[Federal Register Volume 65, Number 203 (Thursday, October 19, 2000)]
[Proposed Rules]
[Pages 62976-62982]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-26738]



[[Page 62975]]

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

Part V





Department of Health and Human Services





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



42 CFR Part 124



Compliance Alternatives for Provision of Uncompensated Services; 
Proposed Rule

  Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / 
Proposed Rules  

[[Page 62976]]


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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

42 CFR Part 124

RIN 0906-AA52


Compliance Alternatives for Provision of Uncompensated Services

AGENCY: Health Resources and Services Administration, HHS.

ACTION: Proposed rules.

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

SUMMARY: The rules proposed below would revise a compliance alternative 
applicable to health care facilities with Hill-Burton uncompensated 
services obligations. The revised compliance alternative would provide 
a more flexible compliance standard for facilities that principally 
serve nonpaying patient populations by reducing the amount of time 
needed to qualify for certification under the alternative and by 
providing for a provisional certification, where a facility is unable 
to qualify for full certification. The rules proposed below would also 
provide a compliance alternative for obligated facilities with 
histories of uncompensated services deficits, to enable them to make up 
the deficits on a timely basis. These revisions would have the effect 
of making it easier for facilities with uncompensated services 
obligations to meet those obligations, while still ensuring the 
availability of uncompensated services to persons unable to pay.

DATES: To be considered, the agency must receive comments on this 
proposed rule on or before December 18, 2000.

ADDRESSES: Submit comments in writing to Division of Facilities 
Compliance and Recovery, Office of Special Programs, Health Resources 
and Services Administration, 5600 Fishers Lane, Room 10C-16, Rockville, 
MD 20857 or submit comments by fax to 301-443-0619.

FOR FURTHER INFORMATION CONTACT: Mr. Eulas Dortch, 301-443-5656.

SUPPLEMENTARY INFORMATION: The Secretary of Health and Human Services 
proposes below to revise certain requirements relating to the 
compliance by health care facilities that received assistance under 
Title VI or Title XVI of the Public Health Service Act, 42 U.S.C. 291, 
et seq., and 42 U.S.C. 300q, et seq. with their assurance, given as a 
condition of such assistance, that they would provide a reasonable 
volume of services to persons unable to pay therefor. The regulations 
establishing the requirements for complying with this assurance, which 
is commonly known as the ``uncompensated services'' assurance, are 
codified at 42 CFR Part 124, Subpart F. The rules proposed below would 
revise one of several current compliance alternatives, to decrease the 
number of years needed to qualify for the alternative and to permit 
qualification on a provisional basis. The rules proposed below would 
also add another compliance alternative, designed for otherwise 
compliant Title VI-assisted facilities that are in chronic deficit in 
meeting their uncompensated services obligations.

I. Background

    The Hill-Burton uncompensated services regulations date, in their 
present form, back to 1979, when regulations containing the basic 
components of the present regulations were promulgated. The 1979 
regulations for the first time established a purely quantitative 
measure of the statutory ``reasonable volume of services'; this 
quantitative measure was a total'' obligation measured in dollars, 
broken down into annual compliance levels. They also provided that a 
facility that failed to provide in a given year uncompensated services 
in an amount sufficient to meet its annual compliance level would have 
a ``deficit,'' which it would have to make up in subsequent years. If 
not made up, the deficit (along with any additional deficits in later 
years) would accumulate, and be adjusted by any increases in the 
medical Consumer Price Index (CPI). See, Sec. 124.503(b)(3).
    In the years since 1979, the regulations have been amended several 
times--in 1986, 1987, 1994, and 1995. Aside from the amendment of the 
basic regulatory structure effected by the 1987 amendment, the rest of 
the amendments were directed at creating various alternative methods by 
which facilities could comply with their obligation to provide a 
reasonable volume of uncompensated services to persons unable to pay. 
These various ``compliance alternatives'' appear at Secs. 124.513-
124.516 of Subpart F. Although each of the compliance alternatives is 
addressed to different types of facilities, all of the facilities that 
qualify for the compliance alternatives share the same basic 
characteristics: they provide significant amounts of free or below cost 
care to persons unable to pay for that care, but, for various reasons, 
are unable to receive sufficient credit for the care they provide to 
meet their Hill-Burton uncompensated services obligations under the 
compliance standards codified at 42 CFR Secs. 124.501-124.512. As a 
consequence, prior to the adoption of the compliance alternatives set 
out at Secs. 124.513-124.516, these types of facilities were generally 
running uncompensated services deficits, despite providing substantial 
services on a free or below-cost basis to poor individuals. The 
compliance alternatives were adopted to address this anomaly.
    Over the years since 1979, the number of facilities with 
outstanding Hill-Burton uncompensated services obligations has shrunk 
from approximately 5,000 in 1979 to the present level of approximately 
850. Thus, approximately 4,150 Hill-Burton assisted facilities have 
fulfilled their obligation, provided as a condition of the federal 
assistance received, to provide a ``reasonable volume of uncompensated 
services to persons unable to pay therefor.'' However, a number of the 
remaining Hill-Burton obligated facilities operate compliant, fully 
expanded uncompensated services programs but fail to receive sufficient 
uncompensated services requests to satisfy their annual dollar 
obligations. (``Fully expanded'' means that the facilities make 
available on request, all of their services at no charge to persons 
unable to pay up to the limit of Category B eligibility (for facilities 
other than nursing homes) or Category C eligibility (for nursing 
homes).) Thus, they run Hill-Burton deficits on a chronic basis, and 
those deficits are adjusted upwards by the percentage change in the 
medical CPI, pursuant to Sec. 124.503(b)(3). The Department believes 
that many of these facilities may never be able to make up their 
deficits under the present requirements.
    A few statistics indicate the dimensions of the problem. As of the 
end of 1998, of the 424 Hill-Burton facilities in deficit, 226 had 
operated a fully expanded, compliant program for at least a year. Of 
these 226 facilities, 117 (52 percent, or 28 percent of the total 
number of facilities in deficit) had operated a fully expanded program 
for the last three years, and, despite providing over $73 million in 
uncompensated services in that period, saw their collective deficit 
increase from $178,724,130 to $180,748,408--an increase of one 
percent--in the same period. Of these 226 facilities, 64 facilities (28 
percent, or 15 percent of the total in deficit) operated fully expanded 
programs for the last two years, and, despite providing over $36 
million in uncompensated services in that period, saw their collective 
deficit decrease only $10.8 million, or 13 percent for that period, 
while in 33 of the 64 facilities, the deficits increased.

[[Page 62977]]

Of the 226 facilities, 45 facilities (20 percent, or 11 percent of the 
total in deficit) operated fully expanded programs in the last year 
and, despite providing over $9.8 million in uncompensated services in 
that period, saw their collective deficit increase from $57,374,195 to 
$61,739,838--an increase of 7.6 percent--in that period. It is 
projected that, because of the increasing deficits a number of these 
facilities are experiencing, 81 facilities will have at least another 
20 years under obligation, and 53 of these 81 will have obligations 
extending for the next 100 years.

II. Proposed Rules

    The rules proposed below share the objective of the prior 
compliance alternatives. Like those compliance alternatives, the rules 
proposed below have the goal of enabling facilities, which, by the 
nature of their operations have great difficulty or find it impossible 
to meet the dollar volume requirements of the general regulations but 
nonetheless provide significant uncompensated services to persons 
unable to pay, to comply with and complete their uncompensated services 
obligations. A corollary goal of this objective is the reduction or 
elimination of the uncompensated services deficits of such facilities.
    In the case of the proposed amendment to Sec. 124.516, the so-
called ``charitable facility'' compliance alternative, the proposed 
rule would permit a provisional certification, to make it easier for 
facilities to qualify for the alternative. See, proposed 
Sec. 124.516(d). Facilities could be provisionally certified, with 
credit toward their obligation earned during the period of provisional 
certification if they met the conditions of the provisional 
certification and with no credit earned if they failed to meet the 
conditions of the provisional certification. See, proposed 
Sec. 124.516(e)(2). The proposed amendment to Sec. 124.516 thus would 
enable facilities whose operations in fact qualify them for the 
charitable facility alternative to start earning credit under that 
alternative at the earliest possible date, instead of requiring a 
three-year track record, which is required under the alternative in its 
present form.
    In the case of the proposed new compliance alternative set out at 
proposed Sec. 124.517, the proposed rule would provide a means by which 
facilities in deficit, which remain in deficit despite running 
procedurally compliant uncompensated services programs, could eliminate 
their deficits and complete their obligations in a reasonable time 
frame. The compliance alternative at proposed Sec. 124.517 is available 
to facilities that do not restrict the availability of uncompensated 
services to their patient population in any way--i.e., they do not 
restrict the type of services of the facility available on an 
uncompensated basis, and they do not restrict eligibility for those 
uncompensated services (for example, by limiting uncompensated services 
to Category A individuals only, or by charging Category B or, for 
nursing homes, Category C individuals). In addition, those facilities 
must comply with the procedural requirements of the standard 
regulations with respect to notice, eligibility determinations, 
recordkeeping requirements, and so on. Also, these facilities provide 
broad notice of their program to provide services to the poor by:
    1. Posting Federally supplied Hill-Burton signs, in prescribed 
locations, that describe the facilities' obligation to provide 
uncompensated services to the poor and specify where to file 
complaints;
    2. Publishing notice of their Federal obligation in local 
newspapers, describing their allocation plan which includes all of 
their services to eligible persons requesting uncompensated services 
with incomes up to twice the poverty guidelines, in the case of 
hospitals, and up to triple the poverty guidelines for nursing homes;
    3. Distributing, to each person coming to the facilities for 
services, specific written notification of the Hill-Burton obligation, 
including the allocation plan, income eligibility criteria, timeframes 
for facilities to make determinations of patients' Hill-Burton 
eligibility, and where to make application for Hill-Burton assistance.
    Thus, it is clear that Hill-Burton facilities qualifying for the 
proposed alternative are unique from other facilities located in their 
areas. Although the non-Hill-Burton facilities may provide charity 
care, their programs tend not to be publically visible and often are 
mere writeoffs to charity after they have exhausted efforts to collect 
payments from the patients.
    Where a facility fails to meet its annual compliance level despite 
the existence of an unrestricted program, the Secretary believes that 
there is clear evidence that there is insufficient demand for the 
uncompensated services offered and that the facility should not have to 
incur a deficit due to a failure of demand. The proposed compliance 
alternative addresses this issue. In addition, we believe that the 
compliance alternative will provide a mechanism that will facilitate 
the goal of making up large deficits. The sheer size of a number of 
deficits leads to a level of discouragement that can affect a 
facility's performance. Where this has happened, the existence of the 
deficit has the perverse effect of harming, rather than helping, the 
pool of eligible individuals such facilities serve. The compliance 
alternative should encourage facilities with chronic deficits to reopen 
their uncompensated services programs and complete their obligations. 
This expansion would result in more uncompensated services provided to 
persons unable to pay. For example, based on the most recent data 
available at the time the NPRM was developed, hospitals which began 
operating fully expanded programs in fiscal year 1997 provided an 
average of 22 percent more uncompensated services than in the previous 
year under a limited program. Despite the increase in services, their 
average Hill-Burton deficit increased by 6 percent due to the effect of 
the CPI adjustment applied to large deficits. Nursing homes which began 
operating fully expanded programs in fiscal year 1997 provided an 
average of 39 percent more uncompensated services than in the previous 
year. Despite the increase in services, their average Hill-Burton 
deficit increased by 16 percent, also because of the CPI adjustment.
    Thus, while the NPRM would likely result in more facilities 
operating fully expanded programs, the greater benefit is that more 
uncompensated services will be provided during their periods of 
obligation.
    Approximately 188 hospitals nationwide could qualify for the 
proposed alternative once they begin to implement compliant and fully 
expanded uncompensated services programs. Significant is the fact that 
only four States have more than eight potentially qualifying 
facilities: New York, 32; Pennsylvania, 22; Wisconsin, 13; and 
Michigan, 12. Within the State of New York, 21 of the 32 facilities are 
the sole hospital care provider within their municipality. In 
Pennsylvania, this is true for 13 of the 27 facilities; in Wisconsin, 
12 of the 13 facilities; and in Michigan, 10 of the 12 facilities. This 
means that these facilities are not meeting their uncompensated 
services obligations because there are not enough Hill-Burton eligible 
people in their communities. They are not shifting the burden of caring 
for the poor to other facilities since in most cases the Hill-Burton 
obligated facilities are the only community providers.
    The proposed alternative could impact as many as 121 nursing homes

[[Page 62978]]

nationwide once they all begin to implement compliant and fully 
expanded uncompensated services programs. Significant is the fact that 
only two States, Michigan with 20 facilities and Ohio, with 15 
facilities, have more than seven qualifying nursing homes. Thirty 
States have three or fewer facilities, with 15 of the States having no 
facilities. Further, the typical nursing home has 75-90 percent of its 
patients covered by Medicaid and Medicare, leaving few and sometimes no 
Hill-Burton eligible patients for credit against their obligations.
    For these reasons, we conclude that where a Hill-Burton facility 
has a record of operating a visible, compliant, and fully expanded 
uncompensated services program, its uncompensated services deficit is 
due to a lack of community need.
    Proposed Sec. 124.517 provides that an existing deficit may be made 
up by converting the deficit to years and providing uncompensated 
services in compliance with the compliance alternative for the 
additional period of time so calculated. See, proposed Sec. 124.517(d). 
The concept underlying the method proposed is to determine, for years 
prior to the first year in which the facility operated a compliant, 
fully expanded program, what percentage the facility's deficit is of 
its total obligation and then to multiply the facility's total period 
of obligation by that percentage to determine how many years of service 
that deficit represents; from that point, the years in compliance with 
the alternative are subtracted from the deficit years to determine how 
many years and days of obligation would remain under the alternative. 
The following examples illustrate how this deficit-to-years conversion 
would work.

Example A: Facility Where 20-Year Statutory Period Has Ended

    Assumed facts: (1) Fiscal year-end date: December 31; (2) 20-year 
end date: April 1, 1987; (3) year or years in which facility operated a 
fully expanded, compliant program: 1 (1998); (4) years in period of 
obligation: 7 years, 91 days (7.249 years); (5) total compliance level 
obligation in 1997 dollars: $356,684; (6) total outstanding deficit 
through 1997: $160,116.
    Calculation: (1) Divide the total deficit, prior to ``alternative 
years'' by the total obligation: $160,116/$356,684 = .45 (percentage of 
deficit); (2) multiply the percentage of deficit by the years in the 
period of obligation: .45  x  7.249 = 3.26 (number of deficit years, 
under the alternative); (3) subtract the number of compliant, fully 
expanded years: 3.26 years--1 year = 2.26 years (number of years to be 
made up under the alternative); (4) multiply the fractional part of the 
year by 365: .26  x  365 = 95 (fraction converted to days); (5) add the 
whole years to the number of days under obligation: 2 years + 95 days = 
2 years, 95 days (period of time under compliance alternative for 
complete deficit make-up); (6) add the years and days to the end of the 
last fiscal year for which the facility operated a fully expanded 
program: December 31, 1998 + 2 years, 95 days = April 5, 2001.
    Example B: Facility Where the 20-Year Statutory Period Has Not Yet 
Ended
    Assumed facts: (1) Fiscal year-end date: December 31; (2) 20-year 
end date: April 1, 2000; (3) year or years in which facility operated a 
fully expanded, compliant program: 2 (1998 and 1999); (4) years in 
period of obligation through 1997: 18 years; (5) total compliance level 
obligation in 1997 dollars: $356,684; (6) total outstanding deficit 
through 1997: $160,116.
    Calculation: (1) Divide the total deficit by the total obligation 
through fiscal year 1997: $160,116/$356,684 = .45 (percentage of 
deficit); (2) multiply the percentage of deficit by the years in period 
of obligation through fiscal year 1997: .45  x  18 = 8.1 (number of 
deficit years, under the alternative); (3) subtract the number of 
compliant, fully expanded years: 8.1 years--2 years = 6.1 years (number 
of years to be made up under the alternative); (4) multiply the 
fractional part of the year by 365: .1  x  365 = 37 (the number of days 
to be added to the whole years); (5) add the whole years to the number 
of days under obligation: 6 years + 37 days = 6 years, 37 days; (6) add 
the years and days to the 20-year end date: April 1, 2000 + 6 years, 37 
days = May 8, 2006.
    Comments are invited on the above methodology and criteria.
    In addition to the foregoing, various technical and conforming 
changes to the existing Subpart F are proposed.

III. Summary of Supporting Analyses

Executive Order 12866

    Executive Order 12866 requires that all regulations reflect 
consideration of alternatives, costs, benefits, incentives, equity, and 
available information. Regulations must meet certain standards, such as 
avoiding unnecessary burden. Regulations which are ``significant'' 
because of cost, adverse effects on the economy, inconsistency with 
other agency actions, budgetary impact, or novel legal or policy issues 
require special analysis. The Department has determined that this rule 
will not have an annual effect on the economy of $100 million or more, 
and does not otherwise meet the definition of a ``significant'' rule 
under Executive Order 12866.

The Regulatory Flexibility Act

    The Regulatory Flexibility Act requires that agencies analyze 
regulatory proposals to determine whether they create a significant 
impact on a substantial number of small entities. As the total universe 
of facilities with outstanding Hill-Burton obligations is small 
(approximately 850 facilities) and approximately half of these are 
presently either without deficit or have elected to comply with their 
uncompensated services obligations through other compliance options, it 
is not anticipated that the proposal will affect a substantial number 
of small entities, within the meaning of the Act. Moreover, the impact 
of the proposed rules should be positive, as they would lessen the 
burden of compliance on those facilities that would elect to utilize 
either of the proposed compliance options. Accordingly, the Secretary 
certifies that the rules proposed below would not create a significant 
impact on a substantial number of small entities.

Paperwork Reduction Act

    The proposed unrestricted availability compliance alternative for 
Title VI facilities rules do not contain any information collection 
requirements subject to OMB review under the Paperwork Reduction Act of 
1995. The proposed amendment to the charitable facility compliance 
alternative rule contains information collections which are subject to 
review by the Office of Management and Budget (OMB) under the Paperwork 
Reduction Act of 1995. The underlying purpose of this rule is to 
decrease recordkeeping, reporting, and notification burden for the 
charitable facilities not already certified under the alternative. 
Facilities receiving prospective certification under the charitable 
facility compliance alternative will no longer be required to maintain 
extensive records on uncompensated services (Sec. 124.510(a)), but 
instead will have to maintain only records which document its 
eligibility for the compliance alternative (Sec. 124.510(b)). These 
documents are ordinarily retained by the facilities so the 
recordkeeping requirement imposes no additional burden. This change is 
expected to reduce the recordkeeping burden by 75 hours per facility 
per year.
    Similarly, reporting burden will be reduced. Charitable facilities 
will be required to apply once for the certification (Sec. 124.516(c)), 
and

[[Page 62979]]

thereafter will need only to certify their continued eligibility 
annually (Sec. 124.509(b)). Currently, facilities in deficit status, 
which include charitable facilities obligated under the general rule, 
must file a report each year which documents the amount of 
uncompensated care provided (Sec. 124.509(a)). This change in reporting 
requirements is expected to reduce the reporting burden by 6 hours per 
facility in the first year, and by 13.5 hours per facility in 
subsequent years.
    Finally, notification/disclosure burden will be eliminated, because 
the facilities will no longer be required to: (1) Publish a notice each 
year of the availability of uncompensated services (Sec. 124.504(a)); 
(2) provide individual written notices to each person seeking service 
in the facility (Sec. 124.504(c)); or (3) provide a determination of 
eligibility to each person applying for uncompensated service 
(Sec. 124.507). These changes are expected to reduce the notification 
burden by 380 hours per facility per year.
    All sections of the regulations that contain reporting, 
recordkeeping, or notification/disclosure requirements previously have 
been approved by OMB under the Paperwork Reduction Act (OMB #0915-
0077). The public is invited to provide comments on this information 
collection requirement so that the Department of Health and Human 
Services may:
    (1) Evaluate whether the proposed collections of information are 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimates of the burdens 
of the collections of information, including the validity of the 
methodology and assumptions used;
    (3) Enhance the quality, utility and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collections of information on those 
who are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology, e.g., permitting electronic 
submission of responses. Written comments should be sent to Mr. Eulas 
Dortch, Director, Division of Facilities Compliance and Recovery, 
Office of Special Programs, Health Resources and Services 
Administration, 5600 Fishers Lane, Room 10C-16, Rockville, MD 20857. 
The title, description, and respondent description of the information 
collections are available from Mr. Dortch with an estimate of the 
annual reporting and recordkeeping burden.
    Included in the estimate is the time for reviewing instructions, 
searching existing data sources, gathering and maintaining the data 
needed, and completing and reviewing the collection of information.

Unfunded Mandates Reform Act

    The proposed rules contain no Federal mandates for State, local, or 
tribal governments or the private sector.

Executive Order 13132

    The proposed rules have no impact on federalism as set forth in 
Executive Order 13132, which became effective on November 8, 1999, 
replacing Executive Order 12612.

Environmental Impact Statement

    The proposed rules have no impact on the quality of the human 
environment and, therefore, an Environmental Impact Statement is not 
required.

List of Subjects in 42 CFR Part 124

    Grant programs--health, Health care, Health facilities, Loan 
programs--health, Low income persons, Reporting and recordkeeping 
requirements.

    Dated: November 29, 1999.
Claude Earl Fox,
Administrator, Health Resources and Services Administration.
    Approved: June 29, 2000.
Donna E. Shalala,
Secretary.
    For the reasons set out in the preamble, it is proposed to amend 
part 124 of title 42, Code of Federal Regulations, as follows:

PART 124--MEDICAL FACILITY CONSTRUCTION AND MODERNIZATION

    1. Revise the authority citation for part 124 to read as follows:

    Authority: 42 U.S.C. 216, 300r, 300s, unless otherwise noted.

Subpart F--Reasonable Volume of Uncompensated Services to Persons 
Unable to Pay

    2. Revise the first sentence of Sec. 124.503(c)(1) to read as 
follows:


Sec. 124.503  Compliance level.

* * * * *
    (c) * * * (1) Except for facilities certified under Sec. 124.513, 
Sec. 124.514, Sec. 124.515, Sec. 124.516, or Sec. 124.517, if a 
facility provides in a fiscal year uncompensated services in an amount 
exceeding its annual compliance level, it may apply the amount of 
excess to reduce its annual compliance level in any subsequent fiscal 
year. * * *
* * * * *
    3. Revise the heading and introductory text of paragraph (a) of 
Sec. 124.508 to read as follows:


Sec. 124.508  Cessation of uncompensated services.

    (a) Facilities not certified under Sec. 124.513, Sec. 124.514, 
Sec. 124.515, Sec. 124.516, or Sec. 124.517. Where a facility, other 
than a facility certified under Sec. 124.513, Sec. 124.514, 
Sec. 124.515, Sec. 124.516, or Sec. 124.517, has maintained the records 
required by Sec. 124.510(a) and determines based thereon that it has 
met its annual compliance level for the fiscal year or the appropriate 
level for the period specified in its allocation plan, it may, for the 
remainder of that year or period:
* * * * *
    4. Revise the heading of paragraph (a) and add paragraph (e) to 
Sec. 124.509 to read as follows:


Sec. 124.509  Reporting requirements.

    (a) Facilities not certified under Sec. 124.513, Sec. 124.514, 
Sec. 124.515, Sec. 124.516, or Sec. 124.517. * * *
* * * * *
    (e) Facilities certified under Sec. 124.517. If a facility 
certified under Sec. 124.517 ceases to provide uncompensated services 
consistent with its certification under that section because of 
financial inability, it shall report such cessation to the Secretary 
within 90 days of the cessation and provide any documentation or 
information relating to the provision or cessation of uncompensated 
services that the Secretary may require.
* * * * *
    5. Revise the heading of paragraph (a) and the heading and the 
first sentence of paragraph (b) of Sec. 124.510 to read as follows:


Sec. 124.510  Record maintenance requirements.

    (a) Facilities not certified under Sec. 124.513, Sec. 124.514, 
Sec. 124.515. Sec. 124.516, or Sec. 124.517. * * *
* * * * *
    (b) Facilities certified under Sec. 124.513, Sec. 124.514, 
Sec. 124.516, or Sec. 124.517. A facility certified under Sec. 124.513, 
Sec. 124.514, Sec. 124.516, or Sec. 124.517 shall retain, make 
available for public inspection consistent with personal privacy, and 
provide to the Secretary on request any records necessary to document 
compliance with the applicable requirements of this subpart in any 
fiscal year, including those documents provided to the Secretary

[[Page 62980]]

under Sec. 124.513(c), Sec. 124.514(c), Sec. 124.516(c), or 
Sec. 124.517(b), as applicable. * * *
* * * * *
    6. Revise the first sentence of paragraph (a)(3) and paragraph 
(b)(1)(iii)(C) of Sec. 124.511 to read as follows:


Sec. 124.511  Investigation and determination of compliance.

    (a) * * *
    (3) When the Secretary investigates a facility, the facility, 
including a facility certified under Sec. 124.513, Sec. 124.514, 
Sec. 124.515, Sec. 124.516, or Sec. 124.517, shall provide to the 
Secretary on request any documents, records and other information 
concerning its operation that relate to the requirements of this 
subpart. * * *
* * * * *
    (b) * * *
    (1) * * *
    (iii) * * *
    (C) The facility had procedures in place that complied with the 
requirements of Sec. 124.504(c), Sec. 124.505, Sec. 124.507, 
Sec. 124.509, 125.510, Sec. 124.513(b)(2), Sec. 124.514(b)(2), 
Sec. 124.515, Sec. 124.516(b)(1) or (b)(2), as applicable, or 
Sec. 124.517(b), and systematically and correctly followed such 
procedures.
* * * * *
    7. Revise the introductory text of paragraph (b) and paragraph 
(c)(1) of Sec. 124.512 to read as follows:


Sec. 124.512  Enforcement.

* * * * *
    (b) A facility, including a facility certified under Sec. 124.513, 
Sec. 124.514, Sec. 124.516, or Sec. 124.517, that has denied 
uncompensated services to any person because it failed to comply with 
the requirements of this subpart will not be in compliance with its 
assurance until it takes whatever steps are necessary to remedy fully 
the noncompliance, including:
* * * * *
    (c) * * *
    (1) Have a system for providing notice to eligible persons as 
required by Sec. 124.504(c), Sec. 124.513(b)(2), Sec. 124.514(b)(2), 
Sec. 124.516 (b)(2)(ii)(A), or Sec. 124.517(b)(2), as applicable;
* * * * *
    8. Revise Sec. 124.516 to read as follows:


Sec. 124.516  Charitable facility compliance alternative.

    (a) Effect of certification. The Secretary may certify as a 
``charitable facility'' a facility which meets the applicable 
requirements of this section. A facility which is certified or 
provisionally certified as a charitable facility is not required to 
comply with this subpart except as provided in this section.
    (b) Methods of qualification for certification or provisional 
certification. (1) A facility may qualify for certification under this 
section if it meets the criteria of paragraph (c)(1) or paragraph 
(c)(2) of this section.
    (2) A facility may qualify for a provisional certification under 
this section if it provides an assurance that meets the requirements of 
paragraph (d)(2) of this section.
    (c) Criteria for certification under paragraph (b)(1) of this 
section. A facility may qualify for certification under paragraph 
(b)(1) of this section if it met the criteria of either paragraph 
(c)(1) or paragraph (c)(2) of this section for the fiscal year 
preceding the request for certification. A facility that seeks 
certification under paragraph (c)(2) of this section must also meet the 
requirements of paragraph (c)(2)(i) or paragraph (c)(2)(ii) of this 
section during each year of certification.
    (1)(i) For facilities that are nursing homes. It received no monies 
directly from patients with incomes up to triple the current poverty 
line issued by the Secretary pursuant to 42 U.S.C. 9902, exclusive of 
amounts charged or received for purposes of claiming reimbursement 
under third party insurance or governmental programs, such as Medicaid 
or Medicare deductible or co-insurance amounts.
    (ii) For all other facilities. It received no monies directly from 
patients with incomes up to double the current poverty line issued by 
the Secretary pursuant to 42 U.S.C. 9902, exclusive of amounts charged 
or received for purposes of claiming reimbursement under third party 
insurance or governmental programs, such as Medicaid or Medicare 
deductible or coinsurance amounts.
    (2) It received at least 10 percent of its total operating revenue 
(net patient revenue plus other operating revenue, exclusive of any 
amounts received, or if not received, claimed, as reimbursement under 
Medicaid or Medicare) from philanthropic sources to cover operating 
deficits attributable to the provision of discounted services. 
Philanthropic sources include private trusts, foundations, churches, 
charitable organizations, state and/or local funding, and individual 
donors; and either--
    (i) Provides health services without charge or at a substantially 
reduced rate (exclusive of amounts charged or received for purposes of 
claiming reimbursement under third party insurance or governmental 
programs, such as Medicaid or Medicare deductible or coinsurance 
amounts) to persons who are determined by the facility to qualify for 
such reduced charges under a program of discounted health services. A 
``program of discounted health services'' must provide for financial 
and other objective eligibility criteria and procedures, including 
notice prior to nonemergency service, that assure effective opportunity 
for all persons to apply for and obtain a determination of eligibility 
for such services, including a determination prior to service where 
requested; or
    (ii) Makes all services of the facility available to all persons at 
no more than a nominal charge, exclusive of amounts charged or received 
for purposes of claiming reimbursement under third party insurance or 
governmental programs, such as Medicaid or Medicare deductible or 
coinsurance amounts.
    (d) Procedures for certification--(1) Certification under paragraph 
(b)(1) of this section. To be certified under paragraph (b)(1) of this 
section, a facility must submit to the Secretary, in addition to other 
materials that the Secretary may from time to time require, copies of 
the following:
    (i) An audited financial statement for the fiscal year preceding 
the request or other documents prescribed by the Secretary, sufficient 
to show that the facility meets the criteria of paragraph (c)(1) or 
(c)(2) of this section, as applicable;
    (ii) Where a facility claims qualification under paragraph 
(c)(2)(i) of this section, a complete description, and documentation 
where requested, of its program of discounted health services, 
including charging and collection policies of the facility, and 
eligibility criteria and notice and determination procedures used under 
its program(s) of discounted health services;
    (iii) Where the facility claims qualification under paragraph 
(c)(1) or paragraph (c)(2)(ii) of this section, a complete description, 
and documentation where requested, of its admission, charging, and 
collection policies.
    (2) Provisional certification under paragraph (b)(2) of this 
section. (i) In order to receive a provisional certification under 
paragraph (b)(2) of this section, prior to the beginning of the fiscal 
year for which provisional certification will be sought, the facility 
must submit to the Secretary an assurance, together with such 
documentation and in such form and manner as the Secretary may require, 
that it will operate during the fiscal year

[[Page 62981]]

a program that qualifies for certification under paragraph (b)(1) of 
this section.
    (ii) No later than 90 days following the end of the fiscal year in 
which a facility has operated a provisionally certified program, the 
facility must submit to the Secretary, the documentation required, as 
applicable, under paragraph (d)(1) of this section.
    (e) Period of effectiveness--(1) Certification under paragraph 
(b)(1) of this section. A certification by the Secretary under 
paragraph (b)(1) of this section remains in effect until withdrawn. The 
Secretary may disallow credit under this subpart when the Secretary 
determines that there has been a material change in any factor upon 
which certification was based or substantial noncompliance with this 
section. The Secretary may withdraw certification where the change or 
noncompliance has not been, in the Secretary's judgment, adequately 
remedied or otherwise continues.
    (2) Provisional certification under paragraph (b)(2) of this 
section. Where the Secretary is satisfied, based on the documentation 
submitted by the facility in accordance with paragraph (d)(2)(ii) of 
this section and any other information available to the Secretary, that 
the facility has complied with the terms of its provisional 
certification under paragraph (b)(2) of this section, the Secretary 
shall certify the facility under paragraph (b)(1) of this section. If 
the Secretary finds that the facility has not complied with the terms 
of its provisional certification under paragraph (b)(2) of this 
section, the facility will receive no credit towards its uncompensated 
services obligation during the fiscal year of provisional 
certification.
    (f) Deficits--(1) Title VI-assisted facilities--(i) Title VI-
assisted facilities with assessed deficits. Where a facility assisted 
under title VI of the Act has been assessed as having a deficit under 
Sec. 124.503(b) that has not been made up prior to certification under 
paragraph (b)(1) of this section, the facility may make up that deficit 
by either--
    (A) Demonstrating to the Secretary's satisfaction that it met the 
applicable requirements of paragraph (c) of this section for each year 
in which a deficit was assessed; or
    (B) Providing an additional period of service under this section on 
the basis of one year (or portion of a year) of certification for each 
year (or portion of a year) of deficit assessed. The period of 
obligation applicable to the facility under Sec. 124.501(b) shall be 
extended until the deficit is made up in accordance with the preceding 
sentence.
    (ii) Title VI-assisted facilities with unassessed deficits. Where 
any period of compliance under this subpart of a facility assisted 
under title VI of the Act has not been assessed, the facility will be 
presumed to have no allowable credit for the unassessed period. The 
facility may either--
    (A) Make up such deficit in accordance with paragraph (f)(1)(i) of 
this section; or
    (B) Submit an independent certified audit, conducted in accordance 
with procedures specified by the Secretary, of the facility's records 
maintained pursuant to Sec. 124.510. If the audit establishes to the 
Secretary's satisfaction that no, or a lesser, deficit exists for the 
period in question, the facility will receive credit for the period so 
justified. Any deficit which the Secretary determines still remains 
must be made up in accordance with paragraph (f)(1)(i)(B) of this 
section.
    (2) Title XVI-assisted facilities--(i) Title XVI-assisted 
facilities with assessed deficits. A facility assisted under title XVI 
of the Act which has an assessed deficit which was not made up prior to 
certification under paragraph (b)(1) of this section shall make up that 
deficit in accordance with paragraph (f)(1)(i) of this section. If it 
cannot make the showing required by that paragraph, it shall make up 
the deficit when its certification under paragraph (b)(1) of this 
section is withdrawn.
    (ii) Title XVI-assisted facilities with unassessed deficits. Where 
any period of compliance under this subpart of a facility assisted 
under title XVI of the Act has not been assessed, the facility will be 
presumed to have no allowable credit for the unassessed period. The 
facility may either--
    (A) Make up such deficit in accordance with paragraph (f)(1)(i) of 
this section; or
    (B) Submit an independent certified audit, conducted in accordance 
with procedures specified by the Secretary, of the facility's records 
maintained pursuant to Sec. 124.510. If the audit establishes to the 
Secretary's satisfaction that no, or a lesser, deficit exists for the 
period in question, the facility will receive credit for the period so 
justified. Any deficit which the Secretary determines still remains 
must be made up in accordance with paragraph (f)(2)(i) of this section.


Sec. 124.517  [Redesignated as Sec. 124.518]

    9. Redesignate Sec. 124.517 as Sec. 124.518 of subpart F.
    10. Add a new Sec. 124.517, to read as follows:


Sec. 124.517  Unrestricted availability compliance alternative for 
Title VI-assisted facilities.

    (a) Effect of certification. The Secretary may certify a Title VI-
assisted facility which meets the requirements of paragraph (b) of this 
section and the applicable requirements of this subpart as an 
unrestricted availability facility. A facility which is so certified is 
not required to comply with the requirements of this subpart, except as 
provided in this section or elsewhere in this subpart.
    (b) Criteria for qualification. A facility may qualify for 
certification under this section if, for any fiscal year for which 
certification is sought, it meets the following criteria:
    (1) It makes all services of the facility available without charge 
to all persons requesting uncompensated services from the facility who 
are eligible under Sec. 124.505, including all persons coming within 
Category B and, if applicable, Category C.
    (2) It complies with the notice and allocation plan requirements of 
Secs. 124.504 and 124.506, except that all notices published or 
provided must describe an allocation plan and program consistent with 
paragraph (b)(1) of this section.
    (3) It makes written determinations in accordance with 
Sec. 124.507, except that all favorable determinations must indicate 
that the facility will provide uncompensated services at no charge.
    (4) It provides uncompensated services consistent with the 
requirements of this section for the entire fiscal year for which 
certification is sought, except that a facility may cease providing 
such services and still receive credit, calculated in accordance with 
paragraph (d) of this section, where--
    (i) The facility has completed its total uncompensated services 
obligation, including making up any deficit; or
    (ii) The facility determines, and submits documentation which the 
Secretary finds, taking into account the factors identified in 
Sec. 124.511(c), sufficient to establish that it is financially unable 
to continue to meet the requirements of this section for the remainder 
of the fiscal year.
    (c) Period of effectiveness. A certification by the Secretary under 
this section remains in effect until withdrawn. The Secretary may 
withdraw certification under this section where the Secretary 
determines the facility is in substantial noncompliance with the 
requirements of paragraph (b) of this section and has not adequately 
remedied or otherwise continues such noncompliance. Where

[[Page 62982]]

the Secretary withdraws certification for part or all of a fiscal year 
or years, no credit may be granted for the period of unremedied 
substantial noncompliance.
    (d) Deficits. (1) Where a Title VI-assisted facility has been 
assessed as having a deficit under Sec. 124.503(b) that has not been 
made up prior to certification under this section, the facility may 
make up the deficit by providing uncompensated services in accordance 
with this section. The facility shall receive credit towards its 
deficit on the basis of one year, or part thereof, of credit towards 
each ``deficit year'' for each year, or part thereof, of operation in 
compliance with this section and the applicable requirements of this 
subpart.
    (2) The number of ``deficit years'' of a facility shall be 
calculated using a methodology as determined by the Secretary. The 
calculation shall consider the ratio of a facility's deficit to its 
obligation for years not fully expanded, and shall provide a facility 
full credit for fully expanded compliant years.

[FR Doc. 00-26738 Filed 10-18-00; 8:45 am]
BILLING CODE 4160-15-P