[Federal Register Volume 65, Number 192 (Tuesday, October 3, 2000)]
[Rules and Regulations]
[Pages 58919-58920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-25373]


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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 413, 489, and 498

[HCFA-1005-CN4]
RIN 0938-AI56


Medicare Program; Prospective Payment System for Hospital 
Outpatient Services: Provider-Based Criteria; Delay of Effective Date 
and Correction

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

ACTION: Notice of delay of effective date and correction.

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

SUMMARY: In the April 7, 2000 Federal Register (65 FR 18434), we 
published a final rule with comment period entitled, ``Prospective 
Payment System for Hospital Outpatient Services.'' New 
Secs. 413.24(d)(6) and 413.65 and revisions to Secs. 489.24, 498.2, and 
498.3 established requirements for facilities or organizations seeking 
provider-based status. This document delays the effective date of these 
provider-based regulations from October 10, 2000 to January 10, 2001, 
applicable for provider cost reporting periods beginning on or after 
January 10, 2001. In this document, we are also making a conforming 
change in the regulations text at Sec. 413.65(i) concerning 
enforcement.

DATES: Effective date:
    The effective date of new Secs. 413.24(d)(6) and 413.65 and revised 
Secs. 489.24, 498.2, and 498.3 is delayed until January 10, 2001.
    Applicability date: New Secs. 413.24(d)(6) and 413.65 and revised 
Secs. 489.24, 498.2, and 498.3 are applicable for provider cost 
reporting periods beginning on or after January 10, 2001.

FOR FURTHER INFORMATION CONTACT: George Morey, (410) 786-4653.

SUPPLEMENTARY INFORMATION:

I. Background

    On April 7, 2000, we published in the Federal Register (65 FR 
18434), a final rule with comment period entitled ``Prospective Payment 
System for Hospital Outpatient Services.'' Among the regulatory 
provisions included were new Secs. 413.24(d)(6) and 413.65 and 
revisions to Secs. 489.24, 498.2, and 498.3. These regulations 
established requirements for facilities or organizations that seek 
provider-based status (departments, provider-based entities, satellite 
facilities, and remote locations of hospitals). The effective date of 
the provider-based regulations, as stated in the April 2000 rule, is 
October 10, 2000.
    New Sec. 413.65(i) states that we will recover any overpayments 
resulting from inappropriate treatment of a facility or organization as 
provided-based. However, this provision states that no recovery will be 
made for any period prior to October 10, 2000, if the management of the 
facility or organization made a ``good faith'' effort to operate it as 
provided-based (as described in Sec. 413.65(i)(3)). The reference to 
October 10, 2000 was included to limit the ``good faith'' exception to 
periods before the effective date of the new requirements.

II. Provisions of This Notice

    Based on the following concerns, we have decided to delay the 
effective date of the provider-based portions of the April 2000 final 
rule until January 10, 2001, applicable for provider cost reporting 
periods beginning on or after January 10, 2001. For example, a provider 
whose cost reporting periods begins on April 1 will not be affected by 
these provider-based regulations until its cost reporting period 
beginning on April 1, 2001.
    To provide for smooth implementation of the provider-based 
regulations, we must clarify a number of administrative, procedural, 
and technical issues and provide our regional offices, which are 
charged with responsibility for making provider-based determinations, 
and hospitals with further training and guidance. We have completed a 
variety of training and informational activities, developed responses 
to ``Frequently Asked Questions,'' and held numerous meetings with 
individual providers and provider associations in order to communicate 
our policies and plans for implementing the new regulations. In the 
course of these activities, the need for additional guidance 
interpreting the regulations and addressing procedural and 
administrative concerns has become apparent. Given the time needed to 
complete and disseminate this material, we have concluded that 
implementation of the new provider-based regulations on October 10, 
2000 would be imprudent.
    A delay in the effective date of the provider-based regulations 
will allow for dissemination of the additional material described 
above, and will give hospitals and other providers additional time to 
fully assess the potential impact of both the new hospital outpatient 
prospective payment system and the new provider-based regulations on 
their facilities and organizations. A delay in

[[Page 58920]]

the effective date will also allow the industry more time to prepare to 
comply with the new regulations, and that in turn will help reduce the 
number of errors or other problems that might occur as a result of 
transition to the new rules. The phase-in of implementation over 12-
months, rather than a single date, will allow for a more manageable 
distribution of work for the regional offices, fiscal intermediaries, 
and hospitals. (As noted earlier, implementation by cost reporting 
periods means that a provider with a cost reporting period starting 
after January 10, 2001, would not be affected by the new regulations 
until the start of its next cost reporting period. Thus, a provider 
with an April 1 cost period would not be affected until April 1, 20001, 
a provider with a July 1 cost period would not be affected until July 
1, 20001, and so on.) We expect to issue further clarification of 
administrative, procedural, and technical issues as soon as possible.
    To provide for uniform and consistent application of the ``good 
faith'' exception to periods before the revised date, we are revising 
Sec. 413.65(i)(2) to state that the exception will be available only 
for main provider cost reporting periods beginning on or after January 
10, 2001 or, in the case of a facility or organization paid as a 
provider-based entity, for that entity's cost reporting periods 
beginning on or after January 10, 2001.
    In October 2000, we plan to host a town hall meeting to discuss 
specific aspects of the provider-based regulations at our headquarters 
in Baltimore, Maryland. The subjects of this meeting will be the ways 
in which a facility or organization can demonstrate that it serves the 
same patient population as the main provider (Sec. 413.65(d)(7)(i)), 
and the applicability of provisions on management contracts 
(Sec. 413.65(f)) to certain on-campus hospital departments. We will 
make further details regarding the town hall meeting available on our 
website, www.hcfa.gov.

III. Impact Statement

    In the April 2000 final rule, we discussed the impact of the 
provider-based regulations on providers and beneficiaries. Because we 
are delaying the implementation of the final rule, the current 
provider-based criteria, as stated in HCFA program manuals, will remain 
in effect for an additional period of time. We believe that any impact 
on small entities would be positive because the delay in effective date 
will allow more time for them to come into compliance with the new 
regulations, and also permit the new regulations to be implemented in a 
more clear and consistent manner.

Correction of Errors

    In FR Doc. 00-8215 of April 7, 2000 (65 FR 18434), make the 
following correction:

Regulations Text


Sec. 413.65  [Corrected]

    On page 18540, in column 3, Sec. 413.65 (i)(2) is corrected to read 
as follows:


Sec. 413.65  Requirements for a determination that a facility or an 
organization has provider-based status.

* * * * *
    (i) * * *
    (2) Recovery of overpayments. If HCFA finds that payments for 
services at the facility or organization have been made as if the 
facility or organization were provider-based, even though HCFA had not 
previously determined that the facility or organization qualified for 
provider-based status, HCFA will recover the difference between the 
amount of payments that actually were made and the amount of payments 
that HCFA estimates should have been made in the absence of a 
determination of provider-based status. Recovery will not be made for 
any main provider cost reporting periods beginning before January 10, 
2001 or, in the case of a facility organization paid as a provider-
based entity, for that entity's cost reporting periods beginning before 
January 10, 2001 if, during all of those periods, the management of the 
facility or organization made a good faith effort to operate it as a 
provider-based facility or organization, as described in paragraph 
(h)(3) of this section.
* * * * *


(Authority: Section 1888(t) of the Social Security Act (42 U.S.C. 
1395yy(t))

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


    Dated: September 19, 2000.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.

    Dated: September 22, 2000.
Donna E. Shalala,
Secretary.
[FR Doc. 00-25373 Filed 9-29-00; 12:41 pm]
BILLING CODE 4120-01-P