[Federal Register Volume 64, Number 229 (Tuesday, November 30, 1999)]
[Rules and Regulations]
[Pages 67028-67052]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30181]



[[Page 67027]]

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Part III





Department of Health and Human Services





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Health Care Financing Administration



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42 CFR Parts 403, 412, 431, etc.



Medicare and Medicaid Programs; Religious Nonmedical Health Care 
Institutions and Advance Directives; Interim Rule

  Federal Register / Vol. 64, No. 229 / Tuesday, November 30, 1999 / 
Rules and Regulations  

[[Page 67028]]



DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 403, 412, 431, 440, 442, 456, 446, 488, and 489

[HCFA-1909-IFC]
RIN 0938-AI93


Medicare and Medicaid Programs; Religious Nonmedical Health Care 
Institutions and Advance Directives

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

ACTION: Interim final rule with comment period.

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

SUMMARY: This rule deletes all references to Christian Science 
sanatoria and sets forth the Medicare requirements for coverage and 
payment of services furnished by religious nonmedical health care 
institutions. It also sets forth the conditions of participation that 
religious nonmedical health care institutions must meet before they can 
participate in Medicare. It sets forth the methods we will use to pay 
religious nonmedical health care institutions and monitor expenditures 
for religious nonmedical health care institution services. 
Additionally, the rule presents the rules governing optional coverage 
of religious nonmedical health care institution services by States 
under the Medicaid program.

DATES: Effective date: These regulations are effective January 31, 
2000.
    The incorporation by reference of the publication in this rule was 
approved by the Director of the Federal Register as of January 31, 
2000.
    Comment date: Comments will be considered if we receive them at the 
appropriate address, as provided below, no later than 5 p.m. on January 
31, 2000.

ADDRESSES: Mail an original and 3 copies of written comments to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: HCFA-1909-IFC, P.O. Box 8017, 
Baltimore, MD 21244-9016.
    If you prefer, you may deliver an original and 3 copies of your 
written comments 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, 7500 Security Boulevard, 
Baltimore, Maryland 21244-1850.

    For further information on ordering copies of the Federal Register 
contained in this document, see the beginning of SUPPLEMENTARY 
INFORMATION.

FOR FURTHER INFORMATION CONTACT:
General Information, Medicare Coverage, and Payment Issues: Jean-Marie 
Moore, (410) 786-3508
Medicare Conditions of Participation: Nancy Archer, (410) 786-0596
Medicaid Issues: Linda Tavener, (410) 786-3838.

SUPPLEMENTARY INFORMATION:

Comments, Procedures, and Availability of Copies

    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code HCFA-1909-IFC. 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).
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password required).

I. Introduction

    Section 4454 of the Balanced Budget Act of 1997 (BBA'97), Public 
Law No. 105-33, enacted August 5, 1997, which amended the Social 
Security Act (the Act), deletes all references to Christian Science 
sanatoria. Section 4454 provides for coverage of inpatient hospital 
services and post-hospital extended care services furnished in 
qualified religious nonmedical health care institutions (RNHCIs) under 
Medicare and as a State Plan option under Medicaid. (We will refer to 
these services as ``RNHCI services.'') While the previous provisions 
were specific to Christian Science sanatoria, the new amendments make 
it possible for institutions other than Christian Science facilities to 
qualify as RNHCIs and to participate in Medicare and Medicaid. The 
programs will only pay for nonmedical health care services furnished in 
RNHCIs, as defined in the law.
    This interim final rule with comment period sets forth the 
requirements that an RNHCI must meet to participate in the Medicare or 
Medicaid programs. This rule permits a Medicare beneficiary to elect to 
receive care in an RNHCI based on his or her own religious convictions 
or to revoke that election if for any reason he or she decides to 
pursue medical care. The rule describes the process involved in making 
future elections. The rule sets forth conditions of participation that 
an RNHCI must fully meet to participate in the Medicare program. If we 
find that the accreditation of an RNHCI by a State, regional, or 
national organization provides reasonable assurances, in accordance 
with 42 CFR part 488, subpart A, that all of our requirements are met 
or exceeded, we may treat that RNHCI as meeting the conditions of 
participation.
    The rule presents the methodologies under which we will pay RNHCIs, 
monitor the Medicare expenditure level for RNHCI services for any given 
federal fiscal year (FFY), and implement a ``sunset'' of the RNHCI 
benefit. Finally, the rule revises Medicaid regulations to reflect 
statutory changes and makes necessary nomenclature and conforming 
changes.

II. Background

    Since the beginning of the Medicare program, the Act contained 
provisions authorizing payment for certain services furnished in 
Christian Science sanatoria. There were similar provisions authorizing 
payment for such services under Medicaid. Section 4454 of BBA'97 
repealed the existing Medicare

[[Page 67029]]

and Medicaid provisions authorizing payment for services furnished in 
Christian Science sanatoria. Section 4454 authorizes Medicare and 
Medicaid payment for certain services provided in an RNHCI, as defined 
in the statute. Services furnished in any facility that meets the 
definition of an RNHCI may qualify for payment, not just those provided 
in Christian Science sanatoria. It should be noted that the Medicaid 
RNHCI provisions are optional and not an essential component of the 
basic Medicaid State plan. As in the past, the new provisions do not 
mention the use of a religious practitioner since we consider the cost 
of using a religious practitioner the financial responsibility of the 
patient.

III. Regulatory Provisions

A. RNHCI Medicare Benefits, Conditions of Participation, and Payment

    We are revising part 403 (Special Programs and Projects) of the 
Code of Federal Regulations by adding a new subpart G, ``Religious 
Nonmedical Health Care Institutions-Benefits, Conditions of 
Participation, and Payment.''
1. Basis and Purpose (Sec. 403.770)
    This rule implements Section 4454 of BBA'97, which amended the 
following sections of the Act: 1821, and 1861(e), (y) and (ss) 
(Medicare provisions); 1902(a) and 1908(e)(1) (Medicaid provisions); 
and 1122(h) and 1162 (conforming provisions).
    Section 4454 of BBA'97 modified section 1861 of the Act in several 
ways. First, section 4454 removed the reference to Christian Science 
from the definition of the term ``hospital'' in section 1861(e) and 
substituted ``religious nonmedical health care institution.'' Section 
4454 also changed the title of section 1861(y) from ``Extended Care in 
Christian Science Skilled Nursing Facilities'' to ``Extended Care in 
Religious Nonmedical Health Care Institutions'' and substituted 
``religious nonmedical health care institution'' for the reference to 
Christian Science sanatorium in that section.
    Section 4454 added new section 1861(ss) to the Act. New section 
1861(ss)(1) of the Act defines the ten minimum characteristics that a 
facility must have to be considered an RNHCI and provides the basis for 
the Medicare conditions of participation described in this rule.
    Section 4454 also added a new section 1821 to the Act, providing 
conditions for coverage of RNHCI services. New section 1821(a) and (b) 
of the Act addresses the requirements that the beneficiary must fulfill 
to qualify for coverage and payment of RNHCI services. New section 
1821(c) and (d) of the Act addresses the monitoring of expenditures for 
RNHCI services, safeguards against excessive expenditures for those 
services, and the circumstances under which the RNHCI benefit created 
by section 4454 will ``sunset''.
    Section 4454 also amends the third sentence in section 1902(a) 
after the phrase ``shall not apply'' by removing the phrase ``to a 
Christian Science sanatorium operated, or listed and certified, by the 
First Church of Christ, Scientists, Boston, Massachusetts'' and 
inserting ``to a religious nonmedical health care institution (as 
defined in section 1861(ss)(1).'' Section 4454 also amends 1908(e)(1) 
after the phrase ``does not include'' by removing ``a Christian Science 
sanatorium operated, or listed and certified, by the First Church of 
Christ, Scientist, Boston, Massachusetts'' and inserting ``a religious 
nonmedical health care institution (as defined in section 
1861(ss)(1)).'' These amendments to the Act provide for RNHCI services 
as a State option under the Medicaid program.
2. Definitions and Terms (Sec. 403.702)
    In the first section of subpart G we have included a ``definitions 
section'' to assist readers with terms or acronyms that are used in the 
rule. However, if a term is defined within the text of the rule, then 
it is not included in the definitions section. The terms and acronyms 
presented in the definitions section are as follows:
    Election means a written statement signed by a beneficiary or the 
beneficiary's legal representative indicating the beneficiary's choice 
to receive nonmedical care or treatment for religious reasons. The term 
is specific to the section 4454 provisions: it is the new process by 
which a beneficiary elects to choose RNHCI services rather than other 
covered medical services.
    Excepted medical care means medical care that is received 
involuntarily or required under Federal, State, or local laws. It is a 
new term specific to the provisions implementing section 4454 and is 
intended to identify the kinds of medical services that can be provided 
to a beneficiary with an election for RNHCI services without revoking 
the election.
    FFY is the acronym for the Federal fiscal year, which is the period 
used in calculating budget figures for the RNHCI program.
    Medical care or treatment means health care furnished by or under 
the direction of a licensed physician that can involve diagnosing, 
treating, or preventing disease and other damage to the mind and body. 
It may involve the use of pharmaceuticals, diet, exercise, surgical 
intervention, and technical procedures.
    Nonexcepted medical care means medical care, other than excepted 
medical care, that is sought by or for a beneficiary who has elected 
religious nonmedical health care institution services. It is a new term 
specific to the provisions implementing section 4454 and is intended to 
define the kinds of medical services that, if received by a beneficiary 
who has previously elected RNHCI services, would revoke the 
individual's election of services.
    Religious nonmedical care or religious method of healing means 
health care furnished under established religious tenets that prohibit 
conventional or unconventional medical care for the treatment of a 
beneficiary. It is a term specific to the provisions implementing 
section 4454 and defines a specific approach to health care management.
    RNHCI stands for ``religious nonmedical health care institution'' 
(as defined in section 1861(ss)(1) of the Act).
    Religious nonmedical nursing personnel means individuals who are 
grounded in the religious beliefs of the RNHCI, trained and experienced 
in the principles of nonmedical care, and formally recognized as 
competent in the administration of care within their religious 
nonmedical health care group. The term is specific to the provisions 
implementing section 4454 and defines a specific group of health care 
workers.
3. Requirements for Coverage (Sec. 403.720)
    In order for a Medicare or Medicaid provider to meet the definition 
of an RNHCI, it must satisfy the ten qualifying provisions as contained 
in new section 1861(ss)(1) of the Act, which are simply restated in the 
rule. While the requirements contained in sections 1861(ss)(1)(B) 
(lawful operation), (G) (ownership by or in a provider of medical 
services), and (H) (utilization review) of the Act are explicitly 
addressed in the Medicare conditions of participation, it is essential 
that a facility meet all ten elements to qualify as an RNHCI for both 
the Medicare and Medicaid programs. Section 1861(ss)(1) of the Act 
states that an RNHCI means an institution that:
    (a) Is described in subsection (c)(3) of section 501 of the 
Internal Revenue Code of 1986 and is exempt from taxes under subsection 
(a) of that section. The inability to either gain or retain this

[[Page 67030]]

status will disqualify an institution from participation as an RNHCI.
    (b) Is lawfully operated under all applicable Federal, State, and 
local laws and regulations. Federal law supersedes State and local laws 
unless the State and local requirements are more stringent than the 
Federal requirements.
    (c) Furnishes only nonmedical nursing items and services to 
patients who choose to rely solely upon a religious method of healing 
and for whom the acceptance of medical services would be inconsistent 
with their religious beliefs. The religious component of the healing is 
not covered by Medicare or Medicaid.
    (d) Furnishes nonmedical items and services exclusively through 
nonmedical nursing personnel who are experienced in caring for the 
physical needs of these patients. This care frequently involves: 
assistance with activities of daily living; assistance in moving, 
turning, positioning, and ambulation; meeting nutritional needs; and 
comfort and support measures.
    (e) Furnishes nonmedical items and services to inpatients on a 
twenty-four hour basis.
    (f) Does not furnish, on the basis of its religious beliefs, 
through its personnel or otherwise, medical items and services 
(including any medical screening, examination, diagnosis, prognosis, 
treatment, or the administration of drugs) for its patients.
    (g) Is not owned by, under common ownership with, or has an 
ownership interest of five percent or more in, a provider of medical 
treatment or services, and is not affiliated with a provider of medical 
treatment or services, or with an individual who has an ownership 
interest of five percent or more in, a provider of medical treatment or 
services. For purposes of this requirement, an affiliation does not 
exist in the circumstances described in section 1861(ss)(4)of the Act 
or Sec. 403.738(c).
    (h) Has in effect a utilization review plan that:
     Provides for review of admissions to the institution, of 
the duration of stays, of cases of continuous extended duration, and of 
the items and services furnished by the institution.
     Requires that the reviews be made by an appropriate 
committee of the institution that includes the individuals responsible 
for overall administration and for supervision of nursing personnel at 
the institution.
     Provides that records be maintained of the meetings, 
decisions, and actions of the committee.
     Meets other requirements as the Secretary finds necessary 
to establish an effective utilization review plan.
    (i) Provides information the Secretary may require to implement 
section 1821 of the Act, including information relating to quality of 
care and coverage determinations.
    (j) Meets other requirements the Secretary finds necessary in the 
interest of the health and safety of individuals who are furnished 
services in the institution. These requirements are the conditions of 
participation in this subpart. The RNHCI must meet or exceed the 
conditions of participation in order to qualify as a Medicare provider. 
The conditions of participation will be discussed individually in 
section III.A.5. of this preamble. The RNHCI must also have a valid 
provider agreement with HCFA.
    In addition to the above requirements, section 4454 of BBA'97 added 
section 1821 to the Act, establishing conditions of coverage for RNHCI 
services. Section 1821(a) of the Act requires that as a condition for 
Part A Medicare coverage:
     The beneficiary must have a condition that would qualify 
under Medicare Part A for inpatient hospital services or extended care 
services furnished in a hospital or skilled nursing facility that is 
not an RNHCI.
    When a Medicare beneficiary has an effective election on file with 
us but does not have a condition that would qualify for Medicare Part A 
inpatient hospital or post-hospital extended care services if the 
beneficiary were an inpatient of a hospital or a resident of an SNF 
that is not an RNHCI, then services furnished in a RNHCI are not 
covered by Medicare. A Medicare claim for services that were furnished 
to that beneficiary would be treated as a claim for uncovered services. 
If the beneficiary only needs assistance with activities of daily 
living, then the beneficiary's condition could not be considered as 
meeting the Medicare Part A requirements.
     The beneficiary must have a valid election in effect to 
receive RNHCI services.
    A beneficiary who meets all other applicable requirements and who 
has in effect a valid election to receive services in an RNHCI is 
eligible for coverage of those services in an RNHCI.
    If no valid election is filed or the election has been revoked and 
no new election is in effect, the beneficiary does not have Medicare 
coverage for services furnished in an RNHCI. Consequently, a Medicare 
claim for services furnished to such a beneficiary would also be 
treated as a claim for uncovered services.
     The RNHCI may not accept a patient as a Medicare or 
Medicaid beneficiary after the sunset provision (Sec. 403.756) is 
implemented unless the patient has an election in effect prior to 
January 1 of the year in which the sunset provision is implemented. A 
claim filed for payment for services furnished to a patient with no 
valid election in effect before January 1 of the year the sunset 
provision is implemented would be denied.
     The RNHCI must, after reasonable investigation, determine 
that the beneficiary has not received nonexcepted medical treatment 
that would have caused his or her election to be revoked. We believe 
that the RNHCI is in the best position to gain information from the 
patient about health care incidents that may have occurred since first 
signing an election statement that might change the election status.
    Examples:

    (a) During the admission interview the RNHCI became aware that 
the beneficiary had been in an accident in which he or she suffered 
lacerations and contusions and was massively confused when 
transferred to a local emergency room. The emergency room staff 
controlled the bleeding and completed repair of the lacerations and 
initiated a neurological assessment before the patient's religious 
preferences were known. This is considered excepted medical care 
since the patient was not mentally competent to refuse the 
initiation of medical care and did not voluntarily seek medical 
attention. Receipt of excepted care does not revoke the 
beneficiary's election for RNHCI services.
    (b) During the admission interview the RNHCI becomes aware that 
the beneficiary had visited a chiropractor to gain relief from 
persistent back pain. This chiropractor visit is considered 
nonexcepted care since the beneficiary voluntarily sought Medicare 
covered medical care, which effectively revokes the election for 
RNHCI services.
    If the election has been revoked, it means the beneficiary and 
RNHCI are responsible for the cost of services that are denied by 
Medicare.
4. Valid Election Requirements (Sec. 403.724)
    The new section 1821(b) of the Act addresses the issues involved in 
beneficiary election of RNHCI services. None of the provisions in this 
section existed prior to the passage of BBA'97.
(a) General Requirements
    (i) The election must be a written statement that includes the 
following statements:
     The beneficiary is conscientiously opposed to acceptance 
of nonexcepted medical treatment as defined in Sec. 403.702. This is a 
statutory requirement that is restated in the rule.

[[Page 67031]]

     The beneficiary acknowledges that the acceptance of 
nonexcepted or conventional medical treatment is inconsistent with his 
or her sincere religious beliefs. This is a statutory requirement that 
is restated in the rule.
     The beneficiary acknowledges that the receipt of 
nonexcepted medical treatment constitutes a revocation of the election 
and may limit further receipt of services in an RNHCI. We believe that 
it is essential that the election indicate the beneficiary's 
understanding as to what acts on his or her part could revoke the 
election.
     The beneficiary acknowledges that the election may be 
revoked by submitting a written statement to HCFA. We believe that it 
is essential that the election indicate the beneficiary's understanding 
as to how he or she can revoke the election.
     The beneficiary acknowledges that revocation of the 
election will not prevent or delay access to medical services available 
under Medicare Part A in facilities other than RNHCIs. We believe that 
it is essential that the election indicate the beneficiary's 
understanding that at no time will he or she be denied access to 
Medicare Part A services.
    (ii) The election must be signed and dated by the beneficiary or 
his or her legal representative. We believe the election for RNHCI 
services can only be made by a Medicare beneficiary or his or her legal 
representative. An election may not be made by or on behalf of an 
individual prior to reaching Medicare eligibility and beneficiary 
status. The election may not be made for an individual by a friend or 
family member who is not the legal representative of the beneficiary.
    (iii) The election must be notarized. We are requiring that 
election statements be signed by the beneficiary or his or her legal 
representative and notarized. We believe that this is necessary to 
assure the identity and relationship of the parties involved and the 
beneficiary's understanding of the content of the election statement. 
An election statement may neither be predated to seek coverage and 
payment for services furnished prior to the date of an election nor 
post-dated to meet the time limitations on making a new election 
imposed by an earlier revocation (see Sec. 403.724(b)). We believe that 
the beneficiary must be eligible to enter an election at the time the 
document is signed and notarized.
    (iv) The RNHCI must keep a copy of the election statement on file 
and submit the original to HCFA with any information obtained regarding 
prior elections or revocations. The maintenance of a double entry 
system will assure the accuracy of a beneficiary's status and 
eligibility for RNHCI services. While we require the receipt of an 
original copy of the election in order to complete the filing process, 
there is nothing that precludes the signing of multiple originals at 
the same time. The provider or the beneficiary and his or her legal 
representative may be more comfortable in having an original rather 
than a copy for future reference. Having an original of the election 
may be particularly important to beneficiaries who feel they might 
relocate at some future date and may not be readmitted to the same 
RNHCI.
    (v) The election becomes effective on the date it is signed. The 
dating of the election is required to establish a history that 
documents the beneficiary's eligibility for RNHCI services.
    (vi) The election remains in effect until revoked. Since there is 
no time limitation on the term of the election statement, it will 
remain effective until revoked by the written request of the 
beneficiary or action of the beneficiary in seeking nonexcepted medical 
care as defined in Sec. 403.702.
(b) Revocation of Election
    (i) A beneficiary's election is revoked by one of the following:
     The beneficiary receives nonexcepted medical treatment for 
which Medicare payment is requested. Under section 1821(b)(3) of the 
Act, an election by a beneficiary will be revoked if the beneficiary 
receives nonexcepted medical treatment for which Medicare payment is 
sought.
    Nonexcepted medical treatment in this rule refers to any medical 
care or treatment other than excepted medical treatment.
    Examples of nonexcepted medical care could include but are not 
limited to the following:
    + A beneficiary receiving medical diagnosis and/or treatment for 
persistent headaches and/or chest pains.
    + A beneficiary in an RNHCI who is transferring to a community 
hospital to have radiological studies and the reduction of a fracture.
    + A beneficiary with intractable back pain receiving medical, 
surgical, or chiropractic services.
     Under section 1821(b)(3) of the Act, an election by an 
individual may also be revoked voluntarily by notifying us in writing.
    (ii) The receipt of excepted medical treatment as defined in 
Sec. 403.702 does not revoke the election made by a beneficiary. 
Examples of excepted services include but are not limited to the 
following:
    + A beneficiary who receives vaccinations required by a State or 
local jurisdiction. This is compliant behavior to meet government 
requirements and not considered as voluntarily seeking medical care or 
services.
    + A beneficiary who is involved in an accident and receives medical 
attention at the accident scene, or in transport to a hospital, or at 
the hospital before being able to make their beliefs and wishes known.
    + A beneficiary who is unconscious and receives emergency care and 
is hospitalized before regaining consciousness or being able to locate 
his or her legal representative.
(c) Limitation on Subsequent Elections
    (i) If a beneficiary's election has been made and revoked twice, 
the following limitations on subsequent elections apply:
     The third election is not effective until 1 year after the 
date of the most recent revocation.
     Any succeeding elections are not effective until 5 years 
after the date of the most recent revocation.
    Section 1821(b)(4) of the Act provides limitations on subsequent 
elections. An individual may file an election and revoke it twice with 
no affect on benefits paid under Medicare Part A for services furnished 
in an RNHCI. However, once an individual's election has been made and 
revoked twice, the next (third) election may not become effective until 
the date that is one year after the date of the most recent revocation. 
Any succeeding election (fourth or later) will not become effective 
until the date that is five years after the date of the most recent 
revocation. While there are progressive waiting periods for an 
individual to file an election following the second revocation, there 
is never a waiting period for the individual to be able to receive 
covered medical services as a Medicare beneficiary.
    (ii) HCFA will not accept as the basis for payment of any claim any 
election filed on or after January 1 of the calendar year in which the 
sunset provision described in Sec. 403.756 becomes effective. Section 
1821(d) of the Act provides that if the sunset provision becomes 
effective we may not accept any more elections for RNHCI services. The 
sunset provision is discussed in detail in section III. A.9. and 
Sec. 403.756 of this rule.

[[Page 67032]]

5. Conditions of Participation
(a) Patient Rights (Sec. 403.730)
    Under section 1861(ss)(1)(J) of the Act, we may accept an RNHCI as 
a participating Medicare provider only if, in addition to meeting the 
specific requirements of that section, it meets other requirements we 
find necessary in the interest of patient health and safety.
    Patient health and safety cannot be protected simply by avoiding 
obvious risk factors such as safety hazards or inadequate staff. 
Therefore, patient rights dealing with freedom from physical, 
psychological, and verbal abuse, misappropriation of property, and 
physical restraints are examples of direct protections of patients' 
physical and emotional health and safety. Successful restoration of 
health depends on many factors related to emotional health, including a 
general feeling of well-being. We believe patient health and safety can 
be protected only if the RNHCI delivers patient care in an atmosphere 
of respect for the individual patient's comfort, dignity, and privacy. 
Therefore, we are setting forth a condition of participation that 
recognizes explicitly that the RNHCI must protect and promote certain 
patient rights.
    The patients' rights condition at Sec. 403.730 has four standards. 
The first standard requires that the RNHCI inform each patient of his 
or her rights before furnishing care. We are not prescribing a specific 
method by which a RNHCI should notify each patient of his or her 
rights, because we believe that each RNHCI should implement a policy 
that reflects its specific manner of operations and minimizes 
administrative burden. This standard also requires that a RNHCI have a 
process for prompt resolution of grievances and that it inform patients 
of this process. The process must include a specific person within the 
facility whom a patient can contact to file a grievance. In addition, 
the facility must provide patients with contact information for 
appropriate State and Federal resources.
    The remaining three standards (Exercise of rights, Privacy and 
safety, and Confidentiality of patient records) under the patient 
rights condition 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 home health agencies. Because the nature of patient care 
varies among provider types, we are including only those patient rights 
that we believe are appropriate and necessary in the religious 
nonmedical setting. We are requiring that a patient have the following 
rights:
     The right to be informed of his or her rights, to 
participate in the development and implementation of his or her plan of 
care, and to make decisions regarding his or her care.
     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, psychological, and 
physical abuse, and misappropriation of property.
     The right to confidentiality of his or her care records.
     The right to be free from the use of restraints.
     The right to be free from involuntary seclusion.
    We believe these patient rights are necessary in the interest of 
patient health and safety. We note that the rights regarding advance 
directives may seem superfluous for those patients seeking nonmedical 
care, but we believe that a patient always has the right to change his 
or her mind regarding the method of health care he or she chooses. 
Advance directives are particularly important for a patient choosing to 
rely solely upon a religious nonmedical method of healing as it makes 
his or her wishes known in the event he or she becomes incapacitated 
and unable to make health care choices.
    HCFA policy in HCFA's nursing home interpretive guidelines defines 
restraints as any manual method or physical or mechanical device, 
material, or equipment attached to or adjacent to the patient's body 
that the individual cannot remove easily that restricts freedom of 
movement or normal access to one's own body. Physical restraints 
include, but are not limited to: Using bed rails to keep a patient from 
voluntarily getting out of bed (as opposed to enhancing mobility while 
in bed); tucking in a sheet so tightly that a bed bound patient cannot 
move; using wheelchair safety bars to prevent a patient from rising 
from the chair; placing a patient in a chair that prevents rising; and 
placing a patient in a wheelchair so close to a wall that the wall 
prevents the patient from rising. Bed rails may be used either as 
restraints or to assist in mobility and transfer of a patient only. The 
use of bed rails as restraints is prohibited unless they are necessary 
to treat a patient's medical symptoms.
    Restraint use may constitute an accident hazard and professional 
standards of practice have eliminated the need for physical restraints 
except under limited medical circumstances. Potential negative outcomes 
for restraint use include incontinence, decreased range of motion, and 
decreased ability to ambulate, symptoms of withdrawal or depression, 
reduced social contact, and death. Studies have shown that bed rails as 
restraints add risk to the patient by potentially increasing the risk 
of more significant injury from a fall from a bed with raised rails 
than from a fall from a bed without bed rails. There are other, safer 
methods to reduce the risk of falls from a bed such as lowering the bed 
or putting the mattress on the floor and frequent staff monitoring. 
Therefore, if a cognizant, able patient requests bed rails to assist in 
mobility, it is not considered a restraint. If, on the other hand, a 
legal representative requests bed rails for a bed bound relative with 
no medical need for bed rails, then it is considered a restraint. The 
representative cannot give permission to use restraints, including bed 
rails for ``safety,'' if it is not necessary to treat the patient's 
medical symptoms. Restraining someone to keep him or her ``safe'' is 
limited to circumstances in which the patient has medical symptoms and 
a physician's order that warrant the use of a restraint (see nursing 
home regulations and interpretive guidelines). Since the RNHCI 
recognizes neither medical symptoms or physicians (and it is prohibited 
to do so by the Act), there is no reason that a restraint may be used 
in a RNHCI.
    HCFA has worked for many years to reduce restraint use and is very 
proud of the progress it has made in doing so. Not only would allowing 
restraints in RNHCIs be counterproductive to their mission and niche, 
but it would be utterly contrary to the standards that we have 
developed in conjunction with other stakeholders in health care that 
would permit restraints only with a medical diagnosis and medical 
orders.
(b) Quality Assessment and Performance Improvement (Sec. 403.732)
    We are requiring a participating RNHCI to implement a continuous 
effort to improve its performance, incorporating an approach that 
focuses on the RNHCI's efforts to improve patient care and 
satisfaction. Specifically, we are requiring each RNHCI to develop, 
implement, maintain and evaluate an effective quality assessment and 
performance improvement program. We are not prescribing specific 
methodologies to achieve this objective. Each RNHCI is free to pursue 
quality improvement in a manner best suited to its individual 
characteristics and resources. However, every RNHCI is responsible for 
implementing actions that result in

[[Page 67033]]

performance improvements across the full range of the RNHCI's services 
to patients. Also, we are requiring an RNHCI's quality assessment and 
performance improvement program to track performance to ensure that 
improvements are sustained over time.
    The quality assessment and performance improvement condition 
(Sec. 403.732) contains two standards, the first addressing the scope 
of the program and the second concerning the responsibility for the 
program. The first standard requires that an RNHCI's quality assessment 
and performance improvement contain the minimum items that must be in 
the RNHCI's program. Specifically, we require that the RNHCI 
objectively evaluate the following areas that we believe are critical: 
access to care, patient satisfaction, staff performance, complaints and 
grievances, discharge planning activities, and safety issues, including 
physical environment. We believe that these items comprise the 
fundamental building blocks of a well-managed RNHCI.
    Additionally, Sec. 403.732 states that for each area listed above, 
and any other areas the RNHCI includes, the RNHCI must define and 
describe quality assessment and performance improvement activities that 
are appropriate for the services furnished by or in the RNHCI.
    Because of the unique nature of the care furnished in RNHCIs, we 
are not prescribing a specific definition of quality or outlining what 
activities are appropriate to meet this standard. However, we welcome 
any comments on whether the regulations should include some prescribed 
methods and some definitions on the nature of quality in an RNHCI.
    Additionally, the RNHCI must measure, analyze, and track 
performance that the RNHCI adopts or develops that reflects processes 
of care and RNHCI operations. By ``measure'' we mean that the RNHCI 
must use an objective means of tracking performance that enables the 
RNHCI to identify differences in performance between two points in 
time. For an RNHCI to consider that it is ``doing better'' is a 
subjective statement and is not an acceptable measure. There must be 
some identifiable units of measurement that a knowledgeable person can 
distinguish as evidence of change. Not all objective measures must be 
shown as valid and reliable (that is, subjected to scientific 
development) to be usable in improvement projects, but they will at 
least identify a starting point and an ending point stated in objective 
terms that relate to the objectives and outcomes of the improvement 
projects. However, rather than mandating specific performance measures, 
we are allowing each RNHCI the flexibility to identify its own measures 
of performance for the activities it identifies as priorities in its 
quality assessment and performance improvement strategy. We are also 
requiring that the RNHCI inform the patients of the scope and 
responsibilities of the quality assessment and performance improvement 
program.
    We also are requiring in Sec. 403.732 that an RNHCI set priorities 
for performance improvement, based on the prevalence and severity of 
the identified problem(s). Lastly, this standard requires the RNHCI to 
take action to correct problems identified through its quality 
assessment and performance improvement program. We envision an RNHCI 
meeting this requirement by conducting an analysis when adverse 
outcomes are identified and then taking action to enact long-term 
correction and improvement of the identified problems.
    The second standard, Program responsibilities, requires that the 
RNHCI's governing body ensure that there is an effective quality 
assessment and performance improvement program. We are requiring that 
the governing body and administration officials be responsible for 
ensuring that the quality assessment and performance improvement 
program addresses identified priorities and be responsible for 
implementing and evaluating improvements. Additionally, the standard 
requires that all programs, departments, and functions be a part of the 
RNHCI's quality assessment and performance improvement program. This 
also includes any services carried out under contract.
(c) Food services (Sec. 403.734)
    This condition has two standards. The first standard, Sanitary 
conditions, requires that food provided to patients be obtained, 
stored, prepared, distributed and served under sanitary conditions. We 
believe that it is necessary for any acceptable food services program 
to serve food that meets these criteria. The other standard requires 
that meals be prepared which furnish adequate nutrition based on the 
recommended dietary allowances of the Food and Nutrition Board of the 
National Research Council, National Academy of Sciences. We believe 
this standard is necessary to protect the health and safety of patients 
in an RNHCI and that the Board's guidelines can appropriately be used 
here because they represent accepted practices that are in widespread 
use in other providers. We are not requiring therapeutic diets or 
parenteral nutrition as these are considered medical practices.
    Additionally, this standard requires that food furnished be 
palatable, attractive and served at the proper temperature. The RNHCI 
is also required to offer substitutes of similar nutritional value to 
patients who refuse food served or desire alternative choices. All 
meals are to be furnished at regular times comparable to normal 
mealtimes in the community and in no instance may there be more than 14 
hours between a substantial evening meal and breakfast the next day. 
Additionally, there RNHCI must offer snacks at bedtime.
(d) Discharge Planning (Sec. 403.736)
    Under this condition, we are requiring the RNHCI to implement a 
discharge planning process to assure that appropriate post-RNHCI 
services are obtained for each patient, as necessary. The discharge 
planning process will apply to services furnished by the RNHCI to 
ensure a timely and smooth transition to the most appropriate type of 
setting for the patient. To be compatible with other regulations for 
other providers, we are dividing the condition into several standards-- 
Discharge planning evaluation, Discharge plan, Transfer or referral, 
and Reassessment.
    The first standard concerns the identification of patients in need 
of evaluation. We are requiring an RNHCI to assess the need for a 
discharge plan for patients likely to suffer any adverse consequences 
if there is no planning and for other patients upon their request. The 
discharge planning process must be initiated when the patient is 
admitted to the facility. Additionally, we are requiring that discharge 
planning be initiated upon the request of the patient or a legal 
representative acting on his or her behalf. The discharge planning 
evaluation must include an assessment of the possibility of a patient 
needing services after discharge and the patient's capacity for self-
care or care in the environment from which he or she entered the RNHCI. 
We are requiring that the evaluation be completed on a timely basis and 
included in the patient's rights record, thus ensuring that appropriate 
arrangements for post-RNHCI care are made before discharge and avoiding 
unnecessary delays. We believe these requirements are necessary because 
they emphasize the need for prompt action to assess and act on the 
discharge planning needs of the patients.

[[Page 67034]]

    The second standard requires that qualified and experienced 
personnel develop the discharge plan and that the RNHCI be responsible 
for the implementation of the plan. We assume this plan to be 
thoughtful and tailored to each individual's needs. A statement such as 
``the patient was discharged to XYZ facility'' is not considered a 
discharge plan. We assume the plan would provide recommendations and 
arrangements for placement, either in the community or in the 
environment from which the patient was admitted. The RNHCI is also 
responsible for reassessing each individual's plan for factors that may 
affect the appropriateness of the plan. The patient or the legal 
representative must be informed and prepared for any post-RNHCI care. 
Additionally, the RNHCI must inform the patient or legal representative 
of his or her ability to choose among any (medical facilities or 
otherwise) participating Medicare providers that will respect the 
preferences of the patient and family.
    The third standard requires the RNHCI to transfer or refer patients 
in a timely manner to another facility (including a medical facility, 
if requested by the beneficiary or his or her legal representative), in 
accordance with Sec. 403.730(b)(2). The RNHCI must notify the patient 
of his or her rights to make decisions about care, including transfers 
and discharges, and must involve the patient in decisions about the 
transfers and discharges. Furthermore, the patient always has the 
choice to revoke his or her election for RNHCI care (in accordance with 
the revocation provisions in Sec. 403.724(b)) in order to receive care 
in a traditional medical setting. While we expect that all transfers 
and referrals will be made in a timely manner, we expect that RNHCIs 
will act as expeditiously as needed to implement transfers or referrals 
to a medical facility that are requested by a patient after the 
patient's revokes his or her election for RNHCI care.
    The last standard requires the RNHCI to reassess its discharge 
planning process on an ongoing basis. This reassessment must include 
reviewing a sampling of discharge plans and follow-up with the patient, 
if necessary, to ensure that the RNHCI was responsive to his or her 
discharge needs.
(e) Administration (Sec. 403.738)
    The first standard is the same as section 1861(ss)(1)(B) of the 
Act, which requires the RNHCI to be operated under all Federal, State, 
and local laws. The administration condition requires the RNHCI to have 
written policies regarding organization, services, and administration. 
This condition consists of three standards--Compliance with Federal, 
State, and local laws, Governing body, and Ownership and disclosure.
    In addition, we are requiring that the RNHCI meet the applicable 
provisions of other HHS regulations, including but not limited to those 
pertaining to nondiscrimination on the basis of race, color or national 
origin (45 CFR part 80); nondiscrimination on the basis of handicap (45 
CFR part 84); nondiscrimination on the basis of age (45 CFR part 91); 
protection of human subjects of research (45 CFR part 46); and fraud 
and abuse (42 CFR part 455). Although these regulations are not in 
themselves considered requirements under this part, their violation may 
result in the termination of the provider agreement or the suspension 
of, or the refusal to grant or continue, payment of Federal funds to an 
RNHCI.
    The second standard, Governing body, described in Sec. 403.738(b), 
requires that the RNHCI appoint a governing body, or a person 
designated to function as a governing body, to be responsible for 
establishing and implementing policies regarding the RNHCI's management 
and operation. We assume that the governing body will create an 
environment that ensures high quality care that is consistent with 
patient needs and the effective administration of the RNHCI.
    We want to emphasize that the governing body is responsible for the 
entire operation of the RNHCI, including contracts, arrangements, and 
the appointment of an administrator. While the governing body 
requirements may necessitate the implementation of certain processes, 
we believe they are essential to ensuring that the RNHCI with which 
HCFA has entered into a provider agreement is, in fact, able to ensure 
patient health and safety. To ensure this accountability, we have 
specified the responsibility of the governing body for establishing and 
implementing all policies regarding the RNHCI's management and 
operation. We believe the performance of these basic organizational 
functions is necessary for a patient-centered environment.
    The third standard states the provisions of sections 
1861(ss)(1)(G)(I) and 1861(ss)(4) of the Act, which permit ownership 
interests and affiliations if they meet certain criteria. Under the 
third standard, a RNHCI may not be owned by, be under common ownership 
with, or have an interest in a provider of medical treatment services. 
Additionally, the RNHCI may not be affiliated with a provider of 
medical treatment or services or affiliated with an individual who has 
an ownership interest in a provider of medical treatment or services. 
Permissible affiliations are one of the following:
     An individual serving as an uncompensated director, 
trustee, officer, employee, or other member of the governing body of 
the RNHCI, or
     An individual who is a director, trustee, officer, 
employee, or staff member of a RNHCI having a family relationship with 
an individual who is affiliated with (or has an ownership interest in) 
a provider of medical treatment or services, or
     An individual or entity furnishing goods or services as a 
vendor of medical treatment to both providers of medical treatment or 
services and RNHCIs.
    We have included the requirement that the RNHCI also comply with 
ownership disclosure requirements of Secs. 420.206 and 455.104 of 42 
CFR Chapter 4.
    In order to adequately monitor the potential for fraud and abuse in 
the program, we have added an additional requirement that the RNHCI 
also furnish written notice to HCFA if a change occurs in any of the 
following:
     Persons with ownership or controlling interest.
     The officers, directors, agents or managing employees.
     The religious entity, corporation, association, or other 
company responsible for the management of the RNHCI.
     The administrator or director of nonmedical nursing 
services.
(f) Staffing (Sec. 403.740)
    Under the condition for staffing we are requiring the RNHCI to have 
qualified experienced personnel present in sufficient numbers to meet 
the specific needs of the patients. The overall goal of this condition 
is to ensure that all the RNHCI's areas, not just those directly 
involved with patient care, are staffed with sufficient, qualified 
personnel. We believe an efficient and well-run institution is the 
product of all staffing areas working to improve the overall quality of 
the facility.
    This condition is composed of three standards which support the 
objective that the RNHCI be staffed with qualified personnel. The first 
of these standards, Personnel qualifications, concerns qualifications 
of those individuals who furnish care to patients. We want to emphasize 
that the standard applies to all such individuals, whether or not they 
are employed or compensated by the RNHCI or, if they are compensated,

[[Page 67035]]

whether salaried or contractors. This standard reflects our view that 
the conditions of participation for RNHCIs should not prescribe 
specific Federal personnel requirements for nonmedical personnel or 
attempt to limit or specify the functions they may perform.
    The next standard, Education, training, and performance evaluation, 
is intended to ensure that the RNHCI staff are aware of their job 
responsibilities and are capable of meeting them. We are requiring that 
personnel receive education or training needed to help them achieve 
this goal. This education may include training that is related to the 
individual job description, performance expectations, applicable 
organizational policies and procedures, and safety responsibilities. We 
are emphasizing that under this standard, the RNHCI is responsible only 
for ensuring that the individual adequately knows the nature of his or 
her specific job duties. The individual is responsible for his or her 
own basic education, and for any continuing education needed to retain 
specific certification(s), unless the RNHCI chooses to assume this 
responsibility as part of the staff development process.
    The second part of this standard requires all personnel in the 
RNHCI, as well as contractors and individuals working under 
arrangement, to demonstrate in practice the skills and techniques 
necessary to perform their assigned duties and responsibilities. It is 
not enough that the RNHCI demonstrates that staff has received 
training, or indicate how much training has been offered or provided. 
For effective health and safety of the patients, it is critical that 
all staff use the skills and techniques necessary to do their jobs 
correctly.
    Lastly, this standard requires the RNHCI to evaluate the 
performance of the staff and implement measures for improvement as 
needed. We assume that all staff, whether directly or indirectly 
involved in patient care, will perform their duties competently and 
efficiently and it is the RNHCI's responsibility to ensure that the 
staff meet these expectations on an ongoing basis.
(g) Physical Environment (Sec. 403.742)
    As with other providers, we expect an RNHCI to maintain a physical 
environment that ensures the safety of the patients, staff, and the 
public. We developed the physical environment standards based upon our 
experiences with other providers participating in the Medicare or 
Medicaid program. Section 403.742 consists of two standards, Buildings 
and Patient rooms. We have set forth requirements that we believe are 
fundamental to effective management of an RNHCI's physical environment.
    The first standard, Buildings, requires that the condition of the 
physical plant and the overall environment be developed and maintained 
so that the safety and well-being of the patients are ensured. These 
requirements state that there must be emergency power for emergency 
lights and for fire detection, alarm, and extinguishing systems; 
procedures for proper storage and disposal of trash; proper 
ventilation, light, and temperature control throughout the RNHCI; a 
written disaster plan to address loss of power, water, and sewage; 
facilities for emergency gas and water supply; an effective pest 
control program; a preventive maintenance program for essential 
equipment; and a working call system for patients to summon aid or 
assistance.
    The second standard, Patient rooms, requires that all patient rooms 
be designed and equipped for the adequate care, comfort and privacy of 
the patient. We have designated that each room accommodate no more than 
four patients and measure at least 80 square feet per patient if a 
multiple patient room, and 100 square feet per patient for a single 
patient room. We may permit variances in the standards relating to room 
size on a case-by-case basis if these variances are intended for the 
special needs of the patients and will not adversely affect the 
patients' health or safety. Additionally, each room must have direct 
access to an exit corridor, have at least one window to the outside, 
and have a floor at or above grade level. Each room must be designed or 
equipped to ensure full visual privacy for each patient.
    The rest of the patient rooms standard concerns what furnishings 
the RNHCI must provide each patient. The RNHCI is responsible for 
furnishing a separate bed of the proper size and height outfitted with 
a clean, comfortable mattress and bedding appropriate for the weather 
and climate. Functional furniture appropriate for the patient's needs 
must also be provided including individual closet space with clothes 
racks and shelves that are accessible to the patient.
(h) Life Safety From Fire (Sec. 403.744)
    The Life Safety Code, developed by the National Fire Protection 
Association, serves as the basis for many Federal, State, and local 
fire safety regulations. The Life Safety Code is a nationally 
recognized standard that includes fire protection requirements 
necessary to protect patients in health care facilities. The Life 
Safety Code covers construction, fire protection, and occupancy 
features needed to reduce danger to life from fire, smoke and fumes. 
The code is applied to both new and existing buildings. The National 
Fire Protection Association revises the code periodically to reflect 
advancements in fire protection.
    Under the condition we are requiring that an RNHCI comply with the 
1997 edition of the Life Safety Code that we have incorporated by 
reference. We are adopting the 1997 edition of the code because we 
believe that it provides the highest available level of protection for 
patients, staff and the public. The regulations also provide that we 
may waive specific provisions of the code that would result in 
unreasonable hardship upon an RNHCI, if the waiver does not adversely 
affect patient health and safety. Additionally, the regulations permit 
an RNHCI to meet a fire and safety code imposed by State law if HCFA 
finds that the State imposed code adequately protects patients.
    The balance of the condition requires that an RNHCI have written 
fire control plans that contain provisions for prompt reporting of 
fires; protection of patients, staff and the public; evacuation; and 
cooperation with the fire fighting authorities. Other written evidence 
must be maintained by the RNHCI that documents the regular inspection 
and approval by the State or local fire agency.
(i) Utilization Review (Sec. 403.746)
    Section 1861(ss)(1)(H) of the Act requires an RNHCI to have in 
effect a utilization review plan. Each RNHCI must have in effect its 
own utilization review plan, including the establishment of a 
utilization review committee to carry out the functions of the program.
    Under the first standard, we are requiring that the UR plan contain 
written procedures for evaluating admissions, the duration of care, the 
need for extended care, and the items and services furnished by the 
RNHCI.
    The second standard provides for the establishment of a UR 
committee which will be responsible for all functions of the UR 
program. We expect the utilization review committee to be responsible 
for evaluating each admission to the facility to ensure that the 
admission is necessary and appropriate. We are requiring that the 
committee consist of the governing body, the administrator or other 
individual responsible for the administration of the RNHCI, the nursing 
supervisor, and other staff as

[[Page 67036]]

appropriate. The committee will evaluate the estimated duration of care 
and, in the event of an extended stay, review the necessity and 
appropriateness of the continued stay. We assume that the committee 
will establish criteria and select norms to be used in determining the 
necessity of admissions, extended stays and other services offered by 
or in the facility as well as an ongoing review of these items. If the 
committee cannot establish necessity or appropriateness of care, we 
assume that the RNHCI will recommend that the patient's admission, 
extended stay, or other services not be approved for payment.
    Unlike other providers participating in the Medicare and Medicaid 
programs, RNHCIs do not offer any medical treatments or procedures, 
conventional or otherwise. Therefore, we do not believe it is 
appropriate to prescribe a specific method or form for the utilization 
review plan. While we have initially decided that allowing flexibility 
for each RNHCI in the process of development and implementation of a 
utilization review plan in a RNHCI will aid in more efficient and 
appropriate delivery of services, we welcome comments on whether a more 
prescriptive method should be required.
6. Estimate of Expenditures and Adjustments (Sec. 403.750)
    Section 1821(c)(1) of the Act requires us to estimate the level of 
Medicare expenditures for RNHCI benefits before the beginning of each 
federal fiscal year (FFY) starting in FFY 2000. In addition, beginning 
with FFY 1999, section 1821(c)(3) of the Act requires us to monitor the 
expenditure level for RNHCI services provided in each FFY.
    The estimation of expenditure levels is necessary to determine if 
adjustments are required to limit payments to RNHCIs in the following 
FFY. In addition, the estimate is used to determine if the sunset 
provision is implemented.
    The estimation of expenditures will take into consideration factors 
that could impact on this budget projection. These factors include, but 
are not limited, to projection of new facilities, the number of 
beneficiaries making elections under this provision, trends in 
discharges, length of stays, inflation, and other events that could 
affect future expenditures. As required by section 1861(e) of the Act, 
we will issue an annual Report to Congress, reviewed by OMB, as the 
vehicle for reporting potential need to make adjustments in payments 
and proposed mechanisms to be employed in order to stay within the 
established expenditure trigger level.
    The first objective of the yearly estimate is to determine if 
payment adjustments are required during the FFY to prevent the level of 
estimated expenditures from exceeding the ``trigger level.'' The 
trigger level is defined in section 1821(c)(2)(C) of the Act as the 
``unadjusted trigger level'' for an FFY increased or decreased by the 
carry forward from the previous FFY. Section 1821(c)(2)(C)(ii)(I) of 
the Act establishes the unadjusted trigger level at $20,000,000 for FFY 
1998, which is also the trigger level for that year. To calculate each 
succeeding unadjusted trigger level for an FFY, it is necessary to 
adjust the unadjusted trigger level from the prior year by the average 
percentage increase in the consumer price index for the 12-month period 
ending with July preceding the beginning of the next FFY. To calculate 
the trigger level for the current FFY, the unadjusted trigger level 
(after being modified by the consumer price index for the current year) 
is either increased or decreased by the carry forward from the previous 
FFY; that is, by the amount by which expenditures for RNHCI services 
either exceeded or fell short of the trigger level for that previous 
FFY.
    We believe that adhering to the terminology that appears in the 
statute to explain the calculation of the trigger level might be 
confusing because it requires an unadjusted trigger level to be 
adjusted twice, once by the consumer price index and once by the carry 
forward. Therefore, to help clarify our explanation of the calculation 
of the trigger level, we use a new term to identify the unadjusted 
trigger level from the prior FFY. The new term, ``base year amount,'' 
is the unadjusted trigger level from the previous FFY. To calculate the 
unadjusted trigger level for the current FFY, the base year amount is 
adjusted by the average consumer price index. This unadjusted trigger 
level is then increased or decreased by the carry forward to compute 
the trigger level for the current FFY.
    To help explain the statutory provision, we have prepared the 
following example.
    Example (1). Trigger Level Calculation. This example shows the 
calculation of the trigger level starting with FFY 1998. For FFY 1998, 
the unadjusted trigger level and the trigger level are the same. The 
initial unadjusted trigger level is established in the statute at 
$20,000,000 for FFY 1998. For FFY 1999, the base year amount is the 
unadjusted trigger level from the prior year, $20,000,000. The 
unadjusted trigger level for 1999 is $20,700,000, which is the base 
year amount ($20,000,000) increased by the multiplication of the base 
year amount by the consumer price index of 3.5 percent ($20,000,000 
times .035 = $700,000). For FFY 1999 the trigger level equals the 
unadjusted trigger level since there is no carry forward. For FFY 2000, 
the base year amount is $20,700,000, which is the unadjusted trigger 
level from the prior year.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Unadjusted
                            Fiscal year                              Base year      CPI        trigger       Trigger     Actual outlays   Carry forward
                                                                       amount                   Level         level
--------------------------------------------------------------------------------------------------------------------------------------------------------
Column                                                                        1          2             3             4               5*                6
1998..............................................................         $-0-        N/A   $20,000,000   $20,000,000     Not Required            $-0 -
1999..............................................................   20,000,000       3.5%    20,700,000    20,700,000       $8,500,000       12,200,000
2000..............................................................   20,700,000       3.5%    21,424,500    33,624,500       16,000,000       17,624,500
2001..............................................................   21,424,500       3.5%    22,174,358    39,798,858       20,000,000       19,798,858
2002..............................................................   22,174,358       3.5%    22,950,460    42,749,318       30,000,000       12,749,318
2003..............................................................   22,950,460       3.5%    23,753,726    36,503,044       40,000,000      (3,496,956)
2004..............................................................   23,753,726       3.5%    24,585,107    21,088,151     25,000,000**      (3,911,849)
2005..............................................................   24,585,107       3.5%    25,445,585    21,533,736     25,000,000**      (3,466,264)
2006..............................................................   25,445,585       3.5%    26,336,180    22,869,916     25,000,000**      (2,130,084)
2007..............................................................   26,336,180       3.5%    27,257,946    25,127,862     27,000,000**      (1,872,138)
--------------------------------------------------------------------------------------------------------------------------------------------------------

*Note: Column 5 actual outlays are for this example only and do not 
represent a projection of expenditures. These numbers were created 
solely for this example.
**Adjustments required by section 1861(c)(2) of the Act.

Calculations:

Column 1--Base Year = Prior Year Unadjusted Trigger.

[[Page 67037]]

Column 2--CPI = For simplicity, this example uses 3.5% for each 
year.
Column 3--Unadjusted Trigger = Current base year times one plus the 
result of the base year times the consumer price index.
FFY 2000--$21,424,500 = $20,700,000  x  1.035 (1+ .035).
Column 4--Trigger Level = Unadjusted triggers level for the current 
fiscal year plus or minus the carry forward from the prior year.
FFY 2000--$33,624,500 = $21,424,500 + $12,200,000.
Column 6--Carry forward = Trigger level minus actual outlays.
FFY 2000--$17,624,500 = $33,624,500 - $16,000,000.
*Note: For FFY 2004 adjustments in payments would be imposed to 
prevent estimated expenditures from exceeding the trigger level of 
$21,088,151.
    Example (2). Trigger Level Calculation--Carry Forward. This example 
calculates the trigger level when the $50 million limitation on the 
carry forward applies. For FFY 2003, the trigger level is $62,503,044 
and actual outlays were $10 million. The difference is $52,503,044, 
which is the potential carry forward to the next FFY. However, since 
this difference is greater than $50 million, the carry forward used to 
compute the trigger level for FFY 2004 is limited to $50 million. The 
trigger level for FFY 2004 is $74,585,107, which is computed by adding 
the unadjusted trigger level of $24,585,107 to the allowed carry 
forward amount of $50 million.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Unadjusted
                            Fiscal year                              Base year      CPI        trigger       Trigger     Actual outlays   Carry forward
                                                                       amount                   level         level
--------------------------------------------------------------------------------------------------------------------------------------------------------
Column                                                                        1          2             3             4               *5                6
1998..............................................................         $-0-        N/A   $20,000,000   $20,000,000     Not Required            $-0 -
1999..............................................................   20,000,000       3.5%    20,700,000    20,700,000       $8,500,000       12,200,000
2000..............................................................   20,700,000       3.5%    21,424,500    33,624,500       10,000,000       23,624,500
2001..............................................................   21,424,500       3.5%    22,174,358    45,798,858       15,000,000       30,798,858
2002..............................................................   22,174,358       3.5%    22,950,460    53,749,318       15,000,000       38,749,318
2003..............................................................   22,950,460       3.5%    23,753,726    62,503,044       10,000,000     **52,503,044
2004..............................................................   23,753,726       3.5%    24,585,107    74,584,107       15,000,000     **59,585,107
2005..............................................................   24,585,107       3.5%    25,445,585    75,445,585       20,000,000     **55,445,585
2006..............................................................   25,445,585       3.5%    26,336,180    76,336,180       35,000,000       41,336,180
2007..............................................................   26,336,180       3.5%    27,257,946    68,594,126       40,000,000       28,594,126
--------------------------------------------------------------------------------------------------------------------------------------------------------

    *Note: Column 5 actual outlays are for this example only and do 
not represent a projection of expenditures. These numbers were 
created solely for this example.
** Carry forward limited to $50 million in computing subsequent 
fiscal years trigger level.
    Section 1821 (c)(2)(A) of the Act provides for a proportional 
reduction in payments for covered RNHCI services when the level of 
estimated expenditures exceeds the trigger level for any FFY. The 
reduction is designed to prevent the level of estimated expenditures 
from exceeding the trigger level for that FFY. However, if actual 
expenditures surpass the trigger level then the trigger level for the 
next FFY is decreased by the excess expenditures. Since the excess is a 
negative carry forward adjustment, it reduces the trigger level for the 
next FFY beginning with FFY 2004, as shown in Example 1.
    In addition to a proportional reduction in payments, section 
1821(c)(2)(B) of the Act authorizes us to impose other conditions or 
limitations to keep Medicare expenditure levels below the trigger 
level. The statute provides us with authority to decide which type of 
adjustment to apply but is silent about when to apply a proportional 
adjustment or when to apply alternative adjustments. Therefore, we have 
extremely broad authority to decide what type of adjustments to impose.
    The rule at Sec. 403.750 follows the statute and provides for 
imposing either a proportional adjustment to payments or alternative 
adjustments, depending on the magnitude of the adjustment required to 
keep the level of estimated expenditures from exceeding the trigger 
level. To account for any error in the estimation of expenditure 
levels, the trigger level for the next FFY is adjusted by the carry 
forward. If expenditures were to exceed the trigger level, the trigger 
level for the subsequent year must be decreased, resulting in more 
drastic payment adjustments in future years. We will do this in an 
attempt to prevent expenditures from exceeding the trigger level for 
three consecutive years and thus avoid having to implement the sunset 
provision.
    We decided not to list the possible alternative adjustments in the 
rule. We considered establishing specific alternative adjustments in 
the regulation but believed this would not provide the flexibility 
needed to modify services and expenditures that section 1821(c)(2) of 
the Act requires in a changing environment. If, in any new FFY, the 
level of estimated expenditures were to exceed the trigger level, and 
we believe that the proportional adjustment alone would be 
inappropriate to reduce expenditures, we will consider making 
alternative adjustments including but not limited to: (1) Not 
certifying new facilities, (2) limiting Medicare payments to the number 
of patient stays from the prior year, (3) limiting the days for which 
Medicare would pay while a beneficiary was an inpatient, or (4) 
limiting the number of new elections that could be filed for RNHCI 
benefits. These alternative adjustments are only a few of the possible 
adjustments that we will consider imposing. We will consider making 
other adjustments depending on the magnitude of the adjustments 
required to prevent estimated expenditures from exceeding the trigger 
level. We will notify RNHCIs of the type or kind of adjustments that we 
will impose in a given FFY. This notification will take place before 
the start of the FFY in which the adjustments are to be effective.
7. Payment Provisions (Sec. 403.752)
(a) Payment to RNHCIs
    Sections 1861(e) and (y)(1) of the Act grant us broad authority to 
construct a payment methodology for RNHCIs. The Congressional committee 
reports which accompanied this statutory provision reflected the intent 
of the enactors that we continue to pay facilities likely to qualify 
under this benefit on an interim basis until the regulations to 
implement the statute were in place, and we have

[[Page 67038]]

done so. The only providers that could qualify as RNHCIs at the time of 
enactment were Christian Science Sanatoria, and for that reason we 
decided to continue to pay those facilities based on the methodology 
under which they had previously been paid; that is, a reasonable cost 
methodology. We have decided to continue to pay RNHCIs under a 
reasonable cost methodology to insure a smooth transition to 
prospective payment, as described below.
    We currently regulate Christian Science sanatoria under the 
regulations described in Secs. 412.90 and 412.98. These regulations 
authorize payments to these facilities under the hospital prospective 
payment system or, if the facility was excluded from the prospective 
payment system, under reasonable cost principles. This final rule will 
formally eliminate Sec. 412.90(c) and Sec. 412.98, and treat all RNHCIs 
the same for payment purposes. We considered establishing different 
payment methodologies for inpatient hospital services and post-hospital 
extended care services furnished in RNHCIs, but have decided not to do 
so. Since the nonmedical component of both inpatient hospital services 
and post-hospital extended care services furnished in RNHCIs are 
similar, and there are no differentiating medical components, we 
believe it is appropriate to have one payment methodology for both 
types of services.
    We will pay RNHCIs under the same reasonable cost methodology we 
have used for Christian Science sanatoria. Based on the historical data 
available to us, Christian Science sanatoria have had average lengths 
of stay exceeding 25 days, similar to long term care hospitals, and we 
anticipate that this pattern will continue. The Christian Science 
sanatoria have all qualified for exclusion from the hospital 
prospective payment system on this basis. We will pay RNHCIs the 
reasonable cost of furnishing covered services to Medicare 
beneficiaries subject to the rate of increase limits in accordance with 
the provisions in 42 CFR 413.40, which implement section 101 of the Tax 
Equity and Fiscal Responsibility Act of 1982 (Public Law 97-248).
    As will be the case for most types of providers after the 
implementation of BBA'97, we eventually intend to pay all RNHCIs based 
on a prospective payment methodology. We are planning to look 
specifically at the SNF, home health, and rehabilitation hospital PPS 
systems as models for payment system development. The SNF PPS is 
resource-based and driven by an assessment instrument that captures 
both resources and functional status. The home health and 
rehabilitation hospital PPS also will be resource-based and driven by 
assessment instruments and functional status. Thus, they appear to have 
the features necessary to capture the resources needed to provide 
religious nonmedical care. One key challenge is to identify a system 
whose classification mechanism can be adapted to use the information 
available in the RNHCI setting, i.e., functional status and resource 
use but not diagnosis or other medical information. At this point, we 
are not sure how that can be achieved fully in any of these settings.
    The application of a prospective payment methodology is a multi-
step process, most of which is carried out by the fiscal intermediary. 
That process would require the RNHCI to complete an assessment 
instrument, for each beneficiary/patient on admission and at designated 
intervals, excluding all identified medical elements contained in the 
instrument. The assessment instrument is primarily geared to 
identifying patient capabilities and the need for assistance with 
activities of daily living and mobility. A completed copy of the 
assessment instrument would be transmitted to the fiscal intermediary 
to be read by computer and converted to a resource/payment 
classification. This would afford an individual RNHCI the ability to 
elect not to participate in the assessment instrument process for each 
beneficiary with the understanding that it would result in the 
automatic assignment of the minimum resource classification for payment 
purposes.
    We believe a prospective payment approach would be effective in 
identifying RNHCI patient needs and appropriately paying for covered 
services to meet beneficiaries' health care needs. Details on the SNF 
prospective payment system were published in the Federal Register on 
May 12, 1998 (63 FR 26252). BBA '97 outlines the requirements for 
prospective payment systems to be developed for HHAs in section 4603 
and for inpatient rehabilitation facilities in section 4421. Details on 
the proposed HHA prospective payment system will be published in the 
Federal Register in the near future. The proposed inpatient 
rehabilitation facility prospective payment system is expected to be 
published as a proposed rule in December of this year. We solicit the 
views of interested entities regarding the development of a prospective 
payment system for RNHCIs. We will consider these views in developing a 
proposal to pay RNHCIs under a prospective payment methodology.
(b) Administrative and Judicial Review
    Under section 1821(c)(2)(D) of the Act there is no administrative 
or judicial review of our estimates of the level of expenditures for 
RNHCI services or the application of the adjustment in payments for 
those services. We are incorporating this provision into our 
regulations.
(c) Beneficiary Liability
    Under the new regulations, RNHCIs are subject to Medicare rules for 
deductibles and coinsurance. Under normal Medicare rules, a provider of 
services may only bill a beneficiary deductible and coinsurance 
amounts. However, section 1821(c)(2)(E) authorizes RNHCIs to bill 
individuals an amount equal to the reduction in payments applied under 
sections 1821(c)(2) (A) or (B) of the Act.
    Because the statute gives us authority to impose a wide variety of 
alternative reductions, and because we are not specifying those 
alternative adjustments in the rule, we also decided not to include in 
the rule a formula for the computation of the amount of the Medicare 
reduction. Establishing a set formula in regulations also would not 
provide flexibility to compute the liability of a beneficiary if there 
was a change in the way RNHCIs are paid later. Instead of limiting the 
computation to a rigid set of rules, the regulations only state that 
RNHCIs have the right to bill beneficiaries for the amount of the 
Medicare reduction.
    To inform beneficiaries of this liability, the regulations require 
RNHCIs to inform each beneficiary in writing of any proportional 
adjustment in effect at the time of their admission or any proportional 
adjustment that may become effective during the beneficiary's Medicare-
covered length of stay. At least 30 days before the Medicare reduction 
is to take effect, RNHCIs must give written notification to 
beneficiaries who are already receiving care. The notification includes 
an explanation that the law permits the RNHCI to bill beneficiaries the 
amount of the allowed Medicare reduction. When the RNHCI bills the 
beneficiary, the regulations require the RNHCI to furnish a calculation 
of the Medicare reduction.
    If we are required to reduce payments to RNHCIs for an FFY, we will 
notify RNHCIs of the amount of the required payment reduction. This 
notification will explain how RNHCIs will calculate the additional 
amount that they may bill the beneficiaries.
    Unless there is an unexpected growth in services furnished by 
RNHCIs, we do

[[Page 67039]]

not anticipate the need to reduce payments in the near future. However, 
we are using example 3 in section L below to show the potential effects 
on the financial liability of a Medicare beneficiary. This example 
assumes a proportional payment reduction of 12 percent to prevent the 
level of estimated expenditures from exceeding the trigger level. 
Because payments are required to be reduced by 12 percent (in this 
example), the statute permits RNHCIs to bill beneficiaries the amount 
of the Medicare reduction. To calculate the additional amount billable 
to the beneficiary in this example we would instruct RNHCIs to use the 
cost per diem from their most recently filed Medicare cost report 
multiplied by the number of days included in the individual's Medicare 
covered length of stay. This cost per discharge would then be reduced 
by any coinsurance and deductible amounts billable to the individual 
and any amounts billable to a third party payer. This net amount would 
be multiplied by the proportional adjustment required for the FFY. The 
result is the Medicare reduction amount that the RNHCI may bill the 
beneficiary. If, in this example, the cost of furnishing a covered 
inpatient service was $5,000 (25 days times $200 per day), the RNHCIs 
could bill the individual an additional $508 ($5,000--$764  x  12%). 
The $508 was computed by subtracting from the cost of the stay ($5,000) 
a deductible of $764 and any coinsurance amount ($0 in this example) 
times the proportional adjustment to payment of 12%. The RNHCI could 
bill the individual $1,272, which consists of the deductible of $764 
and the amount of the Medicare reduction attributable to the 
beneficiary, $508.
8. Monitoring Expenditure Level (Sec. 403.754)
    Section 1821(c)(3)(A) of the Act requires us to monitor the 
expenditure level of RNHCIs beginning with FFY 1999. The regulation 
follows the requirements of the statute and requires us to track actual 
Medicare expenditures for services furnished in RNHCIs. The purpose of 
monitoring Medicare expenditure levels is to calculate the carry 
forward adjustment to the trigger level required by Sec. 403.750(d).
    The carry forward adjustment is defined in section 1821(c)(3)(B)(I) 
of the Act and is the difference between actual expenditures and the 
trigger level for the prior FFY. When the level of Medicare 
expenditures for an FFY exceeds or is less than the trigger level for 
that FFY, then the trigger level for the next FFY will be reduced or 
increased by the amount of the excess or deficit in expenditures. 
However, the carry forward may not exceed $50 million for any FFY, in 
accordance with section 1861(c)(3)(B)(ii) of the Act.
9. Sunset Provision (Sec. 403.756)
    Section 1821(d) of the Act contains the RNHCI sunset provision. 
This provision, when activated, will prevent beneficiaries from making 
elections to receive Medicare payment for religious nonmedical health 
care services after a certain date. The sunset provision will be 
activated when the level of estimated expenditures exceeds the trigger 
level for three consecutive FFYs, beginning in FFY 2002. Under the 
sunset provision, only those individuals with a valid election in 
effect before January 1 following the end of the third consecutive FFY 
in which expenditures exceed the trigger level can have benefits paid 
under part 403, subpart G. After that date, we will not accept any 
elections to pay for services furnished in RNHCIs. The earliest the 
sunset provision could become effective is January 1, 2005. Under this 
scenario, only Medicare beneficiaries with a valid election in effect 
before January 1, 2005, could have religious nonmedical health care 
benefits paid by Medicare, and payment could be made only for RNHCI 
services provided during those elections.
    We will publish a notice in the Federal Register at least 60 days 
before the effective date of the sunset provision to alert the public 
that no elections will be accepted for services in an RNHCI.
    The following example shows when adjustments are made and when the 
sunset provision is activated.
    Example (3). This example compares the trigger level to the level 
of estimated expenditures to determine if adjustment in payments or 
alternative adjustments are required. In addition, it tracks the 
trigger level and the level of estimated expenditures to determine if 
the sunset provision is activated. For the sunset provision to become 
effective, estimated expenditures must exceed the trigger level for 
three consecutive FFYs. In FFY 2001, this example presumes that 
estimated expenditures for Medicare would exceed the trigger level. To 
prevent estimated expenditures from exceeding the trigger level, we 
would need to adjust payments to RNHCIs in the next FFY. This example 
also assumes that estimated expenditures starting in FFY 2003 will 
exceed the trigger level for three consecutive FFYs. In this 
circumstance, the sunset provision would be activated, and, therefore, 
no elections would be accepted after December 31, 2005. Individuals 
with elections in effect on or before December 31, 2005, would continue 
to have benefits paid under this provision for services provided for 
the duration of those elections.

--------------------------------------------------------------------------------------------------------------------------------------------------------
             Fiscal Year                  Trigger Level              Estimated Expenditures                         Adjustments in Payments
--------------------------------------------------------------------------------------------------------------------------------------------------------
Column                                                 1   2                                           3
1998.................................         20,000,000
1999.................................         20,700,000
2000.................................         33,624,500   20,000,000                                  NONE REQUIRED.
2001.................................         39,798,858   45,000,000                                  REDUCE PAYMENTS.
2002.................................         42,749,318   40,000,000                                  NONE REQUIRED.
2003.................................         36,503,044   45,000,000 (1 yr.)                          REDUCE PAYMENTS.
2004.................................         21,088,151   30,000,000 (2 yr.)                          REDUCE PAYMENTS.
2005.................................         21,533,736   25,000,000 (3 yr.)                          REDUCE PAYMENTS.
2006.................................         22,869,916   28,000,000                                  REDUCE PAYMENTS.
--------------------------------------------------------------------------------------------------------------------------------------------------------

Note: Expenditures in this table are an example only and do not 
represent projection of expenditures. These numbers were created 
solely for this example.

B. Medicaid Provisions (Sec. 440.170)

    Services in RNHCIs are optional Medicaid services that a State may 
elect to include in its title XIX State plan in accordance with section 
1905(a)(22) of the Act. This section permits the inclusion of any other 
medical care and any other type of remedial care and any other type of 
remedial care recognized under State law, specified by HCFA. Federal 
financial participation is only

[[Page 67040]]

available to a State for these services if they are included in the 
State Plan.
    Prior to passage of the Balanced Budget Act of 1997, the Medicaid 
program reimbursed for services provided in Christian Science 
sanitoria, or by Christian Science nurses. The Social Security Act 
exempted Christian Science sanitoria from the requirements of section 
1902(a)(9)(A)(State responsibility for establishing and maintaining 
health standards for private or public institutions in which recipients 
of Medicaid may receive care or services), 1902(a)(31)(requirements for 
plans of care, on-site inspections and evaluations of care by 
professional, independent review teams and subsequent reporting to the 
State agency by these teams concerning patients receiving care in 
intermediate care facilities for the mentally retarded) and 1902(a)(33) 
of the Act (condition of participation reviews). The statute also 
exempted Christian Science sanitoria from the utilization review 
requirements of section 1903(I)(4) of the Act and from the requirements 
applicable to the licensing of nursing home administrators specified in 
section 1908(e)(1) of the Act.
    The Balanced Budget Act amended these sections of the statute to 
delete the references to Christian Science sanitoria and to substitute 
references to RNHCIs, as defined in section 1861(ss)(1) of the Act. We 
are incorporating these revisions into the regulations. Consequently, 
there is no longer authority for inclusion of Christian Science 
sanitoria as a coverage category in Medicaid regulations. Section 
4454(b) of the BBA'97 now provides for coverage of a religious 
nonmedical health care institution as defined in section 1861(ss)(1) of 
the Act. Specific ownership and affiliation requirements related to 
RNHCIs are described in section 1861(ss)(4). We are therefore removing 
Sec. 440.170(c), Services in Christian Science sanitoriums. 
Additionally, a RNHCI as defined in section 1861(ss)(1) of the Act 
furnishes exclusively inpatient services. Consequently, we are removing 
Sec. 440.170(b), Services of Christian Science nurses, since it deals 
with care in the home setting. These sections are being replaced with a 
new Sec. 440.170(b), which defines a RNHCI for Medicaid coverage 
purposes as one which meets the requirements of section 1861(ss)(1) of 
the Act, and a new Sec. 440.170(c), which describes the specific 
ownership and affiliation requirements applicable to Medicaid RNHCIs.
    In order to be eligible to bill the Medicaid program, we are 
requiring that a RNHCI meet the Medicare conditions of participation 
described in part 403 of this rule. Section 4454(b) of the BBA'97 
provides for Medicaid coverage of RNHCIs as defined in section 
1861(ss)(1). Section 1861(ss)(1)(J) requires that a RNHCI meet such 
other requirements as the Secretary finds necessary in the interest of 
the health and safety of individuals who are furnished services in the 
institution. This statutory requirement is implemented for the Medicare 
program by the conditions of participation, which set quality and 
safety standards for RNHCIs. We believe that Congress' intent in 
incorporating section 1861(ss)(1)(J) in the Medicaid definition of a 
RNHCI was to ensure the inclusion of similar health and safety 
requirements in the Medicaid regulations. Based on our experience with 
Christian Science sanitoria, we expect that the majority of RNHCIs 
which will serve Medicaid beneficiaries will also serve Medicare 
beneficiaries.
    Therefore, rather than developing separate Medicaid requirements, 
we are specifying that RNHCIs must meet the Medicare conditions of 
participation in order to receive Medicaid reimbursement.

C. Part 488 Survey, Certification and Enforcement Procedures

    Section 1861(ss)(2) provides that we may accept the accreditation 
of an approved group that RNHCIs meet or exceed some or all of the 
applicable Medicare requirements. Therefore, we are amending the 
regulations at Sec. 488.2 to add section 1861(ss)(2) as the statutory 
basis for accreditation of RNHCIs and Sec. 488.6 to add the RNHCIs to 
the list of providers in this section.

D. Part 489--Provider Agreements and Supplier Approval

Technical Change

    Section 4641 of the Balanced Budget Act of 1997 requires that 
the patient's advance directive be placed in a ``prominent part'' of 
his or her medical record. Therefore, we are adding ``prominent 
part'' to Sec. 489.102(a)(2) to reflect this requirement; that is, 
providers are required to ``Document in a prominent part of the 
individual's current medical record * * * an advance directive.''

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), agencies are 
required to provide a 60-day notice in the Federal Register and solicit 
public comment before a collection of information requirement is 
submitted to the 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 PRA 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.
    We are, however, requesting an emergency review of this interim 
final rule with comment period. In compliance with section 
3506(c)(2)(A) of the PRA, we are submitting to OMB the following 
requirements for emergency review. We are requesting an emergency 
review because the collection of this information is needed before the 
expiration of the normal time limits under OMB's regulations at 5 CFR 
part 1320, to ensure compliance with section 4454 of BBA'97. This 
section requires that a Medicare beneficiary (or his or her legal 
representative) who is entering, or who is already in, an RNHCI file an 
election statement 30 days after the publication of this rule in order 
to meet the requirements of the rule. We cannot reasonably comply with 
normal clearance procedures because public harm is likely to result if 
the agency cannot enforce the requirements of this section 4454 of 
BBA'97 in order to ensure that the Medicare beneficiary receives 
covered services in an RNHCI.
    HCFA is requesting OMB review and approval of this collection 11 
working days after the publication of this rule, with a 180-day 
approval period. Written comments and recommendations will be accepted 
from the public if received by the individuals designated below within 
10 working days after the publication of this rule.
    During this 180-day period, we will publish a separate Federal 
Register notice announcing the initiation of an extensive 60-day agency 
review and public comment period on these requirements. We will submit 
the requirements for OMB review and an extension of this emergency 
approval.
    We are soliciting public comment on each of the issues for the 
provisions summarized below that contain information collection 
requirements:

Section 403.724 Valid Election Requirements

    In summary, Sec. 403.724(a)(1) requires an RNHCI to utilize a 
written election statement that includes the requirements set forth in 
this section.

[[Page 67041]]

    The burden associated with this requirement is the one-time effort 
required to agree on the format for the election statement. It is 
estimated that it will take each RNHCI 2 hours to comply with these 
requirements. There are currently 19 Christian Science sanatoria 
participating in Medicare that are expected to apply as RNHCIs; thus, 
there will be a total of 38 burden hours. The burden associated with 
signing, filing and submitting the election statement is described in 
Secs. 403.724(a)(2)and(3) and 403.724(a)(4).
    In summary, Sec. 403.724(a)(2) and (3) require that an election 
must be signed and dated by the beneficiary or his or her legal 
representative and have it notarized.
    The burden associated with this requirement is the time required 
for the beneficiary or his or her legal representative to read, sign, 
and date the election statement and have it notarized. It is estimated 
that it will take each beneficiary approximately 10 minutes to read, 
sign, and date the election statement. We anticipate that the RNHCI 
will have a notary present to witness and notarize the election 
statement. There are approximately 1,000 beneficiaries that will be 
affected by this requirement for a total of 167 burden hours during the 
first year.
    Section 403.724(a)(4) requires that the RNHCI keep a copy of the 
election statement on file and submit the original to HCFA with any 
information obtained regarding prior elections or revocations.
    The burden associated with this requirement is the time required 
for an RNHCI to keep a copy of the election statement and submit the 
original to HCFA. It is estimated that it will take 5 minutes to comply 
with this requirement. During the first year there will be 
approximately 1,000 election statements for a total of 84 burden hours.
    If not revoked, an election is effective for life and does not need 
to be completed during future admissions. Section 403.724(b)(1) states 
that a beneficiary can revoke his or her election statement by the 
receipt of nonaccepted medical treatment or the beneficiary may 
voluntarily revoke the election and notify HCFA in writing. We 
anticipate that there would be very few (fewer than 10 beneficiaries) 
if any instances in which a beneficiary will notify HCFA in writing 
that he or she will revoke his or her election statement. We believe 
the above requirement is not subject to the PRA in accordance with 5 
CFR 1320.3(c)(4) since this requirement does not collect information 
from ten or more entities on an annual basis.

Section 403.730  Condition of Participation: Patient Rights

    Section 403.730(a)(1) states that the RNHCI must inform each 
patient of his or her rights in advance of furnishing patient care.
    The burden associated with this requirement is the time and effort 
necessary to disclose the notice requirements referenced above to each 
patient. We estimate that on average it will take each of the 19 
estimated RNHCIs 8 hours to develop the required notice and that it 
will take each RNHCI 5 minutes to provide each notice, with an average 
of 109 notices provided per RNHCI on an annual basis. Therefore, the 
total annual burden associated with this requirement is 173 hours after 
the first year. For the first year there will be an additional one-time 
burden of 152 hours.
    In its resolution of the grievance, a RNHCI must provide the 
patient with written notice of its decision that contains the name of 
the RNHCI contact person, the process of the facility in resolving the 
grievance, and contact information for appropriate State and Federal 
resources.
    The burden associated with this requirement is the time and effort 
necessary to disclose the written notice to each patient who filed a 
grievance. We estimate that on average it will take each RNHCI 15 
minutes to develop and disseminate the required notice. We further 
estimate that 19 RNHCIs will provide 5 notices on an annual basis, a 
total annual burden of 1.5 hours, with an additional one-time burden of 
5 hours the first year.

Section 403.736  Condition of Participation: Discharge Planning

    While the information collection requirement (ICR) summarized below 
is subject to the PRA, we believe the burden associated with this ICR 
is exempt as defined in 5 CFR 1320.3(b)(2) because the time, effort, 
and financial resources necessary to comply with the requirement would 
be incurred by persons in the normal course of their activities.
    Section 403.736(a)(1) requires that the discharge planning 
evaluation must be initiated at admission and must include the 
following: (1) An assessment of the possibility of a patient needing 
post-RNHCI services and of the availability of those services and (2) 
an assessment of the probability 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 RNHCI.
    Section 403.736(a)(3) states that the discharge planning evaluation 
must be included in the patient's rights record for use in establishing 
an appropriate discharge plan and must discuss the results of the 
evaluation with the patient or a legal representative acting on his or 
her behalf.
    Section 403.736(b)(1) states that, if the discharge planning 
evaluation indicates a need for a discharge plan, qualified and 
experienced personnel must develop or supervise the development of the 
plan.
    Section 403.736(b)(2) states that, in the absence of a finding by 
the RNHCI that the beneficiary needs a discharge plan, the beneficiary 
or his or her legal representative may request a discharge plan. In 
this case, the RNHCI must develop a discharge plan for the beneficiary.
    Section 403.736(b)(3) states that the RNHCI must arrange for the 
initial implementation of the patient's discharge plan.
    Section 403.736(b)(4) states that, if there are factors that may 
affect continuing care needs or the appropriateness of the discharge 
plan, the RNHCI must reevaluate the beneficiary's discharge plan.
    Section 403.736(b)(5) states that the RNHCI must inform the 
beneficiary or legal representative about the beneficiary's post-RNHCI 
care requirements.
    Section 403.736(b)(6) states that the discharge plan must inform 
the beneficiary or his or her legal representative about the freedom to 
choose among providers of care when a variety of providers is available 
that are willing to respect the discharge preferences of the 
beneficiary or legal representative.
    Section 403.736(c) states that the RNHCI must transfer or refer 
patients to appropriate facilities (including medical facilities if the 
beneficiary so desires) as needed for follow up or ancillary care and 
notify the patient of his or her right to participate in planning the 
transfer or referral in accordance with Sec. 403.730(a)(2).
    Section 403.736(d) states that the RNHCI 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.

Section 403.738 Condition of Participation: Administration

    While the information collection requirement (ICR) summarized below 
is subject to the PRA, we believe the

[[Page 67042]]

burden associated with this ICR is exempt as defined in 5 CFR 
1320.3(b)(2) because the time, effort, and financial resources 
necessary to comply with the requirement would be incurred by persons 
in the normal course of their activities.
    Section 403.738(a) states that an RNHCI must have written policies 
regarding its organization, services, and administration.
    While the following ICR is an information collection requirement, 
we believe the ICR is exempt from the PRA as defined in 5 CFR 
1320.3(c)(4), since it does not collect information from 10 or more 
entities on an annual basis.
    Section 403.738(c)(4) states that the RNHCI must furnish written 
notice, including the identity of each new individual or company, to 
HCFA at the time of a change, if a change occurs in any of the 
following: persons with an ownership or control interest, as defined in 
42 CFR 420.201 and 455.101; the officers, directors, agents, or 
managing employees; the religious entity, corporation, association, or 
other company responsible for the management of the RNHCI; and the 
RNHCI's administrator or director of nonmedical nursing services.

Section 403.742 Condition of Participation: Physical Environment

    While the information collection requirement (ICR) summarized below 
is subject to the PRA, we believe the burden associated with this ICR 
is exempt as defined in 5 CFR 1320.3(b)(2) because the time, effort, 
and financial resources necessary to comply with the requirement would 
be incurred by persons in the normal course of their activities.
    Section 403.742(a)(4) requires that a RNHCI have a written disaster 
plan to address loss of power, water, sewage disposal, and other 
emergencies.

Section 403.744 Condition of Participation: Life Safety From Fire

    While the information collection requirement (ICR) summarized below 
is subject to the PRA, we believe the burden associated with this ICR 
is exempt as defined in 5 CFR 1320.3(b)(2) because the time, effort, 
and financial resources necessary to comply with the requirement would 
be incurred by persons in the normal course of their activities.
    Section 403.744(a)(2) states that the RNHCI must have written fire 
control plans that contain provisions for prompt reporting of fires; 
extinguishing fires; protection of patients, staff and the public; 
evacuation; and cooperation with fire fighting authorities.
    Section 403.744(a)(3) states that the RNHCI must maintain written 
evidence of regular inspection and approval by State or local fire 
control agencies.

Section 403.746  Condition of Participation: Utilization Review

    In summary, Sec. 403.746 states that the RNHCI must have in effect 
a written utilization review plan to assess the necessity of services 
furnished. The plan must provide that records be maintained of all 
meetings, decisions, and actions by the utilization review committee. 
The utilization review plan must contain written procedures for 
evaluating the following: admissions, the duration of care, continuing 
care of an extended duration, and items and services furnished.
    Drafting a utilization review plan will take each current RNHCI 3 
hours, for a total one time burden of 57 hours. Though we have received 
no inquiries from any entity about becoming a RNHCI, for purposes of 
this paperwork collection requirement, we estimate that there will be 
one additional RNHCI each year, which will create a 3 hour burden 
annually.

Section 403.752  Payment Provisions

    The following section describes the burden associated with the 
payment provisions and is subject to the PRA.
    Based on the most recent data available, Medicare expenditures for 
Christian Science sanatoria were approximately $8 million annually. The 
trigger level for FFY 1998, the first year of RNHCI implementation, is 
$20 million. Beginning in FFY 2000, when estimated expenditures for 
RNHCI services exceed the trigger level for a FFY, HCFA must adjust the 
RNHCI payment rates.
    However, because of the amount of the gap between current 
expenditures and the trigger level, and because we do not anticipate 
that the number of RNHCIs will increase significantly, we do not 
anticipate having to adjust the payment rates for a minimum of 3 years. 
Thus, the section will not be implemented and there will be no 
paperwork burden associated with it for several years. Therefore, there 
is no burden associated with the following section at this time.
    Section 403.752(d)(I) states that the RNHCI must notify the 
beneficiary in writing at the time of admission of any proposed or 
current proportional Medicare adjustment. A beneficiary currently 
receiving care in the RNHCI must be notified in writing 30 days before 
the Medicare reduction is to take effect. The notification must inform 
the beneficiary that the RNHCI can bill him or her for the proportional 
Medicare adjustment.
    Section 403.752(d)(ii) states that the RNHCI must, at time of 
billing, provide the beneficiary with his or her liability for payment, 
based on a calculation of the Medicare reduction pertaining to the 
beneficiary's covered services permitted by Sec. 403.750(b).

Section 440.170  General Provisions--Medicaid

    We believe the following paperwork burden is not subject to the 
Act, as defined by 5 CFR 1320.4(a)(2), since the collection action is 
conducted during an investigation or audit against specific individuals 
or entities.
    Section 440.170(b)(9) states that an RNHCI must provide information 
HCFA may require, upon request, to implement section 1821 of the Act, 
including information relating to quality of care coverage and 
determinations.

Section 489.102  Requirements for Providers

    The ICR in the following section, except for its application to 
RNHCIs, has been approved under OMB approval number 0938-0610.
    In summary, Sec. 489.102(a) requires that hospitals, critical 
access hospitals, skilled nursing facilities, home health agencies, 
providers of home health care (and for Medicaid purposes, providers of 
personal care services), hospices, and religious nonmedical health care 
institutions document and maintain written policies and procedures 
concerning advance directives with respect to all adult individuals 
receiving medical care.
    For the current approval, we stated that it will take each facility 
3 minutes to document a beneficiary's record whether he or she has 
implemented an advance directive. We anticipate that it will also take 
each RNHCI 3 minutes per patient to comply with this requirement, for a 
total of 104 burden hours on an annual basis. In addition, there will 
be a one-time burden of 8 hours per RNHCI to maintain written policies 
and procedures concerning advance directives, for a total of 152 hours.
    We will submit a revision to OMB Approval Number 0938-610 to 
reflect the addition of RNHCIs to the paperwork burden.
    We have submitted a copy of this rule to OMB for its review of the 
ICRs. These requirements are not effective until they have been 
approved by OMB. A notice will be published in the Federal Register 
when approval is obtained.
    If you comment on any of these information collection and record

[[Page 67043]]

keeping requirements, 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, Attn: 
Julie Brown HCFA-1909-IFC, Fax number: (410) 786-0262 and,
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10235, New Executive Office Building, Washington, DC 
20503.

V. Regulatory Impact Analysis

    We have examined the impacts of this rule as required by Executive 
Order 12866 and the Regulatory Flexibility Act (RFA) (Public Law 96-
354). Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if 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).
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations and government 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. Individuals and States are not included in the definition of 
a small entity.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis 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.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing 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.
    In accordance with the provisions of Executive Order 13132, this 
regulation will not significantly affect the States beyond what is 
required by basic State Plans for Medicaid. It follows the intent and 
letter of the law and does not usurp State authority beyond the basic 
Medicaid requirements. This regulation describes only processes that 
must be undertaken if a State exercises its option to amend the State 
plan to include coverage of inpatient religious nonmedical health care 
institutions (RNHCIs) as set forth in section 4454 of the BBA'97.
    Those States that have RNHCI facilities and have selected to offer 
the optional RNHCI service are very limited. At the moment we only have 
18 facilities participating in Medicare and four in Medicaid. The 
monitoring of the program is conducted by staff in the Boston Regional 
Office (Region I) and they will be responsible for the survey and 
certification activity that is usually conducted by the State Agency.
    Section 4454 of the BBA'97 amended the Act to remove the 
authorization for payment for services furnished in Christian Science 
sanatoria from both Medicare and Medicaid law. Section 4454 authorizes 
payment for inpatient services in a RNHCI for beneficiaries who, for 
religious reasons, are conscientiously opposed to the acceptance of 
medical care. Section 4454 of BBA'97 provides for coverage of the 
nonmedical aspects of inpatient care services in RNHCIs under Medicare 
and as a State option under Medicaid. In order for a provider to 
satisfy the definition of a religious nonmedical health care 
institution, for both Medicare and Medicaid, it must satisfy the ten 
qualifying provisions contained in new section 1861(ss)(1) of the Act. 
The RNHCI choosing to participate in Medicare must also be in 
compliance with both the conditions for coverage and the conditions of 
participation contained in the new regulation. Neither Medicare nor 
Medicaid will pay for any religious aspects of care provided in these 
facilities. HCFA has used one fiscal intermediary to handle all 
Christian Science sanatoria and the Boston Regional Office to monitor 
the process, and we plan to continue that arrangement for RNHCIs.
    Currently, there are 19 Christian Science sanatoria that are 
furnishing services and receiving payment under Medicare. Three of 
these facilities are dually eligible to participate in Medicare and 
Medicaid, and there are two that only participate in Medicaid. Medicare 
expenditure levels for Christian Science sanatoria has been 
approximately $8 million annually.
    We anticipate that most if not all existing Christian Science 
sanatoria will be certified as RNHCIs but do not know how many other 
facilities will be eligible to apply for participation. Therefore, we 
cannot project the impact this regulation will have on payments or the 
number of organizations that will elect to furnish services to what we 
believe is a very small beneficiary population.
    Section 4454 of BBA'97 establishes certain controls on the amount 
of expenditures for RNHCI services in a given FFY. Section 
1821(c)(2)(C) explains the operation of these controls through the use 
of a trigger level. The trigger level for FFY 1998 is $20 million. 
Thereafter, this amount is increased each FFY by the average consumer 
price index. This amount is further increased or decreased by a carry 
forward amount, which is the difference between the previous FFY's 
expenditures and the previous FFY's trigger level.
    The trigger level is used to determine if Medicare payments for the 
current FFY need to be adjusted. Beginning with fiscal year 2000, if 
the estimated level of expenditures for a FFY exceeds the trigger level 
for that FFY, we are required by law to make a proportional adjustment 
to payments or alternative adjustments to prevent expenditures from 
exceeding the trigger level.
    BBA'97 precludes administrative or judicial review of adjustments 
that we determine are necessary to control expenditures. The trigger 
level is also used to activate the sunset provision, which prohibits us 
from accepting any new elections when estimated expenditures exceed the 
trigger level for three consecutive fiscal years.
    Since the Congress has established controls over the amount of 
money that can be spent for RNHCI services and because Christian 
Science sanatoria that qualify as RNHCIs will continue to be paid on a 
reasonable cost basis, there should be no adverse impact on 
beneficiaries or on existing facilities within the next five years 
unless there is a dramatic increase in the number of RNHCIs and their 
Medicare/Medicaid patients.
    For these reasons, we are not preparing analyses for either the RFA 
or section 1102(b) of the Act. We have determined, and we certify, that 
this rule will not have a significant economic impact on a substantial 
number of small entities or a significant impact on the operations of a 
substantial number of small rural hospitals.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

[[Page 67044]]

IV. Regulatory Impact Statement

    Consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 
through 612), we prepare a regulatory flexibility analysis unless we 
certify that a rule will not have a significant economic impact on a 
substantial number of small entities. For purposes of the RFA, all 
health care providers are considered to be small entities. Individuals 
and States are not included in the definition of a small entity.
    Section 1102(b) of the Act requires us to prepare a regulatory 
impact analysis 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.
    Section 4454 of the BBA'97 amended the Act to remove the 
authorization for payment for services furnished in Christian Science 
sanatoria from both Medicare and Medicaid law. Section 4454 authorizes 
payment for inpatient services in a RNHCI for beneficiaries who, for 
religious reasons, are conscientiously opposed to the acceptance of 
medical care. Section 4454 of BBA'97 provides for coverage of the 
nonmedical aspects of inpatient care services in RNHCIs under Medicare 
and as a State option under Medicaid. In order for a provider to 
satisfy the definition of a religious nonmedical health care 
institution, for both Medicare and Medicaid, it must satisfy the ten 
qualifying provisions contained in new section 1861(ss)(1) of the Act. 
The RNHCI choosing to participate in Medicare must also be in 
compliance with both the conditions for coverage and the conditions of 
participation contained in the new regulation. Neither Medicare nor 
Medicaid will pay for any religious aspects of care provided in these 
facilities. HCFA has used one fiscal intermediary to handle all 
Christian Science sanatoria and the Boston Regional Office to monitor 
the process, and we plan to continue that arrangement for RNHCIs.
    Currently, there are 19 Christian Science sanatoria that are 
furnishing services and receiving payment under Medicare. Three of 
these facilities are dually eligible to participate in Medicare and 
Medicaid, and there are two that only participate in Medicaid. Medicare 
expenditure levels for Christian Science sanatoria has been 
approximately $8 million annually.
    We anticipate that most if not all existing Christian Science 
sanatoria will be certified as RNHCIs but do not know how many other 
facilities will be eligible to apply for participation. Therefore, we 
cannot project the impact this regulation will have on payments or the 
number of organizations that will elect to furnish services to what we 
believe is a very small beneficiary population.
    Section 4454 of BBA'97 establishes certain controls on the amount 
of expenditures for RNHCI services in a given FFY. Section 
1821(c)(2)(C) explains the operation of these controls through the use 
of a trigger level. The trigger level for FFY 1998 is $20 million. 
Thereafter, this amount is increased each FFY by the average consumer 
price index. This amount is further increased or decreased by a carry 
forward amount, which is the difference between the previous FFY's 
expenditures and the previous FFY's trigger level.
    The trigger level is used to determine if Medicare payments for the 
current FFY need to be adjusted. Beginning with fiscal year 2000, if 
the estimated level of expenditures for a FFY exceeds the trigger level 
for that FFY, we are required by law to make a proportional adjustment 
to payments or alternative adjustments to prevent expenditures from 
exceeding the trigger level.
    BBA'97 precludes administrative or judicial review of adjustments 
that we determine are necessary to control expenditures. The trigger 
level is also used to activate the sunset provision, which prohibits us 
from accepting any new elections when estimated expenditures exceed the 
trigger level for three consecutive fiscal years.
    Since the Congress has established controls over the amount of 
money that can be spent for RNHCI services and because Christian 
Science sanatoria that qualify as RNHCIs will continue to be paid on a 
reasonable cost basis, there should be no adverse impact on 
beneficiaries or on existing facilities within the next five years 
unless there is a dramatic increase in the number of RNHCIs and their 
Medicare/Medicaid patients.
    For these reasons, we are not preparing analyses for either the RFA 
or section 1102(b) of the Act because we have determined, and we 
certify, that this rule will not have a significant economic impact on 
a substantial number of small entities or a significant impact on the 
operations of a substantial number of small rural hospitals.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

V. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), agencies are 
required to provide a 60-day notice in the Federal Register and solicit 
public comment before a collection of information requirement is 
submitted to the 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 PRA 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.
    We are, however, requesting an emergency review of this interim 
final rule with comment period. In compliance with section 
3506(c)(2)(A) of the PRA, we are submitting to OMB the following 
requirements for emergency review. We are requesting an emergency 
review because the collection of this information is needed before the 
expiration of the normal time limits under OMB's regulations at 5 CFR 
part 1320, to ensure compliance with section 4454 of BBA'97. This 
section requires that a Medicare beneficiary (or his or her legal 
representative) who is entering, or who is already in, an RNHCI file an 
election statement 30 days after the publication of this rule in order 
to meet the requirements of the rule. We cannot reasonably comply with 
normal clearance procedures because public harm is likely to result if 
the agency cannot enforce the requirements of this section 4454 of 
BBA'97 in order to ensure that the Medicare beneficiary receives 
covered services in an RNHCI.
    HCFA is requesting OMB review and approval of this collection 11 
working days after the publication of this rule, with a 180-day 
approval period. Written comments and recommendations will be accepted 
from the public if received by the individuals designated below within 
10 working days after the publication of this rule.
    During this 180-day period, we will publish a separate Federal 
Register notice announcing the initiation of an extensive 60-day agency 
review and public comment period on these requirements. We will submit 
the requirements for OMB review and an extension of this emergency 
approval.

[[Page 67045]]

    We are soliciting public comment on each of the issues for the 
provisions summarized below that contain information collection 
requirements:

Section 403.724  Valid Election Requirements

    In summary, Sec. 403.724(a)(1) requires an RNHCI to utilize a 
written election statement that includes the requirements set forth in 
this section.
    The burden associated with this requirement is the one-time effort 
required to agree on the format for the election statement. It is 
estimated that it will take each RNHCI 2 hours to comply with these 
requirements. There are currently 19 Christian Science sanatoria 
participating in Medicare that are expected to apply as RNHCIs; thus, 
there will be a total of 38 burden hours. The burden associated with 
signing, filing and submitting the election statement is described in 
Secs. 403.724(a) (2) and (3) and 403.724(a)(4).
    In summary, Sec. 403.724(a)(2) and (3) require that an election 
must be signed and dated by the beneficiary or his or her legal 
representative and have it notarized.
    The burden associated with this requirement is the time required 
for the beneficiary or his or her legal representative to read, sign, 
and date the election statement and have it notarized. It is estimated 
that it will take each beneficiary approximately 10 minutes to read, 
sign, and date the election statement. We anticipate that the RNHCI 
will have a notary present to witness and notarize the election 
statement. There are approximately 1,000 beneficiaries that will be 
affected by this requirement for a total of 167 burden hours during the 
first year.
    Section 403.724(a)(4) requires that the RNHCI keep a copy of the 
election statement on file and submit the original to HCFA with any 
information obtained regarding prior elections or revocations.
    The burden associated with this requirement is the time required 
for an RNHCI to keep a copy of the election statement and submit the 
original to HCFA. It is estimated that it will take 5 minutes to comply 
with this requirement. During the first year there will be 
approximately 1,000 election statements for a total of 84 burden hours.
    If not revoked, an election is effective for life and does not need 
to be completed during future admissions. Section 403.724(b)(1) states 
that a beneficiary can revoke his or her election statement by the 
receipt of nonexcepted medical treatment or the beneficiary may 
voluntarily revoke the election and notify HCFA in writing. We 
anticipate that there would be very few (fewer than 10 beneficiaries) 
if any instances in which a beneficiary will notify HCFA in writing 
that he or she will revoke his or her election statement. We believe 
the above requirement is not subject to the PRA in accordance with 5 
CFR 1320.3(c)(4) since this requirement does not collect information 
from ten or more entities on an annual basis.
    While the information collection requirements (ICR) summarized 
below are subject to the PRA, we believe the burden associated with 
these ICRs is exempt as defined in 5 CFR 1320.3(b)(2) because the time, 
effort, and financial resources necessary to comply with these 
requirements would be incurred by persons in the normal course of their 
activities.

Section 403.730  Condition of Participation: Patient Rights

    Section 403.730(a)(1) states that the RNHCI must inform each 
patient of his or her rights in advance of furnishing patient care.

Section 403.732  Condition of participation: Quality Assessment and 
Evaluation

    In summary, Sec. 403.732 states that the RNHCI must develop, 
implement, and maintain a quality assessment and evaluation program.

Section 403.736  Condition of Participation: Discharge Planning

    Section 403.736(a)(1) requires that the discharge planning 
evaluation must be initiated at admission and must include the 
following: (1) an assessment of the possibility of a patient needing 
post-RNHCI services and of the availability of those services and (2) 
an assessment of the probability 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 RNHCI.
    Section 403.736(a)(3) states that the discharge planning evaluation 
must be included in the patient's rights record for use in establishing 
an appropriate discharge plan and must discuss the results of the 
evaluation with the patient or a legal representative acting on his or 
her behalf.
    Section 403.736(b)(1) states that, if the discharge planning 
evaluation indicates a need for a discharge plan, qualified and 
experienced personnel must develop or supervise the development of the 
plan.
    Section 403.736(b)(2) states that, in the absence of a finding by 
the RNHCI that the beneficiary needs a discharge plan, the beneficiary 
or his or her legal representative may request a discharge plan. In 
this case, the RNHCI must develop a discharge plan for the beneficiary.
    Section 403.736(b)(3) states that the RNHCI must arrange for the 
initial implementation of the patient's discharge plan.
    Section 403.736(b)(4) states that, if there are factors that may 
affect continuing care needs or the appropriateness of the discharge 
plan, the RNHCI must reevaluate the beneficiary's discharge plan.
    Section 403.736(b)(5) states that the RNHCI must inform the 
beneficiary or legal representative about the beneficiary's post-RNHCI 
care requirements.
    Section 403.736(b)(6) states that the discharge plan must inform 
the beneficiary or his or her legal representative about the freedom to 
choose among providers of care when a variety of providers is available 
that are willing to respect the discharge preferences of the 
beneficiary or legal representative.
    Section 403.736(c) states that the RNHCI must transfer or refer 
patients to appropriate facilities (including medical facilities if the 
beneficiary so desires) as needed for follow up or ancillary care and 
notify the patient of his or her right to participate in planning the 
transfer or referral in accordance with Sec. 403.730(a)(2).
    Section 403.736(d) states that the RNHCI 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.

Section 403.738  Condition of Participation: Administration

    In summary Sec. 403.738 states that an RNHCI must have written 
policies regarding its organization, services, and administration.

Section 403.742  Condition of Participation: Physical Environment

    Section 403.742(a)(4) requires that a RNHCI have a written disaster 
plan to address loss of power, water, sewage disposal, and other 
emergencies.

Section 403.744  Condition of Participation: Life Safety From Fire

    Section 403.744(a)(2) states that the RNHCI must have written fire 
control plans that contain provisions for prompt reporting of fires; 
extinguishing fires; protection of patients, staff and the public; 
evacuation; and cooperation with fire fighting authorities.
    Section 403.744(a)(3) states that the RNHCI must maintain written 
evidence

[[Page 67046]]

of regular inspection and approval by State or local fire control 
agencies.

Section 403.746  Condition of Participation: Utilization Review

    In summary, Sec. 403.746 states that the RNHCI must have in effect 
a written utilization review plan to assess the necessity of services 
furnished. The plan must provide that records be maintained of all 
meetings, decisions, and actions by the utilization review committee. 
The utilization review plan must contain written procedures for 
evaluating the following: admissions, the duration of care, continuing 
care of an extended duration, and items and services furnished.

Section 489.102  Requirements for Providers

    In summary, Sec. 489.102(a) requires that hospitals, critical 
access hospitals, skilled nursing facilities, home health agencies, 
providers of home health care (and for Medicaid purposes, providers of 
personal care services), hospices, and religious nonmedical health care 
institutions document and maintain written policies and procedures 
concerning advance directives with respect to all adult individuals 
receiving medical care.
    While the following ICR is subject to the PRA, we believe the 
burden associated with this ICR is exempt as defined in 5 CFR 
1320.3(c)(4), since it does not collect information from 10 or more 
entities on an annual basis.

Section 403.738  Condition of Participation: Administration

    Section 403.738(c)(4) states that the RNHCI must furnish written 
notice, including the identity of each new individual or company, to 
HCFA at the time of a change, if a change occurs in any of the 
following: persons with an ownership or control interest, as defined in 
42 CFR 420.201 and 455.101; the officers, directors, agents, or 
managing employees; the religious entity, corporation, association, or 
other company responsible for the management of the RNHCI; and the 
RNHCI's administrator or director of nonmedical nursing services.
    The following sections describe the burden associated with the 
payment provisions. Based on the most recent data available, Medicare 
expenditures for Christian Science sanatoria were approximately $8 
million annually. The trigger level for FFY 1998, the first year of 
RNHCI implementation, is $20 million. Beginning in FFY 2000, when 
estimated expenditures for RNHCI services exceed the trigger level for 
a FFY, HCFA must adjust the RNHCI payment rates. Therefore, the burden 
associated with the following sections is not subject to the PRA at 
this point in time.

Section 403.752  Payment provisions

    Section 403.752(d)(i) states that the RNHCI must notify the 
beneficiary in writing at the time of admission of any proposed or 
current proportional Medicare adjustment. A beneficiary currently 
receiving care in the RNHCI must be notified in writing 30 days before 
the Medicare reduction is to take effect. The notification must inform 
the beneficiary that the RNHCI can bill him or her for the proportional 
Medicare adjustment.
    Section 403.752(d)(ii) states that the RNHCI must, at time of 
billing, provide the beneficiary with his or her liability for payment, 
based on a calculation of the Medicare reduction pertaining to the 
beneficiary's covered services permitted by Sec. 403.750(b).
    We believe the following ICR is not subject to the Act, as defined 
by 5 CFR 1320.4(a)(2), since the collection action is conducted during 
an investigation or audit against specific individuals or entities.

Section 440.170  General Provisions--Medicaid

    Section 440.170(b)(9) states that an RNHCI must provide information 
HCFA may require, upon request, to implement section 1821 of the Act, 
including information relating to quality of care coverage and 
determinations.

PRA Summary of Burden

    The table below indicates the annual number of responses for each 
regulation section in this rule containing ICRs, the average burden per 
response in minutes or hours, and the total annual burden hours.

                                                                 Estimated Annual Burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
             CFR section                              Responses                         Average burden per  response                Burden hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
403.724(a)(1).......................  19.......................................  2 hours..................................  38 hours.
403.724(a)(2)(3)....................  1,000....................................  10 minutes...............................  167 hours.
403.724(a)(4).......................  1,000....................................  5 minutes................................  84 hours.
      Total.........................  .........................................  .........................................  289 hours.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    We have submitted a copy of this rule to OMB for its review of the 
ICRs. These requirements are not effective until they have been 
approved by OMB. A notice will be published in the Federal Register 
when approval is obtained.
    If you comment on any of these information collection and record 
keeping requirements, 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, Attn: 
Louis Blank HCFA-1909-IFC, Fax number: (410) 786-0262 and,
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, Fax numbers: 
(202) 395-6974 or (202) 395-5167

VI. 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 includes a reference to the legal 
authority under which the rule is proposed, and the terms and 
substances of the proposed rule or a description of the subjects and 
issues involved. This procedure can be waived, however, if an agency 
finds good cause that a 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.
    Section 4454 of BBA'97 requires us to publish this rule in final 
with a comment period and bypass the normal notice-and-comment period.
    Therefore, we find good cause to waive the notice of proposed 
rulemaking and to issue this final rule on an interim basis. We are 
providing a

[[Page 67047]]

60-day comment period for public comment.

VII. Response 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 403

    Health insurance, Hospitals, Incorporation by refrence, 
Intergovernmental relations, Medicare, Reporting and recordkeeping 
requirements.

42 CFR Part 412

    Administrative practice and procedure, Health facilities, Medicare, 
Puerto Rico, Reporting and recordkeeping requirements.

42 CFR Part 431

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

42 CFR Part 440

    Grant programs-health, Medicaid.

42 CFR Part 442

    Grant programs-health, Health facilities, Health professions, 
Medicaid, Nursing homes, Reporting and recordkeeping requirements.

42 CFR Part 456

    Administrative practice and procedure, Grant programs-health, 
Health facilities, Medicaid, Reporting and recordkeeping requirements.

42 CFR Part 466

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

42 CFR Part 488

    Health facilities, Medicare, Reporting and recordkeeping 
requirements.

42 CFR Part 489

    Health facilities, Medicare, Reporting and recordkeeping 
requirements.
    Accordingly, 42 CFR chapter IV is amended as follows:

PART 403--SPECIAL PROGRAMS AND PROJECTS

    1. The authority citation for part 403 continues to read as 
follows:

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

    2. Subpart F is added and reserved.
    3. Subpart G is added to read as follows:

Subpart G--Religious Nonmedical Health Care Institutions--Benefits, 
Conditions of Participation, and Payment

Sec.
403.700  Basis and purpose.
403.702  Definitions and terms.
403.720  Conditions for coverage.
403.724  Valid election requirements.
403.730  Condition of participation: Patient rights.
403.732  Condition of participation: Quality assessment and 
performance improvement.
403.734  Condition of participation: Food services.
403.736  Condition of participation: Discharge planning.
403.738  Condition of participation: Administration.
403.740  Condition of participation: Staffing.
403.742  Condition of participation: Physical environment.
403.744  Condition of participation: Life safety from fire.
403.746  Condition of participation: Utilization review.
403.750  Estimate of expenditures and adjustments.
403.752  Payment provisions.
403.754  Monitoring expenditure level.
403.756  Sunset provision.

Subpart G--Religious Nonmedical Health Care Institutions--Benefits, 
Conditions of Participation, and Payment


Sec. 403.700  Basis and purpose.

    This subpart implements sections 1821; 1861(e),(y), and (ss); 1869; 
and 1878 of the Act regarding Medicare payment for inpatient hospital 
or posthospital extended care services furnished to eligible 
beneficiaries in religious nonmedical health care institutions.


Sec. 403.702  Definitions and terms.

    For purposes of this subpart, the following definitions and terms 
apply:
    Election means a written statement signed by the beneficiary or the 
beneficiary's legal representative indicating the beneficiary's choice 
to receive nonmedical care or treatment for religious reasons.
    Excepted medical care means medical care that is received 
involuntarily or required under Federal, State, or local laws.
    FFY stands for Federal fiscal year.
    Medical care or treatment means health care furnished by or under 
the direction of a licensed physician that can involve diagnosing, 
treating, or preventing disease and other damage to the mind and body. 
It may involve the use of pharmaceuticals, diet, exercise, surgical 
intervention, and technical procedures.
    Nonexcepted medical care means medical care (other than excepted 
medical care) that is sought by or for a beneficiary who has elected 
religious nonmedical health care institution services.
    Religious nonmedical care or religious method of healing means 
health care furnished under established religious tenets that prohibit 
conventional or unconventional medical care for the treatment of a 
beneficiary, and the sole reliance on these religious tenets to fulfill 
a beneficiary's total health care needs.
    RNHCI stands for ``religious nonmedical health care institution,'' 
as defined in section 1861(ss)(1) of the Act.
    Religious nonmedical nursing personnel means individuals who are 
grounded in the religious beliefs of the RNHCI, trained and experienced 
in the principles of nonmedical care, and formally recognized as 
competent in the administration of care within their religious 
nonmedical health care group.


Sec. 403.720  Conditions for coverage.

    Medicare covers services furnished in an RNHCI if the following 
conditions are met:
    (a) The provider meets the definition of an RNHCI as defined in 
section 1861(ss)(1) of the Act. That is, it is an institution that:
    (1) Is described in section 501(c)(3) of the Internal Revenue Code 
of 1986 and is exempt from taxes under section 501(a).
    (2) Is lawfully operated under all applicable Federal, State, and 
local laws and regulations.
    (3) Furnishes only nonmedical nursing items and services to 
beneficiaries who choose to rely solely upon a religious method of 
healing and for whom the acceptance of medical services would be 
inconsistent with their religious beliefs.
    (4) Furnishes nonmedical items and services exclusively through 
nonmedical nursing personnel who are experienced in caring for the 
physical needs of nonmedical patients.
    (5) Furnishes nonmedical items and services to inpatients on a 24-
hour basis.
    (6) Does not furnish, on the basis of religious beliefs, through 
its personnel or otherwise medical items and services

[[Page 67048]]

(including any medical screening, examination, diagnosis, prognosis, 
treatment, or the administration of drugs) for its patients.
    (7) Is not owned by, is not under common ownership with, or does 
not have an ownership interest of 5 percent or more in, a provider of 
medical treatment or services and is not affiliated with a provider of 
medical treatment or services or with an individual who has an 
ownership interest of 5 percent or more in, a provider of medical 
treatment or services. (Permissible affiliations are described at 
Sec. 403.738(c).)
    (8) Has in effect a utilization review plan that sets forth the 
following:
    (i) Provides for review of the admissions to the institution, the 
duration of stays, and the need for continuous extended duration of 
stays in the institution, and the items and services furnished by the 
institution.
    (ii) Requires that reviews be made by an appropriate committee of 
the institution that included the individuals responsible for overall 
administration and for supervision of nursing personnel at the 
institution.
    (iii) Provides that records be maintained of the meetings, 
decisions, and actions of the review committee.
    (iv) Meets other requirements as the Secretary finds necessary to 
establish an effective utilization review plan.
    (9) Provides information HCFA may require to implement section 1821 
of the Act, including information relating to quality of care and 
coverage decisions.
    (10) Meets other requirements HCFA finds necessary in the interest 
of the health and safety of the patients who receive services in the 
institution. These requirements are the conditions of participation in 
this subpart.
    (b) The provider meets the conditions of participation cited in 
Secs. 403.730 through 403.746. (A provider may be deemed to meet 
conditions of participation in accordance with part 488 of this 
chapter.)
    (c) The provider has a valid provider agreement as a hospital with 
HCFA in accordance with part 489 of this chapter and for payment 
purposes is classified as an extended care hospital.
    (d) The beneficiary has a condition that would make him or her 
eligible to receive services covered under Medicare Part A as an 
inpatient in a hospital or SNF.
    (e) The beneficiary has a valid election as described in 
Sec. 403.724 in effect for Medicare covered services furnished in an 
RNHCI.


Sec. 403.724  Valid election requirements.

    (a) General requirements. An election statement must be made by the 
Medicare beneficiary or his or her legal representative.
    (1) The election must be a written statement that must include the 
following statements:
    (i) The beneficiary is conscientiously opposed to acceptance of 
nonexcepted medical treatment.
    (ii) The beneficiary acknowledges that the acceptance of 
nonexcepted medical treatment is inconsistent with his or her sincere 
religious beliefs.
    (iii) The beneficiary acknowledges that the receipt of nonexcepted 
medical treatment constitutes a revocation of the election and may 
limit further receipt of services in an RNHCI.
    (iv) The beneficiary acknowledges that the election may be revoked 
by submitting a written statement to HCFA.
    (v) The beneficiary acknowledges that revocation of the election 
will not prevent or delay access to medical services available under 
Medicare Part A in facilities other than RNHCIs.
    (2) The election must be signed and dated by the beneficiary or his 
or her legal representative.
    (3) The election must be notarized.
    (4) The RNHCI must keep a copy of the election statement on file 
and submit the original to HCFA with any information obtained regarding 
prior elections or revocations.
    (5) The election becomes effective on the date it is signed.
    (6) The election remains in effect until revoked.
    (b) Revocation of election. (1) A beneficiary's election is revoked 
by one of the following:
    (i) The beneficiary receives nonexcepted medical treatment for 
which Medicare payment is requested.
    (ii) The beneficiary voluntarily revokes the election and notifies 
HCFA in writing.
    (2) The receipt of excepted medical treatment as defined in 
Sec. 403.702 does not revoke the election made by a beneficiary.
    (c) Limitation on subsequent elections.  (1) If a beneficiary's 
election has been made and revoked twice, the following limitations on 
subsequent elections apply:
    (i) The third election is not effective until 1 year after the date 
of the most recent revocation.
    (ii) Any succeeding elections are not effective until 5 years after 
the date of the most recent revocation.
    (2) HCFA will not accept as the basis for payment of any claim any 
elections executed on or after January 1 of the calendar year in which 
the sunset provision described in Sec. 403.756 becomes effective.


Sec. 403.730  Condition of participation: Patient rights.

    An RNHCI must protect and promote each patient's rights.
    (a) Standard: Notice of rights. The RNHCI must do the following:
    (1) Inform each patient of his or her rights in advance of 
furnishing patient care.
    (2) Have a process for prompt resolution of grievances, including a 
specific person within the facility whom a patient may contact to file 
a grievance. In addition, the facility must provide patients with 
information about the facility's process as well as with contact 
information for appropriate State and Federal resources.
    (b) Standard: Exercise of rights. The patient has the right to:
    (1) Be informed of his or her rights and to participate in the 
development and implementation of his or her plan of care.
    (2) Make decisions regarding his or her care, including transfer 
and discharge from the RNHCI. (See Sec. 403.736 for discharge and 
transfer requirements.)
    (3) Formulate advance directives and expect staff who furnish care 
in the RNHCI to comply with those directives, in accordance with part 
489, subpart I of this chapter. For purposes of conforming with the 
requirement in Sec. 489.102 that there be documentation in the 
patient's medical records concerning advanced directives, the patient 
care records of a beneficiary in an RNHCI are equivalent to medical 
records held by other providers.
    (c) Standard: Privacy and safety. The patient has the right to the 
following:
    (1) Personal privacy.
    (2) Care in a safe setting.
    (3) Freedom from verbal, psychological, and physical abuse, and 
misappropriation of property.
    (4) Freedom from the use of restraints.
    (5) Freedom from involuntary seclusion.
    (d) Standard: Confidentiality of patient records. For any patient 
care records or election information it maintains on patients, the 
RNHCI must establish procedures to do the following:
    (1) Safeguard the privacy of any information that identifies a 
particular patient. Information from, or copies of, records may be 
released only to authorized individuals, and the RNHCI must ensure that 
unauthorized individuals cannot gain access to or alter patient 
records. Original patient care records must be released only in 
accordance with Federal or State laws, court orders, or subpoenas.

[[Page 67049]]

    (2) Maintain the records and information in an accurate and timely 
manner.
    (3) Ensure timely access by patients to the records and other 
information that pertains to that patient.
    (4) Abide by all Federal and State laws regarding confidentiality 
and disclosure for patient care records and election information.


Sec. 403.732  Condition of participation: Quality assessment and 
performance improvement.

    The RNHCI must develop, implement, and maintain a quality 
assessment and performance improvement program.
    (a) Standard: Program scope.  (1) The quality assessment and 
performance improvement program must include, but is not limited to, 
measures to evaluate:
    (i) Access to care.
    (ii) Patient satisfaction.
    (iii) Staff performance.
    (iv) Complaints and grievances.
    (v) Discharge planning activities.
    (vi) Safety issues, including physical environment.
    (2) In each of the areas listed in paragraph (a)(1) of this 
section, and any other areas the RNHCI includes, the RNHCI must do the 
following:
    (i) Define quality assessment and performance improvement measures.
    (ii) Describe and outline quality assessment and performance 
improvement activities appropriate for the services furnished by or in 
the RNHCI.
    (iii) Measure, analyze, and track performance that reflect care and 
RNHCI processes.
    (iv) Inform all patients, in writing, of the scope and 
responsibilities of the quality assessment and performance improvement 
program.
    (3) The RNHCI must set priorities for performance improvement, 
considering the prevalence of and severity of identified problems.
    (4) The RNHCI must act to make performance improvements and must 
track performance to assure that improvements are sustained.
    (b) Standard: Program responsibilities. (1) The governing body, 
administration, and staff are responsible for ensuring that the quality 
assessment and performance improvement program addresses identified 
priorities in the RNHCI and are responsible for the development, 
implementation, maintenance, and performance improvement of assessment 
actions.
    (2) The RNHCI must include all programs, departments, functions, 
and contracted services when developing, implementing, maintaining, and 
evaluating the program of quality assessment and performance 
improvement.


Sec. 403.734  Condition of participation: Food services.

    The RNHCI must have an organized food service that is directed and 
adequately staffed by qualified personnel.
    (a) Standard: Sanitary conditions. The RNHCI must furnish food to 
the patient that is obtained, stored, prepared, distributed, and served 
under sanitary conditions.
    (b) Standard: Meals. The RNHCI must serve meals that furnish each 
patient with adequate nourishment in accordance with the recommended 
dietary allowances of the Food and Nutrition Board of the National 
Research Council, National Academy of Sciences. The RNHCI must do the 
following:
    (1) Furnish food that is palatable, attractive, and at the proper 
temperature and consistency.
    (2) Offer substitutes of similar nourishment to patients who refuse 
food served or desire alternative choices.
    (3) Furnish meals at regular times comparable to normal mealtimes 
in the community. There must be no more than 14 hours between a 
substantial evening meal and breakfast the following day.
    (4) The RNHCI must offer snacks at bedtime.


Sec. 403.736  Condition of participation: Discharge planning.

    The RNHCI must have in effect a discharge planning process that 
applies to all patients. The process must assure that appropriate post-
institution services are obtained for each patient, as necessary.
    (a) Standard: Discharge planning evaluation. (1) The RNHCI must 
assess the need for a discharge plan for any patient identified as 
likely to suffer adverse consequences if there is no planning and for 
any other patient upon his or her request or at the request of his or 
her legal representative. This discharge planning evaluation must be 
initiated at admission and must include the following:
    (i) An assessment of the possibility of a patient needing post-
RNHCI services and of the availability of those services.
    (ii) An assessment of the probability 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 RNHCI.
    (2) The staff must complete the assessment on a timely basis so 
that arrangements for post-RNHCI care are made before discharge and so 
that unnecessary delays in discharge are avoided.
    (3) The discharge planning evaluation must be included in the 
patient's rights record for use in establishing an appropriate 
discharge plan and must discuss the results of the evaluation with the 
patient or a legal representative acting on his or her behalf.
    (b) Standard: Discharge plan. (1) If the discharge planning 
evaluation indicates a need for a discharge plan, qualified and 
experienced personnel must develop or supervise the development of the 
plan.
    (2) In the absence of a finding by the RNHCI that the beneficiary 
needs a discharge plan, the beneficiary or his or her legal 
representative may request a discharge plan. In this case, the RNHCI 
must develop a discharge plan for the beneficiary.
    (3) The RNHCI must arrange for the initial implementation of the 
beneficiary's discharge plan.
    (4) If there are factors that may affect continuing care needs or 
the appropriateness of the discharge plan, the RNHCI must reevaluate 
the beneficiary's discharge plan.
    (5) The RNHCI must inform the beneficiary or legal representative 
about the beneficiary's post-RNHCI care requirements.
    (6) The discharge plan must inform the beneficiary or his or her 
legal representative about the freedom to choose among providers of 
care when a variety of providers is available that are willing to 
respect the discharge preferences of the beneficiary or legal 
representative.
    (c) Standard: Transfer or referral. The RNHCI must transfer or 
refer patients in a timely manner to another facility (including a 
medical facility if requested by the beneficiary, or his or her legal 
representative) in accordance with Sec. 403.730(b)(2).
    (d) Standard: Reassessment. The RNHCI 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.


Sec. 403.738  Condition of participation: Administration.

    An RNHCI must have written policies regarding its organization, 
services, and administration.
    (a) Standard: Compliance with Federal, State, and local laws. The 
RNHCI must operate in compliance with all applicable Federal, State, 
and local laws, regulations, and codes including, but not limited to, 
those pertaining to the following:
    (1) Protection against discrimination on the basis of race, color, 
national

[[Page 67050]]

origin, age, or handicap (45 CFR parts 80, 84, and 91).
    (2) Protection of human research subjects (45 CFR part 46).
    (3) Application of all safeguards to protect against the 
possibility of fraud and abuse (42 CFR part 455).
    (b) Standard: Governing body. (1) The RNHCI must have a governing 
body, or a person designated to function as a governing body, that is 
legally responsible for establishing and implementing all policies 
regarding the RNHCI's management and operation.
    (2) The governing body must appoint the administrator responsible 
for the management of the RNHCI.
    (c) Standard: Affiliations and disclosure. (1) An affiliation is 
permissible if it is between one of the following:
    (i) An individual serving as an uncompensated director, trustee, 
officer, or other member of the governing body of an RNHCI and a 
provider of medical treatment or services.
    (ii) An individual who is a director, trustee, officer, employee, 
or staff member of an RNHCI and another individual, with whom he or she 
has a family relationship, who is affiliated with (or has an ownership 
interest in) a provider of medical treatment or services.
    (iii) The RNHCI and an individual or entity furnishing goods or 
services as a vendor to both providers of medical treatment or services 
and RNHCIs.
    (2) The RNHCI complies with the disclosure requirements of 
Secs. 420.206 and 455.104 of this chapter.
    (3) The RNHCI furnishes written notice, including the identity of 
each new individual or company, to HCFA at the time of a change, if a 
change occurs in any of the following:
    (i) Persons with an ownership or control interest, as defined in 
Secs. 420.201 and 455.101 of this chapter.
    (ii) The officers, directors, agents, or managing employees.
    (iii) The religious entity, corporation, association, or other 
company responsible for the management of the RNHCI.
    (iv) The RNHCI's administrator or director of nonmedical nursing 
services.


Sec. 403.740  Condition of participation: Staffing.

    The RNHCI must be staffed with qualified experienced personnel who 
are present in sufficient numbers to meet the needs of the patients.
    (a) Standard: Personnel qualifications. The RNHCI must ensure that 
staff who supervise or furnish services to patients are qualified to do 
so and that staff allowed to practice without direct supervision have 
specific training to furnish these services.
    (b) Standard: Education, training, and performance evaluation. (1) 
The RNHCI must ensure that staff (including contractors and other 
individuals working under arrangement) have the necessary education and 
training concerning their duties so that they can furnish services 
competently. This education includes, but is not limited to, training 
related to the individual job description, performance expectations, 
applicable organizational policies and procedures, and safety 
responsibilities.
    (2) Staff must demonstrate, in practice, the skills and techniques 
necessary to perform their duties and responsibilities.
    (3) The RNHCI must evaluate the performance of staff and implement 
measures for improvement.


Sec. 403.742  Condition of participation: Physical environment.

    A RNHCI must be designed, constructed, and maintained to ensure the 
safety of the patients, staff, and the public.
    (a) Standard: Buildings. The physical plant and the overall 
environment must be maintained in a manner that ensures the safety and 
well-being of the patients. The RNHCI must have the following:
    (1) Emergency power for emergency lights, for fire detection and 
alarm systems, and for fire extinguishing systems.
    (2) Procedures for the proper storage and disposal of trash.
    (3) Proper ventilation and temperature control and appropriate 
lighting levels to ensure a safe and secure environment.
    (4) A written disaster plan to address loss of power, water, 
sewage, and other emergencies.
    (5) Facilities for emergency gas and water supply.
    (6) An effective pest control program.
    (7) A preventive maintenance program to maintain essential 
mechanical, electrical, and fire protection equipment operating in an 
efficient and safe manner.
    (8) A working call system for patients to summon aid or assistance.
    (b) Standard: Patient rooms. Patient rooms must be designed and 
equipped for adequate care, comfort, and privacy of the patient.
    (1) Patient rooms must meet the following conditions:
    (i) Accommodate no more than four patients.
    (ii) Measure at least 80 square feet per patient in multiple 
patient rooms and at least 100 square feet in single patient rooms.
    (iii) Have direct access to an exit corridor.
    (iv) Be designed or equipped to assure full visual privacy for each 
patient.
    (v) Have at least one window to the outside.
    (vi) Have a floor at or above grade level.
    (2) The RNHCI must furnish each patient with the following:
    (i) A separate bed of proper size and height for the convenience of 
the patient.
    (ii) A clean, comfortable mattress.
    (iii) Bedding appropriate to the weather and climate.
    (iv) Functional furniture appropriate to the patient's needs and 
individual closet space with clothes racks and shelves accessible to 
the patient.
    (3) HCFA may permit variances in requirements specified in 
paragraphs (b)(1)(i) and (ii) of this section relating to rooms on an 
individual basis when the RNHCI adequately demonstrates in writing that 
the variances meet the following:
    (i) Are in accordance with the special needs of the patients.
    (ii) Will not adversely affect patients' health and safety.


Sec. 403.744  Condition of participation: Life safety from fire.

    (a) General. An RNHCI must meet the following conditions:
    (1) Except as provided in paragraph (b) of this section, the RNHCI 
must meet the new or existing health care occupancies provisions of the 
1997 edition of the Life Safety Code of the National Fire Protection 
Association (NFPA 101), which is incorporated by reference. 
Incorporation by reference of NFPA 101, the Life Safety Code, 1997 
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\ (See 
Sec. 483.70).
---------------------------------------------------------------------------

    \1\ The 1997 edition of the Life Safety Code (NFPA 101) is 
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, 1 Batterymarch Park, 
P.O. Box 9101, Quincy, MA 02263-9101.
---------------------------------------------------------------------------

    (2) The RNHCI must have written fire control plans that contain 
provisions for prompt reporting of fires; extinguishing fires; 
protection of patients, staff, and the public; evacuation; and 
cooperation with fire fighting authorities.
    (3) The RNHCI must maintain written evidence of regular inspection 
and approval by State or local fire control agencies.
    (b) Exceptions. (1) If application of the Life Safety Code required 
under

[[Page 67051]]

paragraph (a)(1) of this section would result in unreasonable hardship 
upon the RNHCI, HCFA may waive specific provisions of the Life Safety 
Code, but only if the waiver does not adversely affect the health and 
safety of patients.
    (2) If HCFA finds that the fire and safety code imposed by State 
law adequately protects patients in the institution, the provisions of 
the Life Safety Code required in paragraph (a)(1) of this section do 
not apply in that State.


Sec. 403.746  Condition of participation: Utilization review.

    The RNHCI must have in effect a written utilization review plan to 
assess the necessity of services furnished. The plan must provide that 
records be maintained of all meetings, decisions, and actions by the 
utilization review committee.
    (a) Standard: Utilization review plan. The utilization review plan 
must contain written procedures for evaluating the following:
    (1) Admissions.
    (2) Duration of care.
    (3) Continuing care of an extended duration.
    (4) Items and services furnished.
    (b) Standard: Utilization review committee. The committee is 
responsible for evaluating each admission and ensuring that the 
admission is necessary and appropriate. The utilization review plan 
must be carried out by the utilization review committee, consisting of 
the governing body, administrator or other individual responsible for 
the overall administration of the RNHCI, the supervisor of nursing 
staff, and other staff as appropriate.


Sec. 403.750  Estimate of expenditures and adjustments.

    (a) Estimates. HCFA estimates the level of expenditures for 
services provided under this subpart before the start of each FFY 
beginning with FFY 2000.
    (b) Adjustments to payments. When the level of estimated 
expenditures is projected to exceed the FFY trigger level as described 
in paragraph (d) of this section, for the year of the projection, 
payments to RNHCIs will be reduced by a proportional percentage to 
prevent estimated expenditures from exceeding the trigger level. In 
addition to reducing payments proportionally, HCFA may impose 
alternative adjustments.
    (c) Notification of adjustments. HCFA notifies participating RNHCIs 
before the start of the FFY of the type and level of expenditure 
reductions to be made and when these adjustments will apply.
    (d) Calculation of trigger level. The trigger level for FFY 1998 is 
$20,000,000. For subsequent FFYs, the trigger level is the unadjusted 
trigger level increased or decreased by the carry forward as described 
in Sec. 403.754(b). The unadjusted trigger level is the base year 
amount (the unadjusted trigger level dollar amount for the prior FFY) 
increased by the average consumer price index (the single numerical 
value published monthly by the Bureau of Labor Statistics that presents 
the relationship in United States urban areas for the current cost of 
goods and services compared to a base year, to represent the change in 
spending power) for the 12-month period ending on July 31 preceding the 
beginning of the FFY.


Sec. 403.752  Payment provisions.

    (a) Payment to RNHCIs. Payment for services may be made to an RNHCI 
that meets the conditions for coverage described in Sec. 403.720 and 
the conditions of participation described in Secs. 403.730 through 
403.746. Payment is made in accordance with Sec. 413.40 of this chapter 
to an RNHCI meeting these conditions.
    (b) Review of estimates and adjustments. There is no administrative 
or judicial review of the level of estimated expenditures or the 
adjustments in payments described in Secs. 403.750(a) and (b).
    (c) Effect on beneficiary liability. When payments are reduced in 
accordance with Sec. 403.750(b), the RNHCI may bill the beneficiary the 
amount of the Medicare reduction attributable to his or her covered 
services.
    (d) Notification of beneficiary liability. (1) The RNHCI must 
notify the beneficiary in writing at the time of admission of any 
proposed or current proportional Medicare adjustment. A beneficiary 
currently receiving care in the RNHCI must be notified in writing at 
least 30 days before the Medicare reduction is to take effect. The 
notification must inform the beneficiary that the RNHCI can bill him or 
her for the proportional Medicare adjustment.
    (2) The RNHCI must, at time of billing, provide the beneficiary 
with his or her liability for payment, based on a calculation of the 
Medicare reduction pertaining to the beneficiary's covered services 
permitted by Sec. 403.750(b).


Sec. 403.754  Monitoring expenditure level.

    (a) Tracking expenditures. Starting in FFY 1999 HCFA begins 
monitoring Medicare payments to RNHCIs.
    (b) Carry forward. The difference between the trigger level and 
Medicare expenditures for a FFY results in a carry forward that either 
increases or decreases the unadjusted trigger level described in 
Sec. 403.750(d). In no case may the carry forward exceed $50,000,000 
for an FFY.


Sec. 403.756  Sunset provision.

    (a) Effective date. Beginning with FFY 2002, if the level of 
estimated expenditures for all RNHCIs exceeds the trigger level for 3 
consecutive FFYs, HCFA will not accept as the basis for payment of any 
claim any election executed on or after January 1 of the following 
calendar year.
    (b) Notice of activation. A notice in the Federal Register will be 
published at least 60 days before January 1 of the calendar year that 
the sunset provision becomes effective.
    (c) Effects of sunset provision. Only those beneficiaries who have 
a valid election in effect before January 1 of the year in which the 
sunset provision becomes effective will be able to claim Medicare 
payment for care in an RNHCI, and only for RNCHI services furnished 
during that election.

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL 
SYSTEMS

    1. The authority citation for part 412 continues to read as 
follows:

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

Sec. 412.90  [Removed]

    2. In Sec. 412.90, paragraph (c) is removed and reserved.


Sec. 412.98  [Removed]

    3. Section 412.98 is removed and reserved.

PART 440--SERVICES: GENERAL PROVISIONS

    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. In Sec. 440.170, paragraphs (b) and (c) are revised to read as 
follows:


Sec. 440.170  Any other medical care or remedial care recognized under 
State law and specified by the Secretary.

* * * * *
    (b) Services furnished in a religious nonmedical health care 
institution. Services furnished in a religious nonmedical health care 
institution are services furnished in an institution that:
    (1) Is an institution that is described in (c)(3) of section 501 of 
the Internal Revenue Code of 1986 and is exempt from taxes under 
section 501(a) of that section.

[[Page 67052]]

    (2) Is lawfully operated under all applicable Federal, State, and 
local laws and regulations.
    (3) Furnishes only nonmedical nursing items and services to 
patients who choose to rely solely upon a religious method of healing 
and for whom the acceptance of medical health services would be 
inconsistent with their religious beliefs.
    (4) Furnishes nonmedical items and services exclusively through 
nonmedical nursing personnel who are experienced in caring for the 
physical needs of nonmedical patients.
    (5) Furnishes these nonmedical items and services to inpatients on 
a 24-hour basis.
    (6) Does not furnish, on the basis of its religious beliefs, 
through its personnel or otherwise, medical items and services 
(including any medical screening, examination, diagnosis, prognosis, 
treatment, or the administration of drugs) for its patients.
    (7) Is not owned by, is not under common ownership with, or does 
not have an ownership interest of 5 percent or more in, a provider of 
medical treatment or services and is not affiliated with a provider of 
medical treatment or services or with an individual who has an 
ownership interest or 5 percent or more in a provider of medical 
treatment or services. Permissible affiliations are described in 
paragraph (c) of this section.
    (8) Has in effect a utilization review plan that meets the 
following criteria:
    (i) Provides for the review of admissions to the institution, 
duration of stays, cases of continuous extended duration, and items and 
services furnished by the institution.
    (ii) Requires that the reviews be made by a committee of the 
institution that included the individuals responsible for overall 
administration and for supervision of nursing personnel at the 
institution.
    (iii) Provides that records be maintained of the meetings, 
decisions, and actions of the utilization review committee.
    (iv) Meets other requirements as HCFA finds necessary to establish 
an effective utilization review plan.
    (9) Provides information HCFA may require to implement section 1821 
of the Act, including information relating to quality of care and 
coverage determinations.
    (10) Meets other requirements as HCFA finds necessary in the 
interest of the health and safety of patients who receive services in 
the institution. These requirements are the conditions of participation 
found at part 403, subpart G of this chapter.
    (c) Affiliations. An affiliation is permissible for purposes of 
paragraph (b)(7) of this section if it is between one of the following:
    (1) An individual serving as an uncompensated director, trustee, 
officer, or other member of the governing body of an RNHCI and a 
provider of medical treatment or services.
    (2) An individual who is a director, trustee, officer, employee, or 
staff member of an RNHCI and an another individual, with whom he or she 
has a family relationship, who is affiliated with (or has an ownership 
interest in) a provider of medical treatment or services.
    (3) The RNHCI and an individual or entity furnishing goods or 
services as a vendor to both providers of medical treatment or services 
and RNHCIs.
* * * * *

PART 488--SURVEY, CERTIFICATION, AND, ENFORCEMENT PROCEDURES

    1. The authority citation for part 488 continues to read as 
follows:

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

    2. Section 488.2 is amended by adding ``1861(ss)(2)--Accreditation 
of religious nonmedical health care institutions.'' after ``1861(ee)--
Discharge planning guidelines for hospitals'' and before ``1864--Use of 
State survey agencies.''
    3. Section 488.6 (a) is amended by adding ``religious nonmedical 
health care institutions;'' after ``hospices;'' and before ``screening 
mammography services;''

PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL

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

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

    2. In Sec. 489.102, introductory paragraph (a) is republished and 
paragraph (a)(2) is revised to read as follows:


Sec. 489.102  Requirements for providers

    (a) Hospitals, critical access hospitals, skilled nursing 
facilities, nursing facilities, home health agencies, providers of home 
health care (and for Medicaid purposes, providers of personal care 
services), hospices, and religious nonmedical health care institutions 
must maintain written policies and procedures concerning advance 
directives with respect to all adult individuals receiving medical 
care, or patient care in the case of a patient in a religious 
nonmedical health care institution, by or through the provider and are 
required to:
* * * * *
    (2) Document in a prominent part of the individual's current 
medical record, or patient care record in the case of an individual in 
a religious nonmedical health care institution, whether or not the 
individual has executed an advance directive;
* * * * *

PARTS 431, 440, 442, 456 and 466--[AMENDED]

    1. In the following sections, ``Christian Science Sanitoria 
operated or listed and certified, by the First Church of Christ 
Scientist, Boston, Mass.'' is revised to read ``religious nonmedical 
institutions as defined in Sec. 440.170(b) of this chapter'':
    a. Sec. 431.610(b);
    b. Sec. 442.12(b); and
    c. Sec. 456.601.
    2. In the following sections, ``a Christian Science Sanitorium, 
operated or listed and certified, by the First Church of Christ 
Scientist, Boston, Mass.'' is revised to read ``a religious nonmedical 
institution as defined in Sec. 440.170(b) of this chapter'':
    a. Sec. 431.701(a); and
    b. Sec. 466.1
    3. In Sec. 440.155(b)(1), ``Christian Science sanatorium operated, 
or listed and certified by the First Church of Christ, Scientist, 
Boston Mass.'' is revised to read ``religious nonmedical institution as 
defined in Sec. 440.170(b).''
    4. In Sec. 456.351, ``Christian Science Sanitoria'' is revised to 
read ``religious nonmedical institutions as defined in Sec. 440.170(b) 
of this chapter''.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; Program No. 93.774, Medicare--
Supplementary Medical Insurance Program; and Program No. 93.778, 
Medical Assistance Program)

    Dated: November 17, 1998.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.

    Dated: April 29, 1999.
Donna E. Shalala,
Secretary.
    Note: This document was received at the Office of the Federal 
Register on November 15, 1999.

[FR Doc. 99-30181 Filed 11-29-99; 8:45 am]
BILLING CODE 4120-01-P