[Federal Register Volume 66, Number 9 (Friday, January 12, 2001)]
[Proposed Rules]
[Pages 3377-3380]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-910]



  Federal Register / Vol. 66, No. 9 / Friday, January 12, 2001 / 
Proposed Rules  

[[Page 3377]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 413

[HCFA-1089-P]
RIN 0938-AK15


Medicare Program; Payment for Clinical Psychology Training 
Programs

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise our policy on Medicare payment 
for approved nursing and allied health education programs to permit 
payment for the costs incurred by a provider for the clinical training 
of students enrolled in a clinical psychology training program. 
Consistent with the Conference Agreement language in the Conference 
Report accompanying the Balanced Budget Act of 1997 (Public Law 105-
33), these clinical training costs would be paid separately on a 
reasonable cost basis in accordance with sections 1861(v) and 
1886(a)(4) of the Social Security Act.

DATES: Written comments will be considered if we receive them at the 
appropriate address, as provided below, no later than 5 p.m. March 13, 
2001.

ADDRESSES: Mail written comments (an original and three copies) to the 
following address only: Health Care Financing Administration, 
Department of Health and Human Services, Attention: HCFA 1089-P, P.O. 
Box 8010, Baltimore, MD 21244-1850.
    If you prefer, you may deliver by courier your written comments (an 
original and three copies) to one of the following addresses:
    Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, 
SW., Washington, DC 20201, or
    Room C5-14-03, Central Building, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    Comments mailed to these addresses may be delayed and could be 
considered late.

FOR FURTHER INFORMATION CONTACT: Tzvi Hefter (410) 786-4487.

SUPPLEMENTARY INFORMATION:

Comments, Procedures, Availability of Copies and Electronic Access

    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code HCFA-1089P. Comments received timely will be available for 
public inspection as they are received, generally beginning 
approximately 3 weeks after publication of a document, in Room 443-G of 
the Department's office at 200 Independence Avenue, SW., Washington, 
DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m. 
(phone: (202) 690-7890).
    For comments that relate to information collection requirements, 
mail a copy of comments to: Health Care Financing Administration, 
Office of Information Services, Security and Standards Group, Division 
of HCFA Enterprise Standards, Room N2-14-26, 7500 Security Boulevard, 
Baltimore, Maryland 21244-1850. Attn: John Burke HCFA-1089-P; and 
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 3001, New Executive Office Building, Washington, DC 20503, 
Attn: Allison Herron Eydt, HCFA Desk Officer HCFA-1089-P.
    Copies: To order copies of the Federal Register containing this 
document, send your request to: New Orders, Superintendent of 
Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date 
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guest (no password required).

I. Background

    Medicare has historically paid providers for its share of the costs 
that providers incur in connection with approved educational 
activities. The activities may be broken down into the following three 
general categories to which different payment policies apply:
     Approved graduate medical education (GME) programs in 
medicine, osteopathy, dentistry, and podiatry. Medicare makes direct 
and indirect medical education payments to hospitals operating these 
programs. Existing policy on direct GME payment is found at 42 CFR 
413.86, and for indirect GME payment at 42 CFR 412.105.
     Approved nursing and allied health education programs 
operated by the provider. The costs of these programs are excluded from 
the definition of inpatient hospital operating costs and are not 
included in the calculation of payment rates under the Medicare 
hospital inpatient prospective payment system or in the calculation of 
the target amount subject to the rate-of-increase ceiling for hospitals 
and hospital units excluded from the hospital inpatient prospective 
payment system. These costs are separately identified and ``passed 
through'' (that is, paid separately on a reasonable cost basis).
     All other costs that can be categorized as educational 
programs and activities are considered to be part of normal operating 
costs and are covered on a per-case basis for hospitals subject to the 
hospital inpatient prospective payment system, or on a reasonable cost 
basis subject to the rate-of-increase limits for hospitals and hospital 
units excluded from the hospital inpatient prospective payment system.
    This proposed rule describes how Medicare payments for the costs 
associated with approved nursing and allied health education programs 
are made, and sets forth proposed changes in payment policy for the 
costs incurred by a provider for the clinical training of students 
enrolled in a clinical psychology training program.
    Under regulations at 42 CFR 413.85 (``Cost of approved nursing and 
allied health educational activities''), Medicare makes reasonable cost 
payment to hospitals for hospital-operated nursing and allied health 
education programs. In general, a hospital may receive reasonable cost 
payment if the provider directly incurs the training costs, controls 
the curriculum and the administration of the program, employs the 
teaching staff, and provides and controls both clinical training and 
classroom instruction (where applicable) of a nursing or allied health 
education program.
    Elsewhere in this issue of the Federal Register, we published a 
final regulation that clarified the policy for payments for

[[Page 3378]]

approved nursing and allied health education activities to implement 
section 6205(b)(2) of the Omnibus Budget Reconciliation Act of 1989 
(Public Law 101-239) and sections 4004(b)(1) and (2) of the Omnibus 
Budget Reconciliation Act of 1990 (Public Law 101-508).
    Section 6205(b)(2) of Public Law 101-239 directed the Secretary to 
publish regulations clarifying the rules governing allowable costs of 
approved educational activities and when those costs are eligible for 
pass-through (that is, paid separately from other payments) under the 
hospital inpatient prospective payment system, including the 
relationship required between an approved nursing or allied health 
education program and a hospital for the program's costs to be eligible 
for pass-through. Section 4004(b)(1) of Public Law 101-508 provides 
that, effective for cost reporting periods beginning on or after 
October 1, 1990, if certain conditions are met, the costs incurred by a 
hospital (or by an educational institution related to the hospital by 
common ownership or control) for clinical training (as defined by the 
Secretary) conducted on the premises of the hospital under an approved 
nursing or allied health education program that is not operated by the 
hospital are treated as pass-through costs and paid on the basis of 
reasonable cost. Section 4004(b)(2) of Public Law 101-508 sets forth 
the conditions that a hospital must meet to receive payment on a 
reasonable cost basis under section 4004(b)(1).
    While we were drafting the final rule relating to nursing and 
allied health education activities to implement the Congressional 
mandates under Public Laws 101-239 and 101-508, we received questions 
from representatives of various entities as to whether we would be 
revising our policies to address the language in the Conference 
Agreement in the Conference Report accompanying Public Law 105-33 that 
the ``* * * Conferees also note that the Secretary reimburses for the 
training of certain allied health professionals, and urges the 
Secretary to include * * * psychologists under such authority.'' (H.R. 
Rep. No. 105-217, 105th Cong., 1st Sess., 822 (1997).) Many clinical 
psychology training programs currently do not meet the general criteria 
stated at Sec. 413.85(f) of the regulations to be considered provider-
operated programs because they do not operate both the classroom 
instruction and clinical training portions. We understand that in 
clinical psychology training programs, providers are operating only the 
clinical training portions of the programs.

II. Provisions of the Proposed Rule

    We are proposing to amend Sec. 413.85 to allow a provider to 
receive pass-through reasonable cost payment if it is operating the 
clinical training portion of a clinical psychology training program.
    For purposes of determining whether a hospital operates the 
clinical training portion of a clinical psychology training program, we 
propose to use criteria that correspond to the generally applicable 
criteria for determining whether a hospital operates a program. 
Therefore, we are proposing at new Sec. 413.85(g) that a provider must 
meet the following criteria in order to be considered the operator of 
the clinical training portion of a clinical psychology training 
program:
    (1) Directly incur the clinical training costs.
    (2) Have direct control of the clinical training curriculum.
    (3) Control the administration of the clinical training portion, 
including collection of tuition of the clinical training portion (where 
applicable), control the maintenance of payroll records of teaching 
staff of the clinical training portion or students or both (where 
applicable), and be responsible for day-to-day clinical training 
operation. (A provider may contract with another entity to perform some 
administrative functions, but the provider must maintain control over 
all aspects of the contracted functions.)
    (4) Employ the teaching staff of the clinical training portion.
    We welcome public comment on these proposed criteria. If a provider 
meets all of these proposed criteria for operating the clinical 
training portion of a clinical psychology training program, as well as 
the other requirements for payment listed under Sec. 413.85(d)(1)(i), 
we propose that the provider may receive pass-through reasonable cost 
payment for the net costs of the clinical training portion of the 
program.
    We believe it is critical to expand existing policy to include 
payment for the hospital-based training of this allied health specialty 
because it plays an essential role in providing quality health care to 
Medicare beneficiaries. We believe it is important to pay for hospital-
based clinical psychology training in order to:

 Fulfill the Secretary's commitment to improve mental health 
services for Medicare beneficiaries.

    The Secretary has made a strong commitment to improve the treatment 
of mental health problems experienced by Medicare beneficiaries--most 
notably through the Surgeon General's Report, ``Mental Health: Report 
of the Surgeon General,'' U.S. Department of Health and Human Services, 
National Institutes of Health, National Institute of Mental Health, 
Substance Abuse and Mental Health Services Administration, Rockville, 
Maryland (1999). In making this commitment, the Secretary noted that 
depression, which affects about one in six people and is often higher 
among individuals in nursing homes, is a widely underrecognized and 
undertreated medical condition. We believe that providing funds to help 
train additional persons in the field of clinical psychology may 
greatly assist in both the detection and the adequate treatment of 
depression in this vulnerable group.
    Psychologists are exceptionally well qualified to recognize 
symptoms of depression and provide early intervention services to 
address mental health problems. For example, unlike other groups of 
mental health providers, in some cases clinical psychologists have 
hospital admitting privileges, which could potentially increase the 
accessibility of hospital services to beneficiaries who may need such 
care.

 Provide a more comprehensive approach to care.

    By helping to train more clinical psychologists, we will continue 
to move towards achieving our goal of providing a comprehensive, multi-
disciplinary approach to treating Medicare beneficiaries. In addition, 
it is important that beneficiaries have access to care and treatment 
for both their physical and mental illness.
    In addition, we note that allowing a provider to receive pass-
through reasonable cost payment if it is operating the clinical 
training portion of a clinical psychology training program is also 
consistent with the Conference Report accompanying Public Law 105-33 
cited earlier.

III. Regulatory Impact Statement

    We have examined the impacts of this proposed rule as required by 
Executive Order 12866 and the Regulatory Flexibility Act (RFA) (Public 
Law 96-354). Executive Order 12866 directs agencies to assess all costs 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more annually). We do not consider 
this

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proposed rule as meeting the criteria as a major rule.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations and government agencies. Most 
hospitals and most other providers and suppliers are small entities, 
either by nonprofit status or by having revenues of $5 million or less 
annually. For purposes of the RFA, all providers are treated as small 
entities. Individuals and States are not included in the definition of 
a small entity.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a proposed rule may have a significant 
impact on the operations of a substantial number of small rural 
hospitals. This analysis must conform to the provisions of section 603 
of the RFA. For purposes of section 1102(b) of the Act, we define a 
small rural hospital as a hospital that is located outside of a 
Metropolitan Statistical Area and has fewer than 50 beds.
    Our actuarial estimates indicate that the minimal annual cost to 
the Medicare program associated with payment for the clinical training 
portion of clinical psychology training programs would be approximately 
$30 million the first year after payments begin and may grow to $50 
million by the 5th year. Costs are expected to increase because we 
believe that Medicare's support through its education regulations will 
encourage hospitals to report more costs for clinical psychology 
training programs than are reported today. This estimate is based on 
assumptions as to how much Medicare could pay for additional 
educational programs and how quickly other providers with clinical 
training portions would begin seeking those payments.
    The following chart shows projected costs to the Medicare program 
for the next 5 years:

------------------------------------------------------------------------
                                                              Medicare
                        Fiscal year                            program
                                                               costs*
------------------------------------------------------------------------
2001......................................................          $30
2002......................................................           40
2003......................................................           40
2004......................................................           40
2005......................................................          50
------------------------------------------------------------------------
* In millions.

    We are not preparing analyses for either the RFA or section 1102(b) 
of the Act because we have determined, and we certify, that this 
proposed rule would not have a significant economic impact on a 
substantial number of small entities and would not have a significant 
impact on the operations of a substantial number of small rural 
hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in any one year expenditure by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $100 million. This proposed rule does not mandate any 
requirements for State, local, or tribal governments.
    We have examined this proposed rule in accordance with Executive 
Order 13132, Federalism, and have determined that this proposed rule 
will not impact on the rights, roles and responsibilities of the State, 
local or tribal governments.
    In accordance with the provisions of Executive Order 12866, this 
proposed rule was reviewed by the Office of Management and Budget.

IV. Information Collection Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of an information requirement is submitted 
to the Office of Management and Budget (OMB) for review and approval. 
In order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    The proposed regulation at Sec. 413.85(g)(2)(ii) contains an 
information collection and recordkeeping requirement that is subject to 
review by OMB under the Paperwork Reduction Act of 1995. Under this 
information collection requirement a provider would need to maintain 
documentation of a separate licensure if required by State law, or, if 
licensing is not required, accreditation by the recognized national 
professional organization, for the clinical psychology training 
program. We believe that this information is already maintained for 
those clinical psychology training programs and no additional time will 
be required to satisfy this requirement. Therefore, the burden 
associated with this requirement is exempt from the PRA as defined in 5 
CFR 1320.3(b)(2) and (b)(3).
    Comments on the information collection and record-keeping 
requirement should be mailed to the following addresses:

Health Care Financing Administration, Office of Information Services, 
Security and Standards Group, Division of HCFA Enterprise Standards, 
Room N2-14-26, 7500 Security Boulevard, Baltimore, Maryland 21244-1850. 
Attn: John Burke HCFA-1089-P;

and

Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 3001, New Executive Office Building, Washington, DC 20503, 
Attn: Allison Herron Eydt, HCFA Desk Officer HCFA 1089-P.

V. Response to Public Comments

    Because of the large number of items of correspondence we normally 
receive on a proposed rule, we are not able to acknowledge or respond 
to them individually. However, we will consider all comments that we 
receive by the date and time specified in the DATES section of this 
preamble, and, if we proceed with a final rule, we will respond to the 
comments in the preamble to that rule.

List of Subjects in 42 CFR Part 413

    Health facilities, Kidney diseases, Medicare, Reporting and 
recordkeeping requirements.
    42 CFR Chapter IV Part 413 is amended as set forth below:

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR 
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED 
PAYMENT RATES FOR SKILLED NURSING FACILITIES

    1. The authority citation for part 413 continues to read as 
follows:

    Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i), and 
(n), 1871, 1881, 1883, and 1886 of the Social Security Act (42 
U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and (n), 
1395hh, 1395rr, 1395tt, and 1395ww).

    2. Section 413.85 is amended by:
    A. Revising paragraph (d)(1);
    B. Revising the introductory text of paragraph (f)(1);
    C. Redesignating paragraphs (g) and (h) as paragraphs (h) and (i), 
respectively;

[[Page 3380]]

    D. Adding new paragraph (g); and
    E. Revising newly designated paragraph (h)(1) and the introductory 
text of newly designated paragraph (h)(2).


Sec. 413.85  Cost of approved nursing and allied health education 
activities.

* * * * *
    (d) General payment rules. (1) Payment for a provider's net cost of 
nursing and allied health education activities is determined on a 
reasonable cost basis, subject to the following conditions and 
limitations:
    (i) An approved educational activity must--
    (A) Be recognized by a national approving body or State licensing 
authority as specified in paragraph (e) of this section;
    (B) Meet the criteria specified in paragraph (f) of this section 
for identification as an operator of an approved education program; or 
the criteria specified in paragraph (g) of this section for 
identification as an operator of the clinical training portion of a 
clinical psychology training program.
    (C) Enhance the quality of inpatient care at the provider.
    (ii) The costs for certain nonprovider-operated activities or 
programs are reimbursed on a reasonable cost basis if the activities or 
programs meet the criteria specified in paragraph (h)(2) of this 
section.
    (f) Criteria for identifying programs operated by a provider. (1) 
Except as provided in paragraphs (f)(2) and (g) of this section, for 
cost reporting periods beginning on or after October 1, 1983, in order 
to be considered the operator of an approved nursing or allied health 
education program, a provider must meet all of the following 
requirements:
* * * * *
    (g) Criteria for identifying provider-operated clinical training 
portions of clinical psychology training programs. Effective with cost 
reporting periods beginning on or after [FR: insert 60 days after date 
of publication of final regulation], in order to be considered the 
operator of the clinical training portion of a clinical psychology 
training program, a provider must meet all of the following 
requirements:
    (1) Directly incur the clinical training costs.
    (2) Have direct control of the clinical training curriculum.
    (3) Control the administration of the clinical training portion, 
including collection of tuition of the clinical training portion (where 
applicable), control the maintenance of payroll records of teaching 
staff or students of the clinical training portion, or both (where 
applicable), and be responsible for day-to-day clinical training 
operation. (A provider may contract with another entity to perform some 
administrative functions, but the provider must maintain control over 
all aspects of the contracted functions.)
    (4) Employ the teaching staff of the clinical training portion.
* * * * *
    (h) Payment for certain nonprovider-operated programs. (1) Payment 
rule. Costs incurred by a provider, or by an educational institution 
that is related to the provider by common ownership or control (that 
is, a related organization as defined in Sec. 413.17(b)), for the 
clinical training of students enrolled in an approved nursing or allied 
health education program that is not operated by the provider, are paid 
on a reasonable cost basis if the conditions specified in paragraph 
(h)(2) of this section are met.
    (2) Criteria for identification of approved nonprovider-operated 
education programs. Payment for the incurred costs of educational 
activities identified in paragraph (h)(1) of this section will be made 
if the following conditions are met:
* * * * *

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

    Dated: January 4, 2001.
Robert A. Berenson,
Acting Deputy Administrator, Health Care Financing Administration.
    Dated: January 4, 2001.
Donna E. Shalala,
Secretary.
[FR Doc. 01-910 Filed 1-9-01; 10:21 am]
BILLING CODE 4120-01-P