[Federal Register Volume 67, Number 125 (Friday, June 28, 2002)]
[Notices]
[Pages 43629-43632]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-15971]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-4023-FN]
RIN 0938-ZA16


Medicare Program; Medicare+Choice Organizations--Approval of the 
Accreditation Association for Ambulatory Health Care, Inc. (AAAHC) for 
Medicare+Choice (M+C) Deeming Authority of M+C 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 Accreditation 
Association for Ambulatory Health Care, Inc. (AAAHC) 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 AAAHC's standards for 
managed care plans 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 AAAHC 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 Sec. 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 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), that 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.
    A 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

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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 August 1, 2001, we published a proposed notice in the Federal 
Register (66 FR 39773) announcing the receipt of an application from 
AAAHC 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 received one public comment in support of 
AAAHC's application for M+C deeming authority.

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 AAAHC's accreditation 
program (including their standards and monitoring protocol) were 
compared to the requirements set forth in part 422 for the M+C program.

A. Components of the Review Process

    The review of AAAHC's application for approval of M+C deeming 
authority included the following components.
1. Site Visit
    We conducted a site visit to AAAHC's headquarters to assess--
     The corporate policies and procedures that relate to the 
managed care accreditation program;
     The survey, decision-making, and report-writing processes 
used in AAAHC's managed care accreditation program;
     The resources available for accreditation reviews and 
AAAHC's ability to financially sustain an M+C deeming program;
     The staff and surveyor training and evaluation programs;
     The communication, customer support, and public 
accessibility of accreditation information; and
     AAAHC's ability to investigate and respond appropriately 
to complaints against accredited managed care organizations.
2. Desk-Top Review
    We conducted a desk-top review of AAAHC's managed care 
accreditation program, including--
     A description of AAAHC's survey process for managed care 
plans, 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 
requirements, the content and frequency of the in-service training, the 
evaluation system used to monitor performance, and conflict of interest 
requirements governing AAAHC staff and surveyors;
     A description of the data management and analysis system, 
the types (full, partial, or denial) and categories (provisional, 
conditional, temporary) of accreditation offered by AAAHC, 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 AAAHC M+C organization deeming authority;
     The procedures used to respond to and investigate 
complaints or identify other problems with accredited organizations, 
including coordination of these activities with licensing bodies and 
ombudsmen programs;
     A description of how AAAHC provides accreditation 
information to the general public;
     The policies and procedures for (1) withholding, denying 
and removing accreditation status, and the other actions AAAHC may take 
in response to noncompliance with their standards and requirements, and 
(2) how AAAHC 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) AAAHC-accredited M+C organizations, (2) 
managed care plans surveyed by AAAHC in the past 3 years, and (3) 
managed care plans that were scheduled to be surveyed by AAAHC within 3 
months of submitting their application;
     A written presentation of AAAHC'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, AAAHC agreed to comply with the ongoing responsibility 
requirements stated in Sec. 422.157(c).
3. Assessment of AAAHC's Standards and Methods of Evaluation
    As part of the application, AAAHC 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 AAAHC'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 AAAHC Accreditation Survey
    An observation of an AAAHC accreditation survey of a managed care 
organization allowed our staff to (1) validate that the accreditation 
review methods described in AAAHC's application were equal to (or 
exceeded) the corresponding Medicare requirements, and (2) resolve 
outstanding issues that were identified during the review of AAAHC's 
application materials.

B. Results of the Review Process

    We determined that AAAHC's current accreditation program for 
managed care plans 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)(C) of the Act. To address this issue, AAAHC 
agreed to complement their current managed care accreditation program. 
Thus, when assessing M+C organizations that seek deemed status for the 
Medicare requirements contained in the six categories established in 
the Act (including delegation requirements, which are contained in five 
of the six deeming categories), AAAHC will add the requirements 
described below.
1. Quality Assurance (Sec. 422.152)
    AAAHC will add to its accreditation standards requirements for M+C 
organizations to--

[[Page 43631]]

     Conduct quality improvement projects that meet or exceed 
the requirements specified in Sec. 422.152;
     Achieve and report minimum performance levels when we 
establish them;
     Designate a policymaking body and senior official that are 
accountable for the quality assurance program and that encourage 
providers and consumers to participate actively;
     Collect data related to (1) 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;
     Correct significant systemic problems that come to their 
attention through internal surveillance, complaints, enrollee 
satisfaction surveys, or other mechanisms, such as the use of appeals 
and grievances; and
     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)
    AAAHC will add to its accreditation standards requirements for M+C 
organizations to--
     Provide written notice of rules of participation regarding 
terms of payment, credentialing, participation decisions that are 
adverse to physicians and material changes in participation rules 
before changes are put into effect;
     Provide at least 60 days written notice (applies to 
provider as well) before terminating a contract without cause;
     Establish a formal mechanism to consult with physicians 
regarding medical policy, quality assurance programs, and medical 
management procedures;
     Communicate practice guidelines and any admission, 
continued stay, and discharge criteria to all providers and enrollees 
when appropriate;
     Apply participation procedures equally to physicians 
within all contracted subgroups;
     Address notice requirements when suspending or terminating 
physician agreements;
     Communicate a physician's right to appeal a suspended or 
terminated agreement and ensure that the hearing panel is composed of 
members who are peers of the affected physician;
     Address procedures for initial credentialing (including 
verification for Medicare payment and attestation by the applicant of 
the completeness of the application) and for recredentialing (time 
frame) that are consistent with the Medicare requirements;
     Determine and redetermine that the institutional provider 
or supplier is licensed to operate in the State and is approved for 
participation in Medicare (if applicable) and that the M+C organization 
does not employ or contract with providers who have been excluded from 
the Medicare program;
     Enable providers to communicate treatment options to all 
Medicare beneficiaries;
     Make available information on the plan's policies about 
objecting to cover, furnish, or pay for a particular service on the 
basis of moral or religious reasons; and
     Provide for limitations on provider indemnification that 
is stated in Sec. 422.212.
    AAAHC 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 AAAHC when a M+C 
organization that they have deemed is ``noncompliant'' for any of the 
PIP requirements; AAAHC 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)
    AAAHC will add to its accreditation standards requirements for M+C 
organizations to--
     Maintain written policies and procedures on advance 
directives;
     Give information to patients (directly or by contracting 
with other entities) regarding advance directives that (1) are written, 
(2) address the right to accept or refuse treatment and formulate 
advance directives, and (3) reflect changes in State law within 90 days 
of the effective date;
     Comply with State laws that allow the provider to decline 
care that conflicts with an advance directive and to conscientiously 
object to implementing certain advance directives; and
     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, Sec. 422.502(h))
    AAAHC will add to its accreditation standards requirements for M+C 
organizations to--
     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;
     Implement procedures to ensure that enrollees are not 
discriminated against in the delivery of services or that health care 
professionals are not discriminated against on the basis of license or 
certification;
     Furnish written notice (with a reason for the decision) to 
any provider whose application for participation in a network has been 
declined; and
     Comply with all applicable laws and regulations related to 
discrimination and payment sources.
5. Access to Services (Sec. 422.112)
    AAAHC will add to its accreditation standards requirements for M+C 
organizations to--
     Instruct enrollees regarding their right to access 
emergency health care services without prior authorization when the 
enrollee determines need based upon a prudent layperson standard;
     Offer a panel of primary care providers and arrange for 
necessary specialty care, including women's health services;
     Ensure that services are provided in a culturally 
competent manner to all enrollees and that the organization establishes 
standards for timeliness of access to care and member services that 
meet or exceed any related standards that we may establish;
     Ensure that each enrollee has an ongoing source of primary 
care or that each enrollee has been offered a primary care source and 
that, for each enrollee who accepts the offer, a primary care source 
exists;
     Provide coordination-of-care programs that include (1) an 
initial health care needs assessment and a 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; and

[[Page 43632]]

     Transmit information about services used by the enrollee 
to their primary care provider when a point of service or nonnetwork 
benefit is offered.
    6. Delegation Requirements (Contained in Five of the Six Deeming 
Categories)
    AAAHC will ensure that M+C organizations oversee and are 
accountable for any functions or responsibilities that are described in 
the standards for which AAAHC receives deeming authority, if the area 
(or standard) is delegated to another entity.

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. On June 15, 2002, we notified AAAHC of our approval of their 
application as a national accreditation organization for managed care 
plans that request participation in the M+C program. We are granting 
this deeming authority for 4 years--from June 15, 2002 through June 14, 
2006.

IV. Paperwork Reduction Act

    The requirements associated with granting and withdrawal of deeming 
authority to national accreditation organization, codified in part 422, 
Medicare+Choice Program, are currently approved by OMB under OMB 
approval number 0938-0690, with an expiration date of September 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 AAAHC 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 CMS's 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 6 of those M+C organizations were accredited by AAAHC. 
This notice, however, 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.
    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: May 12, 2002.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 02-15971 Filed 6-27-02; 8:45 am]
BILLING CODE 4120-01-P