[Federal Register Volume 63, Number 223 (Thursday, November 19, 1998)]
[Rules and Regulations]
[Pages 64195-64199]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-30844]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 440 and 441

[HCFA-2060-F]
RIN 0938-AJ05


Medicaid Program; Inpatient Psychiatric Services Benefit for 
Individuals Under Age 21

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

ACTION: Final rule.

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SUMMARY: This final rule amends the CFR by adding a choice of 
accreditation organizations that a State Medicaid agency may use to 
fulfill the requirement for Medicaid approval of, and payment to, 
psychiatric facilities other than psychiatric hospitals or psychiatric 
units of acute care hospitals, that provide the ``inpatient psychiatric 
services benefit for individuals under age 21''. In response to 
comments received on a prior proposed rule, we are retaining the 
requirement for accreditation of psychiatric facilities, but we are 
offering alternatives to accreditation by the Joint Commission on 
Accreditation of Health Care Organizations. Accreditation of 
psychiatric facilities, other than psychiatric hospitals and 
psychiatric units in acute care hospitals, could be performed by the 
Council on Accreditation of Services for Families and Children, the 
Commission on Accreditation of Rehabilitation Facilities, or any other 
accrediting body with comparable standards that is recognized by the 
State. This change is being made while we continue to develop HCFA 
standards for psychiatric facilities based on our evaluation of the 
comments that we received on the proposed standards that were published 
in the NPRM. All of the comments on

[[Page 4196]]

the remaining provisions of the proposed rule will be addressed in a 
second final rule to be published at a future date.

EFFECTIVE DATE: This rule is effective December 21, 1998.

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FOR FURTHER INFORMATION CONTACT: Mary Kay Mullen (410) 786-5480.

SUPPLEMENTARY INFORMATION:

I. Background

    Medicaid is the Federally assisted State program authorized under 
title XIX of the Social Security Act (the Act) to provide funding for 
medical care provided to certain needy aged, blind and disabled 
persons, families with dependent children, and low-income pregnant 
women and children. Each State determines the scope of its program, 
within limitations and guidelines established by the Act and the 
implementing regulations at 42 CFR chapter IV, subchapter C. Each State 
submits a State plan, for our approval, that provides the basis for 
granting Federal funds to cover part of the expenditures incurred by 
the State for medical assistance and the administration of the program.
    Section 1902(a) of the Act specifies the eligibility requirements 
that individuals must meet in order to receive Medicaid. Other parts of 
the Act describe the eligibility groups in detail and specify 
limitations on what may be paid for as ``medical assistance.''

II. Statutory and Regulatory History

    The Social Security Amendments of 1972 (Public Law 92-603) amended 
the Medicaid statute to, among other things, allow States the option of 
covering inpatient psychiatric hospital services for individuals under 
age 21. In this preamble, we will refer to the ``inpatient psychiatric 
hospital services benefit for individuals under age 21'' as the 
``psychiatric/21 benefit.'' Originally the statute required that the 
psychiatric/21 benefit be provided by psychiatric hospitals that were 
accredited by the Joint Commission on Accreditation of Hospitals. This 
organization is now called the Joint Commission on Accreditation of 
Healthcare Organizations. In this preamble, we will refer to this 
organization as the ``Joint Commission''.
    In 1976, the Social and Rehabilitation Service, one of the Federal 
agencies that was later part of the merger that formed HCFA, published 
final regulations in 45 CFR part 249, implementing the psychiatric/21 
benefit. These regulations allowed the coverage of this benefit in 
psychiatric facilities, other than psychiatric hospitals, that were 
accredited by the Joint Commission. The term ``psychiatric facility'' 
was used rather than the statutory term ``psychiatric hospital'' 
because the Joint Commission had modified its accrediting practices to 
encompass a broader range of settings providing psychiatric services. 
Since the statute then required Joint Commission accreditation, we 
wanted to keep our conditions of participation consistent with Joint 
Commission practices.
    In 1981, we received comments from the Joint Commission expressing 
concern about our regulatory requirement for exclusive Joint Commission 
accreditation. The Joint Commission indicated that this Federal 
requirement was in conflict with Joint Commission policy that 
facilities should seek accreditation voluntarily. In response, we noted 
that the regulatory requirement for accreditation by the Joint 
Commission could not be removed because it was required by statute.
    The Deficit Reduction Act of 1984 (DRA) amended section 1905(h) of 
the Act, removing the requirement for Joint Commission accreditation 
and adding the requirement that providers of the psychiatric/21 benefit 
meet the definition of a ``psychiatric hospital'' under the Medicare 
program as specified in section 1861(f) of the Act.
    Despite this statutory change, based on our reading of 
Congressional intent, we did not remove the requirement for Joint 
Commission accreditation from Sec. 441.151(b). Our reliance on Joint 
Commission accreditation was the only basis for coverage of the 
psychiatric/21 benefit in psychiatric facilities other than psychiatric 
hospitals. Our decision to retain the regulatory requirement for Joint 
Commission accreditation was based on the fact that, in enacting the 
1984 amendment, the Congress gave no indication that it intended to 
narrow the psychiatric/21 benefit or alter our policy that had been in 
effect since 1976.
    On November 5, 1990, the Omnibus Budget Reconciliation Act of 1990 
(OBRA '90), amended section 1905(h) of the Act to specify that the 
psychiatric/21 benefit can be provided in psychiatric hospitals that 
meet the definition of that term in section 1861(f) of the Act ``or in 
another inpatient setting that the Secretary has specified in 
regulations.'' This amendment, which was effective as if it had been 
enacted earlier as part of the DRA, affirmed and effectively ratified 
our preexisting policy as articulated in subpart D of 42 CFR part 441, 
which interpreted sections 1905(a)(16) and 1905(h) of the Act as not 
being limited solely to psychiatric hospital settings. OBRA '90 
provides our authority to allow other inpatient settings in addition to 
the psychiatric hospital setting for the psychiatric/21 benefit without 
continuing to require that providers obtain Joint Commission 
accreditation.

III. Provisions of the Proposed Rule

    In the NPRM, published November 17, 1994 (59-FR-59624) we proposed 
to delete the existing regulatory requirement for Joint Commission 
accreditation in Sec. 441.151(b) and to establish HCFA standards that 
psychiatric facilities other than psychiatric hospitals would have to 
meet. In response to the many comments on the issue of accreditation 
that are discussed below, we have reconsidered our position and have 
retained the accreditation requirement, but we have provided additional 
accreditation options. Under the new rule we are not requiring the 
exclusive use of the Joint Commission. We are allowing the option of 
using additional organizations in order to increase the States' 
flexibility in the choice of accrediting organizations. We will 
continue to evaluate the comments on

[[Page 64197]]

the proposed standards for facilities that provide the psychiatric/21 
benefit and we will publish these comments and responses in a second 
final rule at a future date.
    This final rule revises the requirements in Secs. 441.151 and 
440.160 only for psychiatric facilities providing the psychiatric/21 
benefit. The requirements governing psychiatric hospitals and 
psychiatric units in acute care hospitals are not changed.

IV. Analysis of and Responses to Public Comments

    In the preamble to the proposed rule, we included a history of the 
requirement for accreditation by the Joint Commission which has been 
part of the psychiatric/21 benefit since it was first enacted. In the 
NPRM, we proposed to delete the requirement for Joint Commission 
accreditation of psychiatric facilities other than psychiatric 
hospitals from the regulations, since the requirement had been deleted 
from the statute. The NPRM proposed new HCFA standards for psychiatric 
facilities other than psychiatric hospitals or psychiatric units of 
acute care hospitals that provided this benefit. We received a large 
number of comments on the subject of accreditation, more than on any 
other issue raised in the proposed rule.
    Comment: Most of the commenters stated that the NPRM did not 
sufficiently acknowledge the value of accreditation by a national body.
    Response: We proposed in the NPRM to remove the requirement that 
providers of the Psychiatric/21 benefit obtain Joint Commission 
accreditation. Forty eight percent of the 100 commenters stated that 
the proposed rule gave insufficient attention to the importance and the 
value that such accreditation can provide. We recognize the value of 
accreditation as an effective process to measure quality of service 
provided under this benefit. In response to the concerns of those 
groups that asked us to retain the requirement for accreditation, we 
are doing so, but we are also giving states flexibility to choose 
accrediting bodies for psychiatric facilities that are not psychiatric 
hospitals or psychiatric units of acute care hospitals that include not 
only the Joint Commission, but also the Council on Accreditation of 
Services for Families and Children (COA), the Commission on 
Accreditation of Rehabilitation Facilities (CARF), or any other 
accrediting body with comparable standards, that is recognized by the 
State. We will continue to evaluate the comments received on the 
proposed HCFA standards.
    Comment: Many commenters said that it is inefficient to survey 
providers that are accredited. Other commenters urged HCFA to encourage 
States to waive the conditions of participation for providers that are 
accredited by a national accrediting body. Several other commenters 
suggested that HCFA allow accreditation by a national organization to 
serve as a substitute for meeting the proposed HCFA standards. One 
commenter said that HCFA should not allow States to require 
accreditation in addition to HCFA standards, because this would create 
another layer of requirements and entail another survey.
    Response: We plan to reevaluate whether imposition of our standards 
on psychiatric facilities that are not psychiatric hospitals or units 
of acute care hospitals but are already accredited is necessary to 
ensure the quality of services provided under this benefit.
    Comment: A number of commenters objected to the proposed deletion 
of the requirement for Joint Commission accreditation, which they 
referred to as the industry standard of quality.
    Response: We are aware that accreditation is recognized by many as 
a standard of quality and for this reason we are retaining the 
requirement. However we are offering alternatives to Joint Commission 
accreditation of psychiatric facilities that are not psychiatric 
hospitals or units of acute care hospitals by adding COA, CARF, or any 
other accrediting body, recognized by the State, with comparable 
standards. As previously stated, this change is necessary while we 
continue to develop HCFA standards based on the comments we received on 
the proposed standards that were published in the NPRM.
    Comment: A few commenters supported the deletion of the 
accreditation requirement.
    Response: We are continuing to retain the requirement for 
psychiatric facility accreditation in this final rule while we evaluate 
the need for HCFA standards based on the comments received on the 
proposed standards and the relationship of these proposed standards to 
accreditation.
    Comment: One commenter said that if the regulatory requirement is 
deleted, the State should require Joint Commission accreditation. A few 
commenters indicated that States should have the option of requiring 
accreditation if they consider it necessary.
    Response: We agree with those commenters who support States having 
the option of determining what accrediting body will be recognized by 
the State to accredit psychiatric/21 benefit providers. Accordingly, we 
have amended language in this final rule to expand accreditation beyond 
the Joint Commission to include COA, CARF, or any other accrediting 
body with comparable standards that is recognized by the State.

V. Provisions of the Final Regulations

    This final rule, changes Secs. 441.151 and 440.160 of the proposed 
rule, returning it to the current regulatory requirement of 
accreditation but adding as alternative options to Joint Commission 
accreditation of psychiatric facilities that are not psychiatric 
hospitals or psychiatric units of an acute care hospital, accreditation 
by COA, CARF, or any other accrediting body, recognized by the State, 
with comparable standards. The remaining provisions of the proposed 
rule, together with all related comments and responses will be 
published in a final rule at a future date.

VI. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we 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 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    Therefore, we are soliciting public comment on this issue for the 
information requirement discussed below.

Section 441.151 General Requirements

    Section 441.151(d) states that a psychiatric facility, or an 
inpatient program in a psychiatric facility, must certify in writing 
that Medicaid services provided to persons who have reached the age of 
22 years are still necessary in the setting in which it will be 
provided (or is being provided in emergency circumstances) in 
accordance with Sec. 441.152.
    While this IRC is subject to the PRA, we believe that the burden 
associated

[[Page 64198]]

with this ICR is exempt in accordance with 5 CFR 13220.3(b)(2) because 
the time and effort and financial resources necessary to comply with 
this requirement would be incurred by persons in the normal course of 
their activities. These are reasonable and customary State practices 
and the State would impose this standard for efficient utilization of 
Medicaid services in the absence of a Federal requirement. Therefore we 
have assigned one (1) token hour of burden.
    We have submitted a copy of this final rule to OMB for its review 
of the information collection requirement described above. This 
requirement is not effective until it has been approved by OMB.
    If you comment on this information collection requirement, please 
mail copies directly to the following:

Health Care Financing Administration, Office of Information Services, 
Security and Standards Group Division of HCFA Enterprise Standards Room 
N2-14-26, 7500 Security Boulevard Baltimore, MD 21244-1850 Attention: 
Louis Blank, HCFA-2060-F
    and
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10235, New Executive Office Building, Washington, DC 
20503, Attention: Allison Eydt, HCFA Desk Officer

VII. Regulatory Impact Statement

    We have examined the impacts of this final rule as required by 
Executive Order 12866 (EO 12866), the Unfunded Mandates Act of 1995, 
and the Regulatory Flexibility Act (RFA) (Public Law 96-354). EO 12866 
directs agencies to assess all cost and benefits of available 
regulatory alternatives and, when regulation is necessary, to select 
regulatory approaches that maximize net benefits including potential 
economic, environmental, public health and safety effects, distributive 
impacts, and equity. A regulatory impact analysis (RIA) must be 
prepared for major rules with economically significant effects (100 
million or more annually).
    Section 1102(b) of the Act requires us to prepare an RIA if a rule 
may have a significant impact on the operations of a substantial number 
of small rural hospitals. This 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.

A. The Unfunded Mandates Act

    The Unfunded Mandates Reform Act of 1995 also requires (in section 
202) that agencies perform an assessment of anticipated costs and 
benefits before proposing any rule that may result in an annual 
expenditure by State, local or tribal governments, in the aggregate, or 
by the private sector, of $100 million.

B. Regulatory Flexibility Act

    The RFA requires us to analyze options for regulatory relief of 
small businesses. For purposes of the RFA, small entities include small 
businesses, non-profit organizations and governmental agencies. Most 
hospitals and most other providers and suppliers are small entities, 
either by nonprofit status or by having revenues of $5 million or less 
annually. Intermediaries and carriers are not considered to be small 
entities.
    This is not a major rule and there will be no additional costs to 
the Medicaid program as a result of this final rule.
    For this reason we are not preparing an analysis for either the RFA 
or section 1102(b) of the Act, since we have determined, and we certify 
that this final rule would not result in a significant impact on a 
substantial number of small entities and would not have a significant 
impact on the operations of a substantial number of small rural 
hospitals.
    In accordance with the provisions of Executive Order 12866, this 
final regulation was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 440

    Grant programs--health, Medicaid.

42 CFR Part 441

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

    For the reasons set out in the preamble, 42 CFR Chapter IV is 
amended as follows:

PART 440--SERVICES: GENERAL PROVISIONS

    A. Part 440 is amended as follows:
    1. The authority citation for part 440 continues to read as 
follows:

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

    2. Section 440.160 is revised to read as follows:


Sec. 440.160  Inpatient psychiatric services for individuals under age 
21.

    ``Inpatient psychiatric services for individuals under age 21'' 
means services that--
    (a) Are provided under the direction of a physician;
    (b) Are provided by--
    (1) A psychiatric hospital or an inpatient psychiatric program in a 
hospital, accredited by the Joint Commission on Accreditation of 
Healthcare Organizations, or
    (2) A psychiatric facility which is accredited by the Joint 
Commission on Accreditation of Healthcare Organizations, the Council on 
Accreditation of Services for Families and Children, the Commission on 
Accreditation of Rehabilitation Facilities, or by any other accrediting 
organization, with comparable standards, that is recognized by the 
State.
    (c) Meet the requirements in Sec. 441.151 of this subchapter.

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

    B. 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. Section 441.151 is amended by revising paragraphs (b) and (c) 
and adding a new paragraph (d) to read as follows:


Sec. 441.151  General requirements.

* * * * *
    (b) By--
    (1) A psychiatric hospital or an inpatient psychiatric program in a 
hospital, accredited by the Joint Commission on Accreditation of 
Healthcare Organizations; or
    (2) A psychiatric facility which is accredited by the Joint 
Commission on Accreditation of Healthcare Organizations, the Commission 
on Accreditation of Rehabilitation Facilities, the Council on 
Accreditation of Services for Families and Children, or by any other 
accrediting organization, with comparable standards that is recognized 
by the State.
    (c) Before the individual reaches age 21 or, if the individual was 
receiving the services immediately before he or she reached age 21, 
before the earlier of the following--
    (1) The date the individual no longer requires the services; or
    (2) the date the individual reaches 22; and
    (d) Certified in writing to be necessary in the setting in which it 
will be

[[Page 64199]]

provided (or is being provided in emergency circumstances) in 
accordance with Sec. 441.152.

(Catalog of Federal Domestic Assistance Program No. 93,778 Medical 
Assistance Program)

    Dated: June 2, 1998.
Nancy-Ann Min Deparle,
Administrator, Health Care Financing Administration.

    Dated: August 12, 1998.
Donna E. Shalala,
Secretary.
[FR Doc. 98-30844 Filed 11-18-98; 8:45 am]
BILLING CODE 4120-01-P