[Federal Register Volume 64, Number 232 (Friday, December 3, 1999)]
[Notices]
[Pages 67920-67925]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-31361]



[[Page 67920]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration
[HCFA-4009-GNC]
RIN 0938-AJ88


Medicare Program; Criteria and Standards for Evaluating 
Intermediary and Carrier Performance During FY 2000

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

ACTION: General notice with comment period.

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SUMMARY: This notice describes the criteria and standards to be used 
for evaluating the performance of fiscal intermediaries and carriers in 
the administration of the Medicare program beginning January 1, 2000. 
The results of these evaluations are considered whenever HCFA enters 
into, renews, or terminates an intermediary agreement or carrier 
contract or takes other contract actions (for example, assigning or 
reassigning providers or services to an intermediary or designating 
regional or national intermediaries).
    This notice is published in accordance with sections 1816(f) and 
1842(b)(2) of the Social Security Act. We are publishing for public 
comment in the Federal Register those criteria and standards against 
which we evaluate intermediaries and carriers.

DATES: The criteria and standards are effective January 1, 2000.
    Comments: Comments will be considered if we receive them at the 
appropriate address as provided below no later than 5 p.m. (EDT) on 
January 3, 2000.

ADDRESSES: Mail written comments (1 original and 3 copies) to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services (HHS), Attention: HCFA-4009-GNC, P.O. Box 
8016, Baltimore, MD 21244-8016.
    If you prefer, you may deliver your written comments (1 original 
and 3 copies) to one of the following addresses:
    Room 443-G, Hubert H. Humphrey Building, 200 Independence Avenue, 
SW., Washington, DC, 20201, or 7500 Security Boulevard, Baltimore, 
Maryland 21244.
    Because of the staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code HCFA-4009-GNC. 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 443-G of 
the Department's office at 200 Independence Avenue, SW., Washington, 
D.C., on Monday through Friday of each week from 8:30 a.m. to 5 p.m. 
(phone: (202) 690-7890).

FOR FURTHER INFORMATION CONTACT: Sue Lathroum, (410) 786-7409.

SUPPLEMENTARY INFORMATION:

I. Background

    Under section 1816 of the Social Security Act (the Act), public or 
private organizations and agencies participate in the administration of 
Part A (Hospital Insurance) of the Medicare program under agreements 
with the Secretary of Health and Human Services. These agencies or 
organizations, known as fiscal intermediaries, determine whether 
medical services are covered under Medicare and determine correct 
payment amounts. The intermediaries then make payments to the health 
care providers on behalf of the beneficiaries. Section 1816(f) of the 
Act requires us to develop criteria, standards, and procedures to 
evaluate an intermediary's performance of its functions under its 
agreement. We evaluate intermediary performance through the contract 
management process.
    Under section 1842 of the Act, we are authorized to enter into 
contracts with carriers to fulfill various functions in the 
administration of Part B (Supplementary Medical Insurance) of the 
Medicare program. Beneficiaries, physicians, and suppliers of services 
submit claims to these carriers. The carriers determine whether the 
services are covered under Medicare and the payable amount for the 
services or supplies, and then make payment to the appropriate party. 
Under section 1842(b)(2) of the Act, we are required to develop 
criteria, standards, and procedures to evaluate a carrier's performance 
of its functions under its contract. We also evaluate carrier 
performance through the contract management process.
    We are publishing the criteria and standards in the Federal 
Register in order to allow the public an opportunity to comment before 
implementation. In addition to the statutory requirement, our 
regulations at 42 CFR 421.120 and 421.122 provide for publication of a 
Federal Register notice to announce criteria and standards for 
intermediaries prior to implementation. Regulation 42 CFR 421.201 
provides for publication of a Federal Register notice to announce 
criteria and standards for carriers prior to implementation. The 
current criteria and standards were published in the Federal Register 
on September 7, 1994 (59 FR 46258).
    To the extent possible, we make every effort to publish the 
criteria and standards before the beginning of the Federal fiscal year, 
which is October 1. If we do not publish a Federal Register notice 
before the new fiscal year begins, readers may presume that until and 
unless notified otherwise, the criteria and standards which were in 
effect for the previous fiscal year remain in effect.
    In those instances where we are unable to meet our goal of 
publishing the subject Federal Register notice before the beginning of 
the fiscal year, we may publish the criteria and standards notice at 
any subsequent time during the year. If we choose to publish a notice 
in this manner, the evaluation period for any such criteria and 
standards that are the subject of the notice will be revised to be 
effective on the first day of the first month following publication. 
Hence, any revised criteria and standards will measure performance 
prospectively; that is, we will not apply new measurements to assess 
performance on a retroactive basis.
    Also, it is not our intention to revise the criteria and standards 
that will be used during the evaluation period once this information 
has been published in a Federal Register notice. However, on occasion, 
either because of Administrative mandate or Congressional action, there 
may be a need for changes that have direct impact upon the criteria and 
standards previously published, or which require the addition of new 
criteria or standards, or that cause the deletion of previously 
published criteria and standards. Should such changes be necessitated, 
we will issue a Federal Register notice prior to implementation of the 
changes. In all instances, necessary manual issuances will be published 
each year to ensure that the criteria and standards are implemented 
uniformly and accurately. Also, as in previous years, the Federal 
Register notice will be republished and the effective date revised if 
changes are warranted as a result of the public comments received on 
the criteria and standards.

II. Criteria and Standards--General

    Basic tenets of the Medicare program are to pay claims promptly and 
accurately and to foster good beneficiary and provider relations. 
Contractors must administer the Medicare program efficiently and 
economically. We have developed a contractor management program for FY 
2000 that sets

[[Page 67921]]

expectations for the contractor; measures the performance of the 
contractor; evaluates the performance against the expectations; and, 
takes appropriate contract action based upon evaluation of the 
contractor's performance. The goal of performance evaluation is to 
ensure that contractors meet their contractual obligations. We measure 
contractor performance to ensure that contractors do what is required 
of them by law, regulation and HCFA directive. We ensure that 
contractors perform well and continually improve their performance. To 
better evaluate contractor performance, we are working to develop and 
refine measurable performance standards in key areas, and we will be 
facilitating the sharing of ``best practices'' among HCFA reviewers. We 
also are increasing the number of standardized evaluation protocols for 
use in FY 2000. We have structured contractor evaluation into five 
criteria designed to meet those objectives.
    The first criterion in the FY 2000 contractor performance 
evaluation is ``Claims Processing,'' which measures contractual 
performance against claims processing accuracy and timeliness 
requirements. Within the Claims Processing criterion, we have 
identified those performance standards that are mandated by either 
legislation, regulation or judicial decision. These standards include 
claims processing timeliness, and the accuracy of Explanations of 
Medicare Benefits. Further evaluation in the Claims Processing 
criterion may include, but is not limited to, the accuracy of bill and 
claims processing, the level of electronic claims payment, and the 
percent of bills and claims paid with interest.
    The second criterion is ``Customer Service,'' which assesses the 
completeness of the service provided to customers by the contractor in 
its administration of the Medicare program. Mandated standards in the 
Customer Service criterion include the rate of cases reversed by an 
Administrative Law Judge, the timeliness of intermediary 
reconsideration cases, the accuracy and timeliness of carrier reviews 
and hearings, and the accuracy and timeliness of carrier replies to 
beneficiary telephone inquiries. In FY 2000, customer feedback may be 
used to collect comparable data on customer satisfaction and identify 
areas in need of improvement. Among the specific contractor services 
that may be included in the evaluation process under the Customer 
Service criterion are: beneficiary relations; provider education; 
appropriate telephone inquiry responses; and the tone and accuracy of 
all correspondence.
    The third criterion is ``Payment Safeguards,'' which evaluates 
whether the Medicare trust funds are safeguarded against inappropriate 
program expenditures. Intermediary and carrier performance may be 
evaluated in the areas of medical review, Medicare secondary payer, 
fraud and abuse, and audit and reimbursement. Mandated performance 
standards in the Payment Safeguards criterion are the accuracy of 
decisions on skilled nursing facility (SNF) demand bills, and the 
timeliness of processing Tax Equity and Fiscal Responsibility Act 
(TEFRA) target rate adjustments, exceptions, and exemptions. Further 
evaluation in this criterion may include, but is not limited to, some 
core standards for Medical Review and Benefit Integrity.
    The fourth criterion is ``Fiscal Responsibility,'' which evaluates 
the contractor's efforts to protect the Medicare program and the public 
interest. Contractors must effectively manage Federal funds for both 
payment of benefits and cost of administration under the Medicare 
program. Proper financial and budgetary controls, including internal 
controls, must be in place to ensure contractor compliance with its 
agreement with HHS and HCFA. Additional functions reviewed under this 
criterion may include, but are not limited to, adherence to approved 
budget, compliance with the Budget and Performance Requirements, and 
adherence to the Chief Financial Officers Act.
    The fifth and final criterion is ``Administrative Activities,'' 
which measures a contractor's administrative management of the Medicare 
program. A contractor must efficiently and effectively manage its 
operations to ensure constant improvement in the way it does business. 
Proper systems security, Automated Data Processing (ADP) maintenance, 
and disaster recovery plans must be in place. It must also ensure that 
all necessary actions and system changes have been made and tested so 
that it is meeting established milestones along the critical path of 
HCFA's requirements for millennium compliance. Year 2000 compliant 
means information technology that accurately processes date and time 
data (including, but not limited to, calculating, comparing, and 
sequencing) from, into, and between the centuries (the years 1999 and 
2000), and leap year calculations. Furthermore, Year 2000 compliant 
information technology, when used in combination with other information 
technology, must accurately process date and time data if the other 
information technology properly exchanges date and time data with it. A 
contractor's evaluation under the Administrative Activities criterion 
may include, but is not limited to, establishment, application, 
documentation, and effectiveness of internal controls, which are 
essential in all aspects of a contractor's operation. Administrative 
Activities evaluations may also include implementation reviews of 
performance improvement plans, change management plans, and data and 
reporting requirements.
    We have also developed separate measures for evaluating unique 
activities of Regional Home Health Intermediaries (RHHIs). Section 
1816(e)(4) of the Act requires the Secretary to designate regional 
agencies or organizations, which are already Medicare intermediaries 
under section 1816, to perform bill processing functions with respect 
to freestanding home health agency (HHA) bills. The law requires that 
we limit the number of such regional intermediaries (i.e., RHHIs) to 
not more than ten (see 42 CFR 421.117 and the Final Rule published in 
the Federal Register on May 19, 1988 (53 FR 17936) for more details 
about the RHHIs).
    In addition, section 1816(e)(4) of the Act requires the Secretary 
to develop criteria and standards in order to determine whether to 
designate an agency or organization to perform services with respect to 
hospital affiliated HHAs. We have developed separate measures for RHHIs 
in order to evaluate the distinct RHHI functions. These functions 
include the bills processing of freestanding HHAs, hospital affiliated 
HHAs, and hospices. Through an evaluation using these criteria and 
standards we may determine whether the RHHI functions should be moved 
from one intermediary to another in order to ensure effective and 
efficient administration of the program benefit.
    Below we list the criteria and standards to be used for evaluating 
the performance of intermediaries and carriers. In a number of 
instances, we identify a HCFA manual as a source of more detailed 
requirements. Intermediaries and carriers have copies of various 
Medicare manuals referenced in this notice. Members of the public also 
have access to our manualized instructions.
    Medicare manuals are available for review at local Federal 
Depository Libraries (FDLs). Under the FDL Program, government 
publications are sent to approximately 1400 designated public libraries 
throughout the United States. Interested parties may examine

[[Page 67922]]

the documents at any one of the FDLs. Some may have arrangements to 
transfer material to a local library not designated as an FDL. To 
locate the nearest FDL, individuals should contact any public library.
    In addition, individuals may contact regional depository libraries, 
which receive and retain at least one copy of nearly every Federal 
government publication, either in printed or microfilm form, for use by 
the general public. These libraries provide reference services and 
interlibrary loans; however, they are not sales outlets. Individuals 
may obtain information about the location of the nearest regional 
depository library from any library. Information may also be obtained 
from the following web site: www.hcfa.gov/pubforms/progman.htm. Some 
manuals may be obtained from the following web site: www.hcfa.gov/
pubforms/p2192toc.htm.
    Finally, all HCFA regional offices maintain all Medicare manuals 
for public inspection. To find the location of the nearest available 
HCFA regional office, individuals may call the FOR FURTHER INFORMATION 
CONTACT individual listed at the beginning of this notice. That 
individual can also provide information about purchasing or subscribing 
to the various Medicare manuals.

III. Criteria and Standards for Intermediaries

Claims Processing Criterion

    The Claims Processing criterion contains 4 mandated standards.

Standard 1--95% of clean electronically submitted non-Periodic Interim 
Payment (PIP) bills paid within statutorily specified time frames. 
Clean bills are defined as bills that do not require Medicare 
intermediaries and/or carriers to investigate or develop external to 
their Medicare operations on a prepayment basis. Specifically, clean, 
non-PIP electronic claims can be paid as early as the 14th day (13 days 
after the date of receipt) and must be paid by the 31st day (30 days 
after the date of receipt).
Standard 2--95% of clean paper non-PIP bills paid within specified time 
frames. Specifically, clean, non-PIP paper claims can be paid as early 
as the 27th day (26 days after the date of receipt), and must be paid 
by the 31st day (30 days after the date of receipt).
Standard 3--Reversal rate by Administrative Law Judges (ALJ) is 
acceptable. HCFA has defined an acceptable reversal rate as one that is 
at or below 5.0%.
Standard 4--75% of reconsiderations are processed within 60 days and 
90% are processed within 90 days.

    Additional functions may be evaluated under this criterion. These 
functions include, but are not limited to the--
     Bill processing accuracy;
     Attainment of Electronic Media Claims goals;
     Establishment and maintenance of relationship with Common 
Working File Host;
     Management of shared processing sub-contract; and
     Analysis and validation of data.

Customer Service Criterion

    We may review the intermediary's efforts to enhance customer 
satisfaction through the use of customer feedback. Results of the 
feedback may be used to establish comparable data on customer 
satisfaction and to identify areas in need of improvement. The results 
may be summarized for publication in the report of contractor 
performance and shared with individual contractors.
    Functions which may be evaluated under this criterion include, but 
are not limited to, the--
     Accuracy, timeliness and appropriateness of responses to 
telephone inquiries;
     Accuracy of processing reconsideration cases with clear 
responses and appropriate customer-friendly tone and clarity;
     Accuracy, clearness and timeliness of responses to written 
inquiries with appropriate customer-friendly tone and clarity;
     Establishment and maintenance of relationships with 
professional and beneficiary organizations and using focus groups; and
     Conduct of educational and outreach efforts.

Payment Safeguards Criterion

    The Payment Safeguard criterion contains 2 mandated standards.

Standard 1--Decisions of SNF demand bills are accurate.
Standard 2--TEFRA target rate adjustments, exceptions, and exemptions 
are processed within mandated time frames. Specifically, applications 
must be processed to completion within 75 days after receipt by the 
contractor or returned to the hospitals as incomplete within 60 days of 
receipt.

    Additional functions may be evaluated under this criterion. These 
functions include, but are not limited to--
     Medical Review. We may evaluate if the fiscal 
intermediary--
    + Increased the effectiveness of medical review payment safeguard 
activities;
    + Exercised accurate and defensible decision making on medical 
reviews;
    + Educated and communicated effectively with the provider and 
supplier community;
    + Collaborated with other internal components and external entities 
to ensure correct claims payment, and to address situations of fraud, 
waste, and abuse.
     Audit and Reimbursement. We may--
    + Assess the quality of a fiscal intermediary's activities in the 
audit and settlement of Medicare cost reports; and
    + Assess the timeliness of Medicare cost report settlements and the 
accuracy by which a fiscal intermediary has established interim 
provider payments.
     Medicare Secondary Payer. We may--
    + Review the intermediary's MSP processes in administering the 
program and for identifying and recovering mistaken Medicare payments 
in accordance with MIM, Part 3, Secs. 3400ff and 3600ff, and pertinent 
HCFA instructions and transmittals;
    + Develop outcome measures to assess the intermediary's accuracy in 
reporting savings and to determine if claim development procedures are 
followed;
    + Evaluate the accuracy and timeliness of claims payment and 
determine if the Common Working File, internal systems and required 
software are utilized as prescribed; and
    + Evaluate the contractor's ability to prioritize and process 
recoveries in compliance with instructions, determine if recoveries of 
all payers are processed equally, and ensure that audit trail 
documentation exists.
     Fraud and Abuse. We may evaluate if the fiscal 
intermediary--
    + Used proactive and reactive techniques in the detection and 
development of potential fraud cases;
    + Used other corrective and preventive actions (such as payment 
suspensions, Civil Monetary Penalties (CMPs), overpayment assessments, 
pre-payment or post-payment claims reviews, system fixes, claim 
denials, etc.);
    + Properly developed fraud cases for referral to the Office of the 
Inspector General, HHS; and
    + Maintained a good working relationship and extensive networking 
with both internal components and external partners.

[[Page 67923]]

Fiscal Responsibility Criterion

    We may review the intermediary's efforts to establish and maintain 
appropriate financial and budgetary internal controls over benefit 
payments and administrative costs. Proper internal controls must be in 
place to ensure that contractors comply with their agreements with 
HCFA.
    Additional matters to be reviewed under the Fiscal Responsibility 
criterion may include, but are not limited to--
     Adherence to approved budget;
     Compliance with the Budget and Performance Requirements;
     Adherence to the Chief Financial Officers Act; and
     Control of administrative cost and benefit payments.

Administrative Activities Criterion

    We may measure a contractor's administrative ability to manage the 
Medicare program. We may evaluate the efficiency and effectiveness of 
its operation, its system of internal controls, and its compliance with 
HCFA directives and initiatives.
    A contractor must efficiently and effectively manage its operations 
to assure constant improvement in the way it does business. Proper 
systems security, ADP maintenance, and disaster recovery plans must be 
in place. It must also ensure that all necessary actions and system 
changes have been made and tested so that it is meeting established 
milestones along the critical path of HCFA's requirements for 
millennium compliance. Year 2000 compliant means information technology 
that accurately processes date and time data (including, but not 
limited to, calculating, comparing, and sequencing) from, into, and 
between the centuries (the years 1999 and 2000), and leap year 
calculations. Furthermore, Year 2000 compliant information technology, 
when used in combination with other information technology, must 
accurately process date and time data if the other information 
technology properly exchanges date and time data with it. A contractor 
must also test standard system changes to ensure the accurate 
implementation of HCFA instructions.
    HCFA's evaluation of a contractor under the Administrative 
Activities criterion may include, but is not limited to, reviews of the 
contractor's--
     Systems security;
     ADP maintenance;
     Disaster recovery plan;
     Performance Improvement Plans implementation;
     Change Management Plan implementation;
     Data and reporting requirements implementation; and
     Internal controls establishment and use.

IV. Criteria and Standards for Carriers

Claims Processing Criterion

    The Claims Processing criterion contains 5 mandated standards.

Standard 1--95% of clean electronically submitted claims processed 
within statutorily specified time frames. Specifically, clean 
electronic claims can be paid as early as the 14th day (13 days after 
the date of receipt) and must be paid by the 31st day (30 days after 
the date of receipt).
Standard 2--95% of clean paper claims processed within specified time 
frames. Specifically, clean paper claims can be paid as early as the 
27th day (26 days after the date of receipt) and must be paid by the 
31st day (30 days after the date of receipt).
Standard 3--98% of Explanations of Medicare Benefits (EOMBs) are 
properly generated.
Standard 4--95% of review determinations are accurate and clear with 
appropriate customer-friendly tone and clarity, and are completed 
within 45 days.

Standard 5--90% of carrier hearing decisions are accurate and clear 
with appropriate customer-friendly tone and clarity, and are completed 
within 120 days.

    Additional functions may be evaluated under this criterion. These 
functions include, but are not limited to, the--
     Claims Processing accuracy;
     Attainment of Electronic Media Claims goals;
     Management of shared processing sub-contract;
     Establishment and maintenance of relationship with the 
Common Working File Host; and
     Analysis and validation of data.

Customer Service Criterion

    The Customer Service criterion contains 1 mandated standard.
    Standard 1--Telephone inquiries are answered timely.
    Carriers are to achieve a monthly All Trunks Busy Rate of not more 
than 5%. For callers choosing to speak with a customer service 
representative, 97.5% or more of telephone calls are to be answered 
within 120 seconds; no less than 85% are to be answered within the 
first 60 seconds.
    We may review the carrier's efforts to enhance customer 
satisfaction through the use of customer feedback. Results of the 
feedback may be used to establish comparable data on customer 
satisfaction and to identify areas in need of improvement. The results 
may be summarized for publication in the report of contractor 
performance and shared with individual contractors.
    Additional functions may be evaluated under this criterion. These 
functions include, but are not limited to, the carrier's--
     Accuracy and appropriateness of responses to telephone 
inquiries;
     Accuracy, clearness, and timeliness of responses to 
written inquiries with appropriate customer-friendly tone and clarity;
     Establishment and maintenance of relationships with 
professional and beneficiary organizations and using focus groups; and
     Conduct of educational and outreach efforts.

Payment Safeguards Criterion

    Carrier functions that may be reviewed under this criterion 
include, but are not limited to--
     Medical Review. We may evaluate if the carrier --
    + Increased the effectiveness of medical review payment safeguard 
activities;
    + Exercised accurate and defensible decision making on medical 
reviews;
    + Effectively educated and communicated with the provider and 
supplier community;
    + Collaborated with other internal components and external entities 
to ensure correct claims payment, and to address situations of fraud, 
waste, and abuse.
     Medicare Secondary Payer. We may--
    + Review the carrier's MSP processes in administering the program 
and for identifying and recovering mistaken Medicare payments in 
accordance with the Medicare Carriers Manual (MCM, Part 3, Secs. 3375, 
4306.3, and 4307-4308.1), and pertinent HCFA instructions and 
transmittals;
    + Develop outcome measures to assess the carrier's accuracy in 
reporting savings and to determine if claim development procedures are 
followed;
    + Evaluate the accuracy and timeliness of claims payment and 
determine if the Common Working File, internal systems and required 
software are utilized as prescribed; and
    + Evaluate the contractor's ability to prioritize and process 
recoveries in compliance with instructions, determine if recoveries of 
all payers are processed equally, and ensure that audit trail 
documentation exists.
     Fraud and Abuse. We may evaluate if the carrier --

[[Page 67924]]

    + Used proactive and reactive techniques in the detection and 
development of potential fraud cases;
    + Used other corrective and preventive actions (such as payment 
suspensions, CMPs, overpayment assessments, education, pre-payment or 
post-payment claims reviews, system fixes, edits, claim denials, etc.);
    + Properly developed fraud cases for referral to the Office of the 
Inspector General, HHS;
    + Maintained a good working relationship and extensive networking 
with both internal components and external partners.

Fiscal Responsibility Criterion

    We may review the carrier's efforts to establish and maintain 
appropriate financial and budgetary internal controls over benefit 
payments and administrative costs. Proper internal controls must be in 
place to ensure that contractors comply with their agreements with 
HCFA.
    Additional matters to be under the Fiscal Responsibility criterion 
may include, but are not limited to--
     Compliance with the Budget and Performance Requirements;
     Adherence to approved budget;
     Adherence to the Chief Financial Officers Act; and
     Control of administrative cost and benefit payments.

Administrative Activities Criterion

    We may measure a carrier's administrative ability to manage the 
Medicare program. We may evaluate the efficiency and effectiveness of 
its operation, its system of internal controls and its compliance with 
HCFA's directives and initiatives.
    A contractor must efficiently and effectively manage its operations 
to assure constant improvement in the way it does business. Proper 
systems security, ADP maintenance, and disaster recovery plans must be 
in place. It must also ensure that all necessary actions and system 
changes have been made and tested so that it is meeting established 
milestones along the critical path of HCFA's requirements for 
millennium compliance. Year 2000 compliant means information technology 
that accurately processes date and time data (including, but not 
limited to, calculating, comparing, and sequencing) from, into, and 
between the centuries (the years 1999 and 2000), and leap year 
calculations. Furthermore, Year 2000 compliant information technology, 
when used in combination with other information technology, must 
accurately process date and time data if the other information 
technology properly exchanges date and time data with it. Also, a 
contractor must test standard system changes to ensure accurate 
implementation of HCFA instructions.
    A carrier's evaluation under this criterion may include, but is not 
limited to, reviews of--
     Proper systems security;
     ADP maintenance;
     Disaster recovery plan;
     Performance improvement plans implementation;
     Change management plan implementation;
     Data and reporting requirements implementation; and
     Internal controls establishment and use.

V. Regional Home Health Intermediaries' (RHHIs') Criterion

    The following standards are mandated for the Regional Home Health 
Intermediaries' criterion:

Standard 1--95% of clean electronically submitted non-PIP HHA/hospice 
bills paid within statutorily specified time frames. Specifically, 
clean, non-PIP electronic claims can be paid as early as the 14th day 
(13 pays after the date of receipt) and must be paid by the 31st day 
(30 days after the date of receipt).
Standard 2--95% of clean paper non-PIP HHA/hospice bills paid within 
specified time frames. Specifically, clean, non-PIP paper claims can be 
paid as early as the 27th day (26 days after the date of receipt) and 
must be paid by the 31st day (30 days after the date of receipt).
Standard 3--75% of HHA/hospice reconsiderations are processed within 60 
days and 90% are processed within 90 days.

    We may use this criterion to review a RHHI's performance with 
respect to handling the HHA/hospice workload. This includes processing 
HHA/hospice bills timely and accurately, properly paying and settling 
HHA cost reports, and timely and accurately processing reconsiderations 
from beneficiaries, HHAs, and hospices.

VI. Action Based on Performance Evaluations

    A contractor's performance is evaluated against applicable program 
requirements for each criterion. Each contractor must certify that all 
information submitted to HCFA relating to the contractor management 
process, including without limitation all records, reports, files, 
papers and other information, whether in written, electronic, or other 
form, is accurate and complete to the best of the contractor's 
knowledge and belief. A contractor will also be required to certify 
that its files, records, documents, and data have not been manipulated 
or falsified in an effort to receive a more favorable performance 
evaluation. A contractor must further certify that, to the best of its 
knowledge and belief, the contractor has submitted, without withholding 
any relevant information, all information required to be submitted with 
respect to the contractor management process under the authority of 
applicable law(s), regulation(s), contracts, or HCFA manual 
provision(s). Any contractor that makes a false, fictitious, or 
fraudulent certification may be subject to criminal and/or civil 
prosecution, as well as appropriate administrative action. Such 
administrative action may include debarment or suspension of the 
contractor, as well as the termination or nonrenewal of a contract.
    If a contractor meets the level of performance required by 
operational instructions, it meets the requirements of that criterion. 
Any performance measured below basic operational requirements 
constitutes a program deficiency. The contractor will be required to 
develop and implement a Performance Improvement Plan for each program 
deficiency identified. The contractor will be monitored to ensure 
effective and efficient compliance with the performance improvement 
plan, and to ensure improved performance where requirements are not 
met. The contractor will also be monitored when a program vulnerability 
in any performance area is identified. A program vulnerability exists 
when a contractor's performance complies with basic program 
requirements, but one or more weaknesses are present which could result 
in deficient performance if left ignored.
    The results of performance evaluations and assessments under all 
five criteria will be used for contract management activities and will 
be published in the contractor's annual performance report. We may 
initiate administrative actions as a result of the evaluation of 
contractor performance based on these performance criteria. Under 
sections 1816 and 1842 of the Act, we consider the results of the 
evaluation in our determinations when--
     Entering into, renewing, or terminating agreements or 
contracts with contractors;
     Deciding other contract actions for intermediaries and 
carriers (such as deletion of an automatic renewal clause). These 
decisions are made on a case-by-case basis and depend primarily

[[Page 67925]]

on the nature and degree of performance. More specifically, they depend 
on the--
    + Relative overall performance compared to other contractors;
    + Number of criteria in which deficient performance occurs;
    + Extent of each deficiency;
    + Relative significance of the requirement for which deficient 
performance occurs within the overall evaluation program; and
    + Efforts to improve program quality, service, and efficiency.
     Deciding the assignment or reassignment of providers and 
designation of regional or national intermediaries for classes of 
providers.
    We make individual contract action decisions after considering 
these factors in terms of their relative significance and impact on the 
effective and efficient administration of the Medicare program.
    In addition, if the cost incurred by the intermediary or carrier to 
meet its contractual requirements exceeds the amount which the 
Secretary finds to be reasonable and adequate to meet the cost which 
must be incurred by an efficiently and economically operated 
intermediary or carrier, such high costs may also be grounds for 
adverse action.

VII. Response to Public Comments

    Because of the large number of items of correspondence we normally 
receive on Federal Register documents published for comment, we are 
unable 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 of that 
document.
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.
    We have reviewed this notice under the threshold criteria of 
Executive Order 13132 of August 4, 1999, Federalism, published in the 
Federal Register on August 10, 1999 (64 FR 43255). The Executive Order 
is effective November 2, 1999, which is 90 days after the date of this 
Order. We have determined that the notice does not significantly affect 
the rights, roles, and responsibilities of States.
    Section 202 of the Unfunded Mandates Reform Act of 1995 requires 
that agencies assess anticipated costs and benefits before issuing any 
rule that may result in an expenditure by State, local, or tribal 
governments, in the aggregate, or by the private sector, of $100 
million in any one year. This notice will not have an effect on the 
governments mentioned, and the private sector costs will not be greater 
than the $100 million threshold.

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

    Dated: October 6, 1999.
Michael M. Hash,
Deputy Administrator, Health Care Financing Administration.
[FR Doc. 99-31361 Filed 12-2-99; 8:45 am]
BILLING CODE 4120-01-P