[Federal Register Volume 67, Number 164 (Friday, August 23, 2002)]
[Notices]
[Pages 54657-54659]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-21372]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-2140-FN]
RIN 0938-ZA13


Medicare and Medicaid Programs; Approval of Deeming Authority for 
Critical Access Hospitals by the Joint Commission on Accreditation of 
Healthcare Organizations (JCAHO)

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

ACTION: Final notice.

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SUMMARY: This final notice announces our decision to approve the Joint 
Commission on Accreditation of Healthcare Organization's (JCAHO's) 
application as a national accrediting organization for critical access 
hospitals (CAHs) seeking to participate in the Medicare program. 
Following our evaluation of the organizational and programmatic 
capabilities of JCAHO, we have determined that JCAHO standards for CAHs 
meet or exceed the Medicare conditions of participation. Therefore, 
CAHs accredited by JCAHO will be granted deemed status under the 
Medicare program.

EFFECTIVE DATE: This final notice is effective November 21, 2002 
through November 21, 2008.

FOR FURTHER INFORMATION CONTACT: Cindy Melanson, (410) 786-0310.

SUPPLEMENTARY INFORMATION:

I. Background

Statutory Provisions and Regulations

    Under the Medicare program, eligible beneficiaries may receive 
covered services in a critical access hospital (CAH), provided that the 
hospital meets certain requirements. Sections 1820(c)(2)(B) and 1820(e) 
of the Social Security Act (the Act) establish distinct criteria for 
facilities seeking CAH designation. Under this authority, the Secretary 
has set forth in regulations minimum requirements that a CAH must meet 
to participate in Medicare. The regulations at 42 CFR part 485, subpart 
F (Conditions of Participation: Critical Access Hospitals (CAHs)) 
determine the basis and scope of CAH-covered services. Conditions for 
Medicare payment for critical access services can be found at 
Sec. 413.70. Applicable regulations concerning provider agreements are 
at 42 CFR part 489 (Provider Agreements and Supplier Approval) and 
those pertaining to facility survey and certification are at 42 CFR 
part 488, subparts A and B.

Verifying Medicare Conditions of Participation

    In general, we approve a CAH for participation in the Medicare 
program, if it is participating as a hospital at the time it applies 
for CAH designation, and is in compliance with parts 482 (Conditions of 
Participation for Hospitals), and 485, subpart F (Conditions of 
Participation: Critical Access Hospitals (CAHs)). Section 403 of the 
Medicare, Medicaid and SCHIP Balanced Budget Refinement Act of 1999 
expanded this criterion to allow a limited number of additional 
entities to become eligible for CAH designation under certain 
circumstances. Specifically, a rural health clinic previously downsized 
from an acute care hospital, or a closed hospital that requests to 
reopen as a CAH, need only meet the provisions of 42 CFR part 485, 
subpart F (at the time they apply for CAH designation) to be eligible 
to participate in Medicare.
    For a CAH to enter into a provider agreement, a State survey agency 
must certify that the CAH is in compliance with the conditions or 
standards set forth in the statute and part 485 subpart F of our 
regulations. Then, the CAH is subject to ongoing review by a State 
survey agency to determine whether it continues meeting Medicare 
requirements. There is, however, an alternative to State compliance 
surveys. Certification by a nationally recognized accreditation program 
can substitute for ongoing State review.
    Section 1865(b)(1) of the Act provides that, if a provider is 
accredited by a national accreditation body under standards that meet 
or exceed the Medicare conditions of participation, the Secretary can 
``deem'' the provider as having met the Medicare requirements for those 
conditions. Accreditation is voluntary and not required for 
participation in Medicare; providers have the option to undergo State 
surveys or pursue accreditation. The American Osteopathic Association 
(AOA) is currently the only CMS-approved national accreditation 
organization for CAHs.

[[Page 54658]]

II. Deeming Application Approval Process

    Section 1865(b)(3)(A) of the Act provides a statutory timetable to 
ensure that our review of deeming applications is conducted in a timely 
manner. The Act provides us with 210 calendar days to complete our 
survey activities and application review process. Within 60 days of 
receiving a completed application, we must publish a notice in the 
Federal Register that identifies the national accreditation body making 
the request, describes the nature of the request, and provides no less 
than a 30-day public comment period.

III. Proposed Notice

    On March 22, 2002, we published a proposed notice at 67 FR 13344 
announcing the JCAHO's request for approval as a deeming organization 
for CAHs. In the notice, we detailed our evaluation criteria. Under 
section 1865(b)(2) of the Act and Sec. 488.4, we conducted a review of 
the JCAHO application in accordance with the criteria specified by our 
regulation, which includes, but is not limited to the following:
     An onsite administrative review of JCAHO's (1) corporate 
policies; (2) financial and human resources available to accomplish the 
proposed surveys; (3) procedures for training, monitoring, and 
evaluation of its surveyors; (4) ability to investigate and respond 
appropriately to complaints against accredited facilities; and (5) 
survey review and decision-making process for accreditation.
     A comparison of JCAHO's CAH accreditation standards to our 
current Medicare CAH conditions of participation standards.
     A documentation review of JCAHO's survey processes to do 
the following:
     Determine the composition of the survey team, surveyor 
qualifications, and the ability of JCAHO to provide continuing surveyor 
training.
     Compare JCAHO's processes to those of State survey 
agencies, including survey frequency, and the ability to investigate 
and respond appropriately to complaints against accredited facilities.
     Evaluate JCAHO's procedures for monitoring providers or 
suppliers found to be out of compliance with JCAHO program 
requirements. The monitoring procedures are used only when the JCAHO 
identifies noncompliance. If noncompliance is identified through 
validation reviews, the survey agency monitors corrections as specified 
at Sec. 488.7(b)(2).
     Assess JCAHO's ability to report deficiencies to the 
surveyed facilities and respond to the facility's plan of correction in 
a timely manner.
     Establish JCAHO's ability to provide us with electronic 
data in ASCII-comparable code and reports necessary for effective 
validation and assessment of JCAHO's survey process.
     Determine the adequacy of staff and other resources.
     Review JCAHO's ability to provide adequate funding for 
performing required surveys.
     Confirm JCAHO's policies with respect to whether surveys 
are announced or unannounced.
     Obtain JCAHO's agreement to provide us with a copy of the 
most current accreditation survey together with any other information 
related to the survey as we may require, including corrective action 
plans.
    In accordance with section 1865(b)(3)(A) of the Act, the proposed 
notice also solicited public comments regarding whether JCAHO's 
requirements met or exceeded the Medicare conditions of participation 
for CAHs. We received no public comments in response to our proposed 
notice.

IV. Provisions of the Final Notice

A. Differences Between JCAHO and Medicare's Conditions and Survey 
Requirements

    We compared the standards contained in the JCAHO's ``Critical 
Access Hospital (CAH) Manual'' and its survey process in the ``Critical 
Access Hospital Surveyor Handbook'' with the Medicare CAH conditions of 
participation and CMS's ``State and Regional Operations Manual.'' Our 
review and evaluation of JCAHO's deeming application, which were 
conducted as described in section III of this notice yielded the 
following:
     JCAHO provided an updated crosswalk (a table showing the 
match between their standards and our standards) of recommended 
revisions or clarifications to its requirements to ensure that the 
requirements meet or exceed CMS requirements.
     JCAHO adjusted language to consistently refer to CAHs as 
opposed to hospitals.
     JCAHO modified and adjusted its standards for CAHs to more 
clearly document the JCAHO standard and intent statement. The 
reformatted version presents the standards in their entirety and 
facilitates a comparison to the Medicare COPs.
     JCAHO added language to each chapter of the CAH Manual 
stating, ``Critical Access Hospitals going through a deemed status 
survey are expected to meet the standards and the full intent of the 
standards.'' This added language eliminates CMS's concern about JCAHO's 
intent statements not carrying the same weight as the Medicare 
standards.
     JCAHO modified its standard and intent statement to 
include a list of drugs and biologicals commonly used in life-saving 
procedures in order to meet the requirements of Sec. 485.618.
     In order to meet the requirements of Sec. 485.639, JCAHO 
added to its standard and intent statement the language that surgery 
can only be performed by: (1) A doctor of medicine or osteopathy, 
including an osteopathic practitioner recognized under section 
1101(a)(7) of the Act; (2) a doctor of dental surgery or dental 
medicine; or (3) a doctor of podiatric medicine.
     JCAHO standards previously indicated resurvey of a CAH 
every 3 years. JCAHO modified its standards to indicate in the resurvey 
requirements that a 1-year-follow-up visit after the initial 
accreditation survey is required. After the 1-year-follow-up, CAHs will 
be resurveyed every 3 years.
     JCAHO provided a list of currently accredited facilities 
and schedule of surveys to be performed to meet the requirements of 
Sec. 488.4(a)(9) and (10).
     JCAHO addressed our regulations at Sec. 485.623 and 
specifically, Sec. 485.623(d)(1), by recognizing that assessing 
compliance with the life safety code (LSC) is a JCAHO responsibility. 
The LSC, published on an ongoing basis by the National Fire Prevention 
Association, contains building and construction standards designed to 
promote fire-safe structures. In addition to the JCAHO requirement that 
the CAH complete a Statement of Conditions (SOC), which allows the CAH 
to report any known deficiencies in the physical plant, a JCAHO trained 
surveyor also surveys the CAH using the JCAHO environment-of-care 
standards. During the JCAHO survey process, a surveyor will conduct a 
building tour, including above-the-ceiling inspections, and will 
validate what the organization has reported on its SOC. As a result of 
the inspection, JCAHO findings may be cited as requirements for 
improvement and may impact the score and survey outcome. JCAHO requires 
that all findings on the SOC be remediated in the same manner as those 
found independently by JCAHO surveyors. The CMS Financial Report to 
Congress, published in 2002, includes a report on ``Medicare's 
Validation Program for Hospitals Accredited by the JCAHO''. This report 
showed a large discrepancy between the LSC survey findings made by the 
State survey agencies and JCAHO surveys. JCAHO regularly failed to 
identify LSC deficiencies. We expect

[[Page 54659]]

that the current JCAHO LSC survey process will be reviewed when CMS 
adopts the 2000 edition of the LSC, which was published as a proposed 
rule on October 26, 2001 (66 FR 54178). The final rule is under 
development. Insofar as there may be differences between state survey 
standards and JCAHO standards based on the 2000 LSC, we want to provide 
both JCAHO and the states with an opportunity to bring their procedures 
into alignment with the new LSC. If, after reviewing JCAHO's 
performance under such standards, significant discrepancies continue to 
occur, we will address the matter at that time.

B. Term of Approval

    Based on the review and observations described in section III of 
this final notice, we have determined that JCAHO's requirements for 
CAHs meet or exceed our requirements. Therefore, we recognize the JCAHO 
as a national accreditation organization for CAHs that request 
participation in the Medicare program, effective November 21, 2002 
through November 21, 2008.

V. Collection of Information Requirements

    This final notice does not impose any information collection and 
recordkeeping requirements subject to the Paperwork Reduction Act 
(PRA). Consequently, it does not need to be reviewed by the Office of 
Management and Budget (OMB) under the authority of the PRA. The 
requirements associated with granting and withdrawal of deeming 
authority to national accreditation organizations, codified in 42 CFR 
part 488, (Survey, Certification, and Enforcement Procedures) are 
currently approved by OMB under OMB approval number 0938-0690, with an 
expiration date of September 30, 2002.

VI. Regulatory Impact Statement

    We have examined the impact of this notice as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (Pub. L. 98-354), section 1102(b) of 
the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. 
L. 104-4), and Executive Order 13132.
    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. 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 final notice recognizes JCAHO as a national accreditation 
organization for CAHs that request participation in the Medicare 
program. There are neither significant costs nor savings for the 
program and administrative budgets of Medicare. Therefore, 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. We have determined, and the Secretary certifies, that this 
notice will not result in a significant impact on a substantial number 
of small entities and will not have a significant effect on the 
operations of a substantial number 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 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 will not result in an impact of $110 million on 
the governments mentioned or on the private sector.
    In an effort to better assure the health, safety, and services of 
beneficiaries in CAHs already certified as well as provide relief to 
State budgets in this time of tight fiscal restraints, we deem CAHs 
accredited by JCAHO as meeting our Medicare requirements. Thus, we 
continue our focus on assuring the health and safety of services by 
providers and suppliers already certified for participation in a cost-
effective manner.
    In accordance with the provisions of Executive Order 12866, this 
notice was not reviewed by the Office of Management and Budget. In 
accordance with Executive Order 13132, we have determined that this 
notice will not significantly affect the rights of States, local or 
tribal governments.

    Authority: Section 1865 of the Social Security Act (42 U.S.C. 
1395bb).

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program; No. 93.773 Medicare--Hospital Insurance Program; 
and No. 93.774, Medicare--Supplemental Medical Insurance Program).

    Dated: August 16, 2002.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 02-21372 Filed 8-22-02; 8:45 am]
BILLING CODE 4120-01-P