[Federal Register Volume 65, Number 211 (Tuesday, October 31, 2000)]
[Notices]
[Pages 64968-64974]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-27955]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

[HCFA-4010-GNC]
RIN 0938-AK26


Medicare Program; Criteria and Standards for Evaluating 
Intermediary and Carrier Performance During Fiscal Year 2001

AGENCY: Health Care Financing Administration (HCFA), Health and Human 
Services (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 October 1, 2000. 
The results of these evaluations are considered whenever we enter into, 
renew, or terminate an intermediary agreement or carrier contract or 
take other contract actions, for example, assigning or reassigning 
providers or services to an intermediary or designating regional or 
national intermediaries. We are requesting public comment on these 
criteria and standards.

EFFECTIVE DATE: The criteria and standards are effective October 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 
November 30, 2000.

ADDRESSES: Mail written comments (1 original and 3 copies) to the 
following address: Health Care Financing, Administration, Department of 
Health and Human Services, Attention: HCFA-4010-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, or
Room C5-16-03, 7500 Security Boulevard, Baltimore, Maryland.
    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. When commenting, please refer 
to file code HCFA-4010-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,

[[Page 64969]]

SW., Washington, DC, 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

A. Part A--Hospital Insurance

    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 us. These agencies or organizations, known as fiscal 
intermediaries, determine whether medical services are covered under 
Medicare, determine correct payment amounts and then make payments to 
the health care providers (for example, hospitals, skilled nursing 
facilities (SNFs), community mental health centers, etc.) 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. Evaluations of 
Medicare fee-for-service performance need not be limited to the current 
fiscal year (FY), other fixed term basis, or agreement term. We may 
evaluate performance using a time frame that does not mirror the FY or 
other fixed term. The evaluation of intermediary performance is part of 
our contract management process.

B. Part B Medical Insurance

    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. Evaluations of Medicare fee-for-
service performance need not be limited to the current FY, other fixed 
term basis, or contract term. We may evaluate performance using a 
timeframe that does not mirror the FY. The evaluation of carrier 
performance is part of our contract management process.

C. Development and Publication of Criteria and Standards

    In addition to the statutory requirements, 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. Section 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 December 3, 1999 at 64 FR 67920.
    To the extent possible, we make every effort to publish the 
criteria and standards before the beginning of the Federal FY, which is 
October 1. If we do not publish a Federal Register notice before the 
new FY begins, readers may presume that until and unless notified 
otherwise, the criteria and standards that were in effect for the 
previous FY remain in effect. In those instances in which we are unable 
to meet our goal of publishing the subject Federal Register notice 
before the beginning of the FY, 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. Any revised criteria and standards will measure 
performance prospectively; that is, we will not apply new measurements 
to assess performance on a retroactive basis.
    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 action or congressional mandate, there 
may be a need for changes that have direct impact upon the criteria and 
standards previously published, or that require the addition of new 
criteria or standards, or that cause the deletion of previously 
published criteria and standards. If we must make these changes, we 
will publish a Federal Register notice prior to implementation of the 
changes. In all instances, necessary manual issuances will be published 
to ensure that the criteria and standards are applied uniformly and 
accurately. Also, as in previous years, this 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. Analysis of and Response to Public Comments Received on FY 2000 
Criteria and Standards

    We received a total of 19 comments in response to the Federal 
Register notice published on December 3, 1999. All comments were 
reviewed, but none necessitated our reissuance of the FY 2000 Criteria 
and Standards. Medicare program components were advised of the concerns 
as appropriate. When warranted, revisions have been incorporated in 
this Federal Register notice. We are responding to the following 
performance evaluation issues:
    Comment: We were advised that the Blue Cross and Blue Shield 
Medicare contractors have a different scope of work for fraud and abuse 
(F&A) activities than the commercial contractors. As a result, Blue 
Cross and Blue Shield Plans' performance would need to be evaluated 
against the negotiated scope of work, not our manuals, since not all of 
our manual requirements are addressed in the contract amendment.
    Response: While it is true that there are some differences between 
performance expectations for Blue Cross and Blue Shield Plans as 
opposed to commercial contractors, the protocols used for evaluation of 
F&A activities in FY 2000 did not contain performance expectations that 
were not already contained in the Blue Cross and Blue Shield Medicare 
contract.
    Comment: We were advised that references under the Fiscal 
Responsibility Criterion relating to the evaluation of a contractor's 
adherence to the Chief Financial Officers' Act (CFO), 31 USC 503, et 
seq. are incorrect. The expectation to comply with this law is 
applicable to us, not the contractors. The expectation should be 
reworded to reflect that contractors assist the Secretary with being 
compliant with the CFO Act.
    Response: We agree that the requirement referenced in the above 
comment is applicable to us and not to the contractors. The FY 2001 
Federal Register notice has been revised to correctly reflect language 
as contained in the contract. Language in the Federal Register notice 
now specifically references the Federal Managers' Financial Integrity 
Act (FMFIA), 31 U.S.C. 1105, et seq; rather than the CFO Act and also 
states that contractors must cooperate with us in complying with the 
FMFIA.
    Comment: We were advised that the Agency issued a moratorium on the 
review of all demand bills because of the SNF prospective payment 
system

[[Page 64970]]

(PPS). It was suggested that we acknowledge that the standard would not 
be evaluated until the Agency issued instructions and intermediaries 
had a chance to train staff on such.
    Response: The moratorium on the review of all demand bills was 
lifted, and we issued appropriate instructions in March 2000.
    Comment: HCFA was advised that the carrier Customer Service 
criterion states that carriers are to achieve a monthly All Trunks Busy 
(ATB) Rate of not more than 5 percent. For callers choosing to speak 
with a customer service representative, 97.5 percent or more of the 
calls are to be answered within 120 seconds; no less than 85 percent 
are to be answered within the first 60 seconds. A question was raised 
as to whether this requirement applies only to call centers servicing 
beneficiaries (and providers, if the call centers are not separate).
    Response: The telephone service requirement referenced in the above 
comment is applicable to call centers servicing beneficiaries (and 
providers if the centers are not separate). The requirement is not 
applicable to call centers that specifically service providers.

III. Criteria and Standards--General

    Basic principles 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. 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, contract and our directives. We have developed a 
contractor management program for FY 2001 that outlines expectations of 
the contractor; measures the performance of the contractor; evaluates 
the performance against the expectations; and, takes appropriate 
contract action based upon the evaluation of the contractor's 
performance. We work to develop and refine measurable performance 
standards in key areas in order to better evaluate contractor 
performance. In addition to evaluating performance based upon 
expectations for FY 2001, we may conduct follow-up evaluations in areas 
when contractor performance was out of compliance with laws, 
regulations, and our performance expectations during FY 2000, thus 
having required the contractor to submit a Performance Improvement Plan 
(PIP).
    We have structured the FY 2001 Contractor Performance Evaluation 
into five criteria designed to meet those objectives. The first 
criterion 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, the accuracy of Explanations of Medicare 
Benefits (EOMBs) or Medicare Summary Notices (MSNs), the rate of cases 
reversed by the Administrative Law Judge (ALJ), the timeliness of 
intermediary reconsideration cases and the timeliness of carrier 
reviews and hearings. 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, the percent 
of bills and claims paid with interest, and the accuracy of 
reconsiderations, reviews, and hearings.
    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 timeliness of carrier replies to 
beneficiary telephone inquiries and the accuracy and clarity of 
responses to written inquiries. In FY 2001, customer feedback may be 
used to collect comparable data on customer satisfaction and identify 
areas in need of improvement. Further evaluation of services under this 
criterion may include, but is not limited to, a review of beneficiary 
relations; provider education; appropriateness of telephone inquiry 
responses; and walk-in service.
    The third criterion is ``Payment Safeguards,'' which evaluates 
whether the Medicare Trust Fund is safeguarded against inappropriate 
program expenditures. Intermediary and carrier performance may be 
evaluated in the areas of medical review (MR), Medicare secondary payer 
(MSP), F&A (also referred to as benefits integrity (BI)), overpayments 
(OP) , provider enrollment (PE), and audit and reimbursement (A&R). 
Mandated performance standards in the Payment Safeguards criterion are 
the accuracy of decisions on 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, review of the efficient 
and effective compilation and analysis of data to bring about 
continuous improvement in a contractor's efforts to safeguard Medicare 
program dollars. Intermediaries and carriers may also be evaluated on 
any Medicare Integrity Program (MIP) activities if performed under 
their Part A agreement or Part B contract.
    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 
the payment of benefits and costs 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 BPRs, and financial reporting requirements.
    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 (general and application controls), Automated 
Data Processing (ADP) maintenance, and disaster recovery plans must be 
in place. 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 and the 
degree to which the contractor cooperates with us in complying with the 
FMFIA. Administrative Activities evaluations may also include reviews 
related to implementation of change management instructions 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 us 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 these regional intermediaries (RHHIs) to not more than 10; 
see 42 CFR 421.117 and the final rule published in the Federal Register 
on May 19, 1988 at 53 FR 17936 for more details about the RHHIs.
    We have developed separate measures for RHHIs in order to evaluate 
the

[[Page 64971]]

distinct RHHI functions. These functions include the processing of 
bills from 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 several instances, 
we identify a Medicare 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 1,400 designated public 
libraries throughout the United States. Interested parties may examine 
the documents at any one of the FDLs. Some may have arrangements to 
transfer material to a local library not designated as a 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 of our Regional Offices (RO) 
maintain all Medicare manuals for public inspection. To find the 
location of the nearest available HCFA RO, you may call the individual 
listed at the beginning of this notice. That individual can also 
provide information about purchasing or subscribing to the various 
Medicare manuals.

IV. Criteria and Standards for Intermediaries

A. Claims Processing Criterion

    The Claims Processing criterion contains 4 mandated standards. 
Standard 1: 95 percent 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 percent 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 Judge (ALJ) is 
acceptable. We have defined an acceptable reversal rate by an ALJ as 
one that is at or below 5.0 percent.
    Standard 4: 75 percent of reconsiderations are processed within 60 
days and 90 percent 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;
     Establishment and maintenance of relationship with Common 
Working File (CWF) Host;
     Management of shared processing sub-contract;
     Analysis and validation of data; and
     Accuracy of processing reconsideration cases with clear 
responses and appropriate customer-friendly tone and clarity.

B. 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 (RCP) and shared with individual contractors.
    Functions that may be evaluated under this criterion include, but 
are not limited to--
     Accuracy, timeliness and appropriateness of responses to 
telephone inquiries;
     Accuracy and timeliness of responses to written inquiries 
with appropriate customer-friendly tone and clarity;
     Establishment and maintenance of relationships with 
professional and beneficiary organizations;
     Use of focus groups; and
     Conduct of educational and outreach efforts.

C. Payment Safeguards Criterion

    The Payment Safeguard criterion contains two mandated standards.
    Standard 1--Decisions on 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.
    Intermediaries may also be evaluated on any MIP activities if 
performed under their Part A agreement. These functions and activities 
include, but are not limited to--
     Medical Review.
     Applying analytical skills and focusing resources on 
particular providers or claim types that represent unnecessary or 
inappropriate care.
     Developing local and national data that identify 
aberrancies and form the basis of corrective actions, such as educating 
the provider, or become the basis of medical review policies or review 
screens as directed by Medicare program manuals and BPR requirements.
     Making decisions that comply with current coverage 
guidelines.
     Developing means of addressing aberrancies identified 
during the analysis of all local and national data.
     Medicare Secondary Payer.
     Identifying and recovering mistaken Medicare payments in 
accordance with appropriate Medicare Intermediary Manual instructions 
and other pertinent HCFA general instructions.
     Accurately reporting savings and following claim 
development procedures.
     Prioritizing and processing recoveries in compliance with 
instructions.
     Fraud and Abuse (also known as BI).
     Identifying fraud cases that exist within the 
intermediary's service area and taking appropriate actions to dispose 
of these cases.
     Investigating allegations of fraud made by beneficiaries, 
providers, HCFA, Office of Inspector General (OIG), and other sources.
     Putting in place effective fraud detection and deterrence 
programs.
     Overpayments.
     Collecting Medicare debts timely.
     Accurately reporting overpayments to HCFA.

[[Page 64972]]

     Adhering to our instructions for management of Medicare 
Trust Fund debts.
     Provider Enrollment.
     Complying with assignment of staff to the provider 
enrollment function and training the staff in procedures and 
verification techniques.
     Complying with the operational standards relevant to the 
process for enrolling providers.
     Audit and Reimbursement.
     Performing the activities specified in our general 
instructions for conducting audit and settlement of Medicare cost 
reports.
     Settling Medicare cost reports timely and accurately in 
establishing interim provider payments.

D. 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 us.
    Additional matters to be reviewed under the Fiscal Responsibility 
criterion may include, but are not limited to--
     Adherence to approved program management and MIP budgets;
     Compliance with the BPRs;
     Compliance with financial reporting requirements and;
     Control of administrative cost and benefit payments.

E. Administrative Activities Criterion

    We may measure an intermediary's administrative ability to manage 
the Medicare program. We may evaluate the efficiency and effectiveness 
of its operations, its system of internal controls, and its compliance 
with our directives and initiatives.
    We may measure an intermediary's efficiency and effectiveness in 
managing its operations to ensure constant improvement in the way it 
does business. Proper systems security (general and application 
controls), ADP maintenance, and disaster recovery plans must be in 
place. An intermediary must also test system changes to ensure the 
accurate implementation of our instructions.
    Our evaluation of an intermediary under the Administrative 
Activities criterion may include, but is not limited to, reviews of 
its--
     Systems security;
     ADP maintenance (configuration management, testing, change 
management, security, etc.);
     Disaster recovery plan;
     Change management plan implementation;
     Data and reporting requirements implementation; and
     Internal controls establishment and use, including the 
degree to which the contractor cooperates with the Secretary in 
complying with the FMFIA.

V. Criteria and Standards for Carriers

A. Claims Processing Criterion

    The Claims Processing criterion contains five mandated standards.
    Standard 1: 95 percent 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 percent 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 percent of EOMBs and MSNs are properly generated.
    Standard 4: 95 percent of review determinations are accurate and 
clear with appropriate customer-friendly tone and clarity, and are 
completed within 45 days.
    Standard 5: 90 percent 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;
     Management of shared processing sub-contract;
     Establishment and maintenance of relationship with the CWF 
Host; and
     Analysis and validation of data.

B. Customer Service Criterion

    The Customer Service criterion contains two mandated standards.
    Standard 1--Telephone inquiries are answered timely.
    Carriers are to achieve a monthly ATB Rate of not more than 10%. 
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.
    Standard 2--Accuracy and timeliness of responses to written 
inquiries with appropriate customer-friendly tone and clarity. 
Responses to beneficiary written inquiries are written at an 
appropriate reading level.
    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 RCP 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;
     Establishment and maintenance of relationships with 
professional and beneficiary organizations;
     Use of focus groups;
     Conduct of educational and outreach efforts; and
     Walk-in services.

C. Payment Safeguards Criterion

    Carriers may be evaluated on any MIP activities if performed under 
their Part B contracts. In addition other carrier functions and 
activities that may be reviewed under this criterion include, but are 
not limited to--
     Medical Review.
     Applying their analytical skills and focusing resources on 
particular providers or claim types that represent unnecessary or 
inappropriate care.
     Developing effective means of addressing aberrancies 
identified through analyzing data to target prepay and postpay review.
     Using medical coverage guidelines to determine if each 
medical review screen is supported by sufficient documentation.
     Developing means of addressing aberrancies identified 
during the analysis of all local and national data.
     Medicare Secondary Payer.
     Identifying and recovering mistaken Medicare payments in 
accordance with the appropriate Medicare Carriers Manual instructions, 
and other pertinent HCFA general instructions.
     Accurately reporting savings and following claim 
development procedures.
     Prioritizing and processing recoveries in compliance with 
instructions.
     Fraud and Abuse (also known as BI).
     Identifying fraud and abuse cases that exist within the 
carrier's service area and taking appropriate actions to dispose of 
these cases.
     Investigating allegations of fraud and/or abuse made by 
beneficiaries, providers, HCFA, OIG, and other sources.

[[Page 64973]]

     Putting in place effective fraud and abuse detection and 
deterrence programs.
     Overpayments.
     Collecting Medicare debts timely.
     Accurately reporting overpayments to HCFA.
     Adhering to our instructions for management of Medicare 
Trust Fund debts.
     Provider Enrollment
     Complying with assignment of staff to the provider 
enrollment function and training staff in procedures and verification 
techniques.
     Complying with the operational standards relevant to the 
process for enrolling providers.

D. 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 us.
    Additional matters to be reviewed under the Fiscal Responsibility 
criterion may include, but are not limited to--
     Adherence to approved program management and MIP budgets;
     Compliance with the BPRs;
     Compliance with financial reporting requirements; and
     Control of administrative cost and benefit payments.

E. 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 operations, its system of internal controls, and its compliance 
with our directives and initiatives.
    A carrier must efficiently and effectively manage its operations to 
assure constant improvement in the way it does business. Proper systems 
security (general and application controls), ADP maintenance, and 
disaster recovery plans must be in place. Also, a carrier must test 
system changes to ensure accurate implementation of our instructions.
    Our evaluation of a carrier under this criterion may include, but 
is not limited to, reviews of its--
     Systems security;
     ADP maintenance (configuration management, testing, change 
management, security, etc.);
     Disaster recovery plan;
     Change management plan implementation;
     Data and reporting requirements implementation; and
     Internal controls establishment and use including the 
degree to which the contractor cooperates with the Secretary in 
complying with the FMFIA.

VI. Criterion and Standards for RHHIs

    The following standards are mandated for the RHHI criterion:
    Standard 1: 95 percent of clean electronically submitted non-PIP 
HHA/hospice bills are 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 percent of clean paper non-PIP HHA/hospice bills are 
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 percent of HHA/hospice reconsiderations are 
processed within 60 days and 90 percent 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, interim rate setting, and 
accuracy of MR coverage decisions.

VII. Action Based on Performance Evaluations

    We evaluate a contractor's performance against applicable program 
requirements for each criterion. Each contractor must certify that all 
information submitted to us relating to the contract management 
process, including, without limitation, all files, records, documents 
and data, 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 contract 
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. This 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 PIP for each program deficiency identified. The 
contractor will be monitored to ensure effective and efficient 
compliance with the PIP, and to ensure improved performance when 
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 that 
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 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

[[Page 64974]]

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 that we find to be 
reasonable and adequate to meet the cost that must be incurred by an 
efficiently and economically operated intermediary or carrier, these 
high costs may also be grounds for adverse action.

VIII. 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.

IX. Federalism

    We have reviewed this notice under the threshold criteria of 
Executive Order 13132, Federalism. We have determined that the notice 
does not significantly affect the rights, roles, and responsibilities 
of States.

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

    Dated: September 8, 2000.
Nancy-Ann Min DeParle,
Administrator, Health Care, Financing Administration.
[FR Doc. 00-27955 Filed 10-30-00; 8:45 am]
BILLING CODE 4120-01-P