[Federal Register Volume 67, Number 226 (Friday, November 22, 2002)]
[Notices]
[Pages 70439-70442]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29364]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-2155-FN]


Medicare and Medicaid Program; Approval of Application for 
Deeming Authority for Ambulatory Surgical Centers by the Accreditation 
Association for Ambulatory Health Care

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 
Accreditation Association for Ambulatory Health Care's (AAAHC) 
application as a national accrediting organization for ambulatory 
surgical centers (ASCs) seeking to participate in the Medicare program. 
Following an evaluation of the organizational and programmatic 
capabilities of AAAHC, we have determined that AAAHC's standards for 
ASCs meet or exceed the Medicare conditions for coverage. Therefore, 
ASCs accredited by AAAHC will be granted deemed status under the 
Medicare program.

EFFECTIVE DATE: This final notice is effective December 20, 2002, 
through December 20, 2008.

FOR FURTHER INFORMATION CONTACT: Milonda Mitchell (410) 786-3511.

SUPPLEMENTARY INFORMATION:

I. Background

A. Statutory Provisions and Regulations

    Under the Medicare program, eligible beneficiaries may receive 
covered services in ambulatory surgical centers (ASCs), provided that 
the ASCs meet

[[Page 70440]]

certain requirements. Section 1832(a)(2)(F)(i) of the Social Security 
Act (the Act) authorizes the Secretary of the Department of Health and 
Human Services (the Secretary) to establish distinct criteria for 
facilities seeking ASC designation. Under this authority, the Secretary 
has set forth in regulations minimum requirements that ASCs must meet 
to participate in Medicare. The regulations at title 42 CFR part 416 
(Ambulatory Surgical Services) of the Code of Federal Regulations (CFR) 
determine the basis and scope of covered services provided by ASCs and 
Conditions for Medicare payment for ASCs. Applicable regulations 
concerning provider agreements are at part 489 (Provider Agreements and 
Supplier Approval) and those pertaining to facility survey and 
certification are at part 488 (Survey, Certification, and Enforcement 
Procedures), subparts A (General Provisions) and B (Special 
Requirements).

B. Verifying Medicare Conditions for Coverage

    For an ASC to enter into a provider agreement, a State survey 
agency must certify that the ambulatory surgical center is in 
compliance with the conditions or standards set forth in part 416 of 
CMS regulations. Then, the ASC is subject to ongoing review by a State 
survey agency to determine whether it continues to meet the Medicare 
requirements. However, there is an alternative to State compliance 
surveys. Certification by a CMS-approved accreditation program can 
substitute for ongoing State review.
    Section 1865(b)(1) of the Act states that provider entities 
accredited by CMS-approved accrediting organizations are deemed to be 
in compliance with Medicare conditions for coverage. Accreditation by 
an accreditation organization is voluntary and is not required of ASCs 
for participation in Medicare.

C. Deeming Application Approval Process

    Section 1865(b)(3)(A) of the Act provides a statutory timetable to 
ensure that CMS conducts its review of deeming applications in a timely 
manner. The Act provides CMS with 210 calendar days after the date of 
receipt of an application to complete its survey activities and 
application review process. Within 60 days of receiving a completed 
application, CMS 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.

II. Proposed Notice

    On June 28, 2002, CMS published a proposed notice announcing 
AAAHC's request for approval as a deeming organization for ASCs (67 FR 
43610). In the notice, CMS detailed its evaluation criteria. Under 
section 1865(b)(2) of the Act and Sec.  488.4, CMS conducted a review 
of AAAHC's application in accordance with the criteria specified by CMS 
regulations, which include, but are not limited to the following:
    [sbull] An onsite administrative review of AAAHC'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.
    [sbull] A comparison of AAAHC's ASC accreditation standards to CMS' 
current Medicare conditions for coverage.
    [sbull] A documentation review of AAAHC's survey processes to:
    [sbull] Determine the composition of the survey team, surveyor 
qualifications, and the ability of AAAHC to provide continuing surveyor 
training.
    [sbull] Compare AAAHC's processes to those of State survey 
agencies, including survey frequency, and the ability to investigate 
and respond appropriately to complaints against accredited facilities.
    [sbull] Evaluate AAAHC's procedures for monitoring providers or 
suppliers found to be out of compliance with AAAHC program 
requirements. The monitoring procedures are used only when the AAAHC 
identifies noncompliance. If noncompliance is identified through 
validation reviews, the survey agency monitors corrections as specified 
at Sec.  488.7(d).
    [sbull] Assess AAAHC's ability to report deficiencies to the 
surveyed facilities and respond to the facility's plan of correction in 
a timely manner.
    [sbull] Establish AAAHC's ability to provide CMS with electronic 
data in ASCII-comparable code and reports necessary for effective 
validation and assessment of AAAHC's survey process.
    [sbull] Determine the adequacy of staff and other resources.
    [sbull] Review AAAHC's ability to provide adequate funding for 
performing required surveys.
    [sbull] Confirm AAAHC's policies with respect to whether surveys 
are announced or unannounced.
    [sbull] Obtain AAAHC's agreement to provide CMS with a copy of the 
most current accreditation survey together with any other information 
related to the survey that CMS 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 AAAHC's 
requirements met or exceeded the Medicare conditions for coverage for 
ASCs.
    CMS received public comments from the American Academy of Facial 
Plastic and Reconstructive Surgery and the Federated Ambulatory Surgery 
Association recommending the approval of AAAHC's application as a 
national accrediting organization for ASCs.

III. Provisions of the Final Notice

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

    CMS compared the standards contained in AAAHC's ``Accreditation 
Handbook for Ambulatory Health Care,'' its survey process in the 
``AAAHC Survey Report Form,'' and its ``AAAHC Environmental Spot-
Checklist,'' with the Medicare ASC conditions for coverage and CMS' 
State and Regional Operations Manual. CMS conducted its review and 
evaluation of AAAHC's deeming application as described in section III 
of this notice. It yielded the following:
    [sbull] In order to meet the requirements of Sec.  416.41 AAAHC 
added to its standard that all ASCs must have an effective procedure 
for transfer to a local hospital, of patients requiring emergency 
medical care beyond the capabilities of the ASC.
    [sbull] AAAHC revised its Accreditation Handbook and Survey Report 
Form to meet the requirement set forth at Sec.  416.44(c), by requiring 
ventilatory assistance equipment, including airways, manual breathing 
bags, and ventilators in all ASC operating rooms.
    [sbull] AAAHC accepted CMS' recommendation to adopt the 2000 Life 
Safety Code. AAAHC will issue a transmittal of the new LSC requirements 
to its AAAHC Medicare deemed ASCs, AAAHC surveyors, and to its 
potential ASCs applicants requesting an AAAHC Medicare deemed status 
survey. Furthermore, AAAHC has agreed to revise its AAAHC Accreditation 
Handbook Standards Chapter 8 R-MS, Appendix H; AAAHC Survey Report Form 
Chapter 8 R-MS; and Physical Environment Checklist for Ambulatory 
Surgical Centers in February 2003 to reflect the implementation of the 
2000 Life Safety Code.
    [sbull] CMS requested that AAAHC clarify its standard regarding 
requiring only

[[Page 70441]]

existing facilities to conform with existing codes as demonstrated by a 
fire marshal report performed by a State authority and its standard 
requiring that an existing facility which lacks a fire marshal report 
be required to solicit a Life Safety Code Survey from the State fire 
marshal. AAAHC indicated that it will perform a Life Safety Code survey 
for all ASCs applying for or re-applying for an AAAHC Medicare deemed 
status survey. A surveyor credentialed to perform such an inspection 
performs the AAAHC Life Safety Code survey.
    [sbull] AAAHC provided clarification to its reference regarding the 
usage of batteries as an emergency power source by stating that its 
current requirement is based on the 1985 NFPA Life Safety Code. 
However, once CMS adopts the 2000 edition of the Life Safety Code, 
AAAHC agrees that the use of batteries will no longer be an acceptable 
source of emergency power in an ASC, unless specifically permitted by a 
CMS exception to the new NFPA standards. In addition, this 
clarification will be incorporated into the revisions of AAAHC's 
Physical Environment Spot-Check List for Ambulatory Surgical Centers, 
Appendix H; AAAHC Survey Report Form, Chapter 8; and the Facilities and 
Environment Section 18 B of the AAAHC Handbook when published in early 
2003. Prior to these revisions, AAAHC will issue a transmittal to all 
ASCs currently deemed by AAAHC, AAAHC Medicare deemed status surveyors, 
and to ASCs applying for a AAAHC Medicare deemed status survey stating 
that in accordance with the 2000 edition of the Life Safety Code all 
new ambulatory health care facilities with ``critical access areas'' 
(including operating rooms and/or post-anesthesia recovery rooms) will 
be required to provide a ``type I'' essential electrical system (ESS).
    [sbull] CMS requested AAAHC to clarify its descriptions of its 
accreditation decisions for ASCs deemed to participate in the Medicare 
program. AAAHC responded that its Accreditation Committee awards an ASC 
accreditation for a three-year term when it has no reservations about 
the accuracy of the survey findings or the ASC's commitment to continue 
providing high quality care and services, and when it concludes that 
the ASC is in compliance with all of Medicare's conditions for coverage 
all of AAAHC's standards. A one-year term of accreditation is awarded 
by AAAHC's Accreditation Committee when it concludes that the ASC meets 
the Medicare conditions for coverage, but that a portion of the ASC's 
operations require more time to achieve and sustain compliance with all 
AAAHC standards. Therefore, the organization would have a special on-
site review within 10 months from the first survey date to avoid a 
lapse in accreditation. Such a special on-site review would be 
conducted by one or more surveyors and would not be limited to the 
recommendations in the previous survey report. Finally, AAAHC's 
Accreditation Committee awards an ASC a six-month term of accreditation 
when it concludes that the organization meets the Medicare conditions 
for coverage and is in compliance with the AAAHC standards, but is 
ineligible for a three-year term of accreditation because the ASC has 
not been operational for 6 months. However, a six-month term of 
accreditation may also be awarded to an ASC that has been in business 
for longer than 6 months, is seeking both AAAHC accreditation and 
Medicare deemed status for the first time, and AAAHC's Accreditation 
Committee has determined that it meets the Medicare conditions for 
coverage and is in compliance with the AAAHC standards. All ASCs with a 
six-month term of accreditation would have a special on-site review 
within 5 months from the previous survey date with a focus on the issue 
of sustained performance since the initial survey. Such a special on-
site review would be conducted by one or more surveyors and would not 
be limited to the recommendations in the previous survey report. CMS 
deems an ASC accredited by AAAHC for any of these terms to have met or 
exceeded Medicare standards for the duration of that term.

B. Term of Approval

    Based on the review and observations described in section III of 
this final notice, CMS has determined that AAAHC's requirements for 
ASCs meet or exceed CMS requirements. Therefore, CMS recognizes AAAHC 
as a national accreditation organization for ASCs that request 
participation in the Medicare program, effective December 20, 2002 
through December 20, 2008.

IV. 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.

V. 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) (September 16, 1980, 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 (as amended by Executive Order 13258, which 
merely reassigns responsibility of duties) 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, CMS considers 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 AAAHC as a national accreditation 
organization for ASCs 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. CMS has 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, 
CMS has not prepared analyses for either the RFA or section 1102(b) of 
the Act.
    In an effort to better assure the health, safety, and services of 
beneficiaries in ASCs already certified as well as provide relief to 
State budgets in this

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time of tight fiscal restraints, CMS deems ASCs accredited by AAAHC as 
meeting its Medicare requirements. Thus, CMS continues its focus on 
assuring the health and safety of services by providers and suppliers 
already certified for participation in a cost-effective manner.
    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 final notice will not have an effect on 
the governments mentioned nor on the private sector.
    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 final notice will not have a substantial effect on 
State and local governments. In accordance with Executive Order 13132, 
CMS has determined that this notice will not significantly affect the 
rights of States, local, or tribal governments.
    In accordance with the provisions of Executive Order 12866, this 
notice was not reviewed by the Office of Management and Budget.

    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: November 2, 2002.
Thomas Scully,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 02-29364 Filed 11-21-02; 8:45 am]
BILLING CODE 4120-01-P