[Federal Register Volume 67, Number 226 (Friday, November 22, 2002)]
[Proposed Rules]
[Pages 70373-70376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29563]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 482

[CMS-1224-P]
RIN 0938-AM01


Medicare Program; Nondiscrimination in Posthospital Referral to 
Home Health Agencies and Other Entities

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would establish a process for us to 
collect, maintain, and make available to the public, information about 
hospital referrals of Medicare patients to home health agencies (HHAs) 
and other entities with which the hospitals have a financial interest 
or which have a financial interest in the hospital. We would publicize 
this information in an effort to increase awareness regarding the 
availability of Medicare-certified HHAs and other entities to serve the 
Medicare population, and to inform beneficiaries of their freedom to 
choose among available Medicare-participating providers that are 
capable of furnishing the needed services.

DATES: We will consider comments if we receive them at the appropriate 
address, as provided below, no later than 5 p.m. on January 21, 2003.

ADDRESSES: In commenting, please refer to file code CMS-1224-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission. Mail written comments (one original and 
two copies) to the following address ONLY: Centers for Medicare & 
Medicaid Services, Department of Health and Human Services, Attention: 
CMS-1224-P, PO Box 8014, Baltimore, MD 21244-8014.
    Please allow sufficient time for mailed comments to be timely 
received in the event of delivery delays.
    If you prefer, you may deliver (by hand or courier) your written 
comments (one original and two copies) to one of the following 
addresses:

Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., 
Washington, DC 20201, or
Room C5-14-03, 7500 Security Boulevard, Baltimore, MD 21244-1850.

(Because access to the interior of the HHH Building is not readily 
available to persons without Federal Government identification, 
commenters are encouraged to leave their comments in the CMS drop slots 
located in the main lobby of the building. A stamp-in clock is 
available for persons wishing to retain a proof of filing by stamping 
in and retaining an extra copy of the comments being filed.)

    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and could be considered late.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Elizabeth Carmody, (410) 786-7533.

SUPPLEMENTARY INFORMATION: Inspection of Public Comments: Comments 
received timely will be available for public inspection as they are 
received, generally beginning approximately 3 weeks after publication 
of a document, at the headquarters of the Centers for Medicare & 
Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, 
Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule 
an appointment to view public comments, phone (410) 786-7197.
    Copies: Additional copies of the Federal Register containing this 
proposed rule can be made at most libraries designated as Federal 
Depository Libraries and at many other public and academic libraries 
throughout the country that receive the Federal Register.
    This Federal Register document is also available from the Federal 
Register online database through GPO Access, a service of the U.S. 
Government Printing Office. The Web site address is: http://www.access.gpo.gov/nara/index.html.

I. Background

    Section 4321 of the Balanced Budget Act of 1997 (BBA), Pub. L. 105-
33, was enacted by the Congress to improve the administration of the 
Medicare Program by enabling Medicare beneficiaries to make more 
informed choices about the providers from which they receive Medicare 
services. We believe that this provision was intended to address 
concerns that some hospitals were referring patients only to home 
health agencies (HHAs) in which they had a financial interest. Section 
4321 of the BBA addresses both quality and program integrity concerns 
inherent in financial relationships among hospitals, HHAs, and other 
entities.
    Section 4321(a) of the BBA requires that Medicare participating 
hospitals, as part of the discharge planning process, share with each 
beneficiary a list of

[[Page 70374]]

Medicare-certified HHAs that serve the beneficiary's geographic area 
and which request to be listed. In addition, the statute prohibits 
hospitals from specifying that beneficiaries receive services from a 
particular HHA. Further, the statute requires that hospitals identify 
any HHA or other entity in which they have a disclosable financial 
interest or which have a financial interest in them, although it does 
not define what is meant by ``financial interest.'' The intent of 
section 4321(a) is to protect patient choice. Hospitals essentially 
have a captive population and, through the discharge planning process, 
can affect who provides posthospitalization services. CMS has already 
implemented the requirements of section 4321(a). A CMS directive was 
issued on October 31, 1997, and enforcement is carried out through the 
hospital survey and certification process. Moreover, the requirements 
of section 4321(a) are set forth in the proposed hospital conditions of 
participation, published on December 19, 1997 (62 FR 66726).
    This proposed rule would establish a process for implementing 
sections 4321(b) and (c) of the BBA. Section 4321(b) of the BBA 
requires each Medicare participating hospital to maintain and disclose 
to the Secretary of Health and Human Services (the Secretary) the 
following information:
    (1) The nature of any direct or indirect financial interest that 
exists among the hospital and those HHAs and other entities to which 
the hospital refers beneficiaries under a discharge plan.
    (2) The number of beneficiaries who were discharged from the 
hospital and who were identified as requiring home health services.
    (3) The percentage of those beneficiaries who received home health 
services from an HHA in which the hospital has a financial 
relationship.
    Section 4321(c) of the BBA requires the Secretary to make available 
to the public the information disclosed under section 4321(b).

II. Provisions of the Proposed Regulations

    We are proposing a process for collecting and publicizing the 
information required by sections 4321(b) and (c) of the BBA.

A. Claims-Level Information

    Information regarding beneficiary utilization of hospital, HHA, and 
other services is readily available through the secure network 
governing the day-to-day claims processing operations of the Medicare 
Program. These claims data are available at the Medicare fiscal 
intermediaries and carriers as well as at the Centers for Medicare & 
Medicaid Services. We propose to use these data to identify hospital 
discharges and related, subsequent home health services. Further, these 
data will identify the hospitals, HHAs, and other entities that 
furnished the Medicare services.

B. Information About Financial Interests

    We propose to allow hospitals to satisfy their financial disclosure 
obligations under the BBA through the Medicare provider enrollment 
process. The Medicare provider enrollment process already collects 
information that identifies financial relationships between hospitals, 
HHAs, and other entities. For example, when applying for a provider 
number for billing the Medicare program, a hospital must disclose the 
existence and nature of financial interests in HHAs and other entities. 
Accordingly, for the purpose of implementing section 4321(b) of the 
BBA, we propose to define a reportable ``financial interest'' as any 
financial interest that a hospital is required to report according to 
the provider enrollment process, which is governed by section 1124 of 
the Social Security Act (42 U.S.C. 1320a-3) and its implementing 
regulations and manual provisions. We do not believe, however, that 
section 4321 of the BBA should be interpreted to mean that the mere 
existence of a financial relationship between a hospital and an HHA 
constitutes a program abuse.
    To implement sections 4321(b) and (c) of the BBA without placing 
any additional reporting burden on Medicare providers, we propose to 
systemically match and report information from the provider enrollment 
process on financial interests among hospitals, HHAs, and other 
entities with information from day-to-day Medicare claims processing on 
the utilization of home health services. We are soliciting comments on 
our proposed process, as well as alternative methods for collecting and 
reporting data.

C. Form and Manner for Disclosing Information

    Information collected under sections II.A and B of this preamble 
will be made available annually in January for the prior October 
through September period, on a hospital-by-hospital basis. For each 
hospital, we propose collecting and reporting: (1) The total number of 
hospital discharges that led to home health services; (2) the 
percentage of those discharged beneficiaries who received home health 
services from an HHA that had a direct or indirect financial 
relationship with the discharging hospital; (3) the name(s) of the 
HHA(s) and other entities for which a financial relationship with the 
hospital exists and for which posthospital services were furnished; and 
(4) the nature of the financial interest.
    We will determine the most effective and efficient ways to make the 
required information available to the public. Consideration will be 
given to using websites as well as hardcopy distribution. The form and 
manner for making the information available will be guided by the need 
to reach as many beneficiaries as possible in order to assist them in 
making informed choices about who furnishes their health care services. 
As such, we invite comments as to the preferred medium for 
disseminating this information. We anticipate releasing the initial 
report during the first January that is at least 90 days after the 
publication of the final rule.

III. Collection of Information Requirements

    This document does not impose additional information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995. Information about hospital discharges 
and related home health services is available through Medicare claims 
processing systems and databases. Further, financial interest 
information is already available through the Medicare provider 
enrollment process.

IV. Response to Comments

    Because of the large number of items of correspondence we normally 
receive on Federal Register documents published for comment, we are not 
able to acknowledge or respond to them individually. We will consider 
all comments we receive by the date and time specified in the DATES 
section of this preamble, and, if we proceed with a subsequent 
document, we will respond to the comments in the preamble to that 
document.

V. Regulatory Impact Statement

A. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354), 
section 1102(b) of the Social Security Act, the Unfunded

[[Page 70375]]

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, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more in any 1 year). This is not a 
major rule. It would not impose any additional costs on affected 
entities, as compliance with the statute and the rules proposed herein 
are possible through the management and disclosure of information 
already available to the Medicare Program. Some indeterminable benefits 
may result by enabling Medicare beneficiaries to make more informed 
choices about who furnishes their Medicare services. Therefore, no RIA 
is required.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
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 $7.5 
million or less annually. For purposes of the RFA, all hospitals, HHAs, 
and ``other entities'' are considered to be small entities. However, 
the nature of this proposed rule is such that no regulatory burden 
would be placed upon hospitals, HHAs, and other entities. Therefore, no 
regulatory relief options are considered.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds. We certify that this 
proposed rule would not have a significant economic impact on a 
substantial number of small entities or a significant impact on the 
operations of a substantial number of small rural hospitals. 
Information needed to comply with the statute is already available 
through the Medicare claims processing and provider enrollment systems. 
Therefore, no regulatory impact analysis is required.
    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 an expenditure in any 1 year by 
State, local, or tribal governments, in the aggregate, or by the 
private sector, of $110 million. This proposed rule would not have an 
impact on State, local, or tribal governments or 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 proposed rule would not have a substantial effect on 
State or local governments for the reasons noted above.

B. Anticipated Effects

1. Effects on Beneficiaries, Hospitals, HHAs, and Other Entities
    The anticipated effects on Medicare's beneficiaries would be an 
enhanced ability to make informed choices about the care they receive 
from HHAs and other entities upon discharge from a hospital. There are 
approximately 6,000 Medicare-certified hospitals and 6,900 Medicare-
certified HHAs, of which approximately 2,000 are hospital-based. At 
this time, we have not compiled additional data that may identify other 
financial relationships between hospitals, HHAs, and other entities, as 
further defined under the provider enrollment guidelines.
    The effect of this proposed rule on hospitals, HHAs, and other 
entities is uncertain, but the requirements set forth in this proposed 
rule would place no additional burden on these providers. A possible 
outcome might be to influence hospital referral patterns, thus having 
an impact on HHAs and other entities. The information made available in 
compliance with the statute and this proposed rule may impact 
beneficiary choices about who furnishes Medicare services to them and, 
in turn, may have an indeterminable impact on HHAs and other entities 
that receive/do not receive the beneficiary's ``business'' as a result.
2. Effects on the Medicare and Medicaid Programs
    This proposed rule would improve our information campaign to assist 
beneficiaries in their choices for health care delivery. In addition, 
the information made available through this proposed rule would serve 
to ensure that the financial interests between hospitals, HHAs, and 
other entities do not lead to program integrity abuses such as steering 
certain patients (for example, healthier patients) to certain HHAs (for 
example, hospital-owned). We do not believe, however, that section 4321 
of the BBA should be interpreted to mean that the mere existence of a 
financial relationship between a hospital and an HHA constitutes a 
program abuse.
    The effects on the Medicaid Program may be similar in that the 
information about financial relationships between hospitals, HHAs, and 
other entities would be made available to the public.

C. Alternatives Considered

    We considered requiring hospitals to collect and provide the 
information necessary for implementation of this proposed rule. We 
decided to collect the information from existing sources, however, in 
order to create a process that would not be burdensome to the entities 
involved. We request comments on our proposed process as well as on 
alternative approaches of collecting this information. We also invite 
public comment on what impact provision of this information might have 
on home health referrals or beneficiaries' choices of providers.

D. Conclusion

    As described above, this proposed rule proposes a process for 
implementing the statutory requirements under sections 4321(b) and (c) 
of the BBA. This approach would enhance the information made available 
to Medicare beneficiaries and reduce potential program abuses by 
hospitals. Further, the proposed approach for complying with the 
relevant statutory provisions would place no additional burden on all 
affected entities or on any entity, which may be indirectly affected.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 482

    Grant programs--health, Hospitals, Medicaid, Medicare, Reporting 
and recordkeeping requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services proposes to amend 42 CFR chapter IV, part 482 as 
set forth below:

PART 482--CONDITIONS OF PARTICIPATION FOR HOSPITALS

    1. The authority citation for part 482 continues to read as 
follows:


[[Page 70376]]


    Authority: Secs. 1102 and 1871 of the Social Security Act, 
unless otherwise noted (42 U.S.C. 1302 and 1395hh).

    2. Section 482.43 is amended by adding paragraphs (c)(6)(i) through 
(c)(6)(iii) to read as follows:


Sec.  482.43  Condition of participation: Discharge planning.

* * * * *
    (c) * * *
    (6) If a hospital refers a Medicare beneficiary to an HHA or 
another entity in which the hospital has a reportable financial 
interest, or the HHA or other entity has a reportable financial 
interest in the hospital, CMS will make available to the public the 
following information:
    (i) The name of the hospital, HHA, or other entity and the nature 
of the financial interest to the hospital.
    (ii) The number of beneficiaries who the hospital discharged and 
identified as requiring home health services.
    (iii) The percentage of the referrals in paragraph (c)(6)(ii) of 
this section in which the hospital had financial interest in the HHA, 
or the HHA had a financial interest in the hospital.

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

    Dated: July 3, 2002.
Thomas A Scully,
Administrator, , Centers for Medicare & Medicaid Services.

    Approved: August 5, 2002.
Tommy G. Thompson,
Secretary.
[FR Doc. 02-29563 Filed 11-21-02; 8:45 am]
BILLING CODE 4120-01-P