[Federal Register Volume 63, Number 145 (Wednesday, July 29, 1998)]
[Notices]
[Pages 40534-40536]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20253]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration
[HCFA-3009-N]
RIN 0938-AI99


Medicare Program; Peer Review Organization Contracts: 
Solicitation of Statements of Interest From In-State Organizations--
Alaska, Delaware, the District of Columbia, Hawaii, Idaho, Illinois, 
Kentucky, Maine, Nebraska, Nevada, South Carolina, Vermont, and Wyoming

AGENCY: Health Care Financing Administration, HHS.

ACTION: Notice.

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[[Page 40535]]

SUMMARY: This notice, in accordance with section 1153(i) of the Social 
Security Act, gives at least 6 months' advance notice of the expiration 
dates of contracts with out-of-State Utilization and Quality Control 
Peer Review Organizations. It also specifies the period of time in 
which in-State organizations may submit a statement of interest so that 
they may be eligible to compete for these contracts.

DATES: Written statements of interest must be received at the address 
specified no later than 5 p.m. EST, August 28, 1998. Due to staffing 
and resource limitations, we cannot accept statements submitted by 
facsimile (FAX) transmission.

ADDRESSES: Statements of interest must be submitted to the--Health Care 
Financing Administration, Acquisitions and Grants Groups, OICS, Attn.: 
Edward L. Hughes, 7500 Security Boulevard, Mail Stop C2-21-15, 
Baltimore, Maryland 21244-1850.

FOR FURTHER INFORMATION CONTACT: Udo Nwachukwu, (410) 786-7234.

SUPPLEMENTARY INFORMATION:

I. Background

    The Peer Review Improvement Act of 1982 (title I, subtitle C of the 
Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Pub. L. 97-
248) amended Part B of title XI of the Social Security Act (the Act) by 
establishing the Utilization and Quality Peer Review Organization (PRO) 
program.
    PROs currently review certain health care services furnished under 
title XVIII of the Act (Medicare) and under certain other Federal 
programs to determine whether those services are reasonable, medically 
necessary, furnished in the appropriate setting, and are of a quality 
that meets professionally-recognized standards. PRO activities are a 
part of the Health Care Quality Improvement Program (HCQIP), a program 
which supports our mission to ensure health care security for our 
beneficiaries. The HCQIP rests on the belief that a plan's, provider's, 
or practitioner's own internal quality management system is key to good 
performance. The HCQIP is carried out locally by the PRO in each State. 
Under the HCQIP, PROs provide critical tools (for example, quality 
indicators and information) for plans, providers, and practitioners to 
improve the quality of care furnished to Medicare beneficiaries. The 
Congress created the PRO program in order to redirect, simplify, and 
enhance the cost-effectiveness and efficiency of the peer review 
process.
    In June 1984, we began awarding contracts to PROs. We currently 
maintain 53 PRO contracts with organizations that provide medical 
review activities for the 50 United States, the District of Columbia, 
Puerto Rico, and the Virgin Islands. The organizations that are 
eligible to contract as PROs have satisfactorily demonstrated that they 
are either physician-sponsored or physician-access organizations in 
accordance with sections 1152 and 1153 of the Act and our regulations 
at 42 CFR 462.102 and 462.103. A physician-sponsored organization is 
one that is both composed of a substantial number of the licensed 
doctors of medicine or osteopathy practicing medicine or surgery in the 
respective review area and is representative of the physicians 
practicing in the review area. A physician-access organization is one 
that has available to it, by arrangement or otherwise, the services of 
a sufficient number of licensed doctors of medicine or osteopathy 
practicing medicine or surgery in the review area to ensure adequate 
peer review of the services furnished by the various medical 
specialties and subspecialties. In addition, the organization must not 
be a health care facility, health care facility association, or a 
health care facility affiliate, and must have a consumer representative 
on its governing board.
    The Omnibus Budget Reconciliation Act of 1987 (Pub. L. 100-203) 
amended section 1153 of the Act by adding new paragraph (i) that 
prohibits the Secretary from renewing the contract of any PRO that is 
not an in-State organization without first publishing in the Federal 
Register a notice announcing when the contract will expire. This notice 
must be published no later than 6 months before the date the contract 
expires and must specify the period of time during which an in-State 
organization may submit a proposal for the contract. If one or more 
qualified in-State organizations submit a proposal within the specified 
period of time, we may not automatically renew the contract on a 
noncompetitive basis, but must instead provide for competition for the 
contract in the same manner used for a new contract. An in-State 
organization is defined as an organization that has its primary place 
of business in the State in which review will be conducted (or, that is 
owned by a parent corporation, the headquarters of which is located in 
that State).
    There are currently 13 PRO contracts with entities that do not meet 
the statutory definition of an in-State organization. The areas 
affected for purposes of this notice and their respective expiration 
dates are as follows:

Delaware--March 31, 1999
Illinois--March 31, 1999
Kentucky--March 31, 1999
Nevada--March 31, 1999
Vermont--March 31, 1999
Wyoming--March 31, 1999
Alaska--June 30, 1999
District of Columbia--June 30, 1999
Idaho--June 30, 1999
Maine--June 30, 1999
Hawaii--September 30, 1999
Nebraska--September 30, 1999
South Carolina--September 30, 1999

II. Provisions of the Notice

    This notice announces the scheduled expiration dates of the current 
contracts between us and the out-of-State PROs responsible for review 
in the areas mentioned above.
    Interested in-State organizations may submit statements of interest 
to be the PRO for these States. We must receive the statements no later 
than August 28, 1998, and, in its statement of interest, the 
organization must furnish materials that demonstrate that it meets the 
definition of an in-State organization. Specifically, the organization 
must have its primary place of business in the State in which review 
will be conducted or be a subsidiary of a parent corporation, whose 
headquarters is located in that State. In its statement, each 
interested organization must further demonstrate that it meets the 
following requirements:

A. Be Either a Physician-Sponsored or a Physician-Access Organization

1. Physician-Sponsored Organization
    a. The organization must be composed of a substantial number of the 
licensed doctors of medicine and osteopathy practicing medicine or 
surgery in the review area, and be representative of the physicians 
practicing in the review area.
    b. The organization must not be a health care facility, health care 
facility association, or health care facility affiliate.
    c. In order to meet the substantial number requirement of A.1.a., 
an organization must be composed of at least 10 percent of the licensed 
doctors of medicine and osteopathy practicing medicine or surgery in 
the review area. In order to meet the representation requirement of 
A.1.a., an organization must state and have documentation in its files 
demonstrating that it is composed of at least 20 percent of the 
licensed doctors of medicine and osteopathy practicing medicine or 
surgery in the review area. Alternately, if the organization does not 
demonstrate that it is composed of at least 20 percent of the licensed 
doctors of medicine and osteopathy practicing medicine or

[[Page 40536]]

surgery in the review area, the organization must demonstrate in its 
statement of interest through letters of support from physicians or 
physician organizations, or through other means, that it is 
representative of the area physicians.
    2. Physician-Access Organization
    a. The organization must have available to it, by arrangement or 
otherwise, the services of a sufficient number of licensed doctors of 
medicine or osteopathy practicing medicine or surgery in the review 
area to ensure adequate peer review of the services provided by the 
various medical specialties and subspecialties.
    b. The organization must not be a health facility, health care 
facility association, or health care facility affiliate.
    c. An organization meets the requirements of A.2.a. if it 
demonstrates that it has available to it at least one physician in 
every generally recognized specialty; and has an arrangement or 
arrangements with physicians under which the physicians would conduct 
review for the organization.

B. Have at Least one Individual who is a Representative of Consumers on 
its Governing Board

    If one or more organizations meet the above requirements in a PRO 
area and submit statements of interest in accordance with this notice, 
we will consider those organizations to be potential sources for the 13 
contracts upon their expiration. These organizations will be entitled 
to participate in a full and open competition for the PRO contract to 
provide medical review services.

III. Information Collection Requirements

    This notice contains information collection requirements that have 
been approved by the Office of Management and Budget (OMB) under the 
authority of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) 
and assigned OMB Control Number 0938-0526.

    Authority: Section 1153 of the Social Security Act (42 U.S.C. 
1320c-2).

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

    Dated: June 1, 1998.
Nancy-Ann Min Deparle,
Administrator, Health Care Financing Administration.
[FR Doc. 98-20253 Filed 7-28-98; 8:45 am]
BILLING CODE 4120-01-P