[Federal Register Volume 68, Number 229 (Friday, November 28, 2003)]
[Rules and Regulations]
[Pages 66710-66721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-29139]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare and Medicaid Services

42 CFR Parts 403, 489 and 498

[CMS-1909-F]
RIN 0938-AI93


Medicare and Medicaid Programs; Religious Nonmedical Health Care 
Institutions and Advance Directives

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

ACTION: Final rule.

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SUMMARY: This final rule implements requirements under the Balanced 
Budget Act of 1997, which set forth requirements for the new Religious 
Nonmedical Health Care Institution program and advance directives. This 
rule finalizes the Medicare requirements for coverage and payment of 
services furnished by religious nonmedical health care institutions, 
the conditions of participation that these institutions must meet 
before they can participate in Medicare, and the methodology we will 
use to pay these institutions and monitor expenditures for services 
they furnish. This rule also finalizes the rules governing States' 
optional coverage of religious nonmedical health care institution 
services under the Medicaid program. Additionally, this final rule 
addresses comments we received on the November 30, 1999, interim final 
rule and also makes minor changes to clarify our policy. Lastly, this 
rule incorporates a minor change to the requirements for advance 
directives.

DATES: Effective date: These regulations are effective December 29, 
2003.

FOR FURTHER INFORMATION CONTACT:

Jean-Marie Moore, (410) 786-3508 (for general information, Medicare 
coverage, and payment issues);
Nancy Archer, (410) 786-0596 (for Medicare conditions of participation 
issues); and Linda Tavener, (410) 786-3838 (for Medicaid issues).

SUPPLEMENTARY INFORMATION:
    Copies: This Federal Register document is 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 4454 of the Balanced Budget Act of 1997 (BBA '97), (Pub. L. 
105-33, enacted August 5, 1997) provides for removal of all statutory 
and regulatory references to Christian Science sanatoria, and for 
coverage and payment of inpatient hospital services and post-hospital 
extended care services furnished in qualified religious nonmedical 
health care institutions (RNHCIs) under Medicare and as a State Plan 
option under Medicaid. (We will refer to these services as ``RNHCI 
services.'') The new amendments make it possible for institutions other 
than Christian Science facilities to qualify as RNHCIs and to 
participate in Medicare and Medicaid.
    On November 30, 1999, we published an interim final rule in the 
Federal Register (67 FR 67028) to implement the BBA '97 amendments that 
set forth the requirements for coverage and payment for services 
furnished by RNHCIs, and modified the rules regarding advance 
directives.
    Specifically, the interim final rule presented the methodologies 
under which we will pay RNHCIs, monitor the Medicare expenditure level 
for RNHCI secular services for any given federal fiscal year (FFY), and 
implement a statutory ``sunset'' of the RNHCI benefit. In addition, the 
rule set forth the conditions of participation that an RNHCI must fully 
meet to participate in the Medicare program and revised Medicaid 
regulations to reflect statutory changes and made necessary 
nomenclature and conforming changes. Finally, the rule revised the 
regulations pertaining to advance directives for all providers.

II. Provisions of the Interim Final Rule

    Below we provide a brief summary of the provisions we implemented 
in the November 30, 1999, interim final rule to comply with 
requirements set forth by section 4454 of BBA '97.

A. RNHCI Medicare Benefits, Conditions of Participation, and Payment

1. Basis and Purpose (Sec.  403.700)
    This subpart implemented sections 1821; 1861(e), (y) and (ss); 
1869; and 1878 of the Social Security Act (the Act) regarding Medicare 
payment for inpatient hospital or post-hospital extended care services 
furnished to eligible beneficiaries in RNHCIs.

[[Page 66711]]

2. Definitions and Terms (Sec.  403.702)
    Under this section, we included definitions for terms or acronyms 
used in the rule. Those terms that were defined elsewhere within the 
text of the rule were not included under this section.
3. Conditions for Coverage (Sec.  403.720)
    Under this section, we specified the 10 qualifying provisions as 
contained in section 1861(ss)(1) of the Act that a Medicare or Medicaid 
provider must satisfy to meet the definition of an RNHCI. While the 
requirements contained in sections 1861(ss)(1)(B) (lawful operation), 
(G) (ownership by or in a provider of medical services), and (H) 
(utilization review) of the Act were explicitly addressed in the 
Medicare Conditions of Participation before passage of the BBA '97, it 
is essential that a facility meet all 10 elements to qualify as an 
RNHCI for both the Medicare and Medicaid programs.
    In addition to meeting the definition of an RNHCI, the facility 
must also meet conditions of coverage for RNHCI services as established 
under section 1821 of the Act. Specifically, section 1821(a) of the Act 
requires that as a condition for Part A Medicare coverage, the 
beneficiary must have a condition that would qualify under Medicare 
Part A for inpatient hospital services or extended care services 
furnished in a hospital or skilled nursing facility that is not an 
RNHCI. The beneficiary must also have a valid election in effect to 
receive RNHCI services.
    The RNHCI may not accept a patient as a Medicare or Medicaid 
beneficiary after the sunset provision (Sec.  403.756) is implemented, 
unless the patient has an election in effect before January 1 of the 
year in which the sunset provision is implemented. A claim filed for 
payment for services furnished to a patient with no valid election in 
effect before January 1 of the year the sunset provision is implemented 
would be denied. We explain the circumstances in which the sunset 
provision would be triggered at Sec.  403.750 of the regulations.
4. Valid Election Requirements (Sec.  403.724)
    Under this section, we implemented section 1821(b) of the Act to 
address the issues involved in beneficiary election of RNHCI services. 
We specified the general requirements relating to the election and the 
election process as well as the written statements that must be 
included in the election form. In addition, we described the 
circumstances under which the election would be revoked. Finally, we 
discussed the limitations that apply to subsequent elections.
5. Conditions of Participation
    Under section 1861(ss)(1)(J) of the Act, we may accept an RNHCI as 
a participating Medicare provider only if, in addition to meeting the 
specific requirements of that section, it meets other requirements we 
find necessary in the interest of patient health and safety. With the 
broad authority the Act gave us to impose these requirements, we set 
forth those conditions we found to be appropriate and necessary in the 
religious nonmedical setting that an RNHCI must meet to participate in 
the Medicare program. We set forth conditions of participation 
regarding patient rights (Sec.  403.730); quality assessment and 
performance improvement (Sec.  403.732); food services (Sec.  403.734); 
discharge planning (Sec.  403.736); administration (Sec.  403.738); 
staffing (Sec.  403.740); physical environment (Sec.  403.742); life 
safety from fire (Sec.  403.744); and utilization review (UR) (Sec.  
403.746).
    Life Safety from Fire. In the interim final rule we required that 
an RNHCI comply with the 1997 edition of the National Fire Protection 
Association (NFPA) Life Safety Code that we incorporated by reference. 
We discuss the update to the Life Safety Code later in this rule.
    Utilization Review. This was the only condition of participation 
specifically required by statute. Section 1861(ss)(1)(H) of the Act 
requires that an RNHCI have in effect a UR plan that includes the 
establishment of a UR committee to carry out the functions of the 
program.
6. Estimate of Expenditures and Adjustments (Sec.  403.750)
    Section 1821(c)(1) of the Act requires us to estimate the level of 
Medicare expenditures for RNHCI benefits before the beginning of each 
Federal fiscal year (FFY) and requires us to monitor the expenditure 
level for RNHCI services provided in each FFY. The estimation of 
expenditure levels is necessary to determine if adjustments are 
required to limit payments to RNHCIs in the following FFY. In addition, 
the estimate is used to determine if the sunset provision is 
implemented.
    As required by section 1861(e) of the Act, we will issue an annual 
Report to Congress, reviewed by the Office of Management and Budget, as 
the vehicle for reporting the potential need to make adjustments in 
payments and proposed mechanisms to be employed in order to stay within 
the established expenditure ``trigger level'' which is defined in 
section 1821(c)(2)(C) of the Act as the ``unadjusted trigger level'' 
for an FFY, adjusted using the consumer price index to the last 12 
months ending July of the prior FFY, and increased or decreased by the 
carry forward from the previous FFY. In the interim final rule, we 
provided descriptions and examples of the trigger level calculation, 
the carry forward calculation, estimated expenditures, and adjustments 
in payments to help explain the statutory provision (64 FR 67036).
    Section 1821(c)(2)(A) of the Act provides for a proportional 
reduction in payments for covered RNHCI services when the level of 
estimated expenditures exceeds the trigger level for any FFY. In 
addition to a proportional reduction in payments, section 1821(c)(2)(B) 
of the Act authorizes us to impose other conditions or limitations to 
keep Medicare expenditure levels below the trigger level. The statute 
provides us with authority to decide which type of adjustment to apply 
but is silent about when to apply a proportional adjustment or when to 
apply alternative adjustments. Therefore, we have extremely broad 
authority to decide what type of adjustments to impose.
    The regulations at Sec.  403.750 implement the statute and provide 
for imposing either a proportional adjustment to payments or 
alternative adjustments, depending on the magnitude of the adjustment 
required to keep the level of estimated expenditures from exceeding the 
trigger level. To account for any error in the estimation of 
expenditure levels, the trigger level for the next FFY is adjusted by 
the ``carry forward.'' If expenditures were to exceed the trigger 
level, the trigger level for the subsequent year must be decreased, 
resulting in more drastic payment adjustments in future years. We will 
do this in an attempt to prevent expenditures from exceeding the 
trigger level for 3 consecutive years and thus avoid having to 
implement the sunset provision.
7. Payment Provisions (Sec.  403.752)
    Payment to RNHCIs. Sections 1861(e) and (y)(1) of the Act grant us 
broad authority to construct a payment methodology for RNHCIs. We 
specified that we would continue to pay RNHCIs under the same 
reasonable cost methodology we used for Christian Science sanatoria. We 
pay RNHCIs the reasonable cost of furnishing covered services to 
Medicare beneficiaries subject to the rate of increase limits in 
accordance with the provisions in 42 CFR 413.40, which implement 
section 101 of the Tax Equity and Fiscal

[[Page 66712]]

Responsibility Act of 1982 (TEFRA) (Pub. L. 97-248).
    We added that we intended to continue paying all RNHCIs under a 
reasonable cost, subject to the rate of increase limit methodology, 
until we identify an appropriate prospective payment methodology to 
meet the special requirements for this provider group. In the interim 
final rule, we removed and reserved Sec.  412.90(c) and Sec.  412.98 
for the RNHCI prospective payment.
    Administrative and Judicial Review. Under section 1821(c)(2)(D) of 
the Act, there is no administrative or judicial review of our estimates 
of the level of expenditures for RNHCI services or the application of 
the adjustment in payments for those services. We incorporated this 
provision into our regulations.
    Beneficiary Liability. Under the new regulations, RNHCIs are 
subject to Medicare rules for deductibles and coinsurance. Under normal 
Medicare rules, a provider of services may only bill a beneficiary 
deductible and coinsurance amounts. However, section 1821(c)(2)(E) of 
the Act authorizes RNHCIs to bill individuals an amount equal to the 
reduction in payments applied under sections 1821(c)(2)(A) or (B) of 
the Act. We implemented this provision specifying that when payments 
are reduced to prevent estimated expenditures from exceeding the 
trigger level, the RNHCI may bill the beneficiary the amount of the 
Medicare reduction attributable to his or her covered services. In 
addition, we set forth the requirements an RNHCI must follow regarding 
notifying a beneficiary of any current or proposed Medicare 
adjustments.
8. Monitoring Expenditure Level (Sec.  403.754)
    Under this section, we implemented section 1821(c)(3)(A) of the Act 
that requires us to monitor the expenditure level of RNHCIs beginning 
with FFY 1999 which allows us to calculate the carry forward.
9. Sunset Provision (Sec.  403.756)
    Section 1821(d) of the Act contains the RNHCI sunset provision. 
This provision, when activated, will prevent beneficiaries from making 
elections to receive Medicare payment for religious nonmedical health 
care services after a certain date. The sunset provision will be 
activated when the level of estimated expenditures exceeds the trigger 
level for three consecutive FFYs.
    In accordance with this statutory provision, we specified in our 
regulations under this section that beginning FFY 2002, if the level of 
estimated expenditures for all RNHCIs exceeds the trigger level for 3 
consecutive FFYs, we would not accept any Medicare claims for payment 
for any election executed on or after January 1 of the following 
calendar year. We also specified in the interim final rule that we 
would publish a notice in the Federal Register at least 60 days before 
the effective date of the sunset provision to alert the public that no 
elections will be accepted for services in an RNHCI.

B. Medicaid Provisions (Sec.  440.170)

    Services in RNHCIs are optional Medicaid services that a State may 
elect to include in its title XIX State plan in accordance with section 
1905(a)(27) of the Act. This section permits the inclusion of any other 
medical care and any other type of remedial care recognized under State 
law, specified by CMS. Federal financial participation is only 
available to a State for these services if they are included in the 
State Plan.
    Section 4454(b) of the BBA '97 provides for coverage of a religious 
nonmedical health care institution as defined in section 1861(ss)(1) of 
the Act. Specific ownership and affiliation requirements related to 
RNHCIs are described in section 1861(ss)(4) of the Act. We therefore 
revised Sec.  440.170(c), ``Services in Christian Science 
sanitoriums,'' to accommodate the new RNHCI program. Additionally, an 
RNHCI as defined in section 1861(ss)(1) of the Act furnishes 
exclusively inpatient services. Consequently, we revised Sec.  
440.170(b), ``Services of Christian Science nurses,'' since it dealt 
with Christian Science and care in the home setting. We revised 
language at Sec.  440.170(b), to define an RNHCI for Medicaid coverage 
purposes as one that meets the requirements of section 1861(ss)(1) of 
the Act, and Sec.  440.170(c), to describe the specific ownership and 
affiliation requirements applicable to Medicaid RNHCIs. In addition, we 
specified in the interim final rule that RNHCIs are required to meet 
the Medicare conditions of participation described in part 403 of this 
rule in order to be eligible to receive payment under Medicaid, rather 
than developing separate Medicaid requirements.

C. Part 488 Survey, Certification, and Enforcement Procedures

    Section 1861(ss)(2) of the Act provides that we may accept the 
accreditation of an approved group that RNHCIs meet or exceed some or 
all of the applicable Medicare requirements. Therefore, in the interim 
final rule, we amended the regulations at Sec.  488.2 to add section 
1861(ss)(2) of the Act as the statutory basis for accreditation of 
RNHCIs and Sec.  488.6 to add the RNHCIs to the list of providers in 
this section.

D. Part 489, Subpart I--Advance Directives

    Section 4641 of the BBA '97 required that (for all providers 
entering into a provider agreement with CMS) an individual's advance 
directive be placed in a ``prominent part'' of his or her medical 
record. As this was such a minor change to our requirements at section 
489, we requested that this change be appended to the RNHCI regulation, 
thereby avoiding a separate rulemaking process. Therefore, in the 
November 30, 1999 final rule, we added ``prominent part'' to Sec.  
489.102(a)(2) to reflect this requirement. That is, providers are 
required to document an advance directive in a prominent part of the 
individual's current medical record.

III. Analysis of and Responses to Comments

    We received a total of three items of correspondence on the interim 
final rule with comment published on November 30, 1999. The comment 
response on the interim final rule was very limited, and there were no 
similarities in issues raised by the commenters. We received comments 
from a fire safety association; a pediatric medical association; and a 
national religious organization that is oriented to healing by prayer. 
Each commenter approached the final rule in a manner that reflected the 
views of his or her particular organization. The major issues that 
commenters raised included the following:
    [sbull] A prohibition on the admission of children to an RNHCI.
    [sbull] Incorporation of a specific version of the fire safety code 
in the rule.
    [sbull] Modification of the requirements to correspond to the 
beliefs of a specific religious group.
    [sbull] Modification of the requirements related to the election 
process and the related coverage of services.
    [sbull] Modification of the prohibition on the use of restraints.
    We are not making any changes in the regulation as a result of the 
three comments we received, although we note that one change, regarding 
the Life Safety Code, was made in a separate rule on January 10, 2003, 
with an effective date of March 11, 2003 (68 FR 1374). We summarized 
the issues raised by each commenter and have provided our responses 
below.

[[Page 66713]]

A. Pediatric Medical Association

Sections 403.702, 403.730, and 440.170
    Comment: One commenter suggested amending the conditions of 
participation explicitly to prohibit RNHCIs from providing care to any 
child, regardless of whether the individual is seeking payment under 
Medicare or Medicaid for that care. The comment is based on the 
statutory language that authorizes the Secretary to establish standards 
to ensure the health and safety of patients choosing to receive care in 
RNHCIs. The commenter believes that it is impossible to ensure the 
health and safety of children who are patients in an RNHCI because the 
patient is isolated from persons competent or willing to assess the 
need and appropriately secure medical care when the care is necessary 
to preserve the child's life or health. The commenter added that the 
Secretary has the authority to prohibit RNHCIs from providing services 
to children and should do so.
    Response: We do not have the authority to exclude any patients, 
including children, from admission to an RNHCI. Nevertheless, our data 
indicate that no children have sought RNHCI services as program 
beneficiaries thus far. The reason for this situation is that, in at 
least some instances, children must undergo some type of medical 
examination before they can obtain benefits under Medicare and 
Medicaid. For example, a child can only receive Medicare benefits if he 
or she has undergone a medical physical examination and as a result was 
determined to meet Social Security criteria for disability. Such an 
examination is inconsistent with opposition to receipt of traditional 
medical care. For these reasons, we believe few if any children will be 
admitted to RNHCIs as Medicare or Medicaid beneficiaries. Therefore, we 
will not revise the conditions of participation as the commenter 
suggested.

B. Religious Nonmedical Organization

Definitions and Terms--Sec.  403.702
    Comment: The commenter requested that the definition for 
``religious nonmedical care or religious method of healing'' be removed 
or revised as follows:

    Religious nonmedical care or religious method of healing'' means 
health care furnished in accordance with a religious belief or 
doctrine with which the acceptance of conventional or unconventional 
medical care by a beneficiary would be inconsistent.

The commenter argued that our current definition, ``health care 
furnished under established religious tenets that prohibited 
conventional or unconventional medical care for the treatment of a 
beneficiary, and the sole reliance on these religious tenets,'' if 
interpreted literally, could actually prohibit religious nonmedical 
nursing facilities from qualifying as RNHCIs that the Congress clearly 
intended to be qualified.
    The commenter indicated that their method of healing did not 
include the use of conventional or unconventional care and that the 
teachings of this Church did not expressly ``prohibit'' the choice of 
medical treatment. The commenter stated that the choice of treatment 
rested with the individual, but an individual would not be practicing 
his or her religion while receiving medical care. The commenter further 
stated that this is why practicing members of the group, relying 
entirely on spiritual means for healing, required accommodation in 
order to participate in Medicare. The commenter indicated that many 
members of their group engaged in a number of practices that involved 
neither the acceptance of medical treatment nor reliance on religious 
``tenets'' but were undertaken in the interest of practicing good care 
of their ``health.'' The commenter sought more flexibility for a 
beneficiary to select some forms of health care that are nonintrusive 
such as visiting dentists for oral hygiene; visiting an optometrist or 
wearing eyeglasses; or being fitted for or wearing a mechanical hearing 
aid.
    Additionally, the commenter expressed that the definition of 
``religious nonmedical care or religious method of healing'' was 
neither required by nor consistent with the Act, and that 
Constitutional issues have been raised regarding the use of the term 
``established religious tenets.''
    Response: Both the statute and the related legislative history 
demonstrate a clear congressional intent to establish this benefit for 
those who for religious reasons are conscientiously opposed to 
acceptance of medical care and to provide parameters for nonexcepted 
medical treatment. Since both the law and the congressional 
deliberations are clear on the issue, the rule must follow the 
statutory intent and provide a framework for all religious groups that 
may use the benefit. The rule must be applicable to all in the intended 
benefit group, not to just a sector of the potential beneficiaries. 
With regard to a beneficiary's choice or need to receive such services 
as oral hygiene visits, optometry visits or eyeglasses, or testing and 
fitting for hearing aids, it should be noted that Medicare does not 
cover these services and that they are the financial responsibility of 
the individual.
    The use of the term ``religious tenet'' is considered appropriate 
to cover the basic beliefs of any religious group that is seeking 
participation in the RNHCI program. While the use of the term is not 
prescribed by the statute, the development of regulations does provide 
the opportunity to use other language and the term ``religious tenets'' 
is consistent with the Act. Federal courts have repeatedly upheld the 
constitutionality of these provisions. See, for example, Kong v. Min De 
Parle, No. C 00-4285 CRB, 2001 WL 1464549 (N.D.Cal. Nov. 13, 2001) 
(upholding constitutionality of section 4454 of the BBA); see also 
Children's Healthcare is a Legal Duty, Inc. v. Min De Parle, 212 F.3d 
1084 (8th Cir. 2000), cert. den., 532 U.S. 957, 121 S.Ct. 1483 (2001) 
(same). We are making no changes to the terms ``religious nonmedical 
care'' or ``religious method of healing.''
    Comment: The commenter suggested that we provide a more flexible 
definition of ``religious nonmedical nursing personnel'' to provide the 
RNHCI more latitude in hiring outside their religious denomination, if 
they so choose. The commenter indicates that constitutional issues may 
be raised by the requirement that nursing personnel ``be grounded in 
the religious beliefs of the RNHCI.'' The commenter stated that the Act 
only requires personnel to be ``experienced in caring for the physical 
needs of these patients.''
    Additionally the commenter would appreciate it if the regulations 
could clearly state that nursing personnel who are less experienced, 
such as trainees, may provide service to patients under the supervision 
of those who are ``formally recognized as competent in the 
administration of care within their religious nonmedical health care 
group.'' The commenter assumed that the regulations did not prohibit 
RNHCIs from allowing trainees to provide service to patients when 
supervised by experienced personnel but requested that we provide 
clarification in the regulation.
    Response: Medical model health care settings use registered nurses 
or licensed practical nurses that have participated in educational 
programs and following graduation take standardized tests for 
licensure. The statute requires that for payment purposes a beneficiary 
would require hospital or skilled nursing facility care in order to 
qualify for admission to an RNHCI. In turn, by statute the RNHCI may 
provide only nonmedical nursing

[[Page 66714]]

items and services to patients, which is contrary to conventional 
nursing practice. Currently the only standardization for RNHCI nurse 
credentials exists for those individuals prepared in religious group 
nurse training programs and involved in the practice of that religion.
    The phrase ``grounded in the religious beliefs'' of an RNHCI is not 
intended to mean that religious nonmedical nursing personnel must 
``accept or practice'' a particular religious belief. The phrase 
``grounded in the religious beliefs'' means that nonmedical nursing 
personnel must be appropriately familiar with the culture and religious 
beliefs of the RNHCI to care for the physical needs of patients.
    For purposes of writing the rule, it was necessary to choose those 
requirements that would provide a level of standardization for 
providing nonmedical nursing care to beneficiaries. We are retaining 
the definition of religious nonmedical nursing personnel as set forth 
in the interim final rule.
    Similar to other provider types, the issue of nurse trainees was 
not addressed in the rule. The per-diem rate includes payment for RNHCI 
nurses responsible for the care of beneficiaries, and they may also 
supervise those aspects of care provided by trainees. While trainees 
can provide care under the supervision of an RNHCI nurse, any cost or 
payment attributed to the trainee is not to be considered a component 
of the Medicare or Medicaid per diem rate.
    Comment: The commenter suggested that we expand the term ``legal 
representative'' that is included in the definition of ``election'' to 
include someone acting under a valid health care durable power of 
attorney or an equivalent instrument.
    Response: The term ``legal representative'' as used in the 
definition of ``election'' is considered appropriate to safeguard the 
interest of the beneficiary, and we are not making any revisions. The 
designation of a legal representative is a serious responsibility that 
should follow accepted legal protocols and therefore does not require 
further definition in the rule. In this matter, we generally defer to 
the States in deciding who qualifies as a ``legal representative'' 
since State law governs these questions.
Elections and Revocations Sec.  403.724
    Comment: The commenter suggested that for practical purposes an 
election be considered valid without notarization under certain 
circumstances. The commenter requested a grace period to cover those 
periods when the business office is not open, such as evenings, nights, 
weekends, and holidays.
    Response: Since we consider obtaining notary authority for 
individual staff members to be a relatively straightforward process, 
there can be several notaries in a facility to meet beneficiary needs 
when the business office is not open. Additionally, the RNHCI can 
establish relationships with notaries within the community to provide 
assistance in emergency situations. Therefore, we are retaining the 
election policy as established in the interim final rule.
    Comment: The commenter suggested that care be covered without an 
election under certain limited circumstances. The commenter requested a 
grace period of at least 72 hours to provide care for a patient in 
distress, or to locate a legal representative or have one appointed in 
the case of admitting an unresponsive or incompetent Medicare 
beneficiary, before fully executing the election for RNHCI care.
    Response: We do not believe we have the authority for the requested 
grace period. The statute requires a valid election to be in place for 
RNHCI services to be covered and paid for. Delaying the election 
process is of concern particularly for an individual in distress and 
unable to make his or her personal wishes known.
    Comment: The commenter recommended that an election be effective 
retroactively for care provided up to 72 hours before the election is 
signed. If the patient expires before the execution of a valid 
election, the commenter requested that Medicare pay for the care 
provided by the RNHCI to the beneficiary.
    Response: We do not believe we have the authority to accommodate 
the requested pre-election coverage period.
Election Revocation Sec.  403.724(a)(1)(iii)
    Comment: The commenter indicated an inconsistency between section 
1821(b)(3) of the Act and Sec.  403.724(a)(1)(iii) of the regulation, 
regarding payment being received versus payment being requested. The 
commenter believes that the election should be revoked only if Medicare 
makes payment rather than when Medicare medical care is merely sought.
    Response: Section 403.724(a)(1)(iii) of our regulations implements 
section 1821(b)(3) of the Act, which set forth the information that 
must be included in the election form. This section specifies that 
receipt of nonexcepted medical services constitutes a revocation of an 
election. Seeking Medicare medical care indicates that a beneficiary 
anticipates that the program will pay for the service under the 
statute. It is the payment for that Medicare claim that actually 
triggers the revocation of the RNHCI election and (if applicable) the 
start of the waiting period that determines when a new RNHCI election 
may be filed.
Condition of Participation: Patient Rights Sec.  403.730(c)(4)
    Comment: The commenter requested that the utilization review 
committee have the power to authorize the limited use of restraints 
when the patient poses a danger to self, other patients, or staff. The 
commenter indicated that since the UR committee could make an initial 
determination for coverage under Medicare and Medicaid, it could also 
be capable of determining if and when those rare occasions existed when 
there would be a need to protect the safety of a patient and the staff. 
Additionally, the commenter stated that it would be appropriate to 
place specific requirements on the use of restraints, such as--
    [sbull] Choosing the least restrictive manner for the least amount 
of time as possible;
    [sbull] Placing time limits for using restraints without additional 
review by the UR committee;
    [sbull] Not permitting standing orders for the use of restraints;
    [sbull] Using restraints only when absolutely necessary and other 
interventions have been ineffective; and
    [sbull] Requiring RNHCI staff to frequently check on the restrained 
patient.
    Response: Section 1866(ss)(1) of the Act and the related 
legislative history underscore the centrality of nonmedical 
interventions to the care provided by RNHCIs. The statute requires 
active patient choice and limits the benefit to those for whom the 
``acceptance of medical health services would be inconsistent with 
their religious beliefs.'' Under this model, chemical restraints 
(drugs) would clearly be antithetical, as well against the statute. On 
the other hand, ``assistive devices'' (such as crutches, canes, and 
walkers, etc.), used only on a voluntary basis by the patient, would 
not constitute a ``restraint.'' We currently define ``physical 
restraint'' in our hospital condition of participation at Sec.  482.13 
as ``any manual method or physical or mechanical device, material, or 
equipment attached or adjacent to the patient's body that he or she 
cannot easily remove [and] that restricts freedom of movement or normal 
access to one's body.'' In thinking about whether a device or practice 
may be considered a restraint, the RNHCI

[[Page 66715]]

should consider how the device or practice affects the patient. For 
example, if a patient were in a wheelchair with a belt, the belt would 
not be considered a restraint if the patient can independently unsnap 
the belt. The key is to assess each patient and each situation to 
determine how a device or practice will affect the patient. If the belt 
described above were snapped in the back so that the patient could not 
reach it to release it, it would be considered a restraint. (See 
previous discussion in the preamble of the interim final at 64 FR 
67032.)
    Current professional standards of practice and guidelines advocate 
for minimal use of physical restraints, in limited medical 
circumstances. The Medicare and Medicaid programs have very strict 
criteria for the use of physical restraints in other provider types, 
such as hospitals and nursing homes, that require both medical 
supervision and intensive ``medical * * * examination, diagnosis, 
prognosis [and] treatment'' of the patient in order to assure that the 
minimum appropriate restraint is used. While it would seem that rare 
occasions could arise where (physical) restraints could be used to 
protect the safety of a patient or staff, we believe that this 
restraint use, without medical review poses too great a hazard. Since 
the RNHCI statute expressly prohibits these facilities from engaging in 
``medical * * * examination, diagnosis, prognosis [and] treatment,'' 
the use of restraints is not within their purview.
    We disagree that the utilization review committees in the RNHCIs 
could provide an adequate oversight function for the use of physical 
restraints. While the UR committees are the body responsible for 
ascertaining the appropriateness of Medicare (or Medicaid) covered 
services for an individual, they do not have the medical expertise 
necessary to assure that physical restraints could be provided to 
Medicare or Medicaid beneficiaries safely.
Condition of Participation: Food Service Sec.  403.734(b)
    Comment: The commenter requested that we add the language to our 
standard regarding requirements for the meal served to the patient in 
the RNHCI at Sec.  403.734(b). The commenter believes we should add 
that the RNHCI should be required to ensure that the meals served to 
beneficiaries meet the recommended daily allowances of the Food and 
Nutrition Board of the National Research Council, National Academy of 
Sciences, ``except insofar as compliance with such dietary allowances 
would be contrary to the religious beliefs observed by the institution 
or its personnel.'' The commenter considered the recommended dietary 
allowances of the National Academy of Sciences to be a medical model 
that involved learning the chemistry of food and determining the 
patient's body weight and height. As the basis for their objection, the 
commenter cited section 1861(ss)(3)(B)(i) of the Act, which species 
that the Secretary shall not subject a religious nonmedical health care 
institution or its personnel to any medical supervision, regulations, 
or control, insofar as such supervision, regulation, or control would 
be contrary to the religious beliefs observed by the institution or 
those personnel.
    Response: Our first priority is to patient health and safety. We 
appreciate the commenter's suggestion, but we disagree with the 
suggested provision. We do not believe that this requirement violates 
section 1861(ss)(3)(B)(i) of the Act because the requirement is 
designed to meet general physical health needs unrelated to medical 
treatment for any illness, injury, or condition. Because therapeutic 
diets or parenteral nutrition are not expected to be ordered for the 
population of patients in these facilities, we are not suggesting that 
nurses perform duties outside the scope of their religious beliefs. The 
requirements in the rule are not medical in nature, but rather guidance 
for the maintenance of health within the general population.
Condition of Participation: Discharge Planning Sec.  403.736(a)(1)
    Comment: One commenter requested that, following the first sentence 
of the discharge planning evaluation standard at Sec.  403.736(a) that 
states the RNCHI must assess the need for a discharge plan for patients 
likely to suffer adverse consequences if there is no plan and for 
patients upon request or at the request of their legal representative, 
we add the following language, ``provided that this planning process 
shall not require actions which would be contrary to the religious 
beliefs observed by the institution or its personnel.'' The commenter 
believes that the requirement to initiate discharge planning on 
admission requires the nurse to make a prognosis. Again, the commenter 
cited section 1861(ss)(3)(B)(i) of the Act as the basis for the 
objection.
    Response: Again, we appreciate the commenter's suggestion for 
additional language, but we do not agree that the requirement violates 
section 1861(ss)(3)(B)(i) of the Act. The requirement for discharge 
planning is for the safety of the patient and does not mean that a 
medical prognosis is being made. The requirement is not that a 
prognosis be made but rather that the discharge process be started 
early on during a stay, and not only when discharge is imminent. The 
RNCHI is also responsible for identifying the qualified and experienced 
person for developing or supervising a discharge plan. If a patient may 
need additional services after discharge from the RNCHI, a plan must be 
in place to ensure that those services will be available in the 
community or another facility.
Condition of Participation: Utilization Review (UR) Sec.  
403.746(a)&(b)
    Comment: The commenter objected to the requirement of having a UR 
plan that must contain written procedures for evaluating the duration 
of care and the need for continuing care of an extended duration. The 
commenter believes that the requirement leads to speculation about the 
duration of a patient's illness and requires nurses to make a 
prognosis, which is contrary to the nursing practice of the religious 
group. The commenter requested that we revise the standard under Sec.  
403.746(a) to include a disclaimer in favor of their beliefs.
    Response: We are not suggesting that RNHCI nurses practice outside 
of their scope of practice or religious beliefs. We are requiring, 
however, that the RNCHI provide, through procedures written in their UR 
plan, the patient's initial need and appropriateness of an RNHCI stay 
and justifications for extending that stay. The UR condition of 
coverage and condition of participation are statutory, and we do not 
believe we have authority to alter those conditions.
    Comment: The commenter requested that we remove the requirement 
that the governing body be included on the UR committee. The commenter 
stated that the governing bodies of most Christian Science facilities 
are made up of Christian Scientists from the large geographical area 
served by the facility and are not involved in the daily administration 
of the facility. Many do not live close enough to the facility to 
permit review of admissions or decisions on a daily basis. 
Additionally, they do not possess the skills or experience required to 
make appropriate UR decisions. The commenter suggested that the UR 
committee be composed of the administrator, superintendent of nursing, 
the assistant superintendent of nursing or another Christian Science 
nurse, and a nonvoting secretary/recorder.
    Response: We appreciate the commenter's concerns; however, we do 
not agree with these suggestions. The purpose of this requirement is to 
afford

[[Page 66716]]

the governing body the opportunity to be involved in the daily 
operations of the provider. With current technology, including the 
governing body in the UR committee meetings may be accomplished via 
many avenues (for example, teleconferencing).
    Comment: One commenter stated that the proposed regulations do not 
specify the frequency of the UR committee meeting. The organization 
believes that the rules before implementation of the BBA '97, which 
required a meeting at least every 14 days, were appropriate and should 
be in the new rule.
    Response: We appreciate the commenter's suggestion, but we do not 
agree. Because there is no medical necessity for RNHCI UR committee 
meetings within certain time frames, we did not see a necessity to 
mandate these timeframes. Additionally, not mandating a timeframe for 
the frequency of UR committee meetings is less burdensome for the 
provider and can appropriately accommodate patient needs within an 
individual RNHCI.

C. National Fire Safety Protection Association

Condition of Participation: Life Safety From Fire Sec.  403.744(a)(1)
    Comment: The commenter commended us for our recognition of the 
National Fire Safety Protection Association as state-of-the-art 
technology in fire and life safety protection and the best method to 
provide continued health care fire safety to Medicare and Medicaid 
beneficiaries. The association applauded our reference of the 1997 
edition of the Life Safety Code that, they stated, showed our 
commitment to Public Law 104-113, the ``National Technology Transfer 
and Advancement Act of 1995'' (requires Federal government agencies to 
use private sector, national consensus technology standards in carrying 
out public policy wherever appropriate).
    Response: We appreciate the commenter's support. When we published 
the November 30, 1999 interim final rule, we required RNHCIs to comply 
with the 1997 edition of the Life Safe Code, which, at that time, was 
the latest edition. Since that time, a new regulation was published 
updating the Life Safety Code for providers, including RNHCIs. 
Therefore, we are now requiring RNHCIs to comply with the 2000 edition 
of the Life Safety Code that we incorporated by reference in the final 
rule published in the Federal Register on January 10, 2003 (68 FR 
1374). That rule became effective on March 11, 2003.

IV. Provisions of the Final Rule

    For the most part, this final rule incorporates the provisions of 
the November 30, 1999 interim final rule. However, we are making the 
following minor changes to our regulations:
    [sbull] We are making editorial changes to Sec.  403.736(a)(3) to 
clarify our policy regarding the discharge planning evaluation. We are 
specifying that the discharge planning evaluation must be included in 
the patient's ``care'' record rather than the patient's ``rights'' 
record and specified that staff are required to discuss the results of 
the evaluation with the beneficiary.
    [sbull] We are amending to Sec.  403.738(a) to include that RNHCIs 
must comply with Federal, State, and local laws pertaining to ``privacy 
of individually identifiable health information (45 CFR part 164).''
    [sbull] We are amending the introductory text of Sec.  489.102 to 
add RNHCIs among the list of providers that must maintain written 
policies and procedures concerning advance directives. In addition, we 
are adding that these advance directives must be maintained with 
respect to all adult individuals receiving medical care, ``or patient 
care in the case of a patient in a religious nonmedical health care 
institution.'' We intended to make these changes in the interim final 
rule; however, they were not incorporated due to an error in our 
amendatory language.
    [sbull] Section 1861(ss)(i) of the Act specifies the requirements 
that a Medicare or Medicaid provider must meet to satisfy the 
definition of a RNHCI. In addition, section 1866 of the Act requires 
that all providers of services under Medicare enter into a provider 
agreement with the Secretary and comply with other requirements 
specified in that section. Currently, all of the 16 not-for-profit 
Medicare/Medicaid RNHCI providers have provider agreements with CMS. In 
the November 30, 1999 interim final rule, we intended to revise the 
regulations to include RNHCIs among the providers required to enter 
into provider agreements in accordance with the statute. These 
revisions were inadvertently omitted from the interim final rule. 
Therefore, in this final rule, we are revising the regulations at part 
489 so that RNHCIs are subject to the requirements regarding provider 
agreements and supplier approval. In addition we are revising 
regulations at part 498 to ensure the RNHCI access to the appeals 
process in the case of an adverse determination concerning continued 
participation in the Medicare program.

Additional Change Affecting the Rule

    A final rule published on January 10, 2003 (68 FR 1374) revised 
Sec.  403.744 that set forth the condition of participation for life 
safety from fire. That final rule amended the fire safety standards for 
most health care providers, including RNHCIs. It adopted the 2000 
edition of the Life Safety Code and eliminated references in our 
regulations to all earlier editions. The regulation became effective 
March 11, 2003. Since the rule published in January updated this 
provision, we are not republishing or making any additional changes to 
Sec.  403.744 of the regulations.

V. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), we are required to 
provide 30-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the PRA requires that we 
solicit comment on the following issues:
    [sbull] The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
    [sbull] The accuracy of our estimate of the information collection 
burden.
    [sbull] The quality, utility, and clarity of the information to be 
collected.
    [sbull] Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of the issues for the 
provisions summarized below that contain information collection 
requirements:

Section 403.724 Valid Election Requirements

    In summary, Sec.  403.724(a)(1) requires an RNHCI to use a written 
election statement that includes the requirements set forth in this 
section.
    The burden associated with this requirement is the one-time effort 
required to agree on the format for the election statement. It was 
estimated that it would take each RNHCI 2 hours to comply with these 
requirements. This was completed by the 16 RNHCIs when they started 
participating in the program. We know of only one provider that is 
considering applying to participate; thus, there will be a possible 
total of 2 burden hours. There have been no new applications since the 
first providers transitioned into the RNHCI

[[Page 66717]]

program. The burden associated with signing, filing, and submitting the 
election statement is described in Sec.  403.724(a)(2), Sec.  
403.724(a)(3), and Sec.  403.724(a)(4).
    In summary Sec.  403.724(a)(2) and Sec.  403.724(a)(3) require that 
an election must be signed and dated by the beneficiary or his or her 
legal representative and have it notarized.
    The burden associated with this requirement is the time required 
for the beneficiary or his or her legal representative to read, sign, 
and date the election statement and have it notarized. It is estimated 
that it will take each beneficiary approximately 10 minutes to read, 
sign, and date the election statement. We anticipate that the RNHCI 
will have a notary present to witness and notarize the election 
statement. There are approximately 800 beneficiaries that will be 
affected by this requirement for a total of 103.3 burden hours during 
the first year of the final rule.
    Section 403.724(a)(4) requires that the RNHCI keep a copy of the 
election statement on file and submit the original to CMS with any 
information obtained regarding prior elections or revocations.
    The burden associated with this requirement is the time required 
for an RNHCI to keep a copy of the election statement and submit the 
original to CMS. It is estimated that it will take 5 minutes to comply 
with this requirement. During the first year, there will be 
approximately 800 election statements for a total of 66.6 burden hours.
    If not revoked, an election is effective for life and does not need 
to be completed during future admissions. Section 403.724(b)(1) states 
that a beneficiary can revoke his or her election statement by the 
receipt of nonexcepted medical treatment or the beneficiary may 
voluntarily revoke the election and notify CMS in writing. We 
anticipate that there would be very few (fewer than 10 beneficiaries) 
if any instances in which a beneficiary will notify CMS in writing that 
he or she will revoke his or her election statement. We believe the 
above requirement is not subject to the PRA in accordance with 5 CFR 
1320.3(c)(4) since this requirement does not collect information from 
10 or more entities on an annual basis.
    While the information collection requirements summarized below are 
subject to the PRA, we believe the burden associated with these 
information collection requirements is exempt as defined in 5 CFR 
1320.3(b)(2) because the time, effort, and financial resources 
necessary to comply with these requirements would be incurred by 
persons in the normal course of their activities.

Section 403.730 Condition of Participation: Patient Rights

    Section 403.730(a)(1) states that the RNHCI must inform each 
patient of his or her rights in advance of furnishing patient care.
    Section 403.730(b)(3) states that the RNHCI must formulate advance 
directives and expect staff who furnish care in the RNHCI to comply 
with those directives, in accordance with part 489, subpart I of this 
chapter. For purposes of conforming with the requirement in Sec.  
489.102 that there be documentation in the patient's medical records 
concerning advanced directives, the patient care records of a 
beneficiary in an RNHCI are equivalent to medical records held by other 
providers.

Section 403.732 Condition of Participation: Quality Assessment and 
Evaluation

    In summary, Sec.  403.732 states that the RNHCI must develop, 
implement, and maintain a quality assessment and evaluation program.

Section 403.736 Condition of Participation: Discharge Planning

    Section 403.736(a)(1) requires that the discharge planning 
evaluation must be initiated at admission and must include the 
following: (1) An assessment of the possibility of a patient needing 
post-RNHCI services and of the availability of those services; and (2) 
an assessment of the probability of a patient's capacity for self-care 
or of the possibility of the patient being cared for in the environment 
from which he or she entered the RNHCI.
    Section 403.736(a)(3) states that the discharge planning evaluation 
must be included in the patient's care record for use in establishing 
an appropriate discharge plan. Staff must discuss the results of the 
discharge planning evaluation with the patient or a legal 
representative acting on his or her behalf.
    Section 403.736(b)(1) states that, if the discharge planning 
evaluation indicates a need for a discharge plan, qualified and 
experienced personnel must develop or supervise the development of the 
plan.
    Section 403.736(b)(2) states that, in the absence of a finding by 
the RNHCI that the beneficiary needs a discharge plan, the beneficiary 
or his or her legal representative may request a discharge plan. In 
this case, the RNHCI must develop a discharge plan for the beneficiary.
    Section 403.736(b)(3) states that the RNHCI must arrange for the 
initial implementation of the patient's discharge plan.
    Section 403.736(b)(4) states that, if there are factors that may 
affect continuing care needs or the appropriateness of the discharge 
plan, the RNHCI must reevaluate the beneficiary's discharge plan.
    Section 403.736(b)(5) states that the RNHCI must inform the 
beneficiary or legal representative about the beneficiary's post-RNHCI 
care requirements.
    Section 403.736(b)(6) states that the discharge plan must inform 
the beneficiary or his or her legal representative about the freedom to 
choose among providers of care when a variety of providers is available 
that are willing to respect the discharge preferences of the 
beneficiary or legal representative.
    Section 403.736(c) states that the RNHCI must transfer or refer 
patients to appropriate facilities (including medical facilities if the 
beneficiary so desires) as needed for follow up or ancillary care and 
notify the patient of his or her right to participate in planning the 
transfer or referral in accordance with Sec.  ''403.730(a)(2).
    Section 403.736(d) states that the RNHCI must reassess its 
discharge planning process on an ongoing basis. The reassessment must 
include a review of discharge plans to ensure that they are responsive 
to discharge needs.

Section 403.738 Condition of Participation: Administration

    In summary, Sec.  403.738(a) states that an RNHCI must have written 
policies regarding its organization, services, and administration.
    Section 403.738(c)(3) states that the RNHCI must furnish written 
notice, including the identity of each new individual or company, to 
CMS at the time of a change, if a change occurs in any of the 
following: Persons with an ownership or control interest, as defined in 
42 CFR 420.201 and 455.101; the officers, directors, agents, or 
managing employees; the religious entity, corporation, association, or 
other company responsible for the management of the RNHCI; and the 
RNHCI's administrator or director of nonmedical nursing services.
    While this information collection requirement is subject to the 
PRA, we believe the burden associated with this information collection 
requirement is exempt as defined in 5 CFR 1320.3(c)(4), since it does 
not collect information from 10 or more entities on an annual basis.

[[Page 66718]]

Section 403.742 Condition of Participation: Physical Environment

    Section 403.742(a)(4) requires that a RNHCI have a written disaster 
plan to address loss of power, water, sewage disposal, and other 
emergencies.
    Section 403.742(b)(3) requires that CMS may permit variances in 
requirements specified in paragraphs (b)(1)(i) and (b)(1)(ii) of this 
section relating to rooms on an individual basis when the RNHCI 
adequately demonstrates in writing that the variances meet the 
requirements of this section.
    While this information collection requirement is subject to the 
PRA, we believe the burden associated with this ICR is exempt as 
defined in 5 CFR 1320.3(c)(4), since it does not collect information 
from 10 or more entities on an annual basis.

Section 403.746 Condition of Participation: Utilization Review

    In summary, Sec.  403.746 states that the RNHCI must have in effect 
a written utilization review plan to assess the necessity of services 
furnished. The plan must provide that records be maintained of all 
meetings, decisions, and actions by the utilization review committee. 
The utilization review plan must contain written procedures for 
evaluating the following: Admissions, the duration of care, continuing 
care of an extended duration, and items and services furnished.
    The following sections describe the burden associated with the 
payment provisions. Based on the most recent data available, Medicare 
expenditures for Christian Science sanatoria were approximately $5 
million annually. The trigger level for FFY 1998, the first year of 
RNHCI implementation, was $20 million. Beginning in FFY 2000, when 
estimated expenditures for RNHCI services exceed the trigger level for 
a FFY, CMS must adjust the RNHCI payment rates. Therefore, the burden 
associated with the following sections is not subject to the PRA at 
this point in time.

Section 403.752 Payment Provisions

    Section 403.752(d)(i) states that the RNHCI must notify the 
beneficiary in writing at the time of admission of any proposed or 
current proportional Medicare adjustment. A beneficiary currently 
receiving care in the RNHCI must be notified in writing 30 days before 
the Medicare reduction is to take effect. The notification must inform 
the beneficiary that the RNHCI can bill him or her for the proportional 
Medicare adjustment.
    Section 403.752(d)(ii) states that the RNHCI must, at time of 
billing, provide the beneficiary with his or her liability for payment, 
based on a calculation of the Medicare reduction pertaining to the 
beneficiary's covered services permitted by Sec.  403.750(b).
    We believe that this ICR is not subject to the PRA, as implemented 
by 5 CFR 1320.4(a)(2), since the collection action is conducted during 
an investigation or audit against specific individuals or entities.

Section 440.170 General Provisions--Medicaid

    Section 440.170(b)(9) states that an RNHCI must provide, upon 
request, information CMS may require to implement section 1821 of the 
Act, including information relating to quality of care coverage and 
determinations.

Section 489.102 Requirements for Providers

    The ICR in the following section, except for its application to 
RNHCIs, has been approved under OMB approval number 0938-0610.
    In summary, Sec.  489.102(a) requires that hospitals, critical 
access hospitals, skilled nursing facilities, home health agencies, 
providers of home health care (and for Medicaid purposes, providers of 
personal care services), hospices, and religious nonmedical health care 
institutions document and maintain written policies and procedures 
concerning advance directives with respect to all adult individuals 
receiving medical care.
    For the current approval, we stated that it will take each facility 
3 minutes to document a beneficiary's record whether he or she has 
implemented an advance directive. We anticipate that it will also take 
each RNHCI 3 minutes per patient to comply with this requirement, for a 
total of 104 burden hours on an annual basis. In addition, there will 
be a one-time burden of 8 hours per RNHCI to maintain written policies 
and procedures concerning advance directives, for a total of 152 hours.
    We will submit a revision to OMB approval number 0938-0610 to 
reflect the addition of RNHCIs to the paperwork burden.
    We have submitted a copy of this rule to OMB for its review of the 
ICRs. These requirements are not effective until they have been 
approved by OMB. A notice will be published in the Federal Register 
when approval is obtained.
    If you comment on these information collection and recordkeeping 
requirements, please mail copies directly to the following:

Centers for Medicare & Medicaid Services, Office of Strategic 
Operations and Regulatory Affairs, Regulations Development and 
Issuances Group, Attn: Dawn Willinghan, CMS-1909-F, Room C5-14-03, 7500 
Security Boulevard, Baltimore, MD 21244-1850; and
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10235, New Executive Office Building, Washington, DC 
20503, Attn.: Brenda Aguilar, CMS Desk Officer.

VI. 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 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, 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 rule provides religious nonmedical health care institution 
(RNHCI) inpatient services to individuals qualifying for Medicare or 
Medicaid benefits, who because of their religious beliefs do not find 
it appropriate to use conventional medical care. The rule provides for 
the physical care of these beneficiaries in RNHCIs but does not provide 
payment for the religious component of care. Currently, only 16 RNHCI 
facilities nationally participate in the program, with expenditure 
levels approximately $5 million annually. This rule does not reach the 
economic threshold and thus is not considered a major rule.

B. Anticipated Effects

1. Effects on Small Business
    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

[[Page 66719]]

are small entities, either by nonprofit status or by having revenues of 
$6 million to $29 million in any 1 year. For purposes of the RFA, all 
of the 16 not-for-profit Medicare/Medicaid RNHCI providers are 
considered small businesses according to the Small Business 
Administration's size standards, with total revenues of $6 million or 
less in any one year. Individuals and States are not included in the 
definition of a small entity.
    Currently, only one religious group is participating in the RNHCI 
program and no other groups have applied for participation. The RNHCIs 
are operated as independent facilities by individual boards composed of 
members from the religious group. The facilities are not in competition 
with other medical care providers in any geographical area since they 
pursue a religious rather than a medical approach to health care. We 
are not preparing an analysis for the RFA because we have determined 
that this rule will not have a significant economic impact on a 
substantial number of small entities.
2. Effects on Other Health Care Providers
    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 604 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. This rule will not have a 
significant impact on small rural hospitals. The RNHCIs are not in 
competition with other medical care providers in any geographical area, 
since they pursue a religious rather than a medical approach to health 
care. Currently, all of the RNHCIs are located in metropolitan rather 
than rural areas. We are not preparing an analysis for section 1102(b) 
of the Act because we have determined that this rule will not have a 
significant impact on the operations of a substantial number of small 
rural hospitals.
3. Effects on States, Local or Tribal Governments
    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 one year by 
State, local, or tribal governments, in the aggregate, or by the 
private sector, of $110 million. This rule will have no consequential 
effect on the governments mentioned 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.
    In accordance with the provisions of Executive Order 13132, this 
regulation will not significantly affect any State or local government. 
This rule describes only processes that must be undertaken if a State 
chooses to exercise its option to amend the State plan and include 
coverage of inpatient RNHCI services.
    Those States that have RNHCI facilities and have selected to offer 
the optional RNHCI service are very limited. Currently, we only have 16 
facilities participating in Medicare and one of these is dually 
eligible to participate in Medicare and Medicaid. The monitoring of the 
program is conducted by staff in the Boston Regional Office (Region I) 
and they will be responsible for the survey and certification activity 
that is usually conducted by a State Agency. Since this regulation does 
not impose any costs on State or local governments, the requirements of 
E.O. 13132 are not applicable.
4. Effect on the Medicare and Medicaid Programs
    Section 4454 of BBA '97 removed the authorization for payment for 
services furnished in Christian Science sanatoria from under both 
Medicare and Medicaid. Section 4454 authorizes payment for inpatient 
services in an RNHCI for beneficiaries who, for religious reasons, are 
conscientiously opposed to the acceptance of medical care. Section 4454 
of BBA '97 provides for coverage of the nonmedical aspects of inpatient 
care services in RNHCIs under Medicare and as a State option under 
Medicaid. In order for a provider to satisfy the definition of a 
religious nonmedical health care institution, for both Medicare and 
Medicaid, it must satisfy the 10 qualifying provisions contained in 
section 1861(ss)(1) of the Act. The RNHCI choosing to participate in 
Medicare must also be in compliance with both the conditions for 
coverage and the conditions of participation contained in the 
regulations. Neither Medicare nor Medicaid will pay for any religious 
aspects of care provided in these facilities. CMS has used one fiscal 
intermediary to handle all RNHCIs and the Boston Regional Office to 
monitor the process, and we plan to continue that arrangement.
    Section 4454 of BBA '97 establishes certain controls on the amount 
of expenditures for RNHCI services in a given FFY. Section 
1821(c)(2)(C) of the Act explains the operation of these controls 
through the use of a trigger level.
    The trigger level is used to determine if Medicare payments for the 
current FFY need to be adjusted. If the estimated level of expenditures 
for an FFY exceeds the trigger level for that FFY, we are required 
under statute to make a proportional adjustment to payments or 
alternative adjustments to prevent expenditures from exceeding the 
trigger level.
    BBA '97 precludes administrative or judicial review of adjustments 
that we determine are necessary to control expenditures. The trigger 
level is also used to activate the sunset provision, which prohibits us 
from accepting any new elections when estimated expenditures exceed the 
trigger level for 3 consecutive fiscal years. It must be noted that the 
trigger level has not been even closely approached since the inception 
of the program.
    Currently, there are 16 RNHCIs that are furnishing services and 
receiving payment under Medicare. One of these facilities is dually 
eligible to participate in Medicare and Medicaid. There have been no 
Medicaid expenditure reports submitted by any State for several years.
5. Effects on RNHCIs
    The rule enables RNHCI providers and beneficiaries the opportunity 
to continue to receive funding for inpatient health care service that 
are in keeping with their religious convictions. Additionally, the rule 
provides that a beneficiary will always have the option of choosing to 
seek conventional medical care for covered services.

C. Alternatives Considered

    This final rule adheres to the statutory provisions, which in many 
instances were very prescriptive; however, we used every opportunity 
possible to consider alternative approaches as discussed below.
Elections
    The statute does not prescribe when the election must be made 
except to specify that it must be made before receiving care. 
Initially, we considered the possibility of opening the election 
process to all eligible beneficiaries, who would wish to pursue RNHCI 
services, to ensure these benefits would be available when they were 
admitted to an RNHCI. However, some religious groups consider it 
acceptable to receive some medical care (for example, closed

[[Page 66720]]

reduction of fractures) that is considered as nonexcepted care under 
the RNHCI amendments to the statute and regulations. With the above 
cited approach to elections, we might be placing some beneficiaries in 
a position of having an RNHCI election revoked one or more times 
without ever being admitted to an RNHCI. This would subject a 
beneficiary to having to wait the prescribed period of time between 
revocation and when they could again file a viable election. Therefore, 
we decided it was in the beneficiary's best interest to initiate the 
election process at the time of admission to an RNHCI.
Payment to Providers
    The statute provided flexibility for provider payment and initially 
we continued the new provider group under the TEFRA payment methodology 
to ensure a smooth transition. The new RNHCI group was already facing a 
number of changes when compared with their prior requirements as 
Christian Science sanatoria. We considered the possibility of moving 
swiftly to a prospective payment methodology as systems were being 
developed for skilled nursing facilities, home health agencies and 
rehabilitation hospitals. While the new methodologies were different 
from those under the hospital diagnosis related group (DRG), there was 
still a partial diagnosis based relationship to the payment system. 
Since the statute prohibits the use of diagnosis or other medical 
approaches for assessing RNHCI patients, we have decided to wait until 
we can conduct studies and find a methodology that is fully appropriate 
for the RNHCI setting.

D. Conclusion

    For the above reasons, we are not preparing analyses for either the 
RFA or section 1102(b) of the Act. We have determined that this rule 
will 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.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 403

    Health insurance, Hospitals, Intergovernmental relations, Medicare, 
Reporting and recordkeeping requirements.

42 CFR Part 489

    Health facilities, Medicare, Reporting and recordkeeping 
requirements.

42 CFR Part 498

    Administrative practice and procedure, Health facilities, Health 
professions, Medicare, Reporting and recordkeeping requirements.

0
For reasons set forth in the preamble, the Centers for Medicare & 
Medicaid Services amends 42 CFR chapter IV as set forth below:

PART 403--SPECIAL PROGRAMS AND PROJECTS

0
1. The authority citation for part 403 continues to read as follows:

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

Subpart G--Religious Nonmedical Health Care Institutions--Benefits, 
Conditions of Participation, and Payment

0
2. In Sec.  403.736, paragraph (a)(3) is revised to read as follows:


Sec.  403.736  Condition of participation: Discharge planning.

* * * * *
    (a) Standard: Discharge planning evaluation. * * *
    (3) The discharge planning evaluation must be included in the 
patient's care record for use in establishing an appropriate discharge 
plan. Staff must discuss the results of the discharge planning 
evaluation with the patient or a legal representative acting on his or 
her behalf.
* * * * *

0
3. In Sec.  403.738, paragraph (a)(4) is added to read as follows:


Sec.  403.738  Condition of participation: Administration.

* * * * *
    (a) Standard: Compliance with Federal, State, and local laws. * * *
    (4) Privacy of individually identifiable health information (45 CFR 
part 164).
* * * * *

PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL

0
1. The authority citation for part 489 continues to read as follows:

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

0
2. In Sec.  489.2, paragraph (b) introductory text is republished and a 
new paragraph (b)(9) is added to read as follows:


Sec.  489.2  Scope of part.

* * * * *
    (b) The following providers are subject to the provisions of this 
part:
* * * * *
    (9) Religious nonmedical health care institutions (RNHCIs).
* * * * *

0
3. In Sec.  489.10 paragraphs (a) and (c) are revised to read as 
follows:


Sec.  489.10  Basic requirements.

    (a) Any of the providers specified in Sec.  489.2 may request 
participation in Medicare. In order to be accepted, it must meet the 
conditions of participation or requirements (for SNFs) set forth in 
this section and elsewhere in this chapter. The RNHCIs must meet the 
conditions for coverage, conditions for participation and the 
requirements set forth in this section and elsewhere in this chapter.
* * * * *
    (c) In order for a hospital, SNF, HHA, hospice, or RNHCI to be 
accepted, it must also meet the advance directives requirements 
specified in subpart I of this part.
* * * * *

0
4. In Sec.  489.53 paragraph (a) introductry text is republished and 
paragraph (a)(3) is revised to read as follows:


Sec.  489.53  Termination by CMS.

    (a) Basis for termination of agreement with any provider. CMS may 
terminate the agreement with any provider if CMS finds that any of the 
following failings is attributable to that provider:
* * * * *
    (3) It no longer meets the appropriate conditions of participation 
or requirements (for SNFs and NFs) set forth elsewhere in this chapter. 
In the case of an RNHCI no longer meets the conditions for coverage, 
conditions of participation and requirements set forth elsewhere in 
this chapter.
* * * * *

0
5. In Sec.  489.102, paragraph (a) introductory text is revised to read 
as follows:


Sec.  489.102  Requirements for providers.

    (a) Hospitals, critical access hospitals, skilled nursing 
facilities, nursing facilities, home health agencies, providers of home 
health care (and for Medicaid purposes, providers of personal care 
services), hospices, and religious nonmedical health care institutions 
must maintain written policies and procedures concerning advance 
directives with respect to all adult individuals receiving medical 
care, or patient care in the case of a patient in a religious 
nonmedical health

[[Page 66721]]

care institution, by or through the provider and are required to:
* * * * *

PART 498--APPEALS PROCEDURES FOR DETERMINATIONS THAT AFFECT 
PARTICIPATION IN THE MEDICARE PROGRAM AND FOR DETERMINATIONS THAT 
AFFECT THE PARTICIPATION OF ICFs/MR AND CERTAIN NFs IN THE MEDICAID 
PROGRAM

0
1. The authority citation for part 498 continues to read as follows:

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


0
2. In Sec.  498.2 the definition of ``provider'' is revised to read as 
follows:


Sec.  498.2  Definitions.

* * * * *
    Provider means a hospital, critical access hospital (CAH), skilled 
nursing facility (SNF), comprehensive outpatient rehabilitation 
facility (CORF), home health agency (HHA), hospice, or religious 
nonmedical health care institution (RNHCI) that has in effect an 
agreement to participate in Medicare, that has in effect an agreement 
to participate in Medicaid, or a clinic, rehabilitation agency, or 
public health agency that has a similar agreement but only to furnish 
outpatient physical therapy or outpatient speech pathology services, 
and prospective provider means any of the listed entities that seeks to 
participate in Medicare as a provider or to have any facility or 
organization determined to be a department of the provider or provider-
based entity under Sec.  413.65 of this chapter.
* * * * *

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

    Dated: May 19, 2003.
Thomas A. Scully,
Administrator, Centers for Medicare and Medicaid Services.
    Dated: August 6, 2003.
Tommy G. Thompson,
Secretary.
[FR Doc. 03-29139 Filed 11-26-03; 8:45 am]
BILLING CODE 4120-01-P