[Federal Register Volume 63, Number 147 (Friday, July 31, 1998)]
[Rules and Regulations]
[Pages 41170-41171]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20628]



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Part V





Department of Health and Human Services





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Health Care Financing Administration



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42 CFR Parts 441 and 489



Medicare and Medicaid Programs: Surety Bond Requirements for Home 
Health Agencies; Final Rule

  Federal Register / Vol. 63, No. 147, Friday, July 31, 1998 / Rules 
and Regulations  

[[Page 41170]]



DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 441 and 489

[HCFA-1152-2-F]
RIN 0938-AJ08


Medicare and Medicaid Programs; Surety Bond Requirements for Home 
Health Agencies

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

ACTION: Final rule.

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SUMMARY: This final rule revised Medicare and Medicaid regulations 
concerning surety bond requirements published in the Federal Register 
(63 FR 29648) on June 1, 1998. Those regulations specified submission 
compliance dates for all home health agencies (HHAs) to furnish a 
surety bond to HCFA and/or to the State Medicaid agency. This rule 
removes those submission compliance dates.

EFFECTIVE DATE: This final rule is effective on July 31, 1998.

FOR FURTHER INFORMATION CONTACT: Ralph Goldberg, (410) 786-4870 
(Medicare Provisions. Mary Linda Morgan, (410) 786-2011 (Medicare 
Provisions.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Balanced Budget Act of 1997 (BBA '97) requires each home health 
agency (HHA) to secure a surety bond in an amount of at least $50,000 
in order to participate in either the Medicare or the Medicaid program. 
This requirement applies to all participating Medicare and Medicaid 
HHAs, regardless of the date their participation began. We published a 
final rule in the Federal Register on January 5, 1998 (63 FR 292-355) 
to implement the surety bond requirements.
    Generally, that rule requires each HHA participating in Medicare to 
obtain from an authorized Surety and then to furnish to the fiscal 
intermediary a surety bond in an amount that is the greater of $50,000 
or 15 percent of the annual amount paid to the HHA by the Medicare 
program, as such annual amount appears in the HHA's most recently 
accepted cost report.
    The rule also prohibits payment to a State for home health services 
furnished to Medicaid recipients unless the HHA has furnished the 
Medicaid State agency with a surety bond similar to one that meets 
Medicare requirements. The amount of the Medicaid surety bond would be 
the greater of $50,000 or 15 percent of the annual amount paid to the 
HHA by the Medicaid State agency for home health services.
    As a result of technical issues concerning potential Surety 
liability raised by representatives of both the Surety and HHA 
industries after the publication of the January 5, 1998 final rule, we 
published a notice in the Federal Register on March 4, 1998 (63 FR 
10732). That notice advised the public that we intended to make 
technical revisions to the January 5, 1998 final rule. In another final 
rule also published in the March 4, 1998 Federal Register (63 FR 
10730), we removed the February 27, 1998 bond submission compliance 
date, and announced that we intended to establish a new submission 
compliance date that would be a date 60 days after the publication of a 
subsequent final rule.
    On June 1, 1998, an additional final rule was published in the 
Federal Register (63 FR 29648), that addressed all of the technical 
changes announced in the March 4, 1998 notice and revised certain 
sections of the January 5, 1998 final rule. That rule also established 
that the initial submission of a surety bond for Medicare is July 31, 
1998 and for Medicaid by a date specified by each Medicaid State agency 
but no later than September 29, 1998.
    Because of significant concerns expressed by the United States 
Congress and HHAs, and notification that the General Accounting Office 
(GAO) is investigating issues surrounding the surety bond requirement 
we will suspend the compliance date until we evaluate the GAO report.
    Although the surety bond requirements remain in effect, the 
practical effect of this document is to absolve participating HHAs from 
having to show compliance with the requirements until 60 days following 
publication of a new final rule but no earlier than February 15, 1999.

II. Provisions of this Final Rule

    This rule removes the submission compliance dates that specify when 
participating HHAs must submit a surety bond in both the Medicare and 
Medicaid programs.

III. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite prior public comment on proposed rules. The 
notice of proposed rulemaking can be waived, however, if an agency 
finds good cause that notice-and-comment procedure is impracticable, 
unnecessary, or contrary to the public interest and incorporates a 
statement of the finding and its reasons in the rule issued. We find 
good cause to waive the notice-and-comment procedure because it is 
impracticable to employ notice and comment procedures and issue a final 
rule on or before the earliest date currently required for HHAs to 
comply with surety bond submission (July 31, 1998). For this reason, we 
find good cause to waive notice-and-comment and to issue this final 
rule.

IV. Waiver of 30-Day Delay in Effective Date

    We ordinarily make the effective date of a final rule at least 30 
days after the publication of the rule in the Federal Register. 
However, this 30-day delay can be waived if an agency finds good cause 
for making the effective date of the rule earlier than 30 days after 
the publication of the rule. For the same reason discussed in section 
III. above we find it would be impracticable to delay the effective 
date of this rule. Therefore, we find good cause to waive the 30-day 
delay in the effective date for this rule and have made the effective 
date the date of publication in the Federal Register.

V. OMB Review

    In accordance with the provisions of E.O. 12866, this document was 
reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 441

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

42 CFR Part 489

    Health facilities, Medicare, Reporting and recordkeeping 
requirements.
    42 CFR Chapter IV is amended as set forth below:

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

    A. Part 441 is amended as follows:
    1. The authority citation for part 441 continues to read as 
follows:

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

    2. In Sec. 441.16 the heading of paragraph (i) and paragraph (i)(1) 
are revised to read as follows: Sec. 441.16 Home health agency 
requirements for surety bonds; Prohibition on FFP.
* * * * *

    (i) Term and type of bond. (1) Initial term: Each participating HHA 
that is not

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exempted by paragraph (d) of this section must submit to the State 
Medicaid agency a surety bond for a term beginning January 1, 1998. If 
an annual bond is submitted for the initial term it must be effective 
for an annual period specified by the State Medicaid agency.
* * * * *

PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVALS

    B. Part 489 is amended as follows:
    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. in Sec. 489.67 the heading and paragraph (a) are revised to read 
as follows:


Sec. 489.67  Term and type of bond.

    (a) Each participating HHA that does not meet the criteria for 
waiver under Sec. 489.62 must submit to HCFA in a form as HCFA may 
specify, a surety bond for a term beginning January 1, 1998. If an 
annual bond is submitted for the initial term, it must be effective 
through the end of the HHA's current fiscal year.
* * * * *
(Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh)).

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

    Dated July 27, 1998.
Nancy-Ann Min DePearle,
Administrator, Health Care Financing Administration.

    Dated July 28, 1998.
Donna E. Shalala,
Secretary.
[FR Doc. 98-20628 Filed 7-29-98; 1:38 pm]
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