a method of data collection and 
evaluation that identifies or triggers further opportunities for 
improvement. We do not intend for hospitals to collect data from 
performance measures for the sake of meeting a regulatory requirement. 
The hospital must have the flexibility to identify the processes 
targeted for improvement based on the unique needs and priorities of 
the facility and its patients. Moreover, we would expect the processes 
targeted for improvement to change over time as the hospital makes the 
necessary improvement efforts.
    As stated by W. Edwards Deming, the late quality management expert, 
``* * * quality comes from * * * improvement of process(es)'' and the 
degree to which improvement occurs is measured through analysis of 
collected data. (Katz, Jacqueline, Managing Quality, St. Louis: Mosby 
Year Book, 1992, p. 122). Likewise, the intent of this requirement is 
that each hospital will engage in improvement activities, based on its 
own analysis of data, that improve care outcomes and patient 
satisfaction and lead to greater efficiency and economy of operation.
    How to Measure Hospital Quality Improvement Efforts--Options for 
Establishing a Required Minimum Level of Improvement Projects Per Year. 
As the preceding discussion illustrates, even small, rural hospitals 
and those without sophisticated ``research'' capabilities can develop 
and manage effective quality assessment and

[[Page 66736]]

improvement programs that demonstrate sustained improvement over time. 
However, we are concerned that some hospitals may make token efforts to 
meet this requirement, efforts that are aimed primarily at avoiding 
adverse enforcement action resulting from a survey, rather than at 
improving processes and outcomes of care and satisfaction for patients. 
Thus, depending on the comments we receive, we intend to develop for 
the final regulation a requirement that a hospital engage in a minimum 
number of improvement projects that are based upon the hospital's own 
quality assessments of its performance and that show measured, 
sustained results that actually benefit patients.
    We are not proposing specific language in the regulation text at 
this time because we recognize there are many ways in which a minimum 
level of effort can be set.
    We are inviting comment not only on the advisability and necessity 
of such a requirement, but also on the best approaches to achieve this 
minimum level of effort. At a minimum, we would require under the 
quality assessment and performance improvement condition of 
participation that the number of distinct successful improvement 
activities to be conducted annually must be proportional to the scope 
and complexity of the hospital's program. The success of the activity 
would be measured in terms of demonstrated sustained improvement over 
time. We intend to then supplement this underlying requirement with a 
more precise explanation of what would be expected of each hospital. 
Among the possible alternatives that we are considering are the 
following:
    (1) Require the hospital to engage in a specific number of 
improvement projects equal to not less than 1 project per 1,000 patient 
discharges.
    (2) Require a minimum set number of projects (e.g., five) that are 
hospital-wide and most broadly affect patient outcomes and 
satisfaction.
    (3) Require a minimum set number of projects (e.g., five) that are 
not hospital-wide, but that are developed and implemented in various 
areas of the hospital's range of care and services (e.g., one project 
might reduce waiting time in the emergency room, another might focus on 
improving the accuracy of medication administration, etc.).
    (4) Require a minimum number of projects based on bed-size, rather 
than discharges (e.g., 8 projects in a 600-bed hospital, 2 in a 50-bed 
hospital).
    (5) Rather than requiring a minimum number of projects, require the 
hospital to demonstrate (e.g., to the PRO and/or survey agency) what 
projects they are doing and what progress is being achieved.
    (6) Again, rather than specifying minimum number of projects, 
establish a minimum set of types of projects that must be done (e.g., 
hospital operational processes that are predictive of positive 
outcomes, such as infection control measures, or condition-specific 
projects that improve certain clinical outcomes, such as emergency room 
responses to heart attack patients).
    We are certain there are many other ways to approach the ``minimum 
effort'' discussion. The examples noted above illustrate some of the 
possible approaches to ensuring that hospitals invest substantial 
efforts in quality assessment and improvement. The purpose of these 
examples is to elicit comment and suggestions in this regard, and we 
welcome alternative approaches. We note that although our intention is 
to specify in the final rule a minimum level of effort, it is also 
possible that after reviewing all the comments we may conclude that it 
is neither feasible nor desirable to do so.
    Other Elements of the Proposed Quality Assessment and Performance 
Improvement Condition. We propose a new requirement at 
Sec. 482.25(a)(3) that a hospital must use hospital-specific as well as 
PRO data and any other available relevant data, as an integral part of 
its quality assessment and performance improvement strategy, to develop 
its improvement plans and projects. However, if a hospital elects not 
to participate in an improvement project with its PRO, we propose at 
Sec. 482.25(a)(4) that it must be able to demonstrate a level of 
achievement through its own quality assessment and performance 
improvement strategy comparable to or better than that to be expected 
from such participation. Thus, we intend that each hospital have the 
responsibility to engage in improvement projects that are vigorous and 
needed to improve performance across the range of hospital activities 
that affect patient outcomes. For example, if a PRO proposes a 
cooperative project to improve the outcomes for Medicare patients with 
pneumonia, and the hospital chooses not to participate, HCFA surveyors 
would expect to find that projects that the hospital designed and 
implemented on its own (e.g., an improvement project to reduce the use 
of psychoactive medications and physical restraints as patient 
management tools) achieved improvements that were demonstrably as 
important as the expected outcomes that would have been expected from 
the pneumonia study had the hospital chosen to participate in that 
cooperative study. (In assessing the comparability of a hospital 
project with a PRO project, we would consider the number of patients 
affected, the projected magnitude of the benefit to individual 
patients, and the actual changes achieved by the project to the changes 
achieved by participants in the PRO project.)
    We also would require that a hospital set priorities for 
performance improvement, based on the prevalence and severity of 
identified problems. Of course, we expect that a hospital will 
immediately correct problems that are identified through its quality 
assessment and performance improvement program that actually or 
potentially affect the health and safety of patients. For example, if a 
hospital's quality assessment and performance improvement process 
identifies problems with accuracy of medication administration, it is 
not enough for the hospital to consider this area a candidate for an 
improvement program that may or may not be chosen from a priority list 
of potential projects. Rather, since accuracy of medication 
administration is critical to the health and safety of patients, the 
hospital must intervene with a correction and improvement program 
immediately. Overall, a hospital would be expected to give priority to 
improvement activities that most affect clinical outcomes.
    As noted above, perhaps the most fundamental change proposed in the 
new quality assessment and performance COP in comparison to the present 
condition on quality assurance is the focus on taking action to correct 
problems identified through the hospital's quality assessment and 
performance improvement program. This change is reemphasized in the 
proposed requirement at Sec. 482.25(a)(6) that a hospital must take 
actions based on measurement and tracking that result in demonstrable, 
sustained improvements. We envision a hospital meeting this requirement 
by conducting a systems/process analysis when adverse outcomes are 
identified and then taking action to afford long-term correction and 
improvement of the identified problems, as illustrated in the above 
example concerning medication administration.
    The second proposed standard under this COP, proposed 
Sec. 482.25(b), basically builds on the current requirement under 
Sec. 482.21 that the hospital's governing body ensures that there is an 
effective, hospital-wide quality assessment and performance improvement 
program, as well as on the current requirements concerning

[[Page 66737]]

medical staff responsibilities under Sec. 482.22(b) and (c). Under the 
new proposed standard, we would state that the hospital governing body, 
medical staff, and administration officials are responsible for 
ensuring that the hospital-wide quality assessment and performance 
improvement efforts address identified priorities in the hospital and 
for implementing and evaluating improvement actions. We would, however, 
eliminate several procedural requirements under the current medical 
staffing provisions, such as those concerning the organization of the 
medical staff.
    Finally, in keeping with the cross-cutting, hospital-wide approach 
to quality improvement that we believe represents current best 
practices, the standard includes a requirement that all programs, 
departments, and functions be involved in the hospital's quality 
assessment and performance improvement program. This would include 
services that are carried out under contract or by arrangement.
    Under the third standard in this COP, we would retain the current 
requirement on autopsies (existing Sec. 482.22(d)). Under this 
requirement a hospital's medical staff must attempt to secure autopsies 
in cases of unusual deaths or of medical, legal, or educational 
interest. Although this requirement is somewhat prescriptive, we 
believe it is necessary because autopsies are a valuable educational 
tool that contribute to the quality of care in a hospital and, as we 
stated above, can be used by the hospital to improve its performance.
6. Diagnostic and Therapeutic Services or Rehabilitative Services 
(Sec. 482.30)
    We are proposing to restate and consolidate current standards from 
several COPs that relate to required and optional diagnostic and 
therapeutic services into one COP. The condition would have four 
standards. The first standard would require that a hospital be 
primarily engaged in providing, by or under the supervision of one of 
the practitioners described in 42 CFR 410.20(b) (which specifies by 
whom physician services must be furnished to be eligible for Medicare 
Part B payment), either diagnostic and therapeutic services to 
inpatients, or rehabilitative services to inpatients. This standard 
would implement the statutory requirement at section 1861(e)(1) of the 
Act. If a hospital does not meet this standard, it would be found out 
of compliance and would risk termination of its participation in the 
Medicare program.
    The second standard of this condition at proposed Sec. 482.30(b) 
would require that a hospital furnish diagnostic radiology services, as 
required under existing Sec. 482.26. We would expect a patient's 
initial needs for radiology services would be identified in the 
comprehensive assessment performed at admission. In addition we are 
proposing that a hospital that furnishes emergency services on a full-
time basis must provide diagnostic radiology services on a full-time 
basis.
    Separate mention is not made in this condition of the personnel, 
safety, and record standards that are now found under Sec. 482.26(b), 
(c), and (d). As discussed earlier in this preamble, under our proposed 
reorganization of these COPS, we try to deal with such common elements 
in one place instead of repeating them for each condition. Therefore, 
the personnel and safety standards accompanying these conditions are 
now encompassed in the proposed Human Resources and Physical 
Environment conditions, respectively.
    In the next standard, proposed Sec. 482.30(c), we would require 
hospitals to furnish laboratory services, including 24 hour-a-day 
emergency laboratory services, as presently required under existing 
regulations (see Sec. 482.27). We are also proposing to retain the 
current requirement at Sec. 482.27(a) that laboratory services provided 
to patients in the hospital must meet the requirements of the Clinical 
Laboratory Improvement Amendments of 1988 (CLIA), as codified in 42 CFR 
part 493. We propose to delete the requirements of existing 
Sec. 482.27(b)(2), (3) and (4). Section 482.27(b)(3) requires the 
hospital laboratory to make provisions for the proper receipt and 
reporting of specimens the laboratory handles. Since this requirement 
is covered under CLIA provisions, it would be redundant to place it in 
the proposed hospital COP. We are requesting comment on our proposal to 
eliminate the current requirements at Sec. 482.27(b)(2) which requires 
that a written description of laboratory services be available to the 
medical staff and at Sec. 482.27(b)(4) which requires the medical staff 
and a pathologist to determine which tissue specimens require a 
microscopic and/or macroscopic examination. We recognize that it is 
essential for practitioners to know what laboratory services are 
available for diagnosing and delivering care. However, we believe that 
hospitals make their services known to their practitioners, and we are 
not convinced that a regulation is necessary to assure that this 
process occurs. In addition, although microscopic and macroscopic 
examination of tissue specimens may provide valuable information, we 
are requesting comment on whether it is necessary to have a regulation 
which states who can determine what tissue specimens require these 
examinations.
    The fourth proposed standard at Sec. 482.30(d) would state that a 
hospital may elect to offer services in addition to these required 
diagnostic and therapeutic services, such as nuclear medicine, ultra 
sound, rehabilitation medicine services, psychology services, 
respiratory care services, speech and language pathology services, 
audiology services, social work and vocational rehabilitation services, 
to name a few. This listing illustrates but does not limit the range of 
diagnostic and therapeutic services a hospital may provide. If the 
hospital elects to offer such additional optional services, those 
services must be delivered in accordance with the requirements of part 
482.
7. Pharmaceutical Services (Sec. 482.35)
    Overview. Under the proposed condition on pharmaceutical services, 
which would replace current Sec. 482.25, we would require the hospital 
to provide needed medication therapy through a safe, accurate, and 
effective system that minimizes adverse drug events and evaluates the 
patient's response to the therapy.
    In general, we propose to adopt requirements that integrate drug 
therapy services and support a coordination of services by the various 
disciplines that provide them (medicine, nursing, and pharmacy). This 
integration of services is intended to protect patients by establishing 
a four-layer ``safety net'' to prevent adverse drug events (including 
medication errors). It is intended also to detect system errors that 
result from the multiple nodes in the drug distribution process: 
Ordering, transcription, dispensing, and administration.
    The first layer of this safety net is a peer review activity for 
the identification of events that are predictive of adverse drug events 
(see Sec. 482.35(a)(1)). The second layer is the detection of 
medication errors (see Sec. 482.35(a) (2) and (3)). This layer focuses 
on the more objective errors of transcription, dispensing, and 
administration, and leaves the more subjective drug error issues to 
peer review and nurse review mechanisms. The third layer of the net is 
the comprehensive drug information resource, which endeavors to provide 
vital drug and patient information at keys points in the drug 
distribution process (see Sec. 482.35(b)(4)). The fourth layer of the 
net relies on nursing personnel to review drug orders for

[[Page 66738]]

accuracy of the entire system before drugs are administered (see 
Sec. 482.35(b)(5)).
    As a consequence, we are proposing to delete a number of narrowly 
focused, structure and process-oriented requirements, as follows:
    In existing Sec. 482.25(a)--
    (1) Requiring a full-time, part-time or consultant pharmacist.
    (2) Requiring the pharmaceutical service to have adequate 
personnel.
    In existing Sec. 482.25(b)--
    (1) All compounding, packaging, and supervision of drugs must be 
under the supervision of a pharmacist.
    (2) All drugs must be kept in a locked storage area. (Note: Locked 
storage of only controlled drugs is proposed at Sec. 482.35(b)(1).)
    (3) Outdated, mislabeled or otherwise unusable drugs are not 
available for patient use.
    (4) When the pharmacist is not available, drugs and biologicals may 
only be removed from the pharmacy or drug storage area by a designated 
person.
    (6) Drug administration errors, adverse drug reactions and 
incompatibilities are immediately reported to the attending physician 
and the quality assurance program.
    (9) A drug formulary system must be established by the medical 
staff to assure quality pharmaceuticals at a reasonable cost.
    A drug formulary is a system for determining the best quality and 
least expensive drugs, listing them in a formulary, and restricting the 
medical staff to the drugs listed in the formulary. This is a vastly 
different document than the ``comprehensive drug information resource'' 
referred to under Sec. 482.25(b)(4) of this proposed rule. A drug 
formulary is a cost control and quality mechanism. We do not think it 
would be a wise investment of survey agency time to pursue this cost 
control mechanism through enforcement of the COPs, since current 
efforts at cost controls and an emphasis on managed care will probably 
be far more effective at constraining drug costs in hospitals.
    Finally, we plan to eliminate the explicit, process-oriented 
requirements for administration of drugs, and acceptance of telephone 
and other oral orders for drugs, that are now set forth in our nursing 
services requirements at Sec. 482.23(c)(2).
    Description of Standards. The first proposed standard has to do 
with monitoring of adverse drug events (ADEs) and with eliminating or 
minimizing medication errors. We believe a separate standard covering 
ADE monitoring is needed because of its importance to patient care 
quality and patient health and safety. This standard is based on 
Journal of the American Medical Association (JAMA) papers on adverse 
drug events (see Bates, D. W., et al., ``Incidence of Adverse Drug 
Events and Potential Adverse Drug Events,'' JAMA, 274 (1995): 29-34, 
and Leape, L. L., et al., ``Systems Analysis of Adverse Drug Events,'' 
JAMA, 274 (1995): 35-43).
    These papers make the following salient points:
     Forty-two percent of serious and life-threatening ADEs 
were preventable (Bates, page 33).
     Adverse drug events have multiple etiologies, but the lack 
of readily accessible and current drug information along with patient 
care information is a significant part of the problem with adverse drug 
events (Leape, page 40).
     Computerized detection programs that search for events 
likely to be associated with an ADE (e.g., naloxone, an opiate 
antagonist), supplemented by spontaneous reporting using the 
computerized information system and a dedicated person or group with 
responsibility for evaluating these events have been found to represent 
an effective, relatively inexpensive method for identifying ADEs and 
will probably be the strategy of the future (Bates, page 33).
     The most common defects were in systems to disseminate 
knowledge about drugs and to make drug and patient information readily 
accessible at the time it is needed. System changes to improve 
dissemination and display of drugs and patient data should make errors 
in the use of drugs less likely (Leape, page 35).
    We have endeavored to implement the principles established in these 
papers in the first standard, ``Adverse Drug Monitoring.'' First we 
propose that the facility must establish a system of evaluation of ADEs 
by searching current clinical records for events that are predictive of 
an ADE and reporting them to the quality assessment and performance 
program for action. We have not proposed to require that a computerized 
system be used by all hospitals since these regulations primarily will 
affect small, rural, nonaccredited hospitals who may not have the 
resources to develop such a computer system.
    The second and third parts of the ADE standard deal with medication 
errors. A longstanding body of research exists concerning medication 
errors in hospitals. In a paper by Allan and Barker (Allan, Elizabeth 
L. and Barker, Kenneth N., ``Fundamentals of Medication Error 
Research,'' American Journal of Hospital Pharmacy, 47 (1990): 555-71), 
the authors documented medication error studies in approximately 40 
hospitals and nursing homes in the United States and Canada. These 
studies covered a period of time from 1962 to 1987. The hospitals' 
medication error rates ranged from a high of 20.6 percent to a low of 
1.6 percent when wrong timing errors were excluded. When wrong timing 
errors were included, the range was 42.9 percent to 4.4 percent.
    This proposal would permit an overall medication error rate in a 
hospital of no greater than 2 percent and require zero tolerance for 
significant medication errors. Significant medication errors are 
defined as errors that jeopardize or cause serious potential for 
jeopardizing the health and safety of the patient. HCFA has used this 
concept for many years in long-term care facilities, and has 
considerable experience at defining what would constitute a significant 
medication error. The overall error rate would include significant as 
well as nonsignificant (e.g., wrong timing) errors and would result in 
a deficiency citation. Setting an overall limit on medication errors, 
including significant errors, does not mean significant errors are 
tolerated if they remain below 2 percent. Rather, even though the 
regulation provides zero tolerance for significant errors, if 
significant errors do occur, and they are added to the nonsignificant 
errors, a deficiency occurs where the result is greater than 2 percent. 
This deficiency is in addition to the separate deficiency for the 
significant errors. We are proposing the 2-percent standard because 
research and expert opinion has determined that this is a reasonable 
medication error rate to achieve, given modern drug packaging and drug 
information systems. (See Barker, Kenneth N., et al., ``Consultant 
Evaluation of a Hospital Medication System: Analysis of the Existing 
System,'' American Journal of Hospital Pharmacy, 41 (1984): 2013).
    In the Bates, et al, paper, adverse drug events are categorized as 
follows: Ordering, Transcription, Dispensing and Administration. It is 
important to point out that the medication error regulation proposal 
would examine all these categories except ADEs occurring from physician 
ordering questions. For this issue we would rely on the licensed nurse 
(that is, a registered nurse (RN), licensed practical nurse (LPN), or 
licensed vocational nurse (LVN)) review, as proposed under 
Sec. 482.35(b)(5). This is necessary because physician ordering 
questions dealing with the drug, the dose, the route of

[[Page 66739]]

administration, etc., frequently require consultation before a positive 
determination about the occurrence of an ADE.
    The second standard, ``Drug Management Procedures,'' has seven 
parts. The first one requires that drugs and biologicals be kept in 
secure areas; however, those drugs that are ``controlled'' must be 
stored in locked areas as required by the Comprehensive Drug Abuse 
Prevention and Control Act. (We are not requiring that biologicals be 
stored in locked areas because this Act does not include 
``biologicals'' in its provisions.) We are not requiring that the areas 
where the controlled drugs are stored be double locked, since what is 
usually found in most facilities is an individual with a ring of keys 
containing both keys to the double locked compartment. In this case 
``double locked'' is hardly an added security feature. The key to the 
locked compartment should be restricted strictly to individuals who 
have an identified need to access these drugs.
    The requirement for the facility to maintain a record of receipt 
and disposition of controlled drugs may be met in ways other than the 
use of proof of use sheets for each controlled drug. For example, the 
facility may use existing patient records such as the medication 
administration record as a record of disposition of controlled drugs. 
If the facility wishes to maintain records of receipt and disposition 
of controlled drugs by using existing patient care records, it will 
reduce its paperwork burden considerably.
    Proposed Sec. 482.35(b)(3) requires that discrepancies in the 
record of controlled drugs be reported to the individual responsible 
for pharmaceutical services and to the hospital administrator. 
Discrepancies in these records indicate that controlled drugs are being 
used for unauthorized purposes. Proposed Sec. 482.35(b)(3) would 
require that these discrepancies be reported to responsible individuals 
in the hospital, who will then decide whether the local police or the 
Drug Enforcement Agency should be involved.
    The fourth part of the Drug Management Procedures standard would 
require the hospital to establish a computerized or hard copy ability 
to merge patient information with current comprehensive drug 
information at the points of drug ordering, dispensing, and 
administration. This system would promote the development of 
information systems that bring patient information and drug information 
together at critical junctures in the drug ordering and distribution 
process. Comprehensive drug information resources would include the 
United States Pharmacopoeia-Drug Information, American Medical 
Association Drug Evaluations, and the American Hospital Formulary 
Service--Drug Information. (These drug information resources are those 
used to establish Medicaid drug use review under the provisions of 
section 1927(g)(1)(B) of the Social Security Act. Drug information 
resources would not include the Physician Desk Reference since this 
reference is not considered comprehensive and was not listed in the 
statute.)
    The fifth part of this standard would require that before 
medications are administered, a licensed nurse, or a physician if he or 
she is personally administering the drug, review the patient's 
information and the drug order. (The comprehensive drug information 
would also be available for review if there was a need for this 
information.) The purpose of this proposal is to support the 
established practice of nursing personnel questioning the drug order 
from the standpoint of the correctness of the order itself in relation 
to specific patient and drug information that must be readily available 
before or at the point of drug administration. In reviewing this 
information to prevent drug errors, a nurse would be acting only within 
the scope of her or his State licensure. The expectation is that the 
nurse would report any potential errors in drug prescribing to the 
physician, so the physician could determine whether the order needed to 
be changed. This proposed requirement is consistent with current 
research. Leape identified a total of 334 adverse drug events that were 
identified by review of all admissions in 11 medical and surgical units 
in 2 tertiary hospitals for a period of 6 months. Of the 334 adverse 
drug events, 91 or 27 percent were intercepted (prevented). Of these 91 
prevented adverse drug events, 86 percent were prevented by nurses and 
12 percent by pharmacists. This proposed regulation is intended to 
strengthen the potential for nurses and pharmacists to intercept 
adverse drug events of all kinds by providing them with readily 
available information necessary to prevent these events.
    The sixth part of the Drug Management Procedures standard deals 
with positive identification of medication. The current regulations do 
not contain a requirement for positively identifying drugs brought to 
the facility by the patient and then obtaining physician orders before 
they can be administered. We are proposing such a requirement here 
because when an individual is hospitalized it indicates a considerable 
change in their status. ``Positively identified'' in the context of 
this proposed rule means that a pharmacist or someone with similar drug 
identification skills must make sure that the drugs brought to the 
facility are in fact the same drugs that the label represents. This is 
necessary because patients often mix drugs within one container, or 
they separate drugs from their proper labeling. The drugs that the 
individual was taking prior to this hospitalization should be reviewed 
by competent medical personnel to determine if these drugs are still 
necessary, or if they may interfere with other therapies that are 
underway in the hospital.
    Unlike current regulations, this proposed rule would make it clear 
that self-administration of drugs is permitted, but only under orders 
and hospital policy. This proposed rule is important for patients being 
prepared for discharge. These patients should become familiar with 
self-administration of drugs (especially eye drops, inhalers, 
intramuscular injections), so they become well-practiced with this task 
while still under competent supervision.
    Regarding our seventh proposal, existing Sec. 482.25(b)(5) requires 
that orders for drugs and biologicals be automatically stopped after a 
reasonable period of time as predetermined by the medical staff. This 
proposed rule endeavors to achieve the same objective as the current 
rule, that is, the cessation of drug therapy when it is no longer 
necessary. However, our proposal would not limit the hospital to the 
option of automatic stop orders, which discontinue drug therapy 
(especially on holidays and weekends) by administrative fiat without 
any medical assessment as to whether the drug therapy has achieved its 
therapeutic objectives. The proposed rule allows the hospital to 
develop its own approaches for achieving this objective.
    The last standard of the Pharmaceutical Services COP (proposed 
Sec. 482.35(c)) deals with discharge orders for psychopharmacological 
drugs. Under this standard, we would require that orders for 
psychopharmacological drugs be discontinued upon the patient's 
discharge unless the patient has been diagnosed (using standard 
criteria for such diagnoses) with a mental illness. This will prevent 
the use of these drugs (which may be temporarily necessary during a 
hospitalization) from becoming routine after discharge unless a valid 
reason for their use is established. This is particularly necessary in 
patients

[[Page 66740]]

transferred to long-term care facilities, who can suffer considerable 
adverse effects from long-term use of antipsychotic and antianxiety 
drugs that may have been started in the hospital for very valid reasons 
but that may no longer be valid after discharge. A study by Garrard 
(Garrard, Judith, et al., ``Evaluation of neuroleptic drug use by 
nursing home elderly under proposed Medicare and Medicaid 
regulations,'' JAMA, 265 (1991): 463-467) showed that the rate of use 
of neuroleptic (antipsychotic) drugs among nursing home admissions was: 
16 percent when admitted from hospitals, 18 percent from the community, 
and 21 percent from other nursing homes. Regulation of the use of these 
drugs (in the absence of proper differential diagnoses) in nursing 
homes have been in effect since 1990 (see 42 CFR 483.25), and we have 
been criticized because similar rules were not imposed on hospital and 
community practice (Thurston, Ronald G., Letters, JAMA, 265 (1991): 
2962). We believe this proposed requirement represents a fair way to 
address this issue, but invite public comment on alternatives for 
achieving the same objective.
8. Nutritional Services (Sec. 482.40)
    Currently, the food and dietetic services requirements that a 
hospital must meet are found at Sec. 482.28. These requirements 
emphasize the organizational aspects of a hospital's food and dietetic 
services program, including provisions that specify allowable 
contractual arrangements, employee qualifications, and other process-
oriented details.
    We are proposing extensive revisions to these provisions under a 
new nutritional services condition of participation. In keeping with 
the principles discussed above, the new condition of participation 
would promote a patient-centered approach to nutrition. Thus, the 
introductory language for these proposed requirements states explicitly 
that each patient must receive adequate nutrition, including 
therapeutic diets or parenteral nutrition if needed.
    The proposed condition includes only two standards. The first 
standard, ``Sanitary conditions,'' requires that food provided to 
patients be obtained, stored, prepared, distributed and served under 
sanitary conditions. (Note that the term ``food'' is intended to 
include all forms of nutrition, liquid or solid, provided to patients.) 
Although this requirement is not contained in the current hospital 
conditions of participation, we believe that it clearly is an 
underlying necessity for any acceptable nutritional services program. 
Thus, we are proposing to include it explicitly under the nutritional 
services condition. The only other standard would require that menus be 
prepared in advance and meet the nutritional needs of patients based on 
the recommended dietary allowances of the Food and Nutrition Board of 
the National Research Council, National Academy of Sciences. We believe 
the Board's guidelines can appropriately be used here because they 
represent accepted best practices and are already in widespread use 
among hospitals.
    In developing the proposed requirements, we have attempted to 
incorporate straightforward statements of a hospital's 
responsibilities, while eliminating procedural requirements and 
avoiding unnecessary details of how the hospital should carry out its 
nutritional services function. We believe that the requirements largely 
incorporate current best practices in hospital nutrition services, 
while eliminating several burdensome process requirements that are not 
central to meeting the patient's dietary needs (such as the requirement 
under current Sec. 482.28(b)(3) that a current therapeutic diet manual 
approved by the dietitian and medical staff be readily available to all 
medical, nursing, and food service personnel.) We considered 
supplementing the requirements with additional provisions concerning 
staffing requirements or qualifications. Instead, however, we decided 
that the staffing requirements set forth under the proposed human 
resources condition of participation are sufficiently broad to ensure 
that a hospital has adequate qualified staff to carry out its 
nutritional services function. Rather than prescribing how a hospital 
should organize itself to meet its nutritional services 
responsibilities, we prefer to allow each hospital as much flexibility 
as possible in this regard, so that it can focus on incorporating its 
nutritional services program into a cross-cutting approach toward 
achieving optimal patient outcomes. Finally, as discussed above in 
section II.B.4 of this preamble, we note that the existing requirement 
under Sec. 482.28(b)(1) that a therapeutic diet be prescribed by the 
responsible practitioner would now be encompassed within the hospital's 
responsibility under proposed Sec. 482.20(b) to ensure that all patient 
care services be provided in accordance with the orders of qualified 
practitioners.
9. Surgical and Anesthesia Services (Sec. 482.45)
    The proposed condition on surgical and anesthesia services would 
replace the existing regulations at Sec. 482.51 (Condition of 
participation: Surgical services) and Sec. 482.52 (Condition of 
participation: Anesthesia services). We have decided to address both 
areas under a single condition in order to simplify the organization of 
part 482, and to emphasize the close relationship between surgery and 
anesthesia.
    In the new condition, we would delete current process-oriented 
standards having to do with the organization and staffing of the 
hospital's surgical and anesthesia departments or services (existing 
Sec. 482.51(a) and Sec. 482.52(a)), and with hospital policies 
governing surgical and anesthesia care (existing Sec. 482.51(b) and 
Sec. 482.52(b)). In particular, we propose to delete the current 
specific requirements regarding the types of personnel who can serve as 
scrub nurses or perform circulating duties in the operating room. We 
also would eliminate current rules on which practitioners can 
administer anesthesia, and what level of supervision must be provided 
to them. We also propose to delete current prescriptive requirements 
specifying the types of equipment that must be maintained in operating 
suites (existing Sec. 482.51(b)(3)). We believe those requirements 
should be eliminated in favor of those that focus more directly on 
outcomes.
    In place of the current requirements, we propose two basic rules on 
staffing. We would require that surgical procedures be performed only 
by practitioners with appropriate clinical privileges, and that 
anesthesia be administered only by a licensed practitioner permitted by 
the State to administer anesthetics.
    One effect of our proposed staffing and equipment requirement would 
be to allow more flexibility to certified registered nurse anesthetists 
(CRNAs) to practice without oversight by another practitioner. 
Currently, the anesthesia condition (Sec. 482.52(a)(4)) requires that a 
CRNA administer anesthesia only under the supervision of the operating 
practitioner or of an anesthesiologist who is immediately available if 
needed. To allow greater flexibility to hospitals and practitioners and 
to give deference to State scope of practice law, we propose to delete 
this supervision requirement and allow the CRNA to function without 
supervision by another practitioner, where this is in accordance with 
State law. We emphasize that CRNAs are allowed to practice in this way 
only where doing so is consistent with State law. If State law 
establishes a more stringent rule, the hospitals (42 CFR 482.110) would 
be required to furnish care in a way that is consistent with that rule.

[[Page 66741]]

    To ensure that our requirements are consistent across the settings 
in which surgery may be performed, we propose also to eliminate the 
supervision requirement for CRNAs in ambulatory surgical centers (ASCs) 
(42 CFR 416.42) and in critical access hospitals (CAHs) (formerly rural 
primary care hospitals) (RPCHs) (42 CFR 485.639) and allow the CRNA to 
function without supervision by another practitioner, where this is in 
accordance with State law. In addition, if State law establishes a more 
stringent rule, the ambulatory surgical centers (42 CFR 416.40) and 
critical access hospitals (42 CFR 485.608) would be required to furnish 
care in a way that is consistent with that rule.
    We believe it is critical to the health and safety of surgical 
patients to have accurate information on each patient's condition 
before anesthesia is administered and a surgical procedure is 
undertaken. Therefore, we would require under proposed Sec. 482.45(b) 
that a comprehensive assessment be performed before surgery (with a 
modified assessment being permitted in emergency cases) and that a 
preanesthesia evaluation be done by an individual qualified to 
administer anesthesia. We also would require that a postanesthesia 
evaluation for proper recovery be done by an individual qualified to 
administer anesthesia. We propose to delete the current prescriptive 
rule under which the postanesthesia evaluation must be done by the same 
individual who administered the anesthesia.
    In the standard on documentation of care, we have included 
requirements for entry of specified information in the medical record. 
The information that would be required includes a report of the 
comprehensive or modified pre-surgical assessment, a properly executed 
informed consent form, an operative report describing complications, 
reactions, length of time, techniques, findings, tissues removed or 
altered, a record of intraoperative anesthesia, and a report of the 
postanesthesia evaluation. By ``properly executed informed consent,'' 
we mean only that the patient understands the information the hospital 
wishes to convey. The pre-surgical assessment and informed consent form 
would have to be entered in the record before surgery except in 
emergency cases, while the operative report, intraoperative anesthesia 
record, and a report of the postanesthesia evaluation would have to be 
entered in the record promptly following surgery. (The postanesthesia 
evaluation report combines the current requirements for an inpatient 
postanesthesia followup report (Sec. 482.52(b)(3)), and for an 
outpatient postanesthesia evaluation (Sec. 482.52(b)(4)) into a single 
new requirement.) The hospital also would be required to maintain a 
complete, up-to-date operating room register. We recognize that our 
proposal for the documentation requirements for the surgical and 
anesthesia services COP is more extensive and specific than many other 
requirements in these proposals. However, such documentation is common 
to current practice and imposes no additional burden to hospitals as 
these documentation requirements are part of the existing COPs.
10. Emergency Services (Sec. 482.50)
    We propose to delete the existing regulations at Sec. 482.2 
(Condition of participation: Provision of emergency services by 
nonparticipating hospitals), and to add a single new emergency services 
condition that would replace both current Sec. 482.12(f) (Condition of 
participation: Governing body; Standard: Emergency services) and 
current Sec. 482.55 (Condition of participation: Emergency services). 
We believe Sec. 482.2 need not be retained since the regulations at 42 
CFR 424.101 set forth a definition of ``hospital'' that is used for 
purposes of payment for services to Medicare patients that are 
furnished on an emergency basis by a hospital that does not participate 
in the program. By addressing the two latter areas under a single 
regulation, we hope to simplify the organization of the regulations and 
eliminate the need for the user of the regulations to refer to separate 
sections to review the rules on closely related services. For the 
reasons explained below, we also are proposing to add a separate 
standard for hospitals that offer emergency services on less than a 
full-time basis.
    In the standard on hospitals providing full-time emergency 
services, we have emphasized requirements that most directly affect the 
safety of patients. These are the requirements regarding the personnel 
who furnish the services, the appropriateness of the services to 
patient needs, and the integration of emergency services with those of 
other hospital departments. Regarding the proposed requirement for 
sufficient numbers of personnel, we note that some hospitals may choose 
to meet patient needs by using a comparatively smaller, but more highly 
trained and skilled staff. In assessing compliance with this 
requirement, our primary concern will be to determine whether emergency 
service staffing is adequate to produce good treatment outcomes.
    We are proposing the second standard, which is applicable only to 
hospitals providing part-time emergency services, in order to allow 
more flexibility to hospitals that find it necessary, because of 
staffing limitations, low emergency room volumes, or other factors, to 
limit the times during which emergency services can be offered. Because 
of the nature of emergency services, it clearly would be desirable to 
have them available on a 24-hour per day, 7-day per week basis. 
However, many hospitals, particularly those that are small and are 
located in remote rural areas, find it difficult to recruit and pay 
staff to furnish emergency services on this schedule. To avoid a 
situation in which these hospitals find it necessary to terminate 
emergency services altogether, we propose that hospitals that are 
located in rural areas and have fewer than 100 beds may offer emergency 
services on a part-time basis. We propose to use the definition of 
``rural area'' now set forth in our regulations at 42 CFR 
412.62(f)(1)(ii). Under that definition, an area is considered 
``rural'' if it is located outside any Metropolitan Statistical Area 
(MSA) or New England County Metropolitan Area (NECMA), and outside 
specified New England counties.
    We emphasize that this flexibility is not intended to foster 
development of dual standards of care--during its stated hours of 
operation, a hospital emergency department or service must meet exactly 
the same standards as full-time departments or services. However, at 
the times when it chooses not to offer emergency services, the hospital 
would be required to meet only the standard for hospitals that do not 
offer emergency care.
    Section 1867 of the Act (Examination and Treatment of Emergency 
Medical Conditions and Women in Labor) imposes certain obligations on 
Medicare-participating hospitals that have emergency departments. If an 
individual comes to the hospital's emergency department and a request 
is made on the individual's behalf for examination or treatment for a 
medical condition, the hospital must provide, within the capability of 
its emergency department, an appropriate medical screening examination 
and, if necessary, either stabilizing treatment or an appropriate 
transfer. Section 1867 of the Act does not deal explicitly with the 
situation of a hospital that opens its emergency department on only a 
part-time basis. However, it is our policy that a hospital that offers 
emergency services on a regular, part-time basis is not considered to 
have an emergency department under section 1867 at the scheduled times 
when emergency

[[Page 66742]]

services are not available. At those times only, the hospital is not 
subject to the requirements of section 1867 of the Act. The hospital 
would remain obligated at those times to meet the requirements of 
proposed Sec. 482.50(c) for appraisals of emergency cases, initial 
treatment, and referral when appropriate. At all other times (that is, 
when emergency care is offered), the hospital is fully responsible for 
compliance with the statute (and with the implementing regulations at 
42 CFR 489.24) and also would be obligated to meet the emergency 
services requirements set forth in proposed Sec. 482.50(a) and (b).
    We expect that a hospital offering part-time emergency services 
will do so in good faith, and not ``open'' and ``close'' its emergency 
department selectively, in an attempt to avoid meeting its statutory 
obligations to some patients based on their perceived inability to pay. 
We will continue to investigate all allegations we receive of 
violations of section 1867 of the Act and will not hesitate to initiate 
termination proceedings, or to refer cases to the Office of Inspector 
General, if it is clear that a violation has occurred. We welcome 
comments on this proposal.
    The third proposed standard deals with hospitals not offering 
emergency services. We propose to continue to require such a hospital 
to provide for appraisal of emergencies, initial treatment, and 
referral of patients when appropriate. However, we propose to delete 
current process-oriented requirements having to do with the 
organization of the hospital's emergency services (Sec. 482.55(a)(1)) 
and with policies and procedures for the medical care provided in the 
emergency department (Sec. 482.55(a)(3)). We believe those requirements 
should be eliminated in favor of those that focus on activities more 
directly related to outcomes.
11. Discharge Planning (Sec. 482.55)
    Section 1861(e)(6) of the Act requires that a hospital have in 
place a discharge planning process that meets the requirements of 
section 1861(ee) of the Act. Under section 1861(ee), a discharge 
planning process must apply to services furnished by the hospital to 
Medicare beneficiaries, and meet the guidelines and standards 
established by the Secretary of HHS to ensure a timely and smooth 
transition to the most appropriate type of setting for posthospital or 
rehabilitative care. Section 1861(ee)(2) further requires that the 
Secretary's standards and guidelines include seven specific elements, 
as listed in that provision. On December 13, 1994, we published a final 
rule to implement the requirements of sections 1861(e)(6) and 1861(ee) 
of the Act by adding new Sec. 482.43 (Condition of participation: 
Discharge planning) (59 FR 64141). For the reasons explained in the 
preamble to that final rule, we elected under the authority in section 
1861(e) of the Act to require a discharge planning process that applies 
to all patients, not just to Medicare beneficiaries.
    On October 31, 1994, Congress enacted Public Law 103-432, the 
Social Security Act Amendments of 1994 (SSAA'94). Section 107 of that 
legislation amended section 1861(ee)(2) effective November 1, 1995, to 
require that a discharge planning evaluation for a Medicare patient 
include an evaluation of the need for hospice care as well as other 
posthospital care.
    Congress included in the Balanced Budget Act of 1997 (BBA '97), 
Public Law 105-33, enacted August 5, 1997, several amendments to 
section 1861(ee)(2) to address concerns about reports of some hospitals 
referring patients only to HHAs with which they have financial ties. 
Subsection 4321(a) of that legislation, effective November 3, 1997, 
amended the discharge planning evaluation requirements in section 
1861(ee)(2)(D) and added a subparagraph (H) to section 1861(ee)(2). 
These changes are consistent with patient rights, the first core 
condition of patient-centered care in this regulation. As a result of 
these changes a Medicare participating hospital now must: (1) Include 
in a patients's discharge planning evaluation the availability of home 
health services through Medicare participating HHAs which serve the 
patient's geographic area and which request the hospital to be listed; 
and (2) ensure that a patient's discharge plan does not specify or 
otherwise limit the qualified participating HHAs and identify any HHA 
with which the hospital has a ``disclosable financial interest'' if the 
patient is referred to such entities.
    We propose to redesignate Sec. 482.43 as new Sec. 482.55, and to 
republish it with only the changes discussed below. In keeping with the 
shift in focus of these regulations from process to outcome, we propose 
to delete the requirement that a hospital's discharge planning policies 
and procedures be specified in writing, and to add the requirement that 
the discharge planning process assure that appropriate posthospital 
services are obtained for each patient, as necessary.
    To implement section 107 of SSAA'94, we would specify under 
proposed Sec. 482.55(b)(3) that hospitals must evaluate the need for 
hospice as well as other posthospital care. To implement section 
4321(a) of the BBA '97 we would specify under proposed 482.55(b)(7) 
that the discharge planning evaluation must include a list of home 
health agencies that participate in the Medicare program and whose 
services are available to the patient, serve the area in which the 
patient resides, and request to be listed. Since, section 4321(a) 
requires listing the availability of individuals and entities, we have 
been questioned as to who those individuals and entities are. We have 
determined that since section 1861(m) of the Act identifies home health 
services as items or services furnished by a home health agency, or by 
others under arrangement with the agency, section 4321(a) is referring 
to Medicare participating home health agencies. Also in 
Sec. 482.55(b)(7), we have proposed that the HHA should determine the 
geographic area in which the patient resides. We believe the HHA should 
determine the geographic area because the HHA is in the best position 
to know its service area and presumably, would not misrepresent its 
services by requesting to be listed for an area it does not serve. 
Discharge planning is effective if there are resources available to the 
patients at discharge. A hospital's ability to provide patients with 
outside resources for posthospital care are essential to allow many 
patients to stay at home which is a much less expensive alternative 
than institutionalization.
    Under proposed 482.55(c)(6), we propose to require that the 
hospital tailor the plan, where possible, to the preferences of the 
patient and family. Specifically, we would state that the discharge 
plan must inform the patient (or patient's family) of their freedom to 
choose among available Medicare-participating providers that are 
capable of furnishing the needed services (such as SNF or HHA services) 
and must, if possible, respect the patient's or family expressed 
preference. Also, the discharge plan shall not specify or otherwise 
limit the qualified providers that are available to the patient. The 
intent of this change is to provide the patient with the freedom of 
choice to determine which HHA will provide care in accordance with 
Section 1802 of the Act, which states that beneficiaries may obtain 
health services from any Medicare participating provider. As written, 
section 1861 (ee) of the Act requires Medicare participating hospitals, 
as part of their discharge evaluation, to provide patients with a list 
of Medicare-certified home health agencies that serve a patient's

[[Page 66743]]

geographic area and request to be listed by the hospital.
    Hospitals and managed care organizations (MCO) have expressed 
concern as to whether the BBA'97 change was intended to apply to 
patients in managed care plans. MCO members are limited as to what 
services they may obtain from sources other than through the MCO. 
Therefore, providing members with a standardized list of all HHAs in 
the area can be misleading and potentially, financially harmful since 
MCO enrollees may be liable for services that they obtain from sources 
other than the MCO, and patients may interpret a list of HHAs that are 
not available to them under their health plan to mean that they are 
authorized by the MCO. This does not mean that Medicare MCO members in 
particular are denied the freedom of choice they are entitled to under 
section 1802 of the Act. Medicare beneficiaries exercise their freedom 
of choice when they voluntarily enrolle in the MCO and agree to adhere 
to the plans provisions on coverage.
    To alleviate the confusion, hospitals can provide MCO patients with 
a list of available and accessible HHAs approved by the MCO. Another 
option is, when discussing discharge planning with patients, hospitals 
can determine whether the beneficiary has made any prior commitments 
through enrollment in a managed care organization. Where this is the 
case, the patient should be informed of the potential consequences of 
going outside the plan for services. The discharge planning process is 
initiated when a patient is admitted to the hospital. The collection of 
data includes verifying the patient's health insurance. At this time, 
the hospital personnel responsible for discharge planning activities 
can retrieve this information and initiate communication with the MCO 
to coordinate available and accessible posthospital care. We solicit 
the public for comments on this issue.
    HCFA has received a number of questions concerning section 4321(a). 
These questions include: How does the hospital compile the list of 
agencies? What is the hospital's responsibility and liability for 
providing a list? Is there a form for home health agencies to complete 
to request placement on a hospital's list? We welcome public comments 
on these questions and we will take these comments into consideration 
when developing the final rule.
    The process of making a choice includes being provided options to 
make an informed and confident decision. Hospital providing a list of 
available Medicare-certified home health agencies will assist patients 
in making such decisions. Although a hospital is free to design the 
list's format, the list is neither a recommendation nor endorsement by 
the hospital of any particular home health agency's quality of care. If 
HHAs do not meet all criteria, the hospitals are under no obligation to 
place that HHA on the list. The list should be legible and should not 
be used to specify or limit the choice of a HHA.
    Under proposed Sec. 482.55(c)(7), we would state that the discharge 
plan must identify those entities to whom the patient is referred in 
which the hospital has a disclosable financial interest or those 
entities which have a financial interest in the hospital. ``Disclosable 
financial interest'' will be defined in the rule-making process which 
implements section 1866(a)(1)(S) of the Act. In the interim, we suggest 
that hospitals reference the Disclosure of Ownership and Control 
provisions of 42 CFR 420 subpart C, which sets forth requirements for 
providers to disclose ownership and control information and identities 
of managing employees. If a hospital refers patients about to be 
discharged and in need of services, only to entities it owns or 
controls, then the hospital is infringing on the rights of the patient 
to choose the facility they would like to go to for services. The 
proposed disclosable financial interest requirement is an effort to 
increase the beneficiary's awareness of the actual or potential 
financial incentive a hospital may receive as a result of the referral. 
This regulation supports and extends our focus on patient-centered 
outcomes of care. We invite comments on this proposed requirement and 
other concerns hospitals may have regarding their ability both 
operationally and financially to undertake this approach.
    In proposed Sec. 482.55(e), we propose to add the requirement that 
the hospital's discharge planning process be an integral part of the 
hospital's quality assessment and performance improvement program. We 
believe this change is needed to enhance the effectiveness of the 
hospital's discharge planning program and to emphasize the important 
role of discharge planning in contributing to overall quality of care 
in a hospital.
    We are not proposing any other changes in the current discharge 
planning COP. In view of the specificity of section 1861(ee) of the Act 
and the relatively recent implementation of that legislation through 
notice and comment rulemaking, we do not believe there is any further 
benefit to the public to be obtained by again requesting public comment 
on the parts of the regulation that we are republishing without change. 
Thus, with the exception discussed below, we are soliciting comments 
only on the proposed changes to the discharge planning requirements, 
rather than on the entire discharge planning COP.
    Proposed Sec. 482.55(b) (5) and (6) require that hospital personnel 
must complete the required discharge planning evaluation on a timely 
basis and include it in the medical record, thus ensuring that 
appropriate arrangements for posthospital care are made before 
discharge and avoiding unnecessary delays in discharge. We believe 
these requirements, which has been carried over without change from 
existing Sec. 482.43(b) (5) and (6), are useful because they emphasize 
the need for prompt action to assess and act on the discharge planning 
needs of patients. We note that we considered including under proposed 
Sec. 482.55(c) similar requirements about the discharge plan itself; 
however, we decided not to do so because we believe the existing 
requirements will ensure that a discharge plan is completed and 
available far enough in advance of discharge to allow it to be put into 
practice. Nevertheless, it is conceivable that some may interpret the 
absence of an explicit rule on the timing of the plan as an indication 
that it would be acceptable to have only a partial or incomplete plan 
at the time of discharge, or even to develop an after-the-fact ``plan'' 
that does not anticipate needs and try to meet them, but instead merely 
records and attempts to rationalize the postdischarge care already 
received. We welcome comments on whether the possibility of a 
misunderstanding of this point is strong enough to warrant adding, in 
the final rule, an explicit requirement that the discharge plan itself 
must be completed on a timely basis and entered into the medical 
record. We will consider the comments received on this issue, and may 
add an explicit requirement on this point to the final rule.
    Possible Use of the Uniform Needs Assessment Instrument. In 1986, 
Congress directed the Secretary to develop a uniform needs assessment 
instrument (UNAI), or instruments, to serve primarily as a standardized 
means of evaluating an individual's needs for posthospital or 
supportive care. Congress also envisioned the possibility of the UNAI 
being used for determining whether individuals should receive services 
provided under publicly funded programs (that is, linking the 
individual's health status per the UNAI

[[Page 66744]]

to decisions regarding the scope and duration of services to be 
covered). In addition, the UNAI was envisioned as a vehicle for 
tracking individual patients across different Medicare service 
providers (primarily HHAs and SNFs). Although Congress directed the 
Secretary to produce the UNAI, there was no direction concerning its 
implementation. Thus, there is no statutory obligation to use the UNAI 
in practice.
    The Secretary appointed a panel of experts, with HCFA providing the 
staff support services, to develop the UNAI. The expert panel was 
successful in devising a consensus tool that was brief, described the 
patient's functional status, nursing and other care requirements, and 
available family/care giver supports. The UNAI was seen as having 
content validity and clinical utility as judged by the comments of a 
group of experts and a stratified random sample of providers. The final 
UNAI and a comprehensive report about its development were submitted to 
the Congress in 1992. While the panel was enthusiastic about the 
potential for the UNAI as a posthospital discharge planning tool and a 
means of tracking a patient across provider types, the panel did not 
believe the UNAI could be used to evaluate an individual's eligibility 
for posthospital services under the current Medicare benefit structure.
    The UNAI and the Report to Congress have been widely disseminated, 
and many hospitals have chosen to begin using the tool because it 
provides a useful method to organize their discharge planning 
processes. Currently, HCFA is preparing to field test the UNAI in 
hospitals, HHAs, and SNFs. The field test will rely on provider staff 
to complete the UNAI, and will provide information on the UNAI's 
reliability, validity, and administrative feasibility. HCFA's 
contractor for the field test, Research Triangle Institute, is also 
developing a ``high risk screener,'' which will be used to identify 
those Medicare patients in need of an intensive discharge planning 
evaluation and thereby reduce the number of patients who would be 
subject to the UNAI. For example, a Medicare patient who has a minor 
operation and will return to the home with support from an able spouse 
and adult children nearby likely would pass the screener and not 
receive the UNAI as part of the hospital's discharge planning effort 
for that patient. However, an elderly beneficiary who suffers a severe 
stroke, and has a spouse in frail health and no children nearby would 
certainly fail the screener and would receive the UNAI as part of the 
hospital's discharge planning for that patient.
    In the preamble to our December 13, 1994 final rule on discharge 
planning (59 FR 64141), we discussed our work on the UNAI, but we did 
not establish a requirement for its use. Now, with a comprehensive 
effort to change the hospital conditions of participation to a more 
patient-centered, outcome-oriented approach, and a strong emphasis on 
quality assessment and performance improvement, coupled with HCFA's 
intention to use data--particularly functional assessment data--more 
widely in care giving, quality improvement, and consumer information, 
we are considering requiring hospitals to use the UNAI to assess 
Medicare patients who are at-risk of needing posthospital services. The 
purposes of imposing the UNAI as a standard hospital discharge planning 
tool for Medicare patients would be to: (1) Ensure that all relevant 
factors are considered in evaluating an individual's needs for 
continuing care; (2) foster more uniform decisionmaking about the need 
for posthospital care services; (3) direct those patients to the most 
effective and efficient approach to posthospital care services; (4) 
provide posthospital care service providers with more complete and 
consistent baseline information about the patient in order to 
facilitate continuity of care and early assessment and care planning by 
the posthospital provider; and (5) enable managed care organizations 
and HCFA to track the course of outcomes of individual patients across 
provider types within the same health care episode. One primary benefit 
of standardizing the needs assessment process is that the use of common 
language and definitions enables the type of quality monitoring and 
improvement efforts that depend on consistent data and health status/
outcome measures.
    The establishment of common data elements will also allow the same 
types of measures to be used across care settings. Another advantage 
associated with using the UNAI across provider types is that we intend 
that it ``map'' to other assessment tools, such as the Minimum Data Set 
in SNFs and the standard core assessment data set we plan to propose 
shortly for use in HHAs. Thus, if a UNAI accompanies a patient to an 
HHA, the HHA can use most of the information on the UNAI to complete a 
number of items on the HHA standard assessment data set. This 
ultimately would decrease provider burden by streamlining the 
assessment processes and eliminating the need for assessing and 
reporting redundant information. It also would enable providers and 
managed care entities to track and understand care outcomes more fully.
    The UNAI is not a comprehensive assessment tool, nor is it adequate 
for comprehensive care planning. Rather, it gives a snapshot view of 
the patient's functional status and support systems in the home and 
community to help caregivers direct the patient to the next source of 
care and to give the continuing care provider baseline information to 
make initial assessment, care planning, and service delivery more 
efficient and individualized.
    Although we are not now formally proposing to require use of the 
UNAI, we invite comment from the hospital community, especially 
discharge planners, as well as from SNFs, HHAs, and others, about the 
desirability of having a standard approach to posthospital discharge 
planning for Medicare patients who fail the high-risk screener. We 
invite comment on the following questions, as well as any other related 
comments:
    (1) Would the use of a standard posthospital discharge planning 
tool for Medicare patients be helpful to the hospital, the patients, 
and the posthospital care providers in their efforts to ensure the 
patient receives the most effective, efficient, and desirable 
posthospital services necessary to address the patients' continuing 
care needs? If so, why, and if not, why not?
    (2) Would a proposal that limits the required use of the UNAI to 
Medicare patients only (the States could impose it separately if they 
wished for Medicaid patients) create duplicate or multiple systems 
within a hospital and create more problems than benefits? Should the 
UNAI be used for every patient over a certain age (e.g., 50) for whom 
discharge planning is necessary? How would other payers (e.g., fee-for-
service or managed care plans) be affected by a Federal requirement to 
use the UNAI?

Subpart C--Organizational Environment

12. Administration of Organizational Environment (Sec. 482.110)
    The proposed condition on administration of organizational 
environment would replace the existing regulations at Sec. 482.11 
(Condition of participation: Compliance with Federal, State, and local 
laws) and Sec. 482.12 (Condition of participation: Governing body). 
Combining these provisions would simplify the structure of the 
regulations. In addition, it would emphasize that if State or local law 
provides for the licensing of hospitals, and an institution in the 
State wishes to

[[Page 66745]]

participate in Medicare as a separate hospital (rather than as an 
organizational unit of another provider), that institution must also 
show that it is regarded as a separate entity by the State for 
licensure purposes.
    In developing the proposed new condition, we have relocated three 
of the standards previously in the current governing body COP. These 
are the standard on medical staff (Sec. 482.12(a)), the standard on 
care of patients (Sec. 482.12(c)), and the standard on emergency 
services (Sec. 482.12(f)). Under the cross-functional approach we are 
following in these proposed rules, medical staff issues would be 
covered by the proposed new condition on human resources 
(Sec. 482.125), and patient care issues would be covered in the new COP 
that includes patient care (Sec. 482.20). As discussed above, we 
propose to create a new condition on emergency services which would 
include the rules now stated under Sec. 482.12(f) with respect to 
appraisal, initial treatment, and referral of emergency patients by 
hospitals that do not provide emergency services.
    The primary requirement under the proposed governing body COP is 
that a hospital's governing body, other organized group, or an 
individual (hereafter ``governing body'') is legally responsible for 
the management and provision of all care furnished to hospital 
patients, including the structure needed to administer the hospital 
effectively. Thus, the governing body must create an environment that 
helps ensure the provision of high quality care that is consistent with 
patient needs and the effective administration of the hospital. In the 
proposed new condition, we emphasize the responsibility of the hospital 
governing body for the entire operation of the hospital, including care 
furnished under contracts and arrangements, the appointment of an 
administrator, the appointment of the medical staff and its bylaws, and 
the implementation of effective budgeting, accounting, and quality 
control programs. Although these requirements necessitate the use of 
certain processes, they are essential to ensuring that the entity with 
which the Secretary has entered into a participation agreement is in 
fact able to ensure patient health and safety. To help ensure this 
accountability, we have specified the responsibility of the governing 
body for the hospital's compliance with all applicable conditions of 
participation and standards. In addition, performance of these basic 
organizational functions is, in our view, a minimum condition for the 
creation of an environment in which appropriate patient-centered 
activity can occur.
    We are proposing that a hospital must notify HCFA or the State 
survey agency whenever the hospital adds a new service category to the 
list of services it offers (proposed Sec. 482.110(b)(2)(i)). We believe 
this is necessary so that the State survey agency may determine whether 
an onsite survey of the new service is necessary and to ensure that the 
survey team may have the correct number and type of qualified members 
when it next visits the hospital. This should then improve the speed 
and efficiency with which the hospital's certification process can be 
accomplished.
    In addition, we are proposing to require that a hospital notify 
HCFA (through its regional offices) whenever it adds a new service site 
(proposed Sec. 482.110(b)(2)(ii)). For example, a hospital would need 
to notify us if it were to acquire a physician's office and consider it 
an offsite hospital outpatient clinic. We believe this is necessary so 
that we may decide whether an onsite survey is necessary to assure that 
the addition does not alter the previous certification decision 
regarding the hospital. Further, HCFA would need to review the new 
service site to assure that it meets the level of integration required 
for inclusion of the new site as a part of the provider. This will 
ensure that appropriate payment is made. We have issued instructions 
outlining the criteria that must be met in order to demonstrate 
integration inherent in classification of an offsite service as part of 
the hospital in Program Memorandum A-96-7.
    Proposed Sec. 482.110(b)(3) and (4) restate with only minor 
editorial changes current requirements concerning the governing body's 
responsibilities for an institutional plan and budget, as well as the 
medical staff's bylaws. We propose to retain these requirements, in 
accordance with section 1861(e) of the Act.
    Under proposed Sec. 482.110(c), we would redesignate, with changes, 
the requirements under existing Sec. 482.12(c)(5) concerning a 
hospital's responsibility to identify potential organ donors. We 
recognize that these provisions, in particular the requirement that a 
hospital have written protocols addressing various aspects of its organ 
procurement responsibilities, are more prescriptive and process-
oriented than other parts of these proposed rules. However, we believe 
it is necessary to retain these regulations in their existing form to 
implement section 1138 of the Act, which specifically requires written 
hospital protocols for organ procurement. The changes to this section 
are discussed below.
    We are revising Sec. 482.110(c)(ii) (formerly 
Sec. 482.12(c)(5)(i)(A)) and adding new requirements under 
Sec. 482.110(c)(1)(iv) concerning organ procurement organizations 
(OPOs) and hospitals. The development of these requirements is in 
response to issues raised during public hearings held by the Department 
on December 11 through 13, 1996, to examine the allocation policies for 
liver transplantation and to receive comments regarding methods to 
increase organ donation. During those hearings, it became abundantly 
clear that there is a critical shortage of organs available for 
lifesaving transplantation. While the science of transplantation has 
made progress over the last two decades, lives that could be saved 
continue to be lost because of an inadequate supply of donor organs. 
For example, an estimated 12,000 to 15,000 deaths occur in the United 
States each year that could yield suitable donor organs, yet in 1996 no 
more than 5,400 resulted in donations. In April 1997, approximately 
52,000 Americans were waiting for organ transplants. Therefore, we 
believe it is appropriate to propose revisions to the current hospital 
conditions relating to organ donation because we expect these revisions 
will result in a significant number of lives being saved.
    The existing regulations merely repeat the language in section 1138 
of the Social Security Act which requires hospitals to assure that 
families are advised of the right to donate or not donate organs, 
encourage discretion and sensitivity to family values, and notify an 
OPO of potential donors. We are proposing to revise the hospital 
conditions of participation regarding organ donation to emphasize the 
role and relationship of the OPO in the process. Although the proposed 
changes increase the importance of the OPO, our aim is that they will 
result in a more collaborative organ donation process which achieves 
positive results. That is, we hope hospitals and OPOs will work 
together in dealing with their individual and unique circumstances and, 
using the best available practices, achieve significant increases in 
the rate of organ donations.
    Specifically, we are proposing to specify that the hospital must 
ensure that the family is advised, in collaboration with the OPO with 
which the hospital has an agreement, of their right to donate or 
decline to donate (Sec. 482.110(c)(1)(ii)). This proposal is based on 
research in the field of organ donation that indicates that consent to 
donation is highest when the request is

[[Page 66746]]

made by the staff of the OPO rather than the hospital. OPO staff are 
specialty trained medical personnel. They have training in bereavement 
counseling and extensive experience in dealing with families undergoing 
the loss of a loved one. They have knowledge of brain death and are 
particularly skilled in making complicated medical terminology 
understandable to a grieving family. Most importantly, organ donation 
is their principal field, whereas hospital staff have numerous other 
responsibilities. Further, donor consent rates tend to be higher when 
there is a time lapse between the hospital notifying the family of a 
death and the request for organ donation.
    In proposing this change, we considered the possibility that we 
might be viewed as holding hospitals responsible for ensuring that a 
function, such as advising a family of their organ donation rights, be 
performed without providing them with the ability to control the 
situation. That is, the hospital cannot control the OPO and may 
consider that it may be a victim of poor OPO performance. However, the 
conditions of coverage for OPOs include performance standards that hold 
OPOs accountable for achieving a specified number of donors and organs 
based on the size of the population it serves. We believe these 
performance standards will motivate OPOs to provide satisfactory 
service to hospitals. Moreover, we note that the proposed hospital 
conditions hold hospitals accountable for ensuring that they have 
written protocols and do the following:
     Identify potential organ donors as defined by the OPO with 
which the hospital has an agreement;
     Notify the OPO of such potential donors;
     Assure, in collaboration with the OPO with which the 
hospital has an agreement, that the family of each potential organ 
donor knows of its option either to donate organs or tissues or to 
decline to donate;
     Encourage discretion and sensitivity with respect to the 
circumstances, views and beliefs of the families of potential donors; 
and
     Ensure that the hospital works cooperatively with the OPO 
with which the hospital has an agreement, in educating staff on 
donation issues, reviewing death records to improve identification of 
potential donors, and maintaining potential donors while necessary 
testing and placement of potential donated organs take place.
    We expect that if the hospitals and OPOs are not achieving the 
desired results the hospitals would reevaluate and revise their 
protocols. Hospitals would not be cited for a deficiency of this 
standard if the hospital has appropriate protocols, regardless of the 
success of OPO staff in acquiring donors.
    We also are proposing to revise an existing requirement that 
specifies that the hospital must notify OPOs of potential organ donors. 
There is a good deal of variability among hospitals in referral 
patterns. Some hospitals do not call the OPO unless they have 
determined that the patient is medically suited to be a donor and the 
family has consented. On the other hand, some hospitals refer all 
deaths to the OPO. Most hospitals have established criteria, such as 
age or absence of systemic disease, to determine if a potential donor 
should be referred to the OPO.
    In evaluating the organ donor shortage and the actions that 
hospitals may take with regard to donor referral, we considered the 
following options:
     Maintain the current requirement which provides hospitals 
with the flexibility to determine appropriate referrals through their 
written protocols;
     Require mandatory reporting of all death of patients under 
age 75 to the OPOs; and
     Require mandatory reporting of deaths to OPOs using 
protocols defined by the OPOs.
    During our analysis, we identified a number of advantages and 
disadvantages to each of these alternatives before we concluded with 
the proposal to require mandatory reporting of deaths to OPOs using 
protocols defined by the OPO as discussed below. However, we are 
specifically soliciting comments on the advantages and disadvantages of 
the various options, and inviting identification of additional 
alternatives and empirical data supporting various opinions, during the 
public comment period.
    The advantages of the current requirement, which specifies that 
hospitals have a protocol for referring potential donors, are that it 
provides hospitals with desired flexibility and it reiterates the 
language of the statute. However, there are significant disadvantages 
to this approach. The primary concern is that many hospitals have never 
referred a potential donor. As noted above, we believe that there has 
been a large number of potential donors that have been missed; that is, 
we believe the number of potential donors is double to triple the 
number of current donors. We are concerned that this flexibility has 
resulted in a significant number of hospitals failing to refer all 
potential donors and some hospitals not referring any donors. Some 
hospitals view as potential donors only those in whom consent to donate 
has already been obtained and do not even attempt to ask other families 
about the possibility of donating; others refer only when they consider 
the deceased to be a good candidate or when they believe the family may 
consent to the donation. This leads to a loss of opportunity for 
families for whom the gift of a loved one's organ may be the first step 
in the healing process as well as the loss of a substantial number of 
life-saving organs.
    We also considered the alternative of requiring referrals of all 
deaths to the OPO. The State of Pennsylvania has implemented this 
practice. The resulting increase in donation in Eastern Pennsylvania 
has been at least 10-percent. We believe telecommunication technology 
currently exists to permit low-cost and efficient implementation of a 
policy requiring referrals of all deaths. OPOs that have implemented 
such programs indicate that reporting of an individual's death and 
relevant medical information takes only 5 to 10 minutes of time by 
hospital staff. Under such a system of mandatory death reporting, it is 
reasonable to assume that no potential donor will go unidentified and 
few, if any, families of potential donors will go without being given 
the opportunity to donate. This system also has the advantage of 
relieving hospital staff of the burden of making any assessment of 
donor suitability or the families' willingness to donate. Finally, as 
more families are educated about organ donation, even if they decide 
not to donate, myths that inhibit organ donation may be dispelled.
    Despite the major advantages to this alternative, there are 
potential problems. There is clearly a significant cost involved in 
providing and interpreting information on over 1 million deaths 
annually. Conservative implementation estimates of this alternative are 
about $4 million annually (1 million deaths times 5 minutes of hospital 
and OPO time at an assumed average salary cost of $50,000), and may be 
as great as $8 to $10 million. Arguably, the saving of even a single 
statistical life would justify such a cost, using standard benefit-cost 
analysis assumptions. Nonetheless, we recognize that these costs should 
not be imposed if less costly approaches can also achieve increased 
organ donation. In discussing this alternative with the OPO industry, 
we have been advised by some OPOs that they are concerned about 
implementing such a system because they would have to handle a large 
number of unproductive referrals. That is, of the approximately 1 
million deaths

[[Page 66747]]

annually, only about 12,000 to 15,000 are potential organ donors.
    This proposed regulation includes the requirement that hospitals 
report all potential donors using protocols as defined by the OPO. This 
alternative has the advantage of providing support for OPOs in dealing 
with low referral hospitals, while providing a great deal of 
flexibility for OPOs to respond to local community situations and 
resource limitations. As noted above, we solicit comments on 
alternatives that could be more responsive to the national organ 
shortage. We are also considering whether to propose in the OPO 
conditions of coverage a performance standard that could be used to 
determine the extent of organ donations. In principle, procedural 
standards related to organ procurement could be replaced by an outcome 
standard related to organ recovery. However, since we are not clear as 
to how to design or implement the most cost-effective, low-cost 
standard we would welcome public comment.
    We are aware that this proposal, by giving the OPO responsibility 
for defining potential organ donors and the protocol for referring such 
donors to the OPO, raises questions about the impact that it will have 
on the donation and retrieval of a variety of tissues that are also 
used in patient care. Tissue transplants also are important procedures 
that improve, and sometimes save, the lives of recipients. It is our 
expectation that hospitals, OPOs, eye, and tissue banks will work 
cooperatively and effectively to facilitate and enhance both organ and 
tissue donation. We recognize that there is considerable local 
variation in how these arrangements are currently carried out and how 
they might be done under our proposed changes. We will appreciate 
receiving comments on how these proposed changes are likely to impact 
on tissue donation, as well as suggestions on what measures we could 
appropriately take to maximize both tissue and organ donation.
    Finally, we are proposing to add a new requirement that specifies 
that hospitals work cooperatively with the designated OPO in educating 
hospital staff on donation issues, reviewing death records to improve 
identification of potential donors, and maintaining patients while 
necessary testing and placement of potential donor organs take place 
(proposed Sec. 482.110(c)(1)(iv)). We do not believe this requirement 
is unduly burdensome on hospitals since all reasonable hospital costs 
incurred with respect to any organ procurement effort are paid. To 
further the cooperative efforts between hospitals and OPOs, we are also 
proposing to add a requirement that hospitals must provide requested 
data related to patients eligible for transplantation either directly 
to the Department or through the Organ Procurement or Transplantation 
Network. This requirement is explained further in Sec. 482.120 
``Information Management''. We invite comments on the content of this 
new requirement.
13. Infection Control (Sec. 482.115)
    The present requirements on infection control (Sec. 482.42) were 
promulgated as a separate COP largely due to the seriousness of the 
problem of Nosocomial infections. Nosocomial infections subject 
patients to significant additional pain and risk, prolong hospital 
stays, and lead to significant additional costs in health care 
spending.
    We propose to maintain a separate COP on infection control because 
we believe it is vital for protecting patient health and safety. We 
propose to retain most of the standards under the current COP, but we 
would strengthen its focus by requiring hospitals to take appropriate 
actions that result in improvement when problems are identified in 
their infection control programs. This is in concert with the proposed 
quality assessment and performance improvement COP, of which infection 
control must be an integral part.
    The proposed infection control condition places accountability on 
hospitals to prevent, control, and investigate infections and 
communicable diseases, and take actions that result in improvements. 
However, the proposed condition allows flexibility for hospitals to 
determine how to meet these objectives. This includes the flexibility 
to determine how much training in infection control is necessary for 
the hospital's personnel.
    We propose to delete the present requirement that the hospital 
maintain a log of incidents related to infections and communicable 
diseases. In keeping with the outcome-oriented approach of this rule, 
we propose that the hospital must have a method of identifying problems 
in its infection control program and take appropriate actions that 
result in improvement. Although use of a log may be one method to 
identify problems, we do not intend to prescribe how a hospital should 
identify problems.
    We considered requiring hospitals to meet Centers for Disease 
Control and Prevention (CDC) and Occupational Safety and Health 
Administration (OSHA) standards for providing an environment to avoid 
sources of infections and communicable diseases. However, such a 
requirement would raise questions as to which CDC or OSHA standards 
must be met. Moreover, where alternative sets of professionally 
recognized standards exist, we do not wish to restrict hospital 
flexibility by mandating compliance with a particular body of 
standards. Therefore, we are not mandating that hospitals follow any 
specific set of infection control guidelines; however, such guidelines 
are published by CDC, the Association of Practitioners in Infection 
Control (APIC), the American Hospital Association (AHA), and the JCAHO 
and are available as resources on infection control practices.
    We also considered including specific requirements concerning 
employee health status issues. However, we believe the hospital's 
obligation to protect patients from employees with communicable 
diseases is covered in the proposed language that states that the 
hospital maintains an effective infection control program that protects 
patients and hospital staff by preventing and controlling infections 
and communicable diseases. Adequate assessments of employee health 
status fall under this language as part of the protective 
responsibilities of the hospital.
14. Information Management (Sec. 482.120)
    We propose to consolidate current Sec. 482.24 ``Condition of 
participation: Medical record services'', and record requirements in 
several other COPs into a new ``Information management'' COP which 
would reflect the increasing automation and integration of patient care 
data. This new COP would require that a hospital maintain an 
information system to record, communicate, and measure hospital 
performance in order to assure that patient needs are documented and 
met. The information system is also needed to support the hospital's 
quality assessment and performance improvement program.
    The condition consists of two standards. In both standards, we have 
not retained many current process-oriented requirements concerning how 
a hospital must maintain its medical records; instead, we have kept 
only those requirements needed for accurate documentation of a patient 
stay and for quality assessment and performance improvement purposes. 
These requirements should help ensure that orders are communicated and 
documented accurately, thus reducing the risk of errors that could 
jeopardize patients' health and safety.
    The first standard, ``Health Information System'', focuses on 
patient

[[Page 66748]]

care and outcomes. First, we would require the hospital to maintain 
clinical records on all patients. This requirement not only implements 
a specific statutory requirement (section 1861(e)(2) of the Act), but 
also provides a basis for the quality assessment and performance 
improvement activities that we expect will lead to a high standard of 
care for all patients. We have retained the current record retention 
requirement of 5 years because we believe access to records during this 
period is essential to protect the health and safety of current 
patients, since clinicians may well need the details of prior treatment 
to assess and treat current conditions. Five years has been the minimum 
requirement since 1986 and it has proved to be a clear, workable, and 
not overly burdensome standard.
    One part of this standard on which we especially seek comment 
concerns the authentication of record entries. Under proposed 
Sec. 482.120(a)(5), we would consolidate the present requirements at 
Sec. 482.24(c)(1)(i) and (ii) regarding authentication of entries in 
the medical record to state that all entries must be legible, dated, 
and authenticated in written or electronic form by whomever is 
responsible for ordering or providing the service. We are proposing to 
delete the current requirement at Sec. 482.23(c)(2)(ii) on verbal 
orders because we believe our proposed requirement at 
Sec. 482.120(a)(5) would cover authentication of verbal orders. The 
present requirement at Sec. 482.24(c)(1)(ii), which states that 
authentication may include signatures, written initials or computer 
entry, would also be deleted. Although these are accepted standards of 
practice, we do not believe it is necessary that the regulations 
include this level of prescriptive detail.
    We are seeking comment from as broad a range of interests as 
possible on the issue of authentication of medical record entries. We 
recognize that there is a strong interest in the hospital industry in 
modifying, if not eliminating, the requirement for authentication, 
because of questions about whether authentication adds value to the 
quality of the medical record, especially when the countersignature 
comes after the service has been delivered to the patient. However, 
others believe that absence of authentication leads to questions of 
accountability. Therefore, we request comment and suggested language, 
as appropriate, on this issue.
    Regarding the issue of verbal orders, the present requirement at 
Sec. 482.23(c)(2)(ii) states that verbal orders must be signed or 
initialed by the prescribing practitioner as soon as possible. We 
invite comment on the issue of whether a timeframe should be specified 
for signing verbal orders. We believe that many States have laws 
governing timeframes in which verbal orders must be signed; therefore a 
Federal specification may not be necessary.
    Currently, transplant centers report data to the Organ Procurement 
and Transplantation Network, the Scientific Registry, and organ 
procurement organizations regarding the disposition of organs made 
available for transplant. These data include information regarding 
patients waiting for transplants, information on those who have 
received a transplant, follow-up data on patients who have received a 
transplant, and information on those offered an organ for transplant 
but declining to use the organ at the time. Moreover, the information 
submission is voluntary on the part of the transplant centers.
    For the most part, this system of information exchange has worked 
very well. However, from time to time, some concerns have arisen 
regarding the voluntary nature of the data submission, ownership of the 
data, and public access of the information. In an effort to overcome 
any confusion surrounding this information system and to assure that 
all facilities submit appropriate data timely, we are proposing to 
include a provision in section 482.120, information management, related 
to transplantation data.
    Specifically, we are proposing to add a requirement that hospitals 
that perform transplants, whether they are approved by Medicare for 
coverage of the transplant or not, must provide requested data related 
to patients eligible for transplantation either directly to the 
Department or through the Organ Procurement and Transplantation 
Network. The proposal clarifies that data submission is no longer 
voluntary, but is a requirement for the hospital's participation in the 
Medicare program.
    We believe there is authority in both section 1861(e)(9) and 
section 1138 of the Act for this requirement. First, section 1861(e)(9) 
provides that the Secretary may require hospitals participating in the 
Medicare program ``to meet such other requirements that the Secretary 
finds necessary in the interests of the health and safety of 
individuals who are furnished services in the institution.'' When we 
determine whether hospitals are fit for inclusion (or continued 
inclusion) in the Medicare program, we have an interest in knowing how 
well the hospital is performing the full range of services it provides 
to its patients. A hospital's history with respect to the transplant 
services it provides is one area, among many, that helps tell us 
whether the institution is providing high quality services in the safe 
and healthful environment the statute requires, and we believe that 
reviewing data from this area of operation is no less useful for this 
purpose than evaluating other surgical or care areas of the hospital. 
Second, section 1138 requires hospitals to abide by the rules and 
requirements of the Organ Procurement and Transplantation Networks 
(OPTNs). Where OPTNs require hospitals to furnish the kind of data 
addressed in this proposed rule, hospitals would be obligated to 
provide it.
    The second standard in the Information Management COP, ``Management 
of the Information Systems'', contains requirements on the integrity, 
effectiveness, confidentiality, and security of the hospital's data 
systems that are similar to current requirements shorn of their 
process-oriented details. We are also proposing in this standard to 
expand the current requirement in Sec. 482.25(b)(8), which discusses 
the dissemination of a patient's drug profile to the hospital's 
professional staff. We propose building on this to require that all 
medical information on a patient be available to all authorized 
professional staff who provide medical care to the patient. This is 
consistent with the emphasis on an interdisciplinary plan of care for 
each patient, and an integrated approach towards a patient's needs, 
both of which depend on practitioners having accurate and current 
information to deliver appropriate and necessary care.
15. Human Resources (Sec. 482.125)
    Current regulations, which are organized on a department-by-
department basis, contain scattered requirements concerning the 
qualifications and numerical staffing standards for nursing and other 
hospital staff, and for doctors of medicine or osteopathy and other 
practitioners with privileges to treat hospital patients. For example, 
there is a separate condition on medical staff at Sec. 482.22, and 
several COPs, including nursing services (Sec. 482.23), medical record 
services (Sec. 482.24), pharmaceutical services (Sec. 482.25), and 
others, contain requirements for screening and credentialling of 
medical staff members and for employment of (or contracting with) 
adequate numbers of qualified nursing and other nonphysician staff.

[[Page 66749]]

    Under the integrated, interdisciplinary approach inherent to these 
proposed regulations, we are consolidating these scattered references 
into a single condition of participation on human resources. The 
overall goal of the new proposed COP would be to ensure that all 
hospital areas are staffed with sufficient qualified personnel to meet 
the needs of the hospital's patients. We also propose to eliminate many 
process-oriented requirements, in particular those currently set forth 
in Secs. 482.12(a) and 482.22, relating to the composition, 
organization, and conduct of a hospital's medical staff. Although a 
process-oriented requirement, we have retained the current requirement 
that the medical staff operate under bylaws because section 1861(e)(3) 
of the Act explicitly requires them.
    In proposing these changes to the current medical staff 
requirements, we do not intend to discount the value to a hospital of 
having a carefully selected and well-organized medical staff. On the 
contrary, we believe it is self-evident that the medical staff has a 
critical role in ensuring that high quality care is delivered 
consistently and that any hazards to patients are promptly detected and 
eliminated. However, individual hospitals, their employees or 
contractors, and the professionals who have been granted practice 
privileges may choose to have medical staff functions performed in a 
variety of appropriate ways, and we do not believe it is necessary to 
prescribe to a hospital what the composition or organization of its 
medical staff should be. For example, existing Sec. 482.12(a)(7) has 
been interpreted by some to prohibit hospitals from requiring specialty 
board certification or eligibility as a necessary condition for medical 
staff membership. However, there is considerable disagreement between 
hospitals and physicians as to whether board certification or 
eligibility is an important indicator of professional competence. In 
view of this diversity of opinion and absent any indication that the 
quality of care would decline if the current requirement were deleted, 
we are proposing to eliminate the current requirement and to allow each 
hospital to determine, in consultation with its medical staff, whether 
requiring certification, fellowship, or membership in a specialty body 
or society would enhance the quality of care for the hospital's 
patients.
    The proposed new condition consists of three standards that support 
the COP's aim that the hospital be staffed with sufficient qualified 
personnel. The first of these has to do with the qualifications of 
those individuals who furnish health care services to patients of the 
hospital. We wish to emphasize that the requirement would apply to all 
such persons, whether or not they are employed or compensated by the 
hospital and, if they are compensated, without regard to whether they 
are salaried employees or contractors. The standard also applies to 
those separately licensed practitioners, such as doctors of medicine or 
osteopathy, who typically practice independently and bill patients or 
their insurers, rather than the hospital, for their services.
    This proposed standard reflects our view that the conditions of 
participation should not prescribe specific Federal personnel 
qualification requirements for nonphysician personnel, or attempt to 
limit or specify the functions they may perform, unless the Medicare 
statute requires us to do so. We believe this is the best course of 
action for several reasons. First, most States have in effect laws and 
regulations governing licensure and scope of practice for health care 
workers. We believe individual hospitals and their medical staffs, 
working within the context of applicable State law and regulations, are 
best able to determine which personnel to use and how to use them. 
Moreover, the emphasis of the proposed requirements in this area, as in 
other areas affected by these regulations, is not on whether staff have 
specific credentials or were selected under formalized procedures, but 
on whether the outcome of the hospital's staffing practices is the 
delivery of safe, high quality care.
    We recognize that there may be some cases in which the absence of 
any State requirements for a category of hospital worker in a 
particular State may mean that no specific credential is required for 
performance of the function in that State. However, the hospital would 
remain obligated under proposed Sec. 482.125(a) to ensure that 
personnel are qualified to provide or supervise services, and would be 
fully accountable under this section as well as under other relevant 
parts of the regulations (such as Sec. 482.20, Patient Care) for the 
quality of care provided. Individual hospitals are free to develop 
their own specific credential requirements if they believe that doing 
so is in the best interest of their patients.
    In addition, we note that among the resources a hospital has in 
acquiring and maintaining qualified staff is the National Practitioner 
Data Bank, which was authorized by the Health Care Quality Improvement 
Act (HCQIA) of 1986 (Pub. L. 99-660). The HCQIA requires that hospitals 
request information from the National Practitioner Data Bank at the 
time a physician, dentist, or other health care practitioner applies 
for a position on its medical staff (courtesy or otherwise) or for 
clinical privileges at the hospital; and every 2 years (biennially) on 
all physicians, dentists, and other health practitioners who are on its 
medical staff (courtesy or otherwise) who have clinical privileges at 
the hospital.
    The HCQIA requires that hospitals report to the National 
Practitioner Data Bank all professional review actions, based on 
reasons related to professional competence or conduct, adversely 
affecting clinical privileges of physicians and dentists for a period 
longer than 30 days; or voluntary surrender or restriction of clinical 
privileges for physicians and dentists while under, or to avoid, 
investigation.
    We recognize that some may ask whether the hospital's 
responsibility to use qualified personnel is sufficient to assure that 
qualified staff are used in States with weak licensure programs and, in 
such States, whether Medicare should impose additional requirements or 
undertake a larger role. Therefore, we specifically invite public 
comments on this issue especially with regards to specific examples 
where States have weak or no licensure requirements for hospital health 
professions. We hope that commenters who believe Medicare should issue 
additional requirements would offer specific suggestions and any 
available empirical data to support such suggestions.
    The second proposed standard, ``Staffing (Sec. 482.125(b)), retains 
all of the nurse staffing requirements in current regulations at 
Sec. 482.23(b) that are essential to the professional role and 
importance of nurses in a hospital. Of the six requirements in this 
standard, the first two are general in nature and the remaining four 
deal with specific nursing needs. Under the first requirement a 
hospital's staffing must reflect the volume of patients, patient 
acuity, and intensity of the services provided to ensure desirable 
patient care outcomes. To enforce this requirement, and because we are 
concerned about an apparent trend in the country toward reductions in 
hospital nurse staffing, we also propose as a second requirement that a 
hospital must develop and use consistently an explicit process to 
determine on an ongoing basis the level of nursing staff (including 
registered nurses, licensed practical nurses, and nursing assistants) 
needed to effectively implement the general requirement for appropriate 
staffing. This methodology and evidence of its use in meeting the 
nursing staffing needs of the patients must be available

[[Page 66750]]

for public inspection. We are interested in receiving comments on this 
proposal, specifically:
    (1) Is this process-oriented requirement needed and is it strongly 
predictive of the desired quality outcomes one would associate with the 
proposed staffing requirement at Sec. 482.125(b)(1)?
    (2) If not, are there other requirements (such as specific 
numerical ratios) that would better achieve the desired outcomes?
    The third requirement under the staffing standard is that a 
hospital maintain 24-hour registered nurse coverage if it does not have 
a waiver in effect under 42 CFR 405.1910(c). Twenty-four hour nursing 
coverage is required under section 1861(e)(5) of the Act, and thus we 
are continuing to include this requirement. The remaining three 
requirements under this staffing standard discuss the availability of 
registered nurses for bedside care, the responsibility of a registered 
nurse for managing nursing care for patients, adherence of nurses to 
hospital policies and procedures, and hospital management of 
nonemployee nursing personnel. We recognize that some of the other 
nurse staffing requirements are prescriptive and process-oriented, but 
we believe that they help ensure adequate staffing levels in hospitals. 
We welcome comments on how these requirements could be revised or 
simplified without jeopardizing attainment of this goal.
    The third proposed standard is ``Education, Training and 
Performance Evaluation'' (Sec. 482.125(d)). The education and training 
sections are intended to ensure that hospital staff are aware of their 
job responsibilities and capable of meeting them, and that reassigned 
personnel receive the orientation or training needed to help them adapt 
to new or additional job demands. We emphasize that under this standard 
the hospital would be responsible only for ensuring that the individual 
adequately knows the nature of his or her specific job duties in the 
hospital. The individual would continue to be responsible for his or 
her own basic professional education, and for any continuing education 
needed to retain licensure or professional certification, unless the 
hospital chooses to assume this responsibility as part of a 
compensation or incentive arrangement.
    The second part of this standard requires that all personnel who 
furnish health care services in the hospital demonstrate in practice 
the skills and techniques necessary to perform their assigned duties 
and responsibilities. While we believe that process requirements that 
focus on providing training and education to those who provide care and 
services in the hospital are predictive of positive outcomes and 
satisfaction for patients (and protection from negative outcomes), we 
also believe that the real outcome expectation of the requirements is 
reflected in the demonstrated skills and techniques staff actually use 
on a routine basis. This is why we are proposing that all personnel 
furnishing health care services (which would include hospital 
employees, contractors, and individuals working under arrangements) 
demonstrate in routine practice the skills and techniques necessary to 
perform their jobs.
    Such a requirement closes the training and education loop. It is 
not enough for the hospital to demonstrate that individuals have 
received training, or how much training has been offered and provided. 
For effective patient care, it is critical that when the staff perform 
their duties, they actually use the necessary skills and techniques 
they have been taught to do their jobs correctly. For example, every 
hospital employee who comes into contact with patients is taught 
infection control techniques, one of which is hand washing in between 
patient contacts. If a surveyor observes staff who do not wash their 
hands between patient contacts, it is of little value that the hospital 
can show that staff were taught to wash their hands. One of the tasks 
of the survey process will be to determine if a lapse in performance is 
simply an isolated failure of one employee (although that can be so 
serious as to pose a threat to patient health and safety) or if it 
represents a systemic failure posing a widespread danger. Regardless, 
this requirement poses no extraordinary burden on the hospital, since 
the performance expectation of all staff--especially those who directly 
or indirectly serve patient needs--is that they perform their duties 
competently and efficiently. This outcome-oriented requirement simply 
makes explicit this expectation.
16. Physical Environment (Sec. 482.130)
    We propose to replace the requirements on physical environment now 
at Sec. 482.41 with a new physical environment COP that would require 
in general that a hospital maintain a physical environment that is free 
of hazards for patients. The current requirements consist of three 
safety standards containing separate requirements for buildings, life 
safety from fire, and facilities. Each of these standards contains 
requirements on the process of implementing safety standards as well as 
the physical structures and property that must be available in the 
hospital.
    Based on our experience with applying these current requirements 
and suggestions from the parties involved in the development of these 
proposed hospital conditions, we are proposing to reorganize these 
requirements into two physical environment standards and a separate COP 
for life safety issues, as discussed below. We believe this 
reorganization emphasizes the role of physical structures and property 
in ensuring the delivery of high quality care.
    In the first proposed standard, ``Safety management'' 
(Sec. 482.130(a)), we have set forth four requirements that we believe 
are fundamental to effective management of a hospital's physical 
environment. These include preventing, reporting, and correcting 
threatening situations, equipment failures, and actual incidents that 
involve injury to patients or that involve damage to property. Also, we 
believe proper safety management should include a requirement that a 
hospital must have an emergency preparedness system to respond to power 
failures, natural disasters, or other emergencies that disrupt the 
hospital's ability to provide care. We have chosen not to prescribe the 
frequency of reporting safety initiatives, such as quarterly reports to 
the governing body, because we believe the wide range of hospital 
structures and property requires each hospital to define its own 
internal reporting practices. We considered specifying which personnel 
should be responsible for safety management initiatives, but we believe 
no staff should be exempt from ensuring that the hospital environment 
is free of hazards. We also believe hospitals commonly employ safety 
engineers and others who contact all types of personnel when designing 
and managing safety initiatives.
    The second proposed standard, ``Physical Plant and Equipment'' 
(Sec. 482.130(b)), combines three current general requirements for a 
hospital's physical structures and property, but does not include the 
level of detail in current regulations. (For example, a requirement 
concerning the location of diagnostic and therapeutic facilities has 
been deleted.) The requirements simply state that there must be proper 
storage and disposal of trash and medical waste, proper temperature 
control, light and ventilation throughout the hospital, adequate power, 
light, gas and water for patient care during emergencies, and that 
equipment used for patient care services must be properly maintained.

[[Page 66751]]

The inclusion of medical waste and air exchanges is new. These items 
reflect health and safety concerns in recent years over unsafe medical 
waste disposal, the proper care of tuberculosis patients, and the 
prevention of airborne particles and bacteria in hospitals, concerns 
which led to the publication of CDC guidelines on the disposal of 
medical waste and the prevention of transmission of mycobacterium 
tuberculosis (see Occupational Exposure to Bloodborne Pathogens, 56 FR 
64004, December 6, 1991 (Final Rule), and Preventing the Transmission 
of Mycobacterium Tuberculosis in Health Care Facilities, 59 FR 54242, 
October 28, 1994 (Notice). The requirement on maintaining equipment is 
a consolidation of several references in the current regulations.
17. Life Safety From Fire (Sec. 482.135)
    The Life Safety Code (LSC) developed by the National Fire 
Protection Association serves as the basis for many Federal, State, and 
local fire safety regulations, including those contained in the 
Medicare conditions of participation for hospitals. The LSC is a 
nationally recognized standard that includes fire protection 
requirements necessary to protect patients and residents in health care 
facilities. Designed to provide a reasonable degree of safety from fire 
and similar emergencies, the LSC covers construction, fire protection, 
and occupancy features needed to minimize danger to life from fire, 
smoke, and fumes. The code may be applied to both new and existing 
buildings. The National Fire Protection Association revises the LSC 
periodically to reflect advancements in fire protection.
    In the current hospital COPs, the physical environment COP includes 
a standard, ``Life safety from fire,'' that requires that hospitals 
comply with the 1985 edition of the Life Safety Code 
(Sec. 482.41(b)(1)). Section 482.41(b)(1)(i) then sets forth a 
``grandfather'' clause specifying that, under certain circumstances, a 
hospital that originally complied with the 1967 or 1981 edition of the 
LSC hospitals may be considered to be in compliance with the life 
safety standard. The existing regulations also provide that HCFA may 
waive specific provisions of the LSC that would result in unreasonable 
hardship upon a facility, as long as the waiver has no adverse effect 
on patient health and safety. In addition, the regulations permit a 
hospital to meet a fire and safety code imposed by State law if HCFA 
finds that the State-imposed code adequately protects patients in 
hospitals.
    In the proposed hospital COPs, we would continue to incorporate the 
LSC by reference. However, in order to stress the importance of fire 
safety standards for patient health and safety, we propose to establish 
a separate condition, ``Life safety from fire,'' at proposed 
Sec. 482.135. We also propose to update this requirement to specify 
that hospitals must meet the 1994 edition of the LSC, with no 
``grandfathering'' under any of the earlier codes. However, we are also 
currently considering adoption of the later 1997 edition of the LSC 
instead of the 1994 edition. We welcome comments on the proposed 
adoption of the 1997 edition also and will address this issue in the 
final rule for this proposed rule.
    We consider compliance with the LSC to be essential to the safety 
of patients. As noted above, however, compliance with the LSC currently 
is a standard within the existing Physical Environment condition of 
participation. The surveyor that inspects a hospital for LSC purposes 
often works separately from the team that conducts the rest of the 
hospital survey, including those portions of the survey that involve 
other physical environment issues. When the LSC surveyor determines 
that the LSC is not met, the entire Physical Environment COP is found 
to be out of compliance. In practice then, the LSC standard essentially 
is treated as a condition level requirement. Therefore, we believe that 
establishing a separate COP for the Life Safety Code would accurately 
reflect its importance for patient health and safety.
    We are proposing to adopt the 1994 edition of the LSC because we 
believe that it provides the highest available level of protection for 
patients and staff in hospitals, with little or no additional burden to 
providers in existing facilities and at a lower cost in new 
construction. The 1994 edition of the LSC contains distinct sets of 
requirements for new construction and existing facilities. Newly 
constructed health care facilities must have automatic sprinklers 
throughout, allowing them to meet somewhat less rigorous standards in 
other areas. For example, under the 1994 LSC, exits may be 150 feet 
apart rather than 100 feet, interior finish may be Class C rather than 
Class B. Thus, it may actually cost less to construct a new building in 
conformance with the 1994 LSC than under the 1985 LSC.
    The 1994 LSC does not impose any additional requirements for 
existing buildings beyond those specified in the 1985 LSC. Thus, an 
existing hospital that is in compliance with the 1985 LSC would not 
have to make any changes to come into compliance with the 1994 LSC. 
Only hospitals that still comply only with the 1967 LSC may require 
some additional features to achieve compliance with the 1994 LSC. For 
such hospitals, we believe it is inappropriate to require compliance 
with a code that relies on outmoded fire protection methods. We note 
that we are proposing to retain both the waiver provision from the 
existing regulations and the provision permitting use of a State code 
if HCFA finds that it adequately protects patients, which should ensure 
that hospitals that can demonstrate an ability to protect patient 
health and safety are not faced with unreasonable burdens to comply 
with the LSC requirements.
18. Blood and Blood Product Transfusions (Sec. 482.140)
    We propose establishing this requirement as a separate COP because 
of its importance for patient health and safety. The transfusion of 
blood and blood products requires a high degree of coordination between 
medical and nursing staff. Therefore, it is critical that a hospital 
demonstrate practices that ensure safe and accurate transfusions with a 
minimum of transfusion-related reactions.
    Currently, specific, process-oriented requirements for pre-
transfusion testing of blood and blood products are set forth at 42 CFR 
Part 493 (Secs. 493.1271, 493.1273, 493.1275, 493.1277, 493.1279, 
493.1283, and 493.1285). We considered proposing to include all these 
CLIA requirements in the hospital COPs as well as requirements for 
transfusions, maintaining the same degree of prescriptiveness. However, 
we believe that the transfusion COP should incorporate the same 
approach used in the rest of the proposed rule, that is, a balanced 
approach that combines HCFA's and the hospital's responsibility to 
ensure that essential health and safety standards are met. Moreover, 
many of the requirements set forth under part 493 are already stated 
broadly in the proposed hospital COPs. For example, the requirement 
that transfusion facilities are administered only by qualified 
personnel already appears in general terms in the proposed rule at 
Sec. 482.125, Human Resources. Likewise, the requirement that blood and 
blood products be stored under appropriate conditions, including proper 
temperature, is implicit in Sec. 482.130, Physical Environment.
    Therefore, we are proposing under Sec. 482.140 a new COP on blood 
transfusions that would require that hospitals--
    (1) Have procedures for averting, responding promptly to, 
investigating, tracking, and reporting blood

[[Page 66752]]

transfusion reactions to the laboratory and, as appropriate, to Federal 
and State authorities; and
    (2) Take appropriate measures to ensure the positive identification 
of the blood or blood product and the recipient, that blood and blood 
products are stored at the appropriate conditions, including 
temperature, to prevent deterioration, and that blood and blood 
products are readily accessible to the appropriate medical and nursing 
staff.
    As noted above, we have included these requirements because they 
are essential to patient safety.
19. Infectious Blood and Blood Products (Sec. 482.145)
    This condition specifies the steps hospitals must take when they 
become aware that they have administered potentially HIV (human 
immunodeficiency virus)-positive blood or blood products to a patient. 
These requirements restate without change the requirements in existing 
Sec. 482.27(c), Potentially infectious blood and blood products, which 
were set forth in our September 9, 1996 final rule (61 FR 47423). 
Because these requirements were so recently established through notice 
and comment rulemaking, and would merely be redesignated under this 
proposed rule, we are not accepting comments on this section.
20. Utilization Review (Sec. 482.150)
    We propose to maintain the present utilization review (UR) COP as 
presently set forth in Sec. 482.30. We believe this is appropriate 
because when the current UR COP was revised in 1986 (51 FR 22010), we 
strove to delete overly burdensome requirements and reflect only the 
statutory obligations of hospitals for utilization review. These 
obligations have not changed since that time.
    Since all Medicare-participating hospitals must have an agreement 
with the Utilization and Quality Control Peer Review Organization (PRO) 
in the State in which the hospital is located as a condition of payment 
in accordance with the regulations at Sec. 466.86(b), PRO review 
activities fulfill the UR requirements for hospitals. Therefore, the UR 
COP has limited applicability in the survey process. However, in 
unusual cases where a PRO does not in fact perform review provided for 
in its contract with the hospital, these regulations would ensure that 
the provisions of sections 1861(e)(6) and (k) of the Act concerning 
utilization review can be applied.
21. Provider Agreement--Surveyor Access to Provider Records 
(Sec. 489.53)
    In addition to the changes described elsewhere in this document, 
which would affect only hospitals, we propose to add a new provision 
that would apply to all providers participating in Medicare. Under this 
new provision, which would amend our provider agreement regulations at 
42 CFR 489.53, HCFA would be authorized to terminate a provider's 
participation in Medicare if the provider refused to allow access to 
its facilities, or examination of its operations or records, by or on 
behalf of HCFA, as necessary to verify that it is complying with the 
provisions of title XVIII and the applicable regulations of Chapter IV 
of Title 42 of the Code of Federal Regulations, or with the provisions 
of its provider agreement.
    Under Medicare, the surveys needed to verify compliance with health 
and safety requirements or other Medicare rules are not mere paperwork 
reviews, but instead require State surveyors or HCFA personnel to 
perform firsthand observations of facilities and operations as well as 
to review relevant records. The great majority of hospitals and other 
providers recognize the need for these surveys and cooperate willingly 
with them. However, in rare cases a provider may attempt to thwart the 
survey process by refusing to allow access to its facilities, 
operations, or medical or other records. Without this access, it may be 
difficult or impossible to document provider noncompliance with 
applicable conditions of participation or other requirements.
    We believe that a provider that has agreed to participate in 
Medicare and accept payment for treating Medicare patients has an 
inherent obligation to allow access to its facilities, operations, and 
records to the extent that access is needed to verify that the provider 
is complying with all applicable Medicare requirements. If this access 
were denied, we would be unable to carry out our obligations to 
administer the Medicare program. In addition, the health and safety of 
both Medicare and other patients might be jeopardized, since we would 
not be able to detect unsafe practices and identify them for corrective 
action. However, our current regulations do not make this longstanding 
obligation explicit. The proposed rule would correct this problem by 
adding new Sec. 489.53(a)(6) to specify that HCFA may terminate a 
provider agreement if the provider refuses to allow access to its 
facilities, or examination of its operations or records, to verify 
compliance with applicable Federal law and regulations.
    The specific statutory basis for the proposed rule is section 
1871(a)(1) of the Act, which authorizes the Secretary to prescribe such 
regulations as may be necessary to carry out the administration of the 
Medicare program. However, we emphasize that this provision does not 
create a new obligation for providers, but merely codifies an existing 
obligation. For this reason, the proposed rule would not increase the 
compliance burden for facilities. Existing limits on the types of 
information requested and the uses to which it can be put would be 
maintained. For example, as part of the review of the hospital's 
quality assessment and performance improvement program, we would expect 
to have access to hospital incident reports only as a nonpunitive 
review function to determine how the hospital analyzes and tracks these 
data and incorporates the data into its quality assessment and 
performance improvement program.

III. Impact Statement

    We generally prepare a regulatory flexibility analysis that is 
consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 
through 612) unless we certify that a proposed rule such as this would 
not have a significant economic impact on a substantial number of small 
entities. For purposes of the RFA, all non-profit hospitals and other 
hospitals with revenues of $5 million or less annually are considered 
small entities. States and individuals are not considered small 
entities.
    In addition, section 1102(b) of the Social Security Act requires us 
to prepare a regulatory impact analysis for any proposed rule that may 
have a significant impact on the operation 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. Although 
the provisions proposed in this rule do not lend themselves to a 
quantitative impact estimate, we do not anticipate that they would have 
a substantial economic impact on most hospitals. However, to the extent 
that our proposals may have significant effects on providers or 
beneficiaries, or be viewed as controversial, we believe it is 
desirable to inform the public of our projections of the likely effects 
of the proposals.
    As discussed in detail above, this proposed rule sets forth new 
hospital conditions of participation that revise or

[[Page 66753]]

eliminate many existing requirements and incorporate critical 
requirements into four ``core conditions.'' These four COPs--Patient 
Rights; Patient Admission, Assessment, and Plan of Care; Patient Care; 
and Quality Assessment and Performance Improvement--would focus both 
provider and surveyor efforts on the actual care delivered to the 
patient, the performance of the hospital as an organization, and the 
impact of the treatment furnished by the hospital on the health status 
of its patients. In developing these proposed COPs, we have retained 
structure and process-oriented requirements only where we believe they 
are essential to achieving desired patient outcomes or preventing 
harmful outcomes (for example, requiring error free medication 
administration). More often though, we have eliminated structural or 
process-oriented requirements that we no longer believe are necessary 
(such as the prescriptive details concerning bylaws, medical staff 
composition, medical record services, etc.), in favor of an approach 
that, through the proposed core COP on quality assessment and 
performance improvement, invests hospitals with internal responsibility 
for improving their performance. This approach is intended to 
incorporate into our regulations current best practices in well-managed 
hospitals, relying on the hospital to identify and resolve its 
performance problems in the most effective and efficient manner 
possible.
    We believe that the proposed COPs would decrease the administrative 
burden on hospitals to comply with detailed Federal requirements, thus 
reducing the costs incurred by the typical hospital in meeting the 
Medicare conditions of participation. (See the information collection 
section below for examples of specific changes in the recordkeeping and 
paperwork burden of hospitals that would be associated with this 
proposed rule.) Instead, the proposed COPs would provide hospitals with 
much more flexibility to determine how best to pursue our shared 
quality of care objectives in the most cost-effective manner. We expect 
hospitals to develop different approaches to compliance based on their 
varying resources and patient populations, differences in laws in 
various localities (such as those concerning personnel standards), and 
other factors.
    Given the uncertain readiness of some individual hospitals to 
comply with performance expectations under the proposed COPs, 
quantitative analysis of the effects of these proposed changes is not 
possible. Hospitals with quality assessment and performance improvement 
programs already in place that meet these proposed requirements may see 
a reduction in administrative burden because they would no longer have 
to comply with many of the process-oriented requirements of the current 
COPs. Other hospitals that do not currently meet the proposed 
requirements for quality assessment and performance improvement may 
encounter an increased burden in the short term because resources would 
have to be devoted to the development of a quality assessment and 
performance improvement program that covers the complexity and scope of 
the particular hospital's services. However, even in situations where 
the proposed requirements could result in some immediate costs to an 
individual hospital, we believe that the changes that the hospital 
would make would produce real but difficult to estimate long-term 
economic benefits to the hospital (such as cost-effective performance 
practices or higher patient satisfaction that could lead to increased 
business for the hospital).
    We are considering strengthening organ procurement standards and we 
welcome suggestions for an outcome standard. However, with or without 
such a standard, we believe the resource implications of the proposed 
changes are minimal and may even reduce hospital costs. When hospitals 
use organ procurement organization staff to make the required requests 
to the families of potential donors, it is OPO staff rather than the 
hospital staff that must spend time with the family. As to the option 
of reporting all or most deaths to OPOs, this relieves the hospital of 
making the suitability decision. Fewer than 400 patients a year die in 
an average hospital. Assuming five minutes a telephone call, only a few 
person-days would be needed to report all such deaths.
    For the reasons explained above, the Secretary certifies that this 
proposed rule will not have a significant economic impact on a 
substantial number of small providers, and that preparation of an 
Initial Regulatory Flexibility Analysis is not required.
    In accordance with the provisions of Executive Order 12866, this 
proposed rule was reviewed by the Office of Management and Budget.

IV. Information Collection and Recordkeeping Requirements

    Under the Paperwork Reduction Act of 1995, agencies are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3505(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     Whether the information collection is necessary and useful 
to carry out the proper functions of the agency;
     The accuracy of the agency's estimate of the information 
collection burden;
     The quality, utility, and clarity of the information to be 
collected; and
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    This proposed rule contains information collection requirements 
that are subject to OMB review under the Paperwork Reduction Act of 
1995. These information collection requirements are discussed below.
    This proposed rule revises the hospital conditions of participation 
contained in existing 42 CFR part 482 (Secs. 482.1 through 482.66) that 
are applicable under the Medicare and Medicaid programs. The 
information collection requirements contained in these existing 
regulations are approved by OMB under approval number 0938-0328, which 
expires on July 31, 2000 (Secs. 482.12, 482.21, 482.22, 482.27, 482.30, 
482.41, 482.43, 482.53, 482.56, 482.57, 482.60, and 482.62) and 0938-
0698, which expires on January 31, 2000 (Sec. 482.27(c)). For the most 
part, these requirements have been in effect for over 9 years. In this 
proposed rule, we would delete some of these requirements, retain 
others, and add some new ones. On balance, the proposed regulations 
would result in a significantly smaller information collection burden 
on hospitals.

A. Proposed Deleted Requirements

    The existing information collection requirements that we propose to 
delete are:
     Sec. 482.12(e)(2)--The requirement that a hospital 
maintain a list of all contracted services.
     Sec. 482.12(f)(2)--The requirement that the governing body 
ensure that the medical staff has written policies and procedures for 
appraisal of emergencies, initial treatment, and referrals when 
appropriate.
     Sec. 482.22(c)--The requirement that a hospital must have 
written bylaws for medical staff.
     Sec. 482.27(a)(2)--The requirement that a hospital must 
have written description of laboratory services.

[[Page 66754]]

     Sec. 482.41(b)--The requirement that a hospital use the 
applicable provisions of the Life Safety Code of the National Fire 
Protection Association. (We are including application of a later 
edition of the Code in proposed Sec. 482.140.)
     Sec. 482.53(d)--The requirement that a hospital maintain 
signed and dated reports of nuclear medicine interpretations, 
consultations, and procedures. (We proposed to delete the requirement 
specific to nuclear medicine records, but expand recordkeeping 
requirements to apply to all services under a new information 
management requirement in proposed Sec. 482.120.)

B. Proposed Retained Requirements

    The existing information collection requirements that we propose to 
retain are:
     Sec. 482.12(c)(5)(i)--The requirement that a hospital must 
have written protocols related to the identification of potential organ 
donors (proposed Sec. 482.110(c)).
     Sec. 482.12(d)(1), (2), and (4)--The requirement that a 
hospital must have an institutional plan and budget (proposed 
Sec. 482.110(b)(3)).
     Sec. 482.27--The requirement that a hospital undertake 
certain activities when it learns that it has received blood and blood 
products that are at increased risk of transmitting HIV, including the 
requirement that the hospital have specified notifications procedures 
in place and retain certain documentation in the medical record 
(proposed Sec. 482.145).
     Sec. 482.30(c)(1) and (d)(3)--The requirement that a 
hospital must have in effect a utilization review plan that provides 
for review of services furnished by the institution and by members of 
the medical staff to patients entitled to benefits under the Medicare 
and Medicaid programs (proposed Sec. 482.150).
    For those information collection requirements for which we have 
current OMB approvals that will expire sometime in the future (as 
specified earlier under this section), we are asking for public 
comments only as they pertain to the overall requirements under the new 
proposed structure of these regulations.

C. Standard Industry Practice

    Under 5 CFR 1320.3(b)(2), the burden associated with the time, 
effort, and financial resources that would be necessary to comply with 
a collection of information that would be incurred by persons in the 
normal course of business will be excluded from an information 
collection that is subject to OMB approval. The burden in connection 
with these types of collection activities can be disregarded if an 
agency can demonstrate that the collection activities are usual and 
customary. The collection requirements referenced below are usual and 
customary in the conduct of hospital business. Thus, they fall under 
this exclusion:
     Sec. 482.15(a)--The requirement that a hospital must 
ensure that each patient receives a comprehensive assessment that 
identifies the patient's condition and care needs at the time of 
admission as well as an initial estimate of posthospital needs, if any. 
Should the needs of a patient change, the assessment must be updated to 
reflect these changes.
     Sec. 482.15(b)--The requirement that a hospital must 
create a plan of care for all newly admitted patients. The initial plan 
of care must be placed in the medical record within 24 hours of 
admission and must include, although not necessarily in one location in 
the medical record, care to be delivered by all relevant disciplines. 
This plan must be modified to meet any changes in the patient's 
condition that affect the patient's needs.
     Sec. 482.43--The requirement that a hospital must have in 
effect a discharge planning process, with written policies and 
procedures (proposed Sec. 482.55).
     Sec. 482.110(c)(1)(ii)--The requirement that a hospital 
must assure, through the OPO with which the hospital has an agreement, 
that the family of each potential organ donor knows of its option 
either to donate organs or tissues or to decline to donate.
     Sec. 482.120--The requirement that a hospital must 
maintain information systems to record, communicate, and measure 
hospital performance. The information systems may include manual 
systems, automated systems, or both, depending on the complexity of the 
hospital, to record and maintain the clinical and operations data 
necessary for patient care.
     Sec. 482.140--The requirement that a hospital must 
administer blood and blood product transfusions according to approved 
medical staff and nursing policies and procedures, and ensure the 
safety of individuals being transfused within the facility.

D. New Information Collection Requirements

    The proposed regulations allow hospitals greater flexibility in the 
utilization of their staff and resources while strengthening quality 
control requirements to assure patient health and safety. The new 
proposed information collection requirements that are subject to OMB 
approval represent minimal, if any, burden on hospitals.
    As we have discussed earlier in this preamble, in order to 
participate in Medicare and Medicaid, hospitals must be certified as 
meeting the conditions of participation (and hence the information 
collection requirements contained in the conditions). There are 
approximately 6,700 hospitals that participate in Medicare or Medicaid. 
Approximately 5,200 of these hospitals are accredited by JCAHO or AOA. 
HCFA deems these JCAHO and AOA accredited hospitals to meet the 
conditions of participation, except for utilization review 
requirements. The remaining 1,500 non-accredited hospitals must be 
surveyed to ensure compliance with the conditions of participation. 
Therefore, only those hospitals that are not accredited by JCAHO or AOA 
would incur burden from the new information collection requirements 
listed below. The hospitals that would be subject to the information 
collection requirements would include new hospitals (approximately 2 
per year) and current ones undergoing a recertification (currently a 
hospital is resurveyed approximately every 5 years, so an average of 20 
percent of the 1,500 hospitals (300) are resurveyed each year). 
However, we believe that, of the 302 hospitals subject to a survey each 
year, the actual number surveyed would only be 250. We reached this 
conclusion because at least 52 of the hospitals are already 
implementing these three new requirements and would incur no additional 
burden.
    Included in the estimate of burden for the new information 
requirements listed below is the time for reviewing instructions, 
searching existing data sources, gathering and maintaining the data 
needed, and completing and reviewing the collection of information.
1. Sec. 482.10(a)--Standard: Notice of Rights
    a. Requirement: This section requires a hospital to have in effect 
a grievance process for patients to follow if they want to file a 
grievance. The hospital must also indicate who the patient should 
contact to express a grievance.
    b. Burden: We believe the requirement for a grievance process will 
impose an estimated burden of 2 hours per hospital for a total of 500 
annual burden hours.

[[Page 66755]]

2. Sec. 482.25--Condition of Participation: Quality Assessment and 
Performance Improvement
    a. Requirement: This section requires a hospital to have a quality 
assessment and performance improvement program that reflects the 
complexity of the hospital's organization and services (including those 
services provided under contract or arrangements) and implements 
actions that result in improvements across the full range of the 
hospital's services to patients.
    b. Burden: We believe this requirement would impose an estimated 
burden of 3 hours per hospital for a total of 750 annual burden hours.
3. Sec. 482.125(b)--Standard: Staffing
    a. Requirement: This section requires a hospital to have an 
explicit process to determine on an ongoing basis the needed level of 
nurse staffing needs. This methodology and evidence of its use in 
meeting the nurse staffing needs of the patient must be available for 
public inspection.
    b. Burden: We believe this requirement would impose an estimated 
burden of 3 hours per hospital for a total of 750 annual burden hours.
    The total annual burden hours for implementation of the new 
proposed information collection requirements for hospitals is estimated 
to be 2,000 hours.
    The paperwork burden for the proposed new information collection 
requirements would not be effective until it has been approved by OMB. 
A notice will be published in the Federal Register when approval is 
obtained. Organizations and individuals desiring to submit comments on 
this paperwork burden should direct them to the Office of Management 
and Budget, Human Resources and Housing Branch, Room 10235, New 
Executive Office Building, Washington, D.C., 20503; Attention: Allison 
Herron Eydt, HCFA Desk Officer.

V. Responses 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.

List of Subjects

42 CFR Part 416

    Health facilities, Kidney diseases, Medicare, Reporting and 
recordkeeping requirements.

42 CFR Part 482

    Grant programs-health, Hospitals, Medicaid, Medicare, Reporting and 
recordkeeping requirements

42 CFR Part 485

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

42 CFR Part 489

    Health facilities, Medicare, Reporting and recordkeeping 
requirements.
    42 CFR chapter IV would be amended as set forth below:
    A. Part 416 is amended as follows:

PART 416--AMBULATORY SURGICAL SERVICES

    1. The authority citation for part 416 continues to read as 
follows:

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

Subpart C--Specific Conditions for Coverage

    2. Section 416.42(b) is revised to read as follows:


Sec. 416.42  Condition for coverage--Surgical services.

* * * * *
    (b) Standard: Administration of anesthesia. Anesthesia is 
administered only by a licensed practitioner permitted by the State to 
administer anesthetics.
* * * * *
    B. Part 482 is amended as follows:

PART 482--CONDITIONS OF PARTICIPATION FOR HOSPITALS

    1. The authority citation for part 482 continues to read as 
follows:

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

Subpart A--General Provisions


Sec. 482.1  [Redesignated as Sec. 482.5]

    2. Section 482.1 is redesignated as Sec. 482.5 in subpart A and is 
amended by adding a new paragraph (a)(6) to read as follows:


Sec. 482.5  Basis and scope.

    (a) Statutory Basis.
* * * * *
    (6) Section 1138 of the Act sets forth requirements for hospital 
protocols for organ procurement and standards for organ procurement 
agencies' agreements with hospitals for organ procurement.


Sec. 482.5  [Removed]

* * * * *
    3. Section 482.2 is removed.
    4. A new Sec. 482.10 is added to subpart A to read as follows:


Sec. 482.10  Condition of participation: Patient rights.

    A hospital must protect and promote each patient's rights.
    (a) Standard: Notice of rights. A hospital must inform each patient 
of his or her rights in advance of furnishing patient care. The 
hospital must have a grievance process and must indicate who the 
patient can contact to express a grievance.
    (b) Standard: Exercise of rights.
    (1) The patient has the right to be informed of his or her rights 
and to participate in the development and implementation of his or her 
plan of care.
    (2) The patient has the right to make decisions regarding his or 
her care.
    (3) The patient has the right to formulate advance directives and 
to have hospital staff and practitioners who provide care in the 
hospital comply with those directives, in accordance with Sec. 489.100, 
Sec. 489.102, and Sec. 489.104.
    (c) Standard: Privacy and safety.
    (1) The patient has the right to personal privacy and to receive 
care in a safe setting.
    (2) The patient has the right to be free from verbal or physical 
abuse or harassment.
    (d) Standard: Confidentiality of patient records.
    (1) The patient has the right to confidentiality of his or her 
clinical records.
    (2) The patient has the right to access information contained in 
his or her clinical records within a reasonable timeframe.
    (e) Standard: Seclusion and restraint. The patient has the right to 
be free from the use of seclusion or restraint, of any form, as a means 
of coercion, convenience, or retaliation by staff. If seclusion or 
restraints are used (including psychopharmacological drugs used as 
restraints), they must be used in accordance with a patient's plan of 
care. Restraints or seclusion may be used only as a last resort and in 
the least restrictive manner possible, to protect the patient or others 
from harm, and must be removed or ended at the earliest possible time.

[[Page 66756]]

Subparts B and C [Removed]

    5. Subparts B (Secs. 482.11 and 482.12), C (Secs. 482.21 through 
482.43), and D (Secs. 482.51 through 482.77) are removed.
    6. New subparts B and C are added to read as follows:

Subpart B--Patient Care Activities

Sec.
482.15  Condition of participation: Patient admission, assessment, 
and plan of care.
482.20  Condition of participation: Patient care.
482.25  Condition of participation: Quality assessment and 
performance improvement.
482.30  Condition of participation: Diagnostic and therapeutic 
services or rehabilitative services.
482.35  Condition of participation: Pharmaceutical services.
482.40  Condition of participation: Nutritional services.
482.45  Condition of participation: Surgical and anesthesia 
services.
482.50  Condition of participation: Emergency services
482.55  Condition of participation: Discharge planning.

Subpart C--Organization Environment

482.110  Condition of participation: Administration of 
organizational environment.
482.115  Condition of participation: Infection control.
482.120  Condition of participation: Information management.
482.125  Condition of participation: Human resources.
482.130  Condition of participation: Physical environment.
482.135  Condition of participation: Life safety from fire.
482.140  Condition of participation: Blood and blood product 
transfusions.
482.145  Condition of participation: Potentially infectious blood 
and blood products.
482.150  Condition of participation: Utilization review.


Sec. 482.15  Condition of participation: Patient admission, assessment, 
and plan of care.

    The hospital must conduct a comprehensive assessment of the care 
needs of each patient, including an initial assessment of posthospital 
needs, and must establish a coordinated plan for how all relevant 
hospital disciplines will meet those needs.
    (a) Standard: Admission and comprehensive assessment.
    (1) A patient is admitted to the hospital only on the 
recommendation of a licensed practitioner permitted by the State to 
admit patients to a hospital.
    (2) The hospital must ensure that each patient receives a 
comprehensive assessment that identifies the patient's condition and 
care needs at the time of admission as well as an initial estimate of 
posthospital needs, if any. The assessment must be completed in a 
timely manner consistent with the patient's immediate needs and placed 
in the patient's medical record within 24 hours of admission. If an 
assessment is recorded before a scheduled admission, the hospital must 
document any changes in the patient's condition on admission and place 
the updated assessment in the medical record within 12 hours of 
admission. The comprehensive assessment must be updated when the 
patient's needs change.
    (b) Standard: Plan of care.
    (1) Each patient must have an initial written plan of care that 
meets the needs identified in the comprehensive assessment. The initial 
plan of care must be placed in the medical record within 24 hours of 
admission and must include, although not necessarily in one location in 
the medical record, care to be delivered by all relevant disciplines.
    (2) The plan of care must be modified to meet any changes in the 
patient's condition that affect the patient's needs.


Sec. 482.20  Condition of participation: Patient care.

    The hospital ensures that each Medicare patient is under the care 
of an appropriately qualified practitioner. The care provided to each 
patient is coordinated and based on the plan of care.
    (a) Standard: Assignment of responsible practitioner for Medicare 
patients.
    (1) Every Medicare patient is under the care of:
    (i) A doctor of medicine or osteopathy who may delegate tasks to 
other qualified health care personnel to the extent recognized under 
State law or a State's regulatory mechanism;
    (ii) A doctor of dental surgery or dental medicine who is legally 
authorized to practice dentistry by the State and who is acting within 
the scope of his or her license;
    (iii) A doctor of podiatric medicine, but only with respect to 
functions which he or she is legally authorized by the State to 
perform;
    (iv) A doctor of optometry, but only with respect to functions 
which he or she is legally authorized by the State to perform;
    (v) A chiropractor who is licensed by the State or legally 
authorized to perform the services of a chiropractor, but only with 
respect to treatment by means of manual manipulation of the spine to 
correct a subluxation demonstrated by x-ray to exist; or
    (vi) In the case of a patient receiving qualified psychologist 
services as defined in section 1861(ii) of the Act, a clinical 
psychologist, but only with respect to such qualified psychologist 
services and only to the extent permitted by State law.
    (2) A doctor of medicine or osteopathy is on duty or on call at all 
times.
    (3) A doctor of medicine or osteopathy is responsible for the care 
of each Medicare patient with respect to any medical or psychiatric 
problem that is present on admission or develops during hospitalization 
and is not specifically within the scope of practice of one of the 
other practitioners listed in paragraph (a)(1) of this section, as that 
scope is defined by the medical staff, authorized by State law, and 
limited, under paragraphs (a)(1)(v) and (a)(1)(vi) of this section, 
with respect to chiropractors and clinical psychologists, respectively.
    (b) Standard: Delivery of patient care.
    (1) For each patient, the hospital provides care and treatment 
interventions that are coordinated by all relevant disciplines and 
conform to the plan of care.
    (2) The hospital evaluates the patient's progress as appropriate to 
the patient's condition and adjusts care, as necessary, when progress 
is not being achieved.
    (3) Patient care services are provided in accordance with the order 
of practitioners who are qualified and have delineated clinical 
privileges as specified under Sec. 482.125(a).
    (4) If the hospital provides care to outpatients, that care meets 
the same requirements that apply to inpatient care. Inpatient care and 
outpatient care are coordinated to ensure continuity of care for 
patients who move between levels of care.


Sec. 482.25  Condition of participation: Quality assessment and 
performance improvement.

    The hospital must develop, implement, maintain, and evaluate an 
effective, data-driven, quality assessment and performance improvement 
program. The program must reflect the complexity of the hospital's 
organization and services (including those services provided under 
contract or arrangement). The hospital must implement actions that 
result in improvements across the full range of the hospital's services 
to patients.
    (a) Standard: Program scope.
    (1) The hospital's quality assessment and performance improvement 
program must include, but not be limited to, the use of objective 
measures to evaluate--
    (i) Access to care;
    (ii) Patient satisfaction;
    (iii) Staff, administrative and practitioner performance;

[[Page 66757]]

    (iv) Complaints and grievances;
    (v) Diagnostic and therapeutic services;
    (vi) Medication error incidents, achievement of drug therapy goals 
and incidents of adverse drug effects;
    (vii) Nutritional services, including patient's responses to 
therapeutic diets and parenteral nutrition, if used;
    (viii) Surgery and anesthesia services;
    (ix) Emergency services, if provided;
    (x) Discharge planning activities;
    (xi) Safety issues, including infection control and physical 
environment; and
    (xii) Results of autopsies.
    (2) In each of the areas listed in paragraph (a)(1) of this 
section, and any others the hospital includes, the hospital must 
measure, analyze, and track quality indicators or other aspects of 
performance that the hospital adopts or develops that reflect processes 
of care and hospital operations. These performance measures must be 
shown to be predictive of desired outcomes or be the outcomes 
themselves.
    (3) The hospital must use hospital-specific data, as well as PRO 
data and any other available relevant data, as an integral part of its 
quality assessment and performance improvement strategy.
    (4) Although a hospital is not required to participate in a PRO 
cooperative project, the hospital must be able to demonstrate a level 
of achievement through its own quality assessment and performance 
improvement strategy comparable to or better than that to be expected 
from such participation.
    (5) The hospital must set priorities for performance improvement, 
considering prevalence and severity of identified problems, and giving 
priority to improvement activities that affect clinical outcomes.
    (6) The hospital must take actions that result in performance 
improvements and must track performance to assure that improvements are 
sustained.
    (b) Standard: Program responsibilities.
    (1) The hospital governing body (or organized group or individual 
who assumes full legal authority and responsibility for operations of 
the hospital), medical staff and administration officials are 
responsible for ensuring that the hospital-wide quality assessment and 
performance improvement efforts address identified priorities in the 
hospital and are responsible for the development, implementation, 
maintenance and evaluation of improvement actions.
    (2) All hospital programs, departments and functions, including 
contracted services and services provided under arrangement, must be 
involved in developing, implementing, maintaining, and evaluating the 
hospital's program of quality assessment and performance improvement.
    (c) Standard: Autopsies. The hospital must attempt to secure 
autopsies in all cases of unusual deaths and of medical-legal and 
educational interest. The mechanism for documenting permission to 
perform an autopsy must be defined. There must be a system for 
notifying the medical staff, and specifically the attending 
practitioner, when an autopsy is being performed.


Sec. 482.30  Condition of participation: Diagnostic and therapeutic 
services or rehabilitative services.

    (a) The hospital is primarily engaged in providing, by or under the 
supervision of one of the practitioners described in Sec. 410.20(b) of 
this chapter, either diagnostic and therapeutic services to inpatients, 
or rehabilitative services to inpatients.
    (b) The hospital must provide diagnostic radiology services, 
including 24-hour emergency diagnostic radiology services, if the 
hospital provides full-time emergency services (see Sec. 482.50(a)).
    (c) The hospital must provide laboratory services, including 24-
hour emergency laboratory services, to meet the needs of patients. The 
laboratory services must be furnished in accordance with part 493 of 
this chapter.
    (d) If the hospital elects to offer other services in addition to 
the required services, they must be delivered in accordance with the 
requirements of this part.


Sec. 482.35  Condition of participation: Pharmaceutical services.

    The hospital provides medication therapy, as needed, through a 
safe, accurate, effective system that minimizes adverse drug events and 
evaluates the patient's response to the medication therapy.
    (a) Standard: Adverse drug event monitoring.
    (1) The hospital develops and operates a system (manual or 
electronic) to search active clinical records for events that are 
likely to be associated with adverse drug events and refers these 
events to the hospital's quality assessment and performance program for 
action.
    (2) The hospital must ensure that its overall medication error rate 
is no higher than 2.0 percent.
    (3) The hospital must ensure that its patients experience no 
significant medication errors. For purposes of this section, medication 
errors are considered ``significant'' if they actually jeopardize or 
cause serious potential for jeopardizing the health and safety of the 
patient.
    (b) Standard: Drug management procedures.
    (1) All drugs and biologicals are stored in secure areas. In 
addition, all drugs listed in Schedules II, III, IV, and V of the 
Comprehensive Drug Abuse Prevention and Control Act of 1976 must be 
stored in locked compartments within secure storage areas. Only 
authorized personnel may have access to keys.
    (2) The hospital keeps current and accurate records of receipt and 
disposition of all controlled drugs.
    (3) Discrepancies in controlled drugs are reported to the 
individual responsible for pharmaceutical services and to the 
administrator of the hospital.
    (4) A comprehensive drug information resource (computerized or hard 
copy) is available to professional staff for ordering, dispensing, and 
administering of medications. This information resource is readily 
available at common points of drug ordering, dispensing and 
administration in the facility, and is merged with, or located in close 
proximity to, individual patient information at those common points.
    (5) Before medications are administered, a licensed nurse (that is, 
a registered nurse, licensed practical nurse, or licensed vocational 
nurse) or a doctor of medicine or osteopathy must review the individual 
patient's information, and the orders of the practitioner who 
prescribed the medication.
    (6) Medications brought into the hospital by the patient are 
administered only after positive identification of the medications, and 
only on the order of the practitioner responsible for the care of the 
patient under Sec. 482.15(a)(1), in accordance with hospital policy.
    (7) The hospital has policies for discontinuing medications that 
are not specifically limited as to time and/or number of doses to be 
administered.
    (c) Standard: Discharge orders for psychopharmacological drugs. 
Orders for psychopharmacological drugs are discontinued upon discharge 
of the patient, unless the patient has a psychiatric diagnosis listed 
in the Third or Fourth Edition of the American Psychiatric 
Association's Diagnostic and Statistical Manual (DSM-III or DSM-IV), or 
in Chapter Five (Mental Disorders) of the International Classification 
of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) which is 
available through the Government Printing Office, Washington, DC, stock 
number 017-022-01392-4 (1977).

[[Page 66758]]

Sec. 482.40  Condition of participation: Nutritional services.

    The hospital must provide each patient with adequate nutrition, 
including therapeutic diets or parenteral nutrition if needed.
    (a) Standard: Sanitary conditions. The hospital must provide food 
to the patient that is obtained, stored, prepared, distributed and 
served under sanitary conditions.
    (b) Standard: Menus. The hospital must prepare menus prepared in 
advance and meet the nutritional needs of the patients in accordance 
with the recommended dietary allowances of the Food and Nutrition Board 
of the National Research Council, National Academy of Sciences.


Sec. 482.45  Condition of participation: Surgical and anesthesia 
services.

    If the hospital provides surgical or anesthesia services, they are 
provided through the use of qualified staff. The patient receives 
appropriate pre- and post-procedure evaluations, and all care is 
accurately documented.
    (a) Standard: Staffing.
    (1) Surgical procedures are performed only by practitioners with 
appropriate clinical privileges.
    (2) Anesthesia is administered only by a licensed practitioner 
permitted by the State to administer anesthetics.
    (b) Standard: Evaluations.
    (1) A comprehensive assessment of the patient's condition is 
performed before surgery, except in emergency cases where a modified 
assessment is acceptable.
    (2) A preanesthesia evaluation by an individual qualified to 
administer anesthesia is performed prior to the administration of 
anesthesia.
    (3) A postanesthesia evaluation for proper anesthesia recovery is 
performed by an individual qualified to administer anesthesia.
    (c) Standard: Documentation of care.
    (1) The comprehensive or modified presurgical assessment described 
in paragraph (b)(1) of this section is entered in the patient record 
before surgery, except in emergency cases, where the assessment may be 
entered following surgery.
    (2) A properly executed informed consent form for the operation is 
entered in the patient's record by the hospital before surgery, except 
in emergency cases where the delay needed to obtain consent would place 
the health or safety of the patient in serious jeopardy.
    (3) The hospital maintains a complete, up-to-date operating room 
register.
    (4) The hospital writes or dictates an operative report describing 
complications, reactions, length of time, techniques, findings, and 
tissues removed or altered immediately following surgery enters it in 
the patient's record promptly following surgery.
    (5) The hospital maintains an intraoperative anesthesia record 
enters it in the patient's record promptly following surgery or any 
other procedures requiring anesthesia.
    (6) The hospital writes a report of the results of the 
postanesthesia evaluation described in paragraph (b)(3) of this section 
and enters it in the patient's record promptly following completion of 
the procedure for which anesthesia was required.


Sec. 482.50  Condition of participation: Emergency services.

    The hospital provides, within its capabilities and its stated 
mission, services appropriate to the needs of persons seeking emergency 
care. If the hospital provides emergency services on a full-time or 
part-time basis, it meets the applicable standard in paragraph (a) or 
paragraph (b) of this section, respectively; if the hospital does not 
provide any emergency services, it meets the standard in paragraph (c) 
of this section.
    (a) Standard: Hospitals providing full-time emergency services. If 
the hospital provides emergency services on a 24-hour-per-day, 7-day 
per week basis, the hospital meets the following requirements at all 
times:
    (1) The hospital has sufficient numbers of personnel, including 
doctors of medicine or osteopathy, other practitioners and registered 
nurses, to meet patient needs for emergency care.
    (2) The services are appropriate to patient needs.
    (3) The emergency services provided are integrated with other 
departments of the hospital.
    (b) Standard: Hospitals providing part-time emergency services. If 
the hospital provides emergency services, but not on a 24-hour per day, 
7-day per week basis, the hospital meets the following requirements:
    (1) The hospital has fewer than 100 beds and is located in a rural 
area as defined in Sec. 412.62(f)(1)(iii) of this chapter.
    (2) The hospital establishes regular hours and days when the 
emergency services are available, and actually has services available 
at all of those times.
    (3) The hospital notifies local emergency services personnel, law 
enforcement agencies, physician offices, and other health facilities of 
when it does and does not offer emergency services, and provides those 
it has notified with at least 5 calendar days' advance notice of any 
changes in its emergency services schedule.
    (4) The hospital posts its days and hours of operation of emergency 
services in a conspicuous place where the public most commonly is 
informed of the hospital's location.
    (5) The hospital complies with the requirements of paragraphs 
(a)(1) through (a)(3) of this section at all times when it does offer 
emergency services.
    (6) The hospital complies with the requirements of paragraph (c) of 
this section at all times when it does not offer emergency services.
    (c) Standard: Hospitals not providing emergency services. If the 
hospital does not provide emergency services, the hospital must provide 
for appraisal of emergencies, initial treatment, and referral when 
appropriate.


Sec. 482.55  Condition of participation: Discharge planning.

    The hospital must have in effect a discharge planning process that 
applies to all patients. This process assures that appropriate 
posthospital services are obtained for each patient, as necessary.
    (a) Standard: Identification of patients in need of discharge 
planning. The hospital must identify, at an early stage of 
hospitalization, all patients who are likely to suffer adverse health 
consequences upon discharge if there is no adequate discharge planning.
    (b) Standard: Discharge planning evaluation.
    (1) The hospital must provide a discharge planning evaluation to 
the patients identified in paragraph (a) of this section, and to other 
patients upon the patient's request, the request of a person acting on 
the patient's behalf, or the request of the physician.
    (2) A registered nurse, social worker, or other appropriately 
qualified personnel must develop, or supervise the development of the 
evaluation.
    (3) The discharge planning evaluation must include an evaluation of 
the likelihood of a patient needing posthospital services, including 
hospice services, and of the availability of those services.
    (4) The discharge planning evaluation must include an evaluation of 
the likelihood of a patient's capacity for self-care or of the 
possibility of the patient being cared for in the environment from 
which he or she entered the hospital.
    (5) The hospital personnel must complete the evaluation on a timely 
basis so that appropriate arrangements for posthospital care are made 
before discharge, and to avoid unnecessary delays in discharge.

[[Page 66759]]

    (6) The hospital must include the discharge planning evaluation in 
the patient's medical record for use in establishing an appropriate 
discharge plan and must discuss the results of the evaluation with the 
patient or individual acting on his or her behalf.
    (7) The evaluation must include a list of HHAs that are available 
to the patient, that participate in the Medicare program, the 
geographic area (as defined by the HHA) in which the patient resides, 
and that request to be listed by the hospital as available to provide 
home health services to patients the hospital discharges.
    (c) Standard: Discharge plan. (1) A registered nurse, social 
worker, or other appropriately qualified personnel must develop, or 
supervise the development of, a discharge plan if the discharge 
planning evaluation indicates a need for a discharge plan.
    (2) In the absence of a finding by the hospital that a patient 
needs a discharge plan, the patient's physician may request a discharge 
plan. In such a case, the hospital must develop a discharge plan for 
the patient.
    (3) The hospital must arrange for the initial implementation of the 
patient's discharge plan.
    (4) The hospital must reassess the patient's discharge plan if 
there are factors that may affect continuing care needs or the 
appropriateness of the discharge plan.
    (5) As needed, the patient and family members or interested persons 
must be counseled to prepare them for posthospital care.
    (6) The discharge plan must inform the patient or patient's family 
as to their freedom to choose among participating Medicare providers of 
care when a variety of willing providers is available and must, when 
possible, respect patient and family preferences when they are 
expressed. However, the discharge plan must not specify or otherwise 
limit qualified providers that are available to the patient.
    (7) The discharge plan must identify, in a form and manner 
specified by the Secretary, any home health agency to whom the patient 
is referred in which the hospital has a disclosable financial interest, 
as specified by the Secretary consistent with section 1866(a)(1)(S) of 
the Act, or those entities that have a financial interest in the 
hospital.
    (d) Standard: Transfer or referral. The hospital must transfer or 
refer patients, along with necessary medical information, to 
appropriate facilities, agencies, or outpatient services, as needed, 
for followup or ancillary care.
    (e) Standard: Reassessment. (1) The hospital must reassess its 
discharge planning process on an ongoing basis. The reassessment must 
include a review of discharge plans to ensure that they are responsive 
to discharge needs.
    (2) The hospital's discharge planning process must be an integral 
part of the hospital's quality assessment and performance improvement 
program.

Subpart C--Organizational Environment


Sec. 482.110  Condition of participation: Administration of 
organizational environment.

    A governing body, other organized group, or an individual has full 
legal authority and responsibility for the management and provision of 
all hospital services, and develops and implements policies and 
procedures necessary for the effective administration of the hospital. 
This includes care furnished under contracts or arrangements, fiscal 
operations, continuous quality assessment and performance improvement, 
and appointing a qualified administrator who is responsible for the 
day-to-day operations of the program.
    (a) Standard: Federal, State and local laws. The hospital is in 
compliance with applicable Federal, State and local laws related to the 
health and safety of patients and licensure of hospitals.
    (b) Standard: Administrative responsibilities. (1) The governing 
body, other organized group, or responsible individual is responsible 
for all services furnished to the hospital's patients, including 
outpatient services and those provided under contract or arrangements 
(including those for shared services and joint ventures), and ensures 
that the hospital is in compliance with all applicable conditions of 
participation and standards.
    (2) The governing body, other organized group, or responsible 
individual must notify HCFA or the State survey agency when the 
hospital--
    (i) Adds a new service category to the list of services it offers; 
or
    (ii) Adds a new service site.
    (3) The governing body, other organized group, or individual that 
assumes full legal authority and responsibility for the operation of 
the hospital is responsible for development, implementation, and 
administration of the institutional plan and budget. The institutional 
plan and budget must include, but are not limited to:
    (i) An annual operating budget that includes all anticipated income 
and expenses related to items that would, under generally accepted 
accounting principles, be considered income and expense items. (This 
paragraph does not require the preparation, in connection with any 
budget, of an item-by-item identification of the components of each 
type of anticipated expenditure or income.)
    (ii) A capital expenditures plan for at least a 3-year period 
(including the year to which the operating budget described is 
applicable) that includes and identifies in detail the anticipated 
sources of financing for, and the objectives of, each anticipated 
expenditure in excess of $600,000 (or such lesser amount as may be 
established by the State in which the hospital is located, in 
accordance with section 1122(g)(1) of the Act) related to the 
acquisition of land, the improvement of land, buildings, and equipment, 
and the replacement, modernization, and expansion of the buildings and 
equipment that would, under generally accepted accounting principles, 
be considered capital items.
    (iii) A plan submitted to the agency designated under section 
1122(b) of the Act, or if no such agency is designated, to the 
appropriate health planning agency in the State (but this shall not 
apply in the case of a facility exempt from review under section 1122 
by reason of section 1122(j)).
    (iv) Review and updating at least annually.
    (v) Preparation, under the direction of the governing body, other 
organized group, or responsible individual, by a committee consisting 
of representatives of the governing body, the administrative staff, and 
the medical staff of the institution or agency.
    (4) The governing body, other organized group, or individual that 
assumes full legal authority and responsibility for the operation of 
the hospital appoints the medical staff's members and approves its 
bylaws.
    (c) Standard: Organ procurement responsibilities. (1) The governing 
body, other organized group, or responsible individual must ensure that 
the hospital has written protocols that--
    (i) Identify potential organ donors as defined by the OPO with 
which the hospital has an agreement;
    (ii) Assure, in collaboration with the OPO with which the hospital 
has an agreement, that the family of each potential organ donor knows 
of its option either to donate organs or tissues or to decline to 
donate;
    (iii) Encourage discretion and sensitivity with respect to the 
circumstances, views and beliefs of the families of potential donors; 
and
    (iv) Ensure that the hospital works cooperatively with the OPO with 
which the hospital has an agreement, in

[[Page 66760]]

educating staff on donation issues, reviewing death records to improve 
identification of potential donors, and maintaining potential donors 
while necessary testing and placement of potential donated organs take 
place;
    (2) The hospital must notify the OPO designated by the Secretary 
under Sec. 486.316(c) of this chapter of all potential organ donors 
using protocols defined by the OPO.
    (3) A hospital in which organ transplants are performed must be a 
member of the Organ Procurement and Transplantation Network (OPTN) 
established and operated in accordance with section 372 of the Public 
Health Service (PHS) Act (42 U.S.C. 274) and abide by its rules. The 
term ``rules of the OPTN'' means those rules provided for in 
regulations issued by the Secretary in accordance with section 372 of 
the PHS Act. No hospital is considered to be out of compliance with 
section 1138(a)(1)(B) of the Act, or with the requirements of this 
paragraph, unless the Secretary has given the OPTN formal notice that 
he or she approves the decision to exclude the hospital from the OPTN 
and has notified the hospital in writing.
    (4) For purposes of this standard, the term ``organ'' means a human 
kidney, liver, heart, lung, or pancreas.


Sec. 482.115  Condition of participation: Infection control.

    The hospital maintains an effective infection control program that 
protects patients and hospital staff by preventing and controlling 
infections and communicable disease.
    (a) Standard: Sanitary environment. The hospital must provide a 
sanitary environment by following acceptable standards of practice to 
avoid sources and transmission of infections and communicable diseases.
    (b) Standard: Infection control program. The hospital must maintain 
an active program for the prevention, control, and investigation of 
infections and communicable diseases that--
    (1) Is under the direction of a designated infection control 
officer;
    (2) Is an integral part of the hospital's quality assessment and 
performance improvement program; and
    (3) Includes a method of identifying problems and taking 
appropriate actions that result in improvement.


Sec. 482.120  Condition of participation: Information management.

    The hospital maintains information systems to record, communicate, 
and measure hospital performance. The information systems may include 
manual systems, automated systems, or both, depending on the complexity 
of the hospital, to record and maintain the clinical and operations 
data necessary for patient care.
    (a) Standard: Health information system. (1) The hospital maintains 
clinical records on all patients.
    (2) The patient record must document the patient stay (whether 
inpatient or outpatient). This includes recording, to the extent they 
are performed or used, the diagnosis, comprehensive assessment and plan 
of care, evaluations, consent forms, notes on treatments, nursing, 
medications, reactions, a summary report with provisions for followup 
care, and any other relevant reports.
    (3) The interdisciplinary plan of care is a part of the patient 
record, and any revisions to the plan of care are accurately documented 
by the hospital.
    (4) The patient record must note, within 30 days of discharge, the 
final diagnosis and clinical outcomes of the patient stay.
    (5) All patient record entries, including those made as a result of 
verbal orders, must be legible, dated, and authenticated in written or 
electronic form by whomever is responsible for ordering or providing 
the service.
    (6) Patient records must be retained in a reproducible format for 
at least 5 years.
    (7) The hospital must retain original films, scans, and other image 
records (or copies), as appropriate, for at least 5 years.
    (8) If a hospital performs any type of transplants, it must provide 
requested transplant-related data to the Organ Procurement and 
Transplantation Network, the Scientific Registry, the organ procurement 
organizations, and the Department of Health and Human Services as 
requested by the Secretary.
    (b) Standard: Management of the information systems.
    (1) The information systems must be maintained to provide for the 
timely recording, integration, and retrieval of data as well as the 
transmission of data to authorized parties.
    (2) The information systems must contain system standards and 
procedures to ensure the integrity, efficiency, confidentiality, and 
security of data.
    (3) Medical information about the patient (inpatient or outpatient) 
must be available to all authorized professional personnel providing 
medical care to the patient.


Sec. 482.125  Condition of participation: Human resources.

    All hospital areas are staffed with qualified personnel, who are 
present in sufficient numbers to meet the needs of the hospital's 
patients.
    (a) Standard: Credentials/qualifications. (1) The hospital ensures 
that individuals who supervise and/or furnish services to hospital 
patients, including services furnished under contracts or arrangements, 
are qualified to provide or supervise the services, and that types of 
practitioners allowed to practice without direct supervision have 
delineated clinical privileges for these services.
    (2) The hospital grants clinical privileges, and periodically 
reappraises and renews (or denies renewal of) those privileges. If 
State law requires that an employee, contractor, or a practitioner with 
practice privileges be licensed, the hospital verifies (and 
periodically reverifies) compliance with applicable licensure 
requirements, and documents that verification.
    (3) The medical staff operates under bylaws that are approved by 
the governing body, establishes the criteria for selection of its 
members, examines the credentials of candidates and recommends eligible 
candidates to the governing body.
    (b) Standard: Staffing. (1) Staffing for all services provided by 
the hospital reflects the volume of patients, patient acuity, and the 
level of intensity of the services provided to ensure that desired 
outcomes of care are achieved and negative outcomes are avoided.
    (2) In implementing the requirements of paragraph (b) (1) of this 
section, the hospital must develop and use consistently an explicit 
process to determine on an ongoing basis the needed level of nursing 
staff (including registered nurses, licensed practical nurses, and 
nursing assistants). This methodology and evidence of its use in 
meeting the nursing staffing needs of the patients must be available 
for public inspection.
    (3) The hospital must provide 24-hour nursing services furnished or 
supervised by a registered nurse, and have a licensed practical nurse 
or registered nurse on duty at all times, except for rural hospitals 
that have in effect a waiver of the 24-hour nursing service requirement 
granted under Sec. 488.54(c) of this chapter.
    (4) A registered nurse must be immediately available for bedside 
care of any patient, when needed.
    (5) A registered nurse must be responsible for the provision and 
evaluation of nursing care for each patient and must assign the nursing 
care of each patient to other nursing personnel in accordance with the 
patient's needs and the specialized

[[Page 66761]]

qualifications and competence of the nursing staff available.
    (6) The hospital must ensure that all licensed nurses working in 
the hospital adhere to the policies and procedures of the hospital. The 
hospital must provide for the adequate supervision and evaluation of 
the clinical activities of nonemployee nursing personnel.
    (c) Standard: Education, training, and performance evaluation. (1) 
The hospital must ensure that all personnel furnishing health care 
services in the hospital are provided with the necessary education and 
training on the nature of their duties so that they can furnish 
services effectively, efficiently, and competently. This education and 
training includes, but is not limited to, the individual job 
description, performance expectations, applicable organizational 
policies and procedures, safety responsibilities, infection control 
program, and quality assessment and performance improvement activities 
within the hospital.
    (2) All personnel furnishing health care services in the hospital 
must demonstrate in practice the skills and techniques necessary to 
perform their duties and responsibilities.


Sec. 482.130  Condition of participation: Physical environment.

    The hospital must maintain a safe physical environment free of 
hazards for patients.
    (a) Standard: Safety management. (1) The hospital must prevent 
situations that pose a threat to health or property whenever possible; 
when they do occur, the hospital must report and correct them promptly.
    (2) The hospital must prevent equipment failures whenever possible; 
when they do occur, the hospital must report and correct them promptly.
    (3) The hospital must promptly report and investigate all incidents 
that involve injury to patients or that involve damage to property.
    (4) The hospital must have an emergency preparedness system for 
managing the consequences of power failures, natural disasters or other 
emergencies that disrupt the hospital's ability to provide care.
    (b) Standard: Physical plant and equipment. (1) There must be 
procedures for the proper routine storage and prompt disposal of trash 
and medical waste.
    (2) There must be proper light, temperature, and ventilation 
controls throughout the hospital including appropriate air exchanges 
for patient care.
    (3) There must be emergency power and lighting for life-support 
equipment, regardless of location, and for emergency exit areas and 
stairwells. The hospital must make available in all other areas not 
served by the emergency supply source, battery lamps and flashlights. 
The hospital must make available facilities for emergency gas and water 
supply.
    (4) All equipment used to furnish patient care services must be 
properly maintained.


Sec. 482.135  Condition of participation: Life safety from fire.

    Except as provided in paragraphs (a) and (b) of this section, the 
hospital must meet the applicable provisions of the 1994 edition of the 
Life Safety Code of the National Fire Protection Association (LSC), 
which is incorporated by reference. Incorporation by reference of the 
LSC, 1994 edition, was approved by the Director of the Federal Register 
in accordance with 5 U.S.C. 552(a) and 1 CFR part 51.\1\
---------------------------------------------------------------------------

    \1\ When this proposed rule is adopted, the 1994 edition of the 
Life Safety Code will be available for inspection at the HCFA 
Information Resource Center, 7500 Security Boulevard, Central 
Building, Baltimore, MD, and at the Office of the Federal Register, 
800 North Capitol Street, NW, Suite 700, Washington, DC. Copies of 
this publication may be purchased from the National Fire Protection 
Association, Battermarch Park, Quincy, MA 02269.
---------------------------------------------------------------------------

    (a) Waivers. After consideration of State survey agency findings, 
HCFA may waive specific provisions of the Life Safety Code that, if 
rigidly applied, would result in unreasonable hardship upon the 
facility, but only if the waiver does not adversely affect the health 
and safety of patients.
    (b) Exception. The provisions of the Life Safety Code do not apply 
in a State where HCFA finds that a fire and safety code imposed by 
State law adequately protects patients in hospitals.


Sec. 482.140  Condition of participation: Blood and blood product 
transfusions.

    The hospital must administer blood and blood product transfusions 
according to approved medical staff and nursing policies and 
procedures, and ensure the safety of individuals being transfused 
within the facility.
    (a) Standard: Transfusion reactions. The hospital must have 
procedures for identifying, averting, responding promptly to, 
investigating, tracking, and reporting blood and blood product 
transfusion reactions to the laboratory and, as appropriate, to Federal 
and State authorities.
    (b) Standard: Safety and accessibility. The hospital must take 
appropriate measures to ensure the positive identification of the blood 
or blood product and the recipient. Blood and blood product must be 
stored at the appropriate conditions, including temperature, to prevent 
deterioration. Blood and blood products must be readily accessible to 
the appropriate medical and nursing staff.


Sec. 482.145  Condition of participation: Potentially infectious blood 
and blood products.

    (a) Potentially HIV infectious blood and blood products. 
Potentially HIV infectious blood and blood products are prior 
collections from a donor who tested negative at the time of donation 
but tests repeatedly reactive for the antibody to the human 
immunodeficiency virus (HIV) on a later donation, and the FDA-licensed, 
more specific test or other follow-up testing recommended or required 
by FDA is positive and the timing of seroconversion cannot be precisely 
estimated.
    (b) Services furnished by an outside blood bank. If a hospital 
regularly uses the services of an outside blood bank, it must have an 
agreement with the blood bank that governs the procurement, transfer, 
and availability of blood and blood products. The agreement must 
require that the blood bank promptly notify the hospital of the 
following:
    (1) If it supplied blood and blood products collected from a donor 
who tested negative at the time of donation but tests repeatedly 
reactive for the antibody to HIV on a later donation.
    (2) The results of the FDA-licensed, more specific test or other 
follow-up testing recommended or required by FDA completed within 30 
calendar days after the donor's repeatedly reactive screening test. 
(FDA regulations concerning HIV testing and lookback procedures are set 
forth at 21 CFR 610.45--et seq.)
    (c) Quarantine of blood and blood products pending completion of 
testing. If the blood bank notifies the hospital of the repeatedly 
reactive HIV screening test results as required by paragraph (b)(1) of 
this section, the hospital must determine the disposition of the blood 
or blood product and quarantine all blood and blood products from 
previous donations in inventory.
    (1) If the blood bank notifies the hospital that the result of the 
FDA-licensed, more specific test or other followup testing recommended 
or required by FDA is negative, absent other informative test results, 
the hospital may release the blood and blood products from quarantine.
    (2) If the blood bank notifies the hospital that the result of the 
FDA-licensed, more specific test or other followup testing recommended 
or required by FDA is positive, the hospital

[[Page 66762]]

must dispose of the blood and blood products in accordance with 21 CFR 
606.40 and notify patients in accordance with paragraph (d) of this 
section.
    (d) Patient notification. If the hospital has administered 
potentially HIV infectious blood or blood products (either directly 
through its own blood bank or under an agreement described in paragraph 
(b) of this section) or released such blood or blood products to 
another entity or appropriate individual, the hospital must take the 
following actions:
    (1) Promptly make at least three attempts to notify the patient's 
attending physician (that is, the physician of record) or the physician 
who ordered the blood or blood product that potentially HIV infectious 
blood or blood products were transfused to the patient.
    (2) Ask the physician to immediately notify the patient, or other 
individual as permitted under paragraph (h) of this section, of the 
need for HIV testing and counseling.
    (3) If the physician is unavailable, declines to make the 
notification, or later informs the hospital that he or she was unable 
to notify the patient, promptly make at least three attempts to notify 
the patient, or other individual as permitted under paragraph (h) of 
this section, of the need for HIV testing and counseling.
    (4) Document in the patient's medical record the notification or 
attempts to give the required notification.
    (e) Timeframe for notification. The notification effort begins when 
the blood bank notifies the hospital that it received potentially HIV 
infectious blood and blood products and continues for 8 weeks unless--
    (1) The patient is located and notified; or
    (2) The hospital is unable to locate the patient and documents in 
the patient's medical record the extenuating circumstances beyond the 
hospital's control that caused the notification time frame to exceed 8 
weeks.
    (f) Content of notification. The notification given under 
paragraphs (d) of this section must include the following information:
    (1) A basic explanation of the need for HIV testing and counseling.
    (2) Enough oral or written information so that the transfused 
patient can make an informed decision about whether to obtain HIV 
testing and counseling.
    (3) A list of programs or places where the patient can obtain HIV 
testing and counseling, including any requirements or restrictions the 
program may impose.
    (g) Policies and procedures. The hospital must establish policies 
and procedures for notification and documentation that conform to 
Federal, State, and local laws, including requirements for 
confidentiality and medical records.
    (h) Notification to legal representative or relative. If the 
patient has been adjudged incompetent by a State court, the physician 
or hospital must notify a legal representative designated in accordance 
with State law. If the patient is competent, but State law permits a 
legal representative or relative to receive the information on the 
patient's behalf, the physician or hospital must notify the patient or 
his or her legal representative or relative. If the patient is 
deceased, the physician or hospital must continue the notification 
process and inform the deceased patient's legal representative or 
relative.


Sec. 482.150  Condition of participation: Utilization review.

    The hospital must have a utilization review (UR) plan that provides 
for review of services furnished by the institution and by members of 
the medical staff to patients entitled to benefits under the Medicare 
and Medicaid programs.
    (a) Standard: Applicability. The provisions of this section apply 
except in either of the following circumstances--
    (1) A Utilization and Quality Control Peer Review Organization 
(PRO) has assumed binding review for the hospitals.
    (2) HCFA has determined that the UR procedures established by the 
State under title XIX of the Act are superior to the procedures 
required in this section, and has required hospitals in that State to 
meet the UR plan requirements under Secs. 456.50 through 456.245 of 
this chapter.
    (b) Standard: Composition of utilization review committee. A UR 
committee consisting of two or more practitioners must carry out the UR 
function. At least two members of the committee must be doctors of 
medicine or osteopathy. The other members may be any of the other types 
of practitioners specified in Sec. 482.20(a).
    (1) Except as specified in paragraphs (b)(2) and (3) of this 
section, the UR committee must be one of the following--
    (i) A staff committee of the institution.
    (ii) A group outside the institution that is established--
    (A) By the local medical society and some or all of the hospitals 
in the locality; or
    (B) In a manner approved by HCFA.
    (2) If, because of the small size of the institution, it is 
impracticable to have a properly functioning staff committee, the UR 
committee must be established as specified in paragraph (b)(1)(ii) of 
this section.
    (3) The committee's or group's reviews may not be conducted by any 
individual who--
    (i) Has a direct financial interest (for example, an ownership 
interest) in that hospital; or
    (ii) Has been professionally involved in the care of the patient 
whose case is being reviewed.
    (c) Standard: Scope and frequency of review.
    (1) The UR plan must provide for review for Medicare and Medicaid 
patients with respect to the medical necessity of each of the 
following--
    (i) Admissions to the institution.
    (ii) The duration of stays.
    (iii) Professional services furnished, including drugs and 
biologicals.
    (2) Review of admissions may be performed before, at, or after 
hospital admission.
    (3) Except as specified in paragraph (e) of this section, reviews 
may be conducted on a sample basis.
    (4) Hospitals that are paid for inpatient hospital services under 
the prospective payment system set forth in part 412 of this chapter 
must conduct review of duration of stays and review of professional 
services as follows:
    (i) For duration of stays, these hospitals need review only cases 
that they reasonably assume to be outlier cases based on extended 
length of stay, as described in Sec. 412.80(a)(1)(i) of this chapter; 
and
    (ii) For professional services, these hospitals need review only 
cases that they reasonably assume to be outlier cases based on 
extraordinarily high costs, as described in Sec. 412.80(a)(1)(ii) of 
this chapter.
    (d) Standard: Determination regarding admissions or continued 
stays.
    (1) The determination that an admission or continued stay is not 
medically necessary--
    (i) May be made by one member of the UR committee if the 
practitioner or practitioners responsible for the care of the patient, 
as specified in Sec. 482.20(a), concur with the determination or fail 
to present their views when afforded the opportunity; and
    (ii) Must be made by at least two members of the UR committee in 
all other cases.
    (2) Before making a determination that an admission or continued 
stay is not medically necessary, the UR committee must consult the 
practitioner or practitioners responsible for the care of the patient, 
as specified in Sec. 482.20(a), and afford the practitioner

[[Page 66763]]

or practitioners the opportunity to present their views.
    (3) If the committee decides that admission to or continued stay in 
the hospital is not medically necessary, written notification must be 
given, not later than 2 days after the determination, to the hospital, 
the patient, and the practitioner or practitioners responsible for the 
care of the patient, as specified in Sec. 482.20(a).
    (e) Standard: Extended stay review. (1) In hospitals that are not 
paid under the prospective payment system, the UR committee must make a 
periodic review, as specified in the UR plan, of each current inpatient 
receiving hospital services during a continuous period of extended 
duration. The scheduling of the periodic reviews may--
    (i) Be the same for all cases; or
    (ii) Differ for different classes of cases.
    (2) In hospitals paid under the prospective payment system, the UR 
committee must review all cases reasonably assumed by the hospital to 
be outlier cases because the extended length of stay exceeds the 
threshold criteria for the diagnosis, as described in 
Sec. 412.80(a)(1)(i). The hospital is not required to review an 
extended stay that does not exceed the outlier threshold for the 
diagnosis.
    (3) The UR committee must make the periodic review no later than 7 
days after the day required in the UR plan.
    (f) Standard: Review of professional services. The committee must 
review professional services provided, to determine medical necessity 
and to promote the most efficient use of available health facilities 
and services.

Subpart E--[Redesignated as Subpart D]

    Subpart E--Requirements for Specialty Hospitals is redesignated as 
Subpart D. Sections 482.60, 482.61, 482.62,and 482.66 are redesignated 
as Secs. 482.155, 482.160, 482.165, and 482.170, respectively.
    C. Part 485 is amended as follows:

PART 485--CONDITIONS OF PARTICIPATION: SPECIALIZED PROVIDERS

    1. The authority citation for part 485 continues to read as 
follows:

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

Subpart F--Conditions of Participation: Critical Access Hospitals 
(CAHs)

    2. Section 485.639(c) is revised to read as follows:


Sec. 485.639  Condition of participation: Surgical services.

* * * * *
    (c) Administration of Anesthesia. The CAH designates the person who 
is allowed to administer anesthesia to CAH patients in accordance with 
its approved policies and procedures and with State scope of practice 
laws. Anesthesia is administered only by a licensed practitioner 
permitted by the State to administer anesthetics.
* * * * *
    D. Part 489 is amended as follows:

PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL

    1. The authority citation for part 489 continues to read as 
follows:

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

    2. Section 489.53 is amended by republishing paragraph (a) 
introductory text, redesignating paragraphs (a)(6) through (a)(14) as 
paragraphs (a)(7) through (a)(15), respectively, and adding a new 
paragraph (a)(6), to read as follows:


Sec. 489.53  Termination by HCFA.

    (a) Basis for termination of agreement with any provider. HCFA may 
terminate the agreement with any provider if HCFA finds that any of the 
following failings is attributable to that provider:
* * * * *
    (6) It refuses to allow access to its facilities, or examination of 
its operations or records, by or on behalf of HCFA, as necessary to 
verify that it is complying with the provisions of title XVIII and the 
applicable regulations of this chapter, or with the provisions of this 
agreement. (However, this paragraph is not to be construed to require 
the disclosure of the records of a skilled nursing facility quality 
assessment and assurance committee, if such disclosure would be 
inconsistent with Sec. 483.75(o) of this chapter.)
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773, Medicare 
Hospital Insurance; Program No. 93.778, Medical Assistance Program)

    Dated: November 26, 1997.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.

    Dated: December 10, 1997.
Donna E. Shalala,
Secretary.
[FR Doc. 97-32793 Filed 12-15-97; 8:45 am]
BILLING CODE 4120-01-P