[Federal Register Volume 67, Number 56 (Friday, March 22, 2002)]
[Notices]
[Pages 13337-13340]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-7123]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-4026-FN]
RIN 0938-ZA21


Medicare Program; Medicare+Choice Organizations--Approval of the 
Joint Commission on Accreditation of Healthcare Organizations for 
Medicare+Choice (M+C) Deeming Authority for Managed Care Organizations 
That Are Licensed as Health Maintenance Organizations (HMOs) or 
Preferred Provider Organizations (PPOs)

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

ACTION: Final notice.

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SUMMARY: This final notice announces the approval of the Joint 
Commission on Accreditation of Healthcare Organizations (JCAHO) for 
deeming authority of Medicare+Choice (M+C) organizations that are 
licensed as health maintenance organizations (HMOs) or preferred 
provider organizations (PPOs). We have found that the JCAHO's standards 
for managed care plans/integrated delivery networks/provider-sponsored 
organizations (networks) submitted to us and amended during the 
application process, meet or exceed those established by the Medicare 
program. Therefore, M+C organizations that are licensed as HMOs or PPOs 
and are accredited by JCAHO, may receive, at their request, deemed 
status for the M+C requirements in the six areas--Quality Assurance, 
Information on Advance Directives, Antidiscrimination, Access to 
Services, Provider Participation Rules, and Confidentiality and 
Accuracy of Enrollee Records--that are specified in section 
1852(e)(4)(B) of the Social Security Act (the Act).
    Regulations set forth in 42 CFR 422.157(b)(2) specify that the 
Secretary will publish a Federal Register notice that indicates whether 
an accreditation organization's request for approval has been granted 
and the effective date and term of the approval, which may not exceed 6 
years.

FOR FURTHER INFORMATION CONTACT: Trisha Kurtz, (410) 786-4670.

I. Background

    Under the Medicare program, eligible beneficiaries may receive 
covered services through a managed care organization that has a 
Medicare+Choice (M+C) contract with us. To enter into an M+C contract, 
the

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organization must be licensed by the State as a risk-bearing entity and 
must meet the requirements that are set forth in 42 CFR part 422. Those 
regulations implement part C of title XVIII of the Social Security Act 
(the Act), which specifies the services that a managed care 
organization must provide and the requirements that the organization 
must meet to be an M+C contractor. Other relevant sections of the Act 
are parts A and B of title XVIII and part A of title XI pertaining to 
the provision of services by Medicare certified providers and 
suppliers.
    Following approval of the M+C contract, we engage in routine 
monitoring of the M+C organization to ensure continuing compliance. The 
monitoring process is comprehensive and uses a written protocol that 
specifies the Medicare requirements the M+C organization must meet.
    An M+C organization may be exempt from our monitoring of the 
requirements that are in the areas listed in section 1852(e)(4)(B) of 
the Act if the organization is accredited by a CMS-approved accrediting 
organization. In essence, the Secretary ``deems'' that the Medicare 
requirements are met based on a determination that the accrediting 
organization's standards are at least as stringent as Medicare 
requirements. Regulations for the M+C deeming program are set forth in 
Secs. 422.156, 422.157, and 422.158. The term for which we may approve 
an accrediting organization may not exceed 6 years as stated in 
Sec. 422.157(b)(2). For continuing approval, the accrediting 
organization will have to re-apply to us.

II. Provisions of the Proposed Notice

    On September 18, 2001, we published a proposed notice in the 
Federal Register (66 FR 48147) announcing the receipt of an application 
from JCAHO for approval of deeming authority for M+C organizations that 
are licensed as health maintenance organizations (HMOs) or preferred 
provider organizations (PPOs). In the proposed notice, we provided the 
factors on which we would base our evaluation. In accordance with 
Sec. 422.157(b)(1)(iii) of the M+C regulations, we provided a 30-day 
public comment period. We did not receive any public comments in 
response to that proposed notice.

III. Deeming Approval Review and Evaluation

    As set forth in section 1852(e)(4) of the Act and our regulations 
at Sec. 422.158, the review and evaluation of the JCAHO's accreditation 
program (including their standards and monitoring protocol) was 
compared to the requirements set forth in part 422 for the M+C program.

A. Components of the Review Process

    The review of JCAHO's application for approval of M+C deeming 
authority included the following components.
1. Site Visit
    A site visit to JCAHO's headquarters was conducted to assess--
     The corporate policies and procedures that relate to the 
network accreditation program;
     The survey, decision-making, and report-writing processes 
used in JCAHO's network accreditation program;
     The resources available for accreditation reviews and 
JCAHO's ability to financially sustain an M+C deeming program;
     The staff and surveyor training and evaluation programs;
     The communication, customer support and release of 
accreditation information to the public; and
     JCAHO's ability to investigate and respond appropriately 
to complaints against accredited networks.
2. Desk-Top Review
    A desk-top review of JCAHO's network accreditation program, 
included the following items--
     A description of JCAHO's survey process for networks, 
including the frequency of surveys performed, whether the surveys are 
announced or unannounced, surveyor instructions, the review and 
accreditation status decision-making process, procedures used to notify 
accredited M+C organizations of deficiencies and monitoring of the 
correction of deficiencies, and the procedures used to enforce 
compliance with accreditation requirements;
     Information about the individuals who perform network 
accreditation reviews, including the size and composition of the survey 
team, the methods of compensation, the education and experience 
required of them, the content and frequency of the in-service training, 
the evaluation system used to monitor performance, and the conflict of 
interest requirements governing JCAHO staff;
     A description of the data management and analysis system, 
the types (full, partial, or denial) and categories (provisional, 
conditional, temporary) of accreditation offered by JCAHO, the duration 
of each category of accreditation, and a statement identifying the 
types and categories that would serve as a basis for accreditation, if 
we grant JCAHO M+C organization deeming authority;
     The procedures used to respond to and investigate 
complaints or identify other problems with accredited organizations, 
including any coordination of these activities with licensing bodies 
and ombudsmen programs;
     A description of how JCAHO provides accreditation 
information to the general public;
     The policies and procedures for (1) withholding, denying 
and removing accreditation status, and the other actions JCAHO may take 
in response to noncompliance with their standards and requirements; and 
(2) how JCAHO treats accreditation of organizations that are acquired 
by another organization, have merged with another organization, or that 
undergo a change of ownership or management;
     Lists of all (1) JCAHO-accredited M+C organizations, (2) 
networks surveyed by JCAHO in the past 3 years, and (3) networks that 
were scheduled to be surveyed by JCAHO within 3 months of submitting 
their application;
     A written presentation of JCAHO's ability to furnish data 
electronically, via telecommunications;
     A resource analysis that included financial statements for 
the past 3 years (audited, if possible) and the projected number of 
deemed status surveys for the upcoming year; and
     A statement acknowledging that, as a condition of 
approval, JCAHO agreed to comply with the ongoing responsibility 
requirements stated in Sec. 422.157(c).
3. Assessment of JCAHO's Standards and Methods of Evaluation
    As part of the application, JCAHO submitted a crosswalk that 
compared its standards and methods of evaluations with corresponding 
M+C requirements. A multicomponent team of our regional and central 
office staff then reviewed and evaluated JCAHO's standards and 
processes and compared them to the M+C requirements in six areas: 
Quality Assurance, Access to Services, Antidiscrimination, Information 
on Advance Directives, Provider Participation Rules, and 
Confidentiality and Accuracy of Enrollee Records.
4. Observation of a JCAHO Accreditation Survey
    An observation of a JCAHO accreditation survey of a network 
organization allowed our staff to (1) validate that the accreditation 
review methods described in JCAHO's application were equal to (or 
exceeded) the corresponding Medicare requirements, and (2) resolve 
outstanding issues that were identified

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during the review of JCAHO's application materials.

B. Results of the Review Process

    We determined that JCAHO's current accreditation program for 
networks either did not address or did not ``meet or exceed'' several 
of the M+C requirements contained in the six categories set forth in 
section 1852(e)(4)(B) of the Act. To address this issue, JCAHO agreed 
to complement their current network accreditation program. Thus, when 
assessing M+C organizations (including their subcontractors and 
affiliates, as applicable) that seek deemed status for the Medicare 
requirements contained in the six categories established in the Act, 
JCAHO will add the requirements described below.
1. Quality Assurance (Sec. 422.152)
    JCAHO will add to its accreditation standards requirements for M+C 
organizations to do the following--
     Achieve and report minimum performance levels when we 
establish them;
     Assess enrollee satisfaction;
     Correct significant systemic problems that come to their 
attention through internal surveillance, complaints or other 
mechanisms, such as the use of appeals and grievances;
     Conduct quality improvement projects that meet or exceed 
the requirements specified in Sec. 422.152.
     Collect data related to (1) both acute and chronic 
conditions as related to preventive services and care outcomes, (2) the 
use of clinical resources for high volume services, and (3) the 
availability, accessibility, and cultural competency of services;
     Select quality indicators that are objective, clearly 
defined, based upon current research, and generally used in the public 
health community. Indicators must be measured over time, monitored for 
at least 1 year after the desired level of performance is achieved 
(sustained improvement), and benchmarked to targets if we specify 
targets;
     Designate a policymaking body and a senior official that 
are accountable for the quality assurance program and that encourage 
providers and consumers to participate actively;
     Evaluate the effectiveness of the quality assurance 
program strategy on an annual basis and modify as necessary.
2. Provider Participation Rules (42 CFR part 422 subpart E)
    JCAHO will add to its accreditation standards requirements for M+C 
organizations to do the following--
     Provide physicians with (1) written notice of material 
changes in participation rules before the changes are put into effect, 
(2) written notice of participation decisions that are adverse to 
physicians, and (3) a process for appealing adverse participation 
decisions, including (a) having a majority of the members of the 
hearing panel be peers of the affected physician, and (b) allowing the 
physician the opportunity to present information on the decision;
     Provide that the participation guidelines, procedures, and 
Federal requirements apply equally and consistently to all physicians, 
and do not allow for employment or contracts with individuals excluded 
from the Medicare program;
     Provide (1) written notification (with specific content) 
when suspending or terminating an agreement under which the physician 
provides services to the M+C plan enrollees, and (2) notification to 
licensing and disciplinary bodies on quality-related suspensions or 
terminations;
     Provide at least 60 days written notice (applies to 
provider as well) before terminating a contract without cause;
     Make information available to us and to enrollees on 
counseling or referral services to which the M+C organization objects 
on moral or religious grounds;
     Distribute to each enrollee, at the time of enrollment and 
at least annually thereafter, a written statement that includes 
information on his or her right to obtain a summary description of the 
method of physician compensation;
     Ensure that participating providers and suppliers who 
provide services to Medicare enrollees are approved for participation 
in Medicare and that the M+C organization does not employ or contract 
with providers who have opted out of Medicare participation;
     Address the limitation on provider indemnification that is 
stated in Sec. 422.212.
    JCAHO agreed to a Physician Incentive Plan (PIP) review strategy 
that we proposed. M+C organizations will continue to provide PIP 
information directly to us. We will notify JCAHO when a M+C 
organization that they have deemed is ``noncompliant'' for any of the 
PIP requirements; JCAHO will then contact the M+C organization to 
inform it that it must comply with the PIP provisions. If, at the end 
of the accrediting organization's corrective action process, the M+C 
organization continues to be noncompliant, the accrediting organization 
will refer the case to us.
3. Information on Advance Directives (Sec. 422.128)
    JCAHO will add to its accreditation standards requirements for M+C 
organizations to do the following--
     Implement written policies and procedures for advance 
directives for all adult patients served, and share those policies and 
procedures with each enrollee at the time of enrollment;
     Comply with State laws that (1) allow the provider to 
conscientiously object to certain types of care (including a statement 
of limitation, if the M+C organization cannot implement the advance 
directive), and (2) require information concerning health care 
decision-making rights to be reflected within 90 days after the 
effective date of the law;
     Inform individuals that complaints concerning 
noncompliance with the advance directive requirements may be filed with 
the State survey and certification agency.
4. Antidiscrimination (Sec. 422.110 and Sec. 422.502(h))
    JCAHO will add to its accreditation standards requirements for M+C 
organizations to do the following--
     Prohibit the denial, limitation or conditioning of 
coverage or benefits to eligible enrollees on the basis of any factor 
that relates to health status, except in the case of an individual with 
end-stage renal disease;
     Comply with all applicable laws and regulations related to 
discrimination and payment sources.
5. Access to Services (Sec. 422.112)
    JCAHO will add to its accreditation standards requirements for M+C 
organizations to do the following--
     Instruct enrollees regarding their right to (1) access 
emergency services without prior authorization, (2) choose a personal 
provider from a panel of primary care providers accepting new 
enrollees, and (3) refuse care from specific providers;
     Provide information regarding treatment options in a 
language that the enrollee understands;
     Provide services, both clinical and nonclinical, that are 
readily available, accessible, and appropriate, when medically 
necessary (24 hours a day/7 days a week) to all enrollees, including 
those with limited English proficiency or reading skills and those with 
diverse cultural and ethnic backgrounds. Services include access to 
specialty care such as women's health services;
     Provide coordination-of-care programs that include (1) an 
initial health care needs assessment and a

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follow-up process, (2) policies regarding ongoing coordination of care 
by primary care providers or other means, (3) procedures for the 
identification of, and treatment plans for, individuals with complex or 
serious needs, and (4) coordination of plan services with community and 
social services;
     Establish, monitor, and improve performance regarding 
standards for timeliness of access to care and member services that 
meet or exceed our standards;
     Conduct an ongoing program to monitor compliance with 
policies and procedures that ensure that information for patient care 
and quality review is available;
     Transmit information to the enrollee's primary care 
provider regarding services used under a point-of-service (POS) benefit 
by an enrollee.
6. Confidentiality and Accuracy of Enrollee Records (Sec. 422.118)
    JCAHO will add to its accreditation standards requirements for M+C 
organizations to release original medical records only in accordance 
with Federal or State laws, court orders, or subpoenas; however, when 
permitted by law, the records must be made available to treatment 
providers and to organizations involved in assessing quality of care or 
investigating enrollee grievances.
7. Delegation Requirements (Contained in Five of Six Deeming 
Categories)
    JCAHO will add to its accreditation standards requirements for M+C 
organizations to do the following--
     Oversee and be accountable for any functions or 
responsibilities that are described in the standards for which JCAHO 
received deeming authority, if that area (or standard) is delegated to 
another entity;
     Specify in a written agreement the delegated activities 
and reporting responsibilities of the entity and provide for the 
revocation of the delegation or other remedies for inadequate 
performance;
     Monitor the performance of the entity on an ongoing basis 
and formally review the organization at least annually.

C. Term of Approval

    Regulations at Sec. 422.157(b)(2) permit us to grant a term of 
approval for deeming authority for accreditation organizations of up to 
6 years. We are granting this deeming authority through March 24, 2008.

IV. Paperwork Reduction Act

    The requirements associated with granting and withdrawal of deeming 
authority to national accreditation organizations, codified in part 
422, Medicare+Choice Program, are currently approved by OMB under OMB 
approval number 0938-0690, with an expiration date of June 30, 2002. 
Consequently, this notice does not need to be reviewed by the Office of 
Management and Budget (OMB) under the authority of the PRA.

V. Regulatory Impact Statement

    We have examined the impact of this notice as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review) and the 
Regulatory Flexibility Act (RFA) September 19, 1980 (Pub. L. 96-354). 
Executive Order 12866 directs agencies to assess all costs and benefits 
of available regulatory alternatives and, when regulation is necessary, 
to select regulatory approaches that maximize net benefits (including 
potential economic, environmental, public health and safety effects; 
distributive impacts; and equity).
    The RFA requires agencies to analyze options for regulatory relief 
for 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 in any 1 year (for details, see the 
Small Business Administration's publication that set forth size 
standards for health care industries at 65 FR 69432). For purposes of 
the RFA, States and individuals are not considered small entities.
    Also, section 1102(b) of the Act requires the Secretary to prepare 
a regulatory impact analysis for any notice that may have a significant 
impact on the operations of a substantial number of small rural 
hospitals. Such an analysis must conform to the provisions of section 
604 of the RFA. For purposes of section 1102(b) of the Act, we consider 
a small rural hospital as a hospital that is located outside of a 
Metropolitan Statistical Area and has fewer than 100 beds.
    This notice merely recognizes JCAHO as a national accreditation 
organization that has approval for deeming authority for HMOs or PPOs 
that are participating in the M+C program. Since M+C organizations are 
monitored every 2 years by our regional office staff to determine 
compliance with M+C requirements, we believe that the M+C deeming 
program has the potential to reduce both the regulatory and 
administrative burdens associated with the Medicare+Choice program. In 
FY 2001, there were 179 M+C contracts and 5,578,605 enrollees. 
Approximately eight of those M+C organizations were accredited by 
JCAHO.
    This notice is not a major rule as defined in Title 5, United 
States Code, section 804(2) and is not an economically significant rule 
under Executive Order 12866.
    Therefore, we have determined, and the Secretary certifies, that 
this notice will not result in a significant impact on small entities 
and will not have an effect on the operations of small rural hospitals. 
Therefore, we are not preparing analyses for either the RFA or section 
1102(b) of the Act.
    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 expenditure in any 1 year by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $110 million. This notice has no consequential effect on 
State, local, or tribal governments. We believe the private sector 
costs of this notice fall below this threshold as well.
    In accordance with Executive Order 13132, this notice will not 
significantly affect the rights of States and does not significantly 
affect State authority. This regulation describes only processes that 
must be undertaken to fulfill our obligation to enforce our regulations 
as required by the April 8, 1997 (62 FR 16985) regulation.
    In accordance with the provisions of Executive Order 12866, this 
notice was not reviewed by OMB.

    Authority: Secs. 1851 and 1855 of the Social Security Act (42 
U.S.C. 1395w-21 and 42 U.S.C. 1395w-25)

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

    Dated: March 14, 2002.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 02-7123 Filed 3-21-02; 8:45 am]
BILLING CODE 4120-01-P