[Federal Register Volume 68, Number 234 (Friday, December 5, 2003)]
[Rules and Regulations]
[Pages 67955-67960]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-30096]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 412, 413, 476, and 484

[CMS-3055-F]
RIN 0938-AK68


Medicare Program; Photocopying Reimbursement Methodology

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

ACTION: Final rule.

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SUMMARY: This final rule increases the rate of reimbursement for 
expenses incurred by prospective payment system (PPS) hospitals for 
photocopying medical records requested by Quality Improvement 
Organizations (QIOs), formerly known as Utilization and Quality Control 
Peer Review Organizations (PROs). We are increasing the rate from 7 
cents per page to 12 cents per page to reflect inflationary changes in 
the labor and supply cost components of the formula.
    This final rule also provides for the periodic review and 
adjustment of the per-page reimbursement rate to account for inflation 
and changes in technology. The methodology for calculating the per-page 
reimbursement rate will remain unchanged.
    We are also providing for the payment of the expenses of furnishing 
photocopies to QIOs, to other providers subject to a PPS (for example, 
skilled nursing facilities and home health agencies), in accordance 
with the rules established for reimbursing PPS hospitals for these 
expenses.

EFFECTIVE DATE: These regulations are effective on January 5, 2004.

FOR FURTHER INFORMATION CONTACT: Les Caplan, (410) 786-7223.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 1866(a)(1)(F) of the Social Security Act (the Act) requires 
a hospital, as a condition of Medicare participation, to enter into an 
agreement with a quality improvement organization (QIO), for the peer 
review of Medicare services provided by the hospital. (Note: QIOs were 
formerly known as peer review organizations (PROs). We published a 
final rule with comment period on May 24, 2002 (67 FR 36539), changing 
the name to QIOs.) Our regulations at 42 CFR 476.78 provide that health 
care facilities that

[[Page 67956]]

submit Medicare claims must cooperate in the conduct of QIO reviews, 
including providing the QIO with information necessary to its 
determinations. This often includes providing the QIO with photocopies 
of patients' medical records.
    We published a final rule on October 20, 1992, in the Federal 
Register (57 FR 47779), following notice-and-comment rulemaking, which 
established a formula for calculating the rate of reimbursement for 
these photocopy costs incurred by hospitals. Using this formula, we set 
the rate at 7 cents per page. The regulation requires us to determine a 
fixed payment amount per page by adding per-page labor costs and per-
page supply costs. The regulation also provides for Medicare payment 
for the costs of first class postage for mailing records to QIOs. As 
discussed in detail in the October 20, 1992, final rule (57 FR 47779), 
the payment established by Sec.  476.78 represents an additional 
payment to hospitals under the prospective payment system (PPS) for 
photocopy costs. Payment for the equipment and overhead costs 
associated with furnishing the QIO with required documentation is made 
under other Medicare payment provisions for capital-related costs and 
inpatient operating costs.
    The formula for calculating the per-page reimbursement rate for 
photocopies is set forth at Sec.  476.78(c), which provides:
    Photocopying reimbursement methodology for prospective payment 
system hospitals. Hospitals subject to the prospective payment system 
are paid for the photocopying costs that are directly attributable to 
the hospitals' responsibility to the QIOs to provide photocopies of 
requested hospital records. The payment is in addition to payment 
already provided for these costs under other provisions of the Social 
Security Act and is based on a fixed amount per page as determined by 
CMS as follows:
    (1) Step one. CMS adds the annual salary of a photocopy machine 
operator and the costs of fringe benefits as determined in accordance 
with the principles set forth in OMB circular A-76.
    (2) Step two. CMS divides the amount determined in paragraph (c)(1) 
of this section by the number of pages that can be reasonably expected 
to be made annually by the photocopy machine operator to establish the 
labor cost per page.
    (3) CMS adds to the per-page labor cost determined in paragraph 
(c)(2) of this section the per-page costs of supplies.
    Using this formula we established the per-page rate of 7 cents in 
the October 20, 1992, final rule. The validity of this rule and its 
reimbursement methodology were challenged in a certified class action 
by Medicare--participating hospitals, in the U.S. Court of Appeals for 
the Ninth Circuit. Queen of Angels/Hollywood Presbyterian Medical 
Center v. Shalala, 65 F.3d 1472, 1476 (9th Cir. 1995). The Court of 
Appeals upheld the validity of our photocopy reimbursement methodology 
and sustained the lawfulness of the 7 cents per page rate established 
in the rule.
    Due to increases in labor and supply costs, we are increasing the 
reimbursement rate from 7 cents per page to 12 cents per page in 
accordance with the established court-approved methodology set forth in 
Sec.  476.78(c).

Current Photocopy Reimbursement Rate

    Under the current regulation, we apply a uniform per-page rate on a 
nationwide basis to all PPS hospitals that have QIO agreements. We base 
the calculation on labor and supply costs. The calculation in the 
current rule, as discussed in the preamble to the October 20, 1992, 
rule, is based on the following:
    [sbull] An operator will copy approximately 364,320 pages annually.
    [sbull] The salary level of an operator is equivalent to a GS-5 
experienced midlevel secretary ($17,686) plus 27.9 percent fringe 
benefits ($4,934) for a total salary of $22,620.
    [sbull] Paper costs are 0.5 cents per page ($25 per case of paper 
with 5,000 sheets in a case).
    [sbull] Toner and developer costs are 0.5 cents per page.

The total cost per page is 7 cents.

II. Provisions of the Proposed Regulations

    On November 22, 2002, we published a proposed rule (67 FR 70358) in 
which we proposed to increase the rate of QIO-related photocopy 
reimbursement from 7 cents to 12 cents per page. We calculated this 
rate by updating the salary, fringe benefits, and supply figures used 
in the October 20, 1992, final rule. In accordance with the methodology 
at Sec.  476.78(c), we considered the following factors in calculating 
the proposed rate: (1) The labor costs associated with photocopying and 
(2) the costs of supplies.

A. Labor Costs

    Labor costs were calculated consistent with the methodology at 
Sec.  476.78(c), first, by adding the annual salary of a photocopy 
machine operator with the costs of fringe benefits, and second, by 
dividing that sum by the number of pages that can reasonably be 
expected to be made in a year.

B. Annual Salary of a Photocopy Machine Operator

    In the October 20, 1992, rule, we adopted the salary level for an 
experienced (GS-5) midlevel secretary in the Federal government as 
representative of that of a photocopy machine operator. Use of this 
figure approximated or exceeded the actual salary information for 
individuals performing these tasks that had been submitted by various 
commenters. Furthermore, we determined that use of this salary level 
yielded payments that were more than adequate to ensure a sufficient 
skill level. The annual salary of $17,686 used in the October 20, 1992, 
rule was derived from the U.S. Office of Personnel Management's 1992 
General Schedule.
    In this final rule, we will continue to deem the salary of a 
Federal GS-5 midlevel secretary as representative of a photocopy 
operator's salary; however, we will update the figure to take into 
account increases in the payment rate of a midlevel secretary. Thus, as 
discussed in the proposed rule, we are using the GS-5 annual salary of 
$28,727 derived from the U.S. Office of Personnel Management's 2002 
General Schedule to calculate the revised rate.

C. Fringe Benefits

    In the October 20, 1992, final rule, we ascribed the fringe 
benefits of an employee to be 27.9 percent of the employee's salary, 
which was the standard percentage dictated by the cost principles set 
forth in the Office of Management and Budget (OMB) Circular A-76. While 
there may be other yardsticks to measure this component of costs, we 
find this to be a reasonable resource since the thrust of this OMB 
circular is to help the government compare potentially incurred costs 
to determine whether the costs can be more economically incurred 
internally or through contract with a commercial source. Therefore, we 
continue to use OMB Circular A-76 to calculate the annual fringe 
benefit cost. Accordingly, fringe benefits were calculated in the 
November 22, 2002, proposed rule based on 29.7 percent of the GS-5 
salary as outlined in the OMB Circular A-76 Transmittal Memorandum 19--
FY 2000 estimate. Thus, the annual fringe benefit cost is $8,532 
($28,727 * 29.7 percent).

[[Page 67957]]

D. Number of Pages Copied Annually

    In this final rule, we are using 364,320 pages per year in the 
calculation of the annual labor cost. In the October 20, 1992, rule, we 
determined that 364,320 was the number of pages that could reasonably 
be expected to be copied in a year. Earlier, in the proposed rule 
``Changes to Peer Review Organizations Regulations'', published on 
March 16, 1988, at 53 FR 8654, we had proposed the use of 748,000 pages 
per year in the calculation of the annual labor cost. This initial 
figure was determined based on copying documents at a rate of six pages 
per minute for each hour in an 8 hour day, 5 days a week, 52 weeks per 
year. The estimate was based on hand feeding of documents into the 
photocopying machine for duplication, although we recognized that there 
are many photocopying tasks that may be accomplished through automatic 
feeds. Automatic feeds greatly increase the number of pages that can be 
generated by a machine on an hourly basis, and as a result, greatly 
decrease the cost of photocopying per page.
    In response to comments received on the March 16, 1988, proposed 
rule (53 FR 8654), we revised the 748,000 figure in the October 20, 
1992, final rule to account for time spent by the photocopy machine 
operator in search and retrieval tasks, and time away from work on 
annual vacation, sick, and holiday leave. This resulted in a reduction 
from 748,000 to 364,320 in our estimate of the number of pages that may 
be reasonably expected to be made annually, and a corresponding 
increase in the per-page labor rate.
    We are unaware of any significant changes in technology since the 
October 20, 1992, final rule (57 FR 47779) that would lead to either a 
significant decrease or increase in the annual number of pages that may 
be copied. Nor are we aware of any changes that would significantly 
increase or decrease the time allocated to search and retrieval tasks. 
Therefore, we continue to use the 364,320 figure to calculate the per-
page labor cost.

E. Calculation of Per-Page Labor Costs

    To determine the per-page labor cost, the total of salary ($28,727) 
and fringe benefits ($8,532) costs, which amount to $37,259, was 
divided by 364,320 pages, the number of copies made in a year, 
resulting in an annual labor cost per page of 10 cents ($37,259/364,320 
pages).

F. Supply Costs

    In the proposed rule, we proposed a total supply cost of 2.3 cents 
per page. This is based on a per-page paper cost of 0.5 cents and a 
developer and toner cartridge cost of 1.8 cents per page. The paper 
costs were calculated based on $23 per case of paper with 5,000 sheets 
in a case. This equates to 0.5 cents per page ($23/5,000).
    In this rule, we used an objective methodology to calculate the 
per-page cost for toner and developer that can also be used in future 
updates. We calculated these costs using estimates of the costs for 
toner cartridges and developer drums contained in the General Services 
Administration (GSA) supply catalogue, and on the basis of a photocopy 
machine producing 364,320 pages annually.

G. Payment Rate Per Page

    Consistent with Sec.  476.78(c)(3), the payment rate per page is 
the total of the per-page labor cost and the per-page supply cost, 
which is equivalent to 12 cents. The established calculation 
methodology actually results in a cost of 12.3 cents per page, however, 
consistent with our policy and generally accepted mathematics 
principles, we chose to round down to 12 cents. We believe this 
decision is both reasonable and supportable, based on the fact that the 
higher amount substantially exceeds all published OMB inflation 
indexes, including the Consumer Price Index (CPI)-Wage index 
(photocopying expense is largely comprised of labor costs).

H. Future Updates to Rate of Photocopy Reimbursement

    In addition to updating the rate of reimbursement for photocopies, 
we are also amending the existing regulation to permit the rate to be 
adjusted without undergoing notice-and-comment rulemaking each time it 
needs to be adjusted to reflect inflationary or technology changes.
    We intend to review and adjust the rate periodically in accordance 
with the same factors considered in establishing the rate in the 
October 20, 1992, final rule and the updated rate in this final rule. 
This review will include an examination of the labor and supply 
components of the formula, and we will update the rate as necessary to 
account for significant inflationary changes to these components.
    Absent some compelling reason, in future updates, we will continue 
to deem the salary and fringe benefits of a Federal government GS-5 
midlevel secretary as representative of the salary and fringe benefits 
of a photocopy machine operator and use those values to calculate the 
reimbursement rate. Also, absent some compelling reason or major 
technological change that would lead to a significant increase or 
decrease in the number of pages that can be made annually, we will not 
change the number of pages used in calculating the rate.

I. Reimbursement to Other PPS Providers of the Cost of Photocopying

    We will provide for the payment of the expenses of furnishing 
photocopies to QIOs, to other providers subject to a PPS (for example, 
skilled nursing facilities (SNFs) and home health agencies (HHAs)), in 
accordance with the rules established at Sec.  476.78 for reimbursing 
PPS hospitals for these expenses.
    Current regulations do not address reimbursement for providers 
other than hospitals for costs of photocopying medical records in 
cooperation with QIO review activities because in the past QIO review 
of providers other than hospitals was relatively insignificant. To the 
extent that this review activity took place, it was minimal, and the 
related costs were included on the provider's cost report. SNFs, HHAs, 
and other providers have recently converted from the cost-based 
reimbursement system to a PPS. Because QIO review of these providers 
has been minimal or nonexistent, costs related to this activity are not 
adequately reflected in the base PPS rate. Therefore, we believe it is 
appropriate to provide for a means of paying for these costs when they 
occur. To accomplish this change, we will replace the more narrow term 
``hospitals'' with ``providers,'' in Sec.  476.78(b)(2) and (c), to 
include other providers subject to a PPS.
    Additionally, we will revise the payment provisions for SNFs and 
HHAs by adding a paragraph at Sec.  413.355 and Sec.  484.265, that 
authorizes reimbursement for the costs of photocopying and mailing 
medical records required for QIO review, to SNFs and HHAs.
    We will amend Sec.  476.78(d) to provide that, as with other 
disputes regarding Medicare payment to providers, disputes concerning 
payments for costs related to QIO review under Sec.  476.78 and the 
other payment provisions of the Medicare statute and regulations must 
be presented in accordance with the administrative and judicial review 
requirements of section 1878 of the Act and subpart R of 42 CFR part 
405.

III. Analysis of and Responses to Public Comments

    We received three timely items of correspondence in response to the 
proposed rule published on November 22, 2002. A summary of the major 
issues

[[Page 67958]]

raised in those comments and our responses follow:
    Comment: One QIO commented that the November 22, 2002, proposed 
rule would increase pass-through photocopy costs well beyond the amount 
budgeted in their seventh round Medicare contract. This increase could 
cause the QIO to exceed the total cost of its contract.
    Response: Increased photocopying costs are included in the seventh 
round scope of work funding level. However, these costs are a true 
pass-through; that is, CMS is responsible for paying providers, and CMS 
uses its QIO contractors as the vehicle to pay them. Although CMS does 
not anticipate increasing the total cost of each QIO contract 
immediately upon publication of this rule, any time a QIO believes it 
will exceed the total cost of its contract, the QIO should immediately 
notify CMS (see ``Limitation of Cost'' clause in the seventh round 
contract). If the excess costs are the result of increased photocopying 
reimbursement, CMS will exercise one of the four options CMS always 
uses in similar cases--we will either request that money be added to 
the contract, reduce work, ask the QIO to move funds between cost 
centers or line items, or some combination of these options. In no case 
will CMS expect the QIO to absorb any excess pass-through with existing 
contract funds without a corresponding reduction or shifting in level 
of effort.
    Comment: One hospital commented that the method for calculating 
labor costs described in section II.A of the preamble of the November 
22, 2002, proposed rule only provides for the cost of a photocopy 
machine operator, while in actual practice a significant portion of 
records reproduction time should be attributed to record retrieval, 
review, and re-filing by a records technician. The hospital further 
stated its pay scale for a records technician ranges from $8.30 to 
$11.22 per hour.
    Response: We agree with this comment. However, in section II.D of 
the preamble of the November 22, 2002, proposed rule, we explained how 
we calculated the estimated number of pages copied annually. As 
discussed in detail at 57 FR 47780, this estimate was adjusted before 
publication of the current regulation to take into account the 
appropriate amount of labor time required to perform all of the steps 
that are performed in addition to the actual photocopying, such as 
logging in the request, retrieving the record, refiling the record, and 
mailing copies. Thus, the term ``photocopy machine operator'' can 
reasonably be interpreted to include records technicians or anyone else 
directly involved in the hands-on process. Further, section II.B of the 
preamble of the November 22, 2002, proposed rule explains that we used 
an updated representative annual salary of $28,727, or an hourly rate 
of $13.81, which exceeds this provider's salary range for a records 
technician. Therefore, we have not increased the per-page reimbursement 
rate based on this comment.
    Comment: Another commenter questioned the raw data we applied to 
the approved methodology for calculating the per-page cost of 
photocopying medical records. Although this commenter strongly 
supported the three primary objectives of the rule (to increase 
reimbursement, extend provisions of the rule to all PPS providers, and 
allow for periodic adjustment of rates without notice and comment 
rulemaking), the commenter contended the rate should be significantly 
higher than the proposed 12 cents per page.
    In particular, this organization stated the proposed labor rate is 
insufficient to retain qualified personnel in the private sector, 
fringe benefit rates are too low, the number of pages copied annually 
is too high due to recent Health Insurance Portability and 
Accountability Act of 1996 (HIPAA) requirements, and the cost of 
supplies is too low as a result of comparing GSA bulk purchase costs to 
actual costs available to private sector companies. The commenter 
believes we used the October 20, 1992, regulation as a starting point 
for current calculations and that regulation was based on artificially 
low cost assumptions.
    The commenter supports extending the proposed reimbursement 
methodology to non-hospital PPS providers and also supported the 
periodic review provisions. However, the commenter asked us to amend 
the rate review section to require such a review at no more than 5-year 
intervals.
    Response: In this rule, we used recent cost data to calculate the 
proposed per-page photocopy costs and did not simply build on 1992 
data. However, we believe that the data used in both this rule and the 
1992 rule is reasonable and accurately reflects the costs associated 
with this responsibility. Further, we believe the proposed 
representative salary and fringe benefit rates of $28,727 and 29.7 
percent, respectively, are reasonable and sufficient to attract and 
retain qualified personnel. The fringe benefit (F/B) rate, in 
particular, is very close to the mean F/B rate of the numerous 
contractors we reviewed before publication of the November 22, 2002, 
proposed rule, to validate the A-76 Transmittal Memorandum. Although 
the 29.7 percent F/B rate is based on the 2000 OMB guidance, we have 
applied it to a higher base figure and see no reason to adjust it 
further. The $28,727 salary estimate represents a mid-level GS-5 
secretary salary in 2002, which we believe is a fair and accurate 
comparison to the skill level necessary to process medical record 
photocopying requests.
    The estimated number of pages has remained constant since the 
October 20, 1992, regulation was published. Although the commenter may 
be correct that HIPAA privacy requirements will modestly reduce the 
maximum number of pages an operator or technician can copy per year, it 
is still too soon to calculate the exact effect of that legislation. 
Further, we believe that increases in the speed and simplicity of 
reproduction hardware over the last 10 years may offset any decreases 
in volume resulting from HIPAA.
    The comment that the cost of supplies to non-governmental 
organizations exceeds the GSA catalogue price may be valid. However, 
the GSA price provides a solid benchmark that does not vary widely by 
vendor or product quality. Further, our proposed overall reimbursement 
rate per page amounts to a 7 percent annual increase over the 10 years 
since publication of the previous rule. This is approximately twice the 
inflation index rate and adequately compensates for any modest 
differences between the government and private-sector costs of 
supplies.
    We believe the suggestion to include a maximum 5-year interval 
between review periods has some merit but may be unnecessary. By 
eliminating the need for notice and comment rulemaking, it becomes 
unlikely that any future rate adjustment will take longer than 5 years 
and potentially could be more frequent.

IV. Provisions of the Final Regulations

    This final rule incorporates the provisions of the proposed rule 
with only one minor change. We have deleted the proposed revision of 
Sec.  476.78(b)(4), thus leaving that section unchanged from the 
existing text. The proposed amendment, replacing ``hospital'' with 
``provider,'' had an unintended consequence of appearing to extend the 
requirement to provide QIOs with discharge notices from hospitals to 
other inpatient providers. That is neither the purpose nor the intent 
of this final rule.

V. Collection of Information Requirements

    Under the Paperwork Reduction Act (PRA) of 1995, agencies are 
required to provide 60-day notice in the Federal

[[Page 67959]]

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, section 3506(c)(2)(A) of the 
PRA of 1995 requires that we solicit comment on the following issues:
    [sbull] Whether the information collection is necessary and useful 
to carry out the proper functions of the agency;
    [sbull] The accuracy of the agency's estimate of the information 
collection burden;
    [sbull] The quality, utility, and clarity of the information to be 
collected; and
    [sbull] Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    Section 476.78 of this regulation contains information collection 
requirements. In summary, Sec.  476.78 requires providers to submit 
information to the QIO during the conduct of a QIO review. Because this 
information is collected during the conduct of an audit, investigation, 
and/or an administrative action, we believe these collection 
requirements are not subject to the PRA as stipulated under 5 CFR 
1320.4.

VI. Regulatory 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 when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). A 
regulatory impact analysis (RIA) must be prepared for rules that 
constitute significant regulatory action, including rules that have an 
economic effect of $100 million or more annually. This final rule is 
not a major rule in terms of the aggregate costs involved.
    The 53 separate QIO contracts are awarded on a staggered 3-year 
basis. Current sixth scope of work contracts provide photocopy 
reimbursement costs of 7 cents per page. The total dollars budgeted 
were $8.6 million per year and the 3-year costs were $25.9 million. We 
estimate by the time this final regulation is published, 19 QIOs will 
have completed their sixth round contracts, and the other 34 will have 
less than 153 months (combined) out of a total of 636 months (for all 
53 QIOs) remaining in the final year of their sixth round contracts. 
This translates to 24 percent of the final sixth round year. As such, 
we project this regulation will increase the costs in the last (that 
is, current) year of the sixth scope of work by $1.5 million above the 
previous budgeted level of $8.6 million, to a total of $10.1 million. 
However, in future years--based on the full 12 months and all 53 QIOs 
under contract--the increase will be nearly $6.2 million annually.
    Thus, we have determined that this final rule is not a major rule 
with economically significant effects because it will not result in 
increases in total expenditures of $100 million or more per year.
    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 small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
$6 million to $29 million or less annually (see 65 FR 69432). 
Individuals and States are not included in the definition of a small 
entity.
    We generally prepare a regulatory flexibility analysis that is 
consistent with the RFA unless we certify that a rule will not have a 
significant impact on a substantial number of small entities. We have 
not prepared an analysis for the RFA because we have determined, and 
certify, that this final rule will have no significant economic impact 
on small entities. The regulation will not impose any economic or 
operational regulatory burdens on small entities. The regulation will 
only assist providers in performing the tasks required under the QIO 
program sixth scope of work, by increasing the reimbursement for 
providing copies of documents to the QIOs.
    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. We have not prepared an 
analysis for section 1102(b) of the Act because we have determined that 
this final regulation will not have a significant impact on the 
operations of small rural hospitals for the reasons stated above in our 
discussion of the RFA.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies prepare an assessment of 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 or more. We have determined that 
this final rule will not result in such an expenditure. Rather, the 
final rule will benefit providers by increasing the photocopy 
reimbursement rate.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a rule that imposes substantial 
direct compliance costs on State and local governments, preempts State 
law, or otherwise has Federalism implications. We have reviewed this 
final rule under the threshold criteria of Executive Order 13132 and 
have determined that it will not have a substantial direct effect on 
the rights, roles, and responsibilities of States or local governments.
    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 412

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

42 CFR Part 413

    Health facilities, Kidney diseases, Medicare, Puerto Rico, 
Reporting and recordkeeping requirements.

42 CFR Part 476

    Grant programs-health, Health care, Health facilities, Health 
professions, Quality Improvement Organizations (QIO), Reporting and 
record keeping requirements.

42 CFR Part 484

    Health facilities, Health professions, Medicare, Reporting and 
recordkeeping requirements.


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

[[Page 67960]]

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL 
SERVICES

Subpart H--Payment to Hospitals Under the Prospective Payment 
Systems

0
1. The authority citation for part 412 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.  412.115, revise paragraph (c) to read as follows:


Sec.  412.115  Additional payments.

* * * * *
    (c) QIO photocopy and mailing costs. An additional payment is made 
to a hospital in accordance with Sec.  476.78 of this chapter for the 
costs of photocopying and mailing medical records requested by a QIO.

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR 
END-STAGE RENAL DISEASE SERVICES; PROSPECTIVELY DETERMINED PAYMENT 
RATES FOR SKILLED NURSING FACILITIES

Subpart J--Prospective Payment for Skilled Nursing Facilities

0
1. The authority citation for part 413 continues to read as follows:

    Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i), and 
(n), 1871, 1881, 1883, and 1886 of the Social Security Act (42 
U.S.C. 1302, 1395d(d), 1395f(b), 1395l(a), (i), and (n), 1395hh, 
1395rr, 1395tt, and 1395ww).


0
2. Add a new Sec.  413.355 to read as follows:


Sec.  413.355  Additional payment: QIO photocopy and mailing costs.

    An additional payment is made to a skilled nursing facility in 
accordance with Sec.  476.78 of this chapter for the costs of 
photocopying and mailing medical records requested by a QIO.

PART 476--UTILIZATION AND QUALITY CONTROL REVIEW

Subpart C--Review Responsibilities of Quality Improvement 
Organizations (QIOs)

General Provisions

0
1. The authority citation for part 476 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.  476.78, revise the introductory text to paragraph (b); 
revise paragraphs (b)(2), and the introductory text to paragraph (c); 
add new paragraph (c)(4); and revise paragraph (d) to read as follows:


Sec.  476.78  Responsibilities of health care providers.

* * * * *
    (b) Cooperation with QIOs. Health care providers that submit 
Medicare claims must cooperate in the assumption and conduct of QIO 
review. Providers must--
* * * * *
    (2) Provide patient care data and other pertinent data to the QIO 
at the time the QIO is collecting review information that is required 
for the QIO to make its determinations. The provider must photocopy and 
deliver to the QIO all required information within 30 days of a 
request. QIOs pay providers paid under the prospective payment system 
for the costs of photocopying records requested by the QIO in 
accordance with the payment rate determined under the methodology 
described in paragraph (c) of this section and for first class postage 
for mailing the records to the QIO. When the QIO does postadmission, 
preprocedure review, the facility must provide the necessary 
information before the procedure is performed, unless it must be 
performed on an emergency basis.
* * * * *
    (c) Photocopying reimbursement methodology for prospective payment 
system providers. Providers subject to the prospective payment system 
are paid for the photocopying costs that are directly attributable to 
the providers' responsibility to the QIOs to provide photocopies of 
requested provider records. The payment is in addition to payment 
already provided for these costs under other provisions of the Social 
Security Act and is based on a fixed amount per page as determined by 
CMS as follows:
* * * * *
    (4) CMS will periodically review the photocopy reimbursement rate 
to ensure that it still accurately reflects provider costs. CMS will 
publish any changes to the rate in a Federal Register notice.
    (d) Appeals. Reimbursement for the costs of photocopying and 
mailing records for QIO review is an additional payment to providers 
under the prospective payment system, as specified in Sec.  412.115, 
Sec.  413.355, and Sec.  484.265 of this chapter. Thus, appeals 
concerning these costs are subject to the review process specified in 
part 405, subpart R of this chapter.

PART 484--HOME HEALTH SERVICES

Subpart E--Prospective Payment System for Home Health Agencies

0
1. The authority citation for part 484 continues to read as follows:

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


0
2. Add a new Sec.  484.265 to read as follows:


Sec.  484.265  Additional payment.

    QIO photocopy and mailing costs. An additional payment is made to a 
home health agency in accordance with Sec.  476.78 of this chapter for 
the costs of photocopying and mailing medical records requested by a 
QIO.

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

    Dated: May 23, 2003.
Thomas A. Scully,
Administrator, Center for Medicare & Medicaid Services.

    Approved: August 28, 2003.
Tommy G. Thompson,
Secretary.
[FR Doc. 03-30096 Filed 11-28-03; 11:32 am]
BILLING CODE 4120-01-P