[Federal Register Volume 67, Number 17 (Friday, January 25, 2002)]
[Notices]
[Pages 3719-3720]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1066]



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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-3081-N]
RIN 0938-ZA26


Medicare Program; Peer Review Organization Contracts: 
Solicitation of Statements of Interest From In-State Organizations--
Alaska, Hawaii, Idaho, Illinois, Kentucky, Maine, Nebraska, South 
Carolina, Vermont, and Wyoming

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

ACTION: Notice.

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SUMMARY: This notice, in accordance with section 1153(i) of the Social 
Security Act, gives at least 6 months advance notice of the expiration 
dates of contracts with out-of-State Utilization and Quality Control 
Peer Review Organizations. It also specifies the period of time in 
which in-State organizations may submit a statement of interest so that 
they may be eligible to compete for these contracts.

DATES: Written statements of interest must be received at the address 
specified no later than 5 p.m. EST February 11, 2002. Due to staffing 
and resource limitations, we cannot accept statements submitted by 
facsimile (FAX) transmission.

ADDRESSES: Statements of interest must be submitted to the Centers for 
Medicare & Medicaid Services, Acquisitions and Grants Groups, OICS, 
Attn.: Edward L. Hughes, 7500 Security Boulevard, Mail Stop C2-21-15, 
Baltimore, Maryland 21244-1850.

FOR FURTHER INFORMATION CONTACT: Udo Nwachukwu, (410) 786-7234.

SUPPLEMENTARY INFORMATION:

I. Background

    The Peer Review Improvement Act of 1982 (title I, subtitle C of the 
Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Pub. L. 97-
248) amended Part B of title XI of the Social Security Act (the Act) by 
establishing the Utilization and Quality Control Peer Review 
Organization (PRO) program.
    PROs currently review certain health care services furnished under 
title XVIII of the Act (Medicare) and under certain other Federal 
programs to determine whether those services are reasonable, medically 
necessary, provided in the appropriate setting, and are of a quality 
that meets professionally recognized standards. PRO activities are a 
part of the Health Care Quality Improvement Program (HCQIP), a program 
which supports our mission to ensure health care security for our 
beneficiaries. The HCQIP rests on the belief that a plan's, provider's, 
or practitioner's own internal quality management system is key to good 
performance. The HCQIP is carried out locally by the PRO in each State. 
Under the HCQIP, PROs provide critical tools (for example, quality 
indicators and information) for plans, providers, and practitioners to 
improve the quality of care provided to Medicare beneficiaries. The 
Congress created the PRO program in part to redirect, simplify, and 
enhance the cost-effectiveness and efficiency of the peer review 
process.
    In June 1984, we began awarding contracts to PROs. We currently 
maintain 53 PRO contracts with organizations that provide medical 
review activities for the 50 States, the District of Columbia, Puerto 
Rico, and the Virgin Islands. The organizations that are eligible to 
contract as PROs have satisfactorily demonstrated that they are either 
physician-sponsored or physician-access organizations in accordance 
with sections 1152 and 1153 of the Act and our regulations at 42 CFR 
475.102 and 475.103. A physician-sponsored organization is one that is 
both composed of a substantial number of the licensed doctors of 
medicine and osteopathy practicing medicine or surgery in the 
respective review area, and who are representative of the physicians 
practicing in the review area. A physician-access organization is one 
that has available to it, by arrangement or otherwise, the services of 
a sufficient number of licensed doctors of medicine or osteopathy 
practicing medicine or surgery in the review area to ensure adequate 
peer review of the services furnished by the various medical 
specialties and subspecialties. In addition, the organization must not 
be a health care facility, health care facility association, a health 
care facility affiliate, or in most cases a payor organization. 
(Statutes and regulations provide that, in the event CMS determines no 
otherwise qualified nonpayor organization is available to undertake a 
given PRO contract, CMS may select a payor organization that otherwise 
meets requirements to be eligible to conduct PRO Utilization and 
Quality Control Peer Review.) The selected organization must have a 
consumer representative on its governing board.
    The Omnibus Budget Reconciliation Act of 1987 (Pub. L. 100-203) 
amended section 1153 of the Act by adding a new paragraph (i) that 
prohibits us from renewing the contract of any PRO that is not an in-
State organization without first publishing in the Federal Register, a 
notice announcing when the contract will expire. This notice must be 
published no later than 6 months before the date the contract expires 
and must specify the period of time during which an in-State 
organization may submit a proposal for the contract. If one or more 
qualified in-State organizations submit a proposal within the specified 
period of time, we cannot automatically renew the contract on a 
noncompetitive basis, but must instead provide for competition for the 
contract in the same manner used for a new contract. An in-State 
organization is defined as an organization that has its primary place 
of business in the State in which review will be conducted (or, that is 
owned by a parent corporation, the headquarters of which is located in 
that State).
    There are currently 10 PRO contracts with entities that do not meet 
the statutory definition of an in-State organization. The areas 
affected for purposes of this notice along with their respective 
expiration dates are as follows:

Illinois, July 31, 2002
Vermont, July 31, 2002
Wyoming, July 31, 2002
Maine, July 31, 2002
Alaska, October 31, 2002
Idaho, October 31, 2002
Hawaii, January 31, 2003
Kentucky, January 31, 2003
Nebraska, January 31, 2003
South Carolina, January 31, 2003

II. Provisions of the Notice

    The notice announces the scheduled expiration dates of the current 
contracts between CMS and out-of-State PROs responsible for review in 
the areas mentioned above.
    Interested in-State organizations may submit statements of interest 
to be the PRO for these States. We must receive the statements no later 
than February 11, 2002, and in its statement of interest, the 
organization must furnish materials that demonstrate that it meets the 
definition of an in-State organization. Specifically, the organization 
must have its primary place of business in the State in which review 
will be conducted or be a subsidiary of a parent corporation, whose 
headquarters is located in that State. In its statement, each 
interested organization must further demonstrate that it meets the 
following requirements:

A. Be Either a Physician-Sponsored or a Physician-Access Organization

1. Physician-Sponsored Organization
    a. The organization must be composed of a substantial number of the 
licensed

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doctors of medicine and osteopathy practicing medicine or surgery in 
the review area, and who are representative of the physicians 
practicing in the review area.
    b. The organization must not be a health care facility, health care 
facility association, health care facility affiliate, or in most cases 
a payor organization.
    c. In order to meet the ``substantial number of doctors of medicine 
and osteopathy'' requirement of paragraph A.1.a of this section, an 
organization must be composed of at least 10 percent of the licensed 
doctors of medicine and osteopathy practicing medicine or surgery in 
the review area. In order to meet the representation requirement of 
paragraph A.1.a of this section, an organization must state and have 
documentation in its files demonstrating that it is composed of at 
least 20 percent of the licensed doctors of medicine and osteopathy 
practicing medicine or surgery in the review area. Alternatively, if 
the organization does not demonstrate that it is composed of at least 
20 percent of the licensed doctors of medicine and osteopathy 
practicing medicine or surgery in the review area, the organization 
must demonstrate in its statement of interest through letters of 
support from physicians or physician organizations, or through other 
means, that it is representative of the area physicians.
2. Physician-Access Organization
    a. The organization must have available to it, by arrangement or 
otherwise, the services of a sufficient number of the licensed doctors 
of medicine or osteopathy practicing medicine or surgery in the review 
area to ensure adequate peer review of the services furnished by the 
various medical specialties and subspecialties.
    b. The organization must not be a health care facility, health care 
facility association, health care facility affiliate, or in most cases 
a payor organization.
    c. An organization meets the requirements of paragraph A.2.a of 
this section if it demonstrates that it has available to it at least 
one physician in every generally recognized specialty and has an 
arrangement or arrangements with physicians under which the physicians 
would conduct review for the organization.

B. Have at Least One Individual Who Is a Representative of Consumers on 
Its Governing Board

    If one or more organizations meet the above requirements in a PRO 
area and submit statements of interest in accordance with this notice, 
we will consider those organizations to be potential sources for the 10 
contracts upon their expiration. These organizations will be entitled 
to participate in a full and open competition for the PRO contract to 
perform the PRO statement of work.

III. Information Collection Requirements

    This notice contains information collection requirements that have 
been approved by the Office of Management and Budget (OMB) under the 
authority of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35) 
and assigned OMB Control Number 0938-0526.

    Authority: Section 1153 of the Social Security Act (42 U.S.C. 
1320c-2).


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

    Dated: December 12, 2001.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 02-1066 Filed 1-24-02; 8:45 am]
BILLING CODE 4120-01-P