[Federal Register Volume 66, Number 177 (Wednesday, September 12, 2001)]
[Rules and Regulations]
[Pages 47410-47413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-22915]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 422

[CMS-1160-F]
RIN 0938-AK41


Medicare Program; Requirements for the Recredentialing of 
Medicare+Choice Organization Providers

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule changes the requirement for recredentialing 
providers who are physicians or other health care professionals for 
Medicare+Choice Organizations (M+COs) from at least every 2 years to at 
least every 3 years. This change is consistent with managed care 
industry recognized standards of practice and quality, and with 
standards already adopted by nationally recognized private quality 
assurance accrediting organizations. This change simplifies 
administrative requirements by retaining consistency with the private 
accrediting processes. This rule benefits M+COs and providers within 
the M+COs who must be recredentialed, while continuing to address 
quality issues of Medicare beneficiaries.

DATES: The effective date of this rule is October 12, 2001.

FOR FURTHER INFORMATION CONTACT: Siera Gollan, (410) 786-6664.

SUPPLEMENTARY INFORMATION:

I. Background

    Sections 1851 through 1859 of the Social Security Act (the Act) 
established Part C of the Medicare program, known as the 
``Medicare+Choice (M+C) Program.'' On June 26, 1998, we published a 
comprehensive interim final rule (63 FR 34968) in the Federal Register 
to implement the M+C Program. That interim final rule set forth the M+C 
regulations in 42 CFR Part 422--Medicare+Choice Program. We published a 
subsequent final rule with comment period in the Federal Register on 
June 29, 2000 (65 FR 40170).
    When these rules were promulgated, we established a 2-year 
recredentialing cycle consistent with standards adopted by nationally 
recognized private quality assurance accrediting organizations. Under 
Sec. 422.204(b)(2)(ii), Medicare+Choice Organizations (M+COs) are 
required to recredential providers who are physicians or other health 
care professionals (including members of physicians groups) at least 
every 2 years. The recredentialing updates information obtained during 
initial credentialing, considers performance indicators such as those 
collected through quality assurance programs, utilization management 
systems, handling of grievances and appeals, enrollment satisfaction 
surveys,

[[Page 47411]]

and other plan activities, and includes an attestation of the 
correctness and completeness of the new information.
    Since the promulgation of these M+C rules, however, the nationally 
recognized private quality assurance accrediting organizations' 
standards for recredentialing have changed to a 3-year cycle. 
Therefore, our regulations are no longer consistent with standards 
adopted by these organizations. We believe that the change in the 
standards for recredentialing from a 2-year cycle to a 3-year cycle is 
appropriate because it lessens the administrative burdens on M+COs and 
their providers without negatively affecting Medicare beneficiaries or 
the Medicare program.
    On December 27, 2000, we published a proposed rule in the Federal 
Register (65 FR 81813) proposing to change the requirement for the 
recredentialing of providers who are physicians or other health care 
professionals for M+COs in Sec. 422.204(b)(2)(ii) from at least a 2-
year cycle to at least a 3-year cycle. The proposed change to the 
regulation still allowed for M+COs to recredential their providers on a 
2-year cycle if they wished to do so.

II. Analysis of, and Responses to, Public Comments on the Proposed 
Rule

    We received 8 timely comments in response to the December 27, 2000 
proposed rule. The majority of the comments were from health plans and 
credentials verification organizations. We reviewed each commenter's 
letter and grouped like or related comments. Some comments were 
identical, indicating that the commenters had submitted form letters. 
The comments and our responses are summarized below.

A. Change the Recredentialing Requirement From at Least Every 2 Years 
to at Least Every 3 Years

    Comment: The majority of commenters expressed their support of 
changing the recredentialing cycle for M+COs from at least every 2 
years to at least every 3 years. They stated that the change will 
decrease administrative costs and result in consistency with private 
accrediting organizations, while at the same time maintaining the level 
of quality necessary to adequately protect Medicare beneficiaries.
    Response: We appreciate the support of these commenters. This 
change will make our regulations consistent with the recredentialing 
standards adopted by nationally recognized private quality assurance 
accrediting organizations. We agree that it will lessen the 
administrative burdens on M+COs and their providers without negatively 
affecting Medicare beneficiaries or the Medicare program.
    Comment: One commenter pointed out that the proposed rule modified 
Sec. 422.204(b)(2)(ii) by omitting several words in the explanation of 
the purpose of recredentialing. The commenter agreed with the move from 
at least every 2 years to at least every 3 years, but suggested that 
the final rule otherwise retain the existing regulatory language.
    Response: Our purpose for making minor editorial changes to the 
language was not to change the intent of the rule, but to make the 
language clearer. The recredentialing process does the following:
     Updates information obtained during initial credentialing.
     Considers performance indicators such as those collected 
through quality assurance programs, utilization management systems, 
handling of grievances and appeals, enrollee satisfaction surveys, and 
other plan activities.
     Includes an attestation of the correctness and 
completeness of the new information.
    We understand the commenter's concern with the regulations text in 
the proposed rule and we have changed the text in this final rule to 
more accurately distinguish between the three components of 
recredentialing above.
    Comment: Several commenters, representing credentials verification 
organizations (CVOs), expressed concern about moving from a 2-year to a 
3-year recredentialing cycle. These commenters cited risk management 
issues, such as protecting their patients from harm, on the part of the 
M+COs.
    These commenters also stated that timely and thorough 
recredentialing practices ensure quality health care, while reducing 
the risk to health plans and reducing the probability of medical errors 
and substandard care. They stated that there is no definitive research 
showing that moving to a 3-year cycle is in the best interest of the 
public (pointing out that of the 32 states that require 
recredentialing, 12 require recredentialing every 2 years while only 
eight require it every 3 years), and they believe that most M+COs will 
choose to implement the 3-year recredentialing cycle, even though we 
allow them to accept a more stringent standard.
    Response: The M+CO must assess any possible risks, including risk 
management issues, of implementing any standards in their own 
organizations. Since the regulation still allows for more frequent 
recredentialing of providers, it is the decision of the M+CO whether to 
implement the 3-year recredentialing cycle. We believe that, as a 
national policy, risk management will not be negatively effected by a 
3-year recredentialing cycle.
    We agree that timely and thorough recredentialing is necessary to 
ensure quality health care, reduce risk to health plans and members, 
and reduce the probability of medical errors and substandard care. 
However, we agree with the nationally recognized private quality 
assurance accrediting organizations who have determined that these 
factors are not compromised by moving from a 2-year recredentialing 
cycle to a 3-year recredentialing cycle. If a State law requires a more 
stringent recredentialing cycle for M+CO providers, the State law 
supercedes our 3-year requirement.

B. Miscellaneous Comments

    Comment: Several commenters expressed the need for a form of 
interim monitoring of providers credentials including licensure, 
querying the National Practitioner Data Bank (NPDB), and sanction 
activity.
    Response: We currently require interim monitoring in several ways. 
We require that all M+CO's monitor the Medicare and Medicaid sanction 
list published by the Office of the Inspector General as frequently as 
that list is published (monthly). We also require resolution and 
documentation of any member complaint or grievance. The M+CO is also 
prohibited from contracting with providers who opt out of Medicare. In 
addition to accessing the NPDB, M+COs are encouraged to query the 
Healthcare Integrity and Protection Data Bank (HIPDB). M+COs are also 
permitted to establish their own interim monitoring procedures, in 
order to ensure that unqualified providers are not providing care to 
Medicare beneficiaries.
    Comment: One commenter suggested that we try to simplify and 
standardize credentialing requirements. The commenter suggested 
establishing a centralized credentialing provider databank and 
``perpetual'' verifications, outside of the NPDB.
    Response: Although this request is outside the scope of this 
regulation, we, in conjunction with other organizations, are in the 
process of exploring the possibility of having a centralized data bank 
for provider credentials.
    Comment: One commenter suggested that we align our credentialing 
standards with those of the National Committee for Quality Assurance 
(NCQA). This commenter believes that a meaningful reduction in 
administrative burden is dependent upon comprehensive standardization. 
This commenter also believed that aligning

[[Page 47412]]

standards with the NCQA standards would not compromise the rigorous 
standards currently required through the Quality Improvement System for 
Managed Care standards. Another commenter suggested that we accept a 
form of provisional credentialing to remain consistent with NCQA.
    Response: Although this request is not directly related to this 
regulation, we are currently re-examining all of our standards related 
to provider credentialing. We are assessing standards that are 
implemented by private accrediting organizations and evaluating the 
applicability of those standards to the Medicare program.

III. Provisions of This Final Regulation

    This final rule incorporates the 3-year recredentialing cycle of 
the proposed rule. As discussed in section II of this preamble, we 
believe the requirement of a 3-year recredentialing cycle for providers 
who are physicians or other health care professionals for M+COs is 
consistent with industry standards and continues to ensure high quality 
care for Medicare beneficiaries.
    We have made a minor editorial change to the language describing 
what recredentialing includes, but have not changed the substance or 
the intent of this language from the current regulation or the proposed 
rule.

IV. Collection of Information 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 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.
    We are soliciting public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements:
    Section 422.204 (Provider selection and credentialing) requires 
recredentialing at least every 3 years that updates information 
obtained during initial credentialing, considers performance indicators 
such as those collected through quality assurance programs, utilization 
management systems, handling of grievances and appeals, enrollee 
satisfaction surveys, and other plan activities, and includes an 
attestation of the correctness and completeness of the new information. 
While the criteria and timing of the recredentialing process is 
currently approved under OMB control number 0938-0753, the general 
recredentialing criteria of every 2 years is being revised to every 3 
years.
    If you comment on the information collection and recordkeeping 
requirements, please mail copies directly to the following:

Centers for Medicare & Medicaid Services, Office of Information 
Services, Information Technology Investment Management Group, Attn.: 
John Burke, Room N2-14-26, 7500 Security Boulevard, Baltimore, MD 
21244-1850.
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10235, New Executive Office Building, Washington, DC 
20503, Attn: Allison Herron Eydt, CMS Desk Officer.

V. Regulatory Impact Statement

A. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review) and the 
Regulatory Flexibility Act (RFA) (September 19, 1980 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 ($110 million or more in any 1 year). This rule is 
not a major rule, as there are no additional costs to implement the one 
change that results from this final rule. Since the rule changes the 
recredentialing requirement from a 2-year to a 3-year cycle, it 
decreases administrative costs for the health plan and the providers 
within the health plan.
    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 to $25 million or less annually (see 66 FR 69432). For purposes 
of the RFA, some M+COs are considered to be small entities. Individuals 
and States are not included in the definition of a small entity.
    In addition, section 1102(b) of the Social Security Act requires us 
to prepare a regulatory impact analysis if a 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.
    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 an expenditure in any 1 year by 
State, local, or tribal governments, in the aggregate, or by the 
private sector, of $100 million. This rule will not have an effect on 
State, local, or tribal governments, nor will the rule meet the $100 
million threshold.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. This rule does not impose any direct requirement costs on 
State or local governments.

B. Anticipated Effects

1. Effects on M+COs
    The effect on M+COs will be to lessen the mandated recredentialing 
requirements to at least once every 3 years rather than the current 
requirement of at least once every 2 years. If the rule is not 
promulgated, Medicare M+COs would be required to recredential on a 
schedule that is different and more demanding for Medicare contractors 
than private contractors, adding an administrative complexity and cost 
without benefit. M+COs can maintain recredentialing more often at their 
option; this change simply addresses consistency with standards of 
private accreditation agencies.

[[Page 47413]]

2. Effects on Other Providers
    Effects on other providers are limited, except that providers in 
M+COs will not be required to provide credentialing material at a 
greater frequency than they are required to provide it by the private 
accreditation agencies and the M+COs' individual corporate 
requirements.
3. Effects on the Medicare and Medicaid Programs
    This rule makes no change to the Medicaid program. The rule 
simplifies the recredentialing mandated cycle for consistency with the 
private accreditation processes for Medicare M+COs. If the rule is not 
promulgated, a cycle inconsistent with the private accreditation 
organizations will require private accreditation organizations to 
change their cycle in order to be deemed for Medicare and require M+COs 
and their providers to undergo an additional administrative cost and 
process without identified benefit to Medicare beneficiaries or the 
Medicare program.

C. Alternatives Considered

    The only other alternative would be to leave the regulation 
unchanged. To meet our goal to be consistent, when appropriate, with 
the standards of the private accreditation organizations, we decided 
that the change is necessary.

D. Conclusion

    For these reasons, 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 rule does not have a significant economic impact on 
a substantial number of small entities, or a significant impact on the 
operations of a substantial number of small rural hospitals.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects Affected in 42 CFR Part 422

    Administrative practice and procedure, Health facilities, Health 
maintenance organizations (HMO), Medicare+Choice, Penalties, Privacy, 
Provider-sponsored organizations (PSO), Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 42 CFR chapter IV is 
amended as follows:

PART 422--MEDICARE+CHOICE PROGRAM

    1. The authority citation for part 422 is revised to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

    2. Revise Sec. 422.204(b)(2)(ii) to read as follows:


Sec. 422.204  Provider selection and credentialing.

* * * * *
    (b) * * *
    (2) * * *
    (ii) Recredentialing at least every 3 years that updates 
information obtained during initial credentialing, considers 
performance indicators such as those collected through quality 
assurance programs, utilization management systems, handling of 
grievances and appeals, enrollee satisfaction surveys, and other plan 
activities, and that includes an attestation of the correctness and 
completeness of the new information; and
* * * * *

    Authority: Secs. 1102, 1851 through 1857, 1859, and 1871 of the 
Social Security Act (42 U.S.C. 1302, 1395w-21 through 1395w-27, and 
1395hh).

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

    Dated: September 7, 2001.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: September 7, 2001.
Tommy G. Thompson,
Secretary.
[FR Doc. 01-22915 Filed 9-11-01; 8:45 am]
BILLING CODE 4120-01-P