[Federal Register Volume 69, Number 227 (Friday, November 26, 2004)]
[Notices]
[Pages 68931-68935]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-25830]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-2202-FN]


Medicare and Medicaid Programs; Approval of Application for 
Deeming Authority for Ambulatory Surgical Centers by the American 
Association for Accreditation of Ambulatory Surgery Facilities, Inc.

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

ACTION: Final notice.

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SUMMARY: This final notice announces the approval of an application 
from the American Association for Accreditation of Ambulatory Surgery 
Facilities, Inc., (AAAASF) for continued recognition as a national 
accrediting organization for ambulatory surgical centers (ASCs) that 
request participation in the Medicare or

[[Page 68932]]

Medicaid programs. Following an evaluation of the organizational and 
programmatic capabilities of AAAASF, we determined that AAAASF's 
standards for ASCs meet or exceed the Medicare conditions for coverage. 
Therefore, ASCs accredited by AAAASF under the CMS-approved program 
will be deemed to have met the conditions for coverage under the 
Medicare program.

EFFECTIVE DATE: This final notice is effective November 26, 2004 
through November 26, 2009.

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

SUPPLEMENTARY INFORMATION:

I. Background

A. Statutory Provisions and Regulations

    Under the Medicare program, eligible beneficiaries may receive 
covered services in an ambulatory surgical center (ASC), provided that 
the ASC meets certain requirements. Section 1832(a)(2)(F)(i) of the 
Social Security Act (the Act) authorizes the Secretary to establish 
distinct criteria for a facility seeking designation as an ASC. Under 
this authority, the Secretary has set forth in regulations minimum 
requirements that an ASC must meet to participate in Medicare. The 
regulations at 42 CFR part 416 (Ambulatory Surgical Services) specify 
the conditions under which Medicare makes payments for covered services 
provided by an ASC. Applicable regulations concerning provider 
agreements are at part 489 (Provider Agreements and Supplier Approval) 
and those pertaining to facility survey and certification are at part 
488 (Survey Certification and Enforcement Procedures), subparts A 
(General Provisions) and B (Special Requirements).

B. Verifying Medicare Conditions for Coverage (CfC)

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

II. Deeming Application Approval Process

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

III. Provisions of the Proposed Notice

    On July 23, 2004, we published a proposed notice (69 FR 44027) in 
the Federal Register that announced the American Association for 
Accreditation of Ambulatory Surgery Facilities, Inc.'s (AAAASF's) 
request for approval as a deeming organization for ASCs. In that 
notice, we detailed our evaluation criteria. Under section 1865(b)(2) 
of the Act and regulations at Sec.  488.4, we conducted a review of 
AAAASF's application in accordance with the criteria specified by our 
regulations, which include, but are not limited to the following:
     An onsite administrative review of AAAASF's (1) corporate 
policies; (2) financial and human resources available to accomplish the 
proposed surveys; (3) procedures for training, monitoring, and 
evaluation of its surveyors; (4) ability to investigate and respond 
appropriately to complaints against accredited facilities; and (5) 
survey review and decision-making process for accreditation.
     A comparison of AAAASF's ASC accreditation standards to 
our current Medicare conditions for coverage.
     A documentation review of AAAASF's survey processes to:

--Determine the composition of the survey team, surveyor 
qualifications, and the ability of AAAASF to provide continuing 
surveyor training.
--Compare AAAASF's processes to those of State survey agencies, 
including survey frequency, and the ability to investigate and respond 
appropriately to complaints against accredited facilities.
--Evaluate AAAASF's procedures for monitoring providers or suppliers 
found to be out of compliance with AAAASF program requirements. The 
monitoring procedures are used only when the AAAASF identifies 
noncompliance. If noncompliance is identified through validation 
reviews, the survey agency monitors corrections as specified at Sec.  
488.7(d).
--Assess AAAASF's ability to report deficiencies to the surveyed 
facilities and respond to the facility's plan of correction in a timely 
manner.
--Establish AAAASF's ability to provide us with electronic data in 
ASCII-comparable code and reports necessary for effective validation 
and assessment of AAAASF's survey process.
--Determine the adequacy of staff and other resources.
--Review AAAASF's ability to provide adequate funding for performing 
required surveys.
--Confirm AAAASF's policies with respect to whether surveys are 
announced or unannounced.
--Obtain AAAASF's agreement to provide us with a copy of the most 
current accreditation survey together with any other information 
related to the survey that we may require, including corrective action 
plans.

    In accordance with section 1865(b)(3)(A) of the Act, the proposed 
notice also solicited public comments regarding whether AAAASF's 
requirements met or exceeded the Medicare conditions for coverage for 
ASCs.
    We did not receive public comments regarding AAAASF's renewal 
application as a national accrediting organization for ASCs.

IV. Provisions of the Final Notice

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

    On March 18, 2004, we sent a letter to AAAASF stating that 
``AAAASF's new and revised standards meet or exceed the Medicare CfCs 
for ASCs and therefore has approved the revisions forwarded to CMS on 
March 3, 2004.'' We sent this letter in response to AAAASF's September 
2003 submission of new and revised standards. Although, we approved the 
new and revised standards on March 18, 2004, AAAASF indicated in a 
letter dated June 10, 2004 that ``it will not implement its new 
standards until October 1, 2004 and that the approved Medicare 
standards will be printed prior to August 1, 2004 and will be sent to 
all new applicants after that date.'' Since AAAASF's implementation of 
its new and revised standards occurred during the review of its renewal 
application, we are including in this final notice AAAASF's

[[Page 68933]]

comments and responses to our review of its crosswalk ``Comparison of 
New AAAASF Standards and CMS Standards.'' The purpose of this review 
was to ensure that AAAASF's standards met or exceeded the Medicare CfCs 
for ASCs. The review yielded the following:
     In order to meet the requirements of Sec.  416.41, AAAASF 
added to its standard that the governing body is legally responsible 
for the safe and effective operation of the ASCs.
     We requested AAAASF to clarify its standard AAAASF number 
4.020.11.0, regarding its criteria for patient discharge. In addition, 
we recommended that AAAASF strike its reference to Post Anesthesia Care 
Unit (PACU) and insert ASC. AAAASF responded and revised its standards 
by requiring the physician to examine the patient immediately before 
discharge from the ASC. Lastly, AAAASF adopted our recommendation and 
removed PACU from its standards and inserted ASC.
     In order to meet the requirements of Sec.  416.42(c), we 
recommended that AAAASF revise its standard, AAAASF standard 
8.001.08.0, by requiring the ASCs to provide not only the patient's 
legally responsible representative with post-operative instructions 
before discharge, but also the actual patient himself or herself with 
post-operative instructions before discharge. AAAASF adopted our 
recommendation by revising its standard, which now requires adequate 
written post-operative instructions (including procedures in emergency 
situations) to be given to the patient and, if applicable, the adult 
responsible for the patient's care before discharge.
     AAAASF standard 10.002.01.0 indicated that the facility 
must display ``a professional look.'' We requested that AAAASF provide 
a definition/clarification of ``a professional look'' to ensure that 
its standard was in accordance with Sec.  416.44. As referenced in 
Comparison of New AAAASF Standards and CMS Standards, AAAASF defines a 
professional look as ``the facility being properly constructed, 
equipped, and maintained to protect the health and safety of 
patients.''
     In order to meet the requirements of Sec.  416.44(a)(2), 
we recommended that AAAASF revise its standard 3.032.02.0, by requiring 
the ASC to have a separate recovery and waiting area. AAAASF revised 
its standard by requiring ASCs' recovery rooms in its Medicare ASCs to 
be distinctly separate and segregated from the waiting area.
     We asked AAAASF to revise its standard 9.002.00.1, to 
comply with Sec.  416.44(c)(1), by requiring its operating rooms (ORs) 
to have an emergency call system present in the OR. AAAASF revised its 
standards accordingly.
     To comply with Sec.  416.44(c)(4), AAAASF revised its 
standard 9.002.00.4, by requiring its facilities to use standard 
cardiac defibrillators versus an automated external defibrillators.
     We asked AAAASF to revise its standard 9.002.00.9, which 
did not state that emergency medication must be readily available in 
the OR. The AAAASF standard failed to meet the requirements set forth 
in Sec.  416.44(c)(9). AAAASF adopted our recommendation.
     AAAASF standard 7.004.09.0 failed to meet our standard 
Sec.  416.44(d), by not specifying who was responsible for the use of 
cardiopulmonary resuscitation equipment in the ASC. AAAASF revised its 
standard by requiring a physician, Certified Registered Nurse 
Anesthetist (CRNA) or registered nurse (RN) with Advanced Cardiac Life 
Support certification or who is otherwise qualified in resuscitation to 
be immediately available in the facility until all patients have been 
discharged from the ASC.
     AAAASF standard 11.000.05.4 failed to reference granting 
privileges in accordance with recommendations from qualified medical 
personnel, as referenced at Sec.  416.45(a). AAAASF revised its 
standard accordingly.
     We requested that AAAASF revise its standard 11.000.01.2, 
which failed to state that medical staff would be accountable to the 
governing body. AAAASF revised it standard in accordance with our 
regulations at Sec.  416.45.
     AAAASF standard 4.001.01 did not require medical records 
to be complete and comprehensive in accordance with Sec.  416.47. 
AAAASF revised its standard by requiring medical records to be 
accurate, legible, documented, complete, comprehensive, and filed in a 
timely manner to ensure adequate patient care.
     In order to meet the requirements of Sec.  416.47(b)(4), 
we recommended that AAAASF insert the phrase ``except those exempted by 
the governing body'', in its standard 4.020.05.0. AAAASF adopted our 
recommendation. The standard now is identical to Sec.  416.74(b)(4).
     In order to meet the requirements of Sec.  416.47(b)(5), 
we recommended that AAAASF revise its standard 4.003.01.3, by requiring 
the medical record to include documentation of patient drug reactions. 
AAAASF adopted our recommendation.
     In accordance with Sec.  416.47(b)(8), AAAASF revised its 
standard 8.000.04.0, to require the physician to include the discharge 
diagnosis in the patient's medical record.
     In accordance with Sec.  416.48(a), AAAASF revised its 
standard 8.001.06.0, to require a physician or RN to administer drugs 
to patients.
    In addition to conducting a review of AAAASF's standards, we 
reviewed the materials contained in ``AAAASF Medicare Resource Guide,'' 
``AAAASF's Policy and Procedures Manual,'' and AAAASF's ``Introductory 
Letter and Informational Packet.'' We compared this information with 
our State and Regional Operations Manual. This review yielded the 
following:
     We asked AAAASF to clarify the name of its Medicare 
Program for ASCs, as the organization used the title ``Medicare 
Accreditation and Medicare Certification'' interchangeably throughout 
its application materials. AAAASF advised us that the name of its 
program is ``AAAASF Medicare Accreditation.'' This program accredits 
Class B and Class C ASCs.
     We requested AAAASF to provide a definition or criteria 
for Class B and Class C facilities. According to AAAASF, a Class B 
facility performs surgical procedures in the facility under local or 
topical anesthesia and/or under intravenous or parenteral sedation, 
regional anesthesia, analgesia or dissociative drugs (excluding 
Propofol) without the use of endotracheal or laryngeal mask intubation, 
or inhalation general anesthesia (including nitrous oxide). In 
addition, the Class B facility must meet every standard under AAAASF's 
Class A facility requirements. AAAASF defines Class C facilities as 
facilities meeting the requirements under Class A and Class B. In 
addition, Class C facilities perform surgical procedures with 
intravenous Propofol, spinal or epidural anesthesia, endotracheal or 
laryngeal mask intubation or inhalation anesthesia (including nitrous 
oxide), spinal or epidural, which is administered by an 
anesthesiologist or a certified registered nurse anesthetist (CRNA).
     We requested AAAASF to clarify its accreditation 
decisions, as its policies and procedures indicate that, ``Offices can 
be approved or not approved for accreditation or they can be placed on 
provisional status.'' AAAASF responded that Class B and Class C 
facilities are either granted or denied Medicare Accreditation. These 
facilities are required to fully comply with AAAASF's Medicare 
standards and are prohibited from receiving provisional status.
     We requested AAAASF to provide clarification regarding its 
accreditation

[[Page 68934]]

cycle and its self-evaluation process. AAAASF responded that its 
Medicare accreditation is effective for 3 years (assuming that the 
facility remains in compliance with all AAAASF requirements for 
continued Medicare accreditation, which includes completion of a second 
and third year self-evaluation). The second and third year self-
evaluation survey is conducted by the Facility Director and/or 
Registered Nurse (OR manager) annually to ensure continued compliance 
with all AAAASF requirements. AAAASF processes the evaluation and the 
facility is notified of any deficiencies. If the facility has any 
deficiencies, it is required to correct them within 30 days. AAAASF 
performs an onsite Medicare inspection at every consecutive 3-year 
cycle.
     We asked AAAASF to state who is responsible for performing 
the Life Safety Code (LSC) survey for its Medicare ASCs. It responded 
that it has contracted with Fire and Life Safety Concepts, L.L.C. to 
conduct its unannounced LSC surveys. In addition, AAAASF clarified that 
it is not requiring its Medicare ASCs to obtain their own LSC 
inspections from a state fire marshal or hired qualified inspector to 
qualify for Medicare accreditation.
     AAAASF submitted documentation stating that ``The Life 
Safety Code inspection is only performed during re-inspection if we 
require compliance with a new version of the NFPA Life Safety Code.'' 
We requested AAAASF to revise this statement, because a LSC survey is 
always required during re-accreditation by a deemed accreditation 
organization. In addition, we requested AAAASF to require its 
facilities to comply with the 2000 edition of the LSC. AAAASF responded 
that it will require its Medicare ASCs to obtain LSC surveys at the 
time of initial application, application renewal, or in instances which 
warrant a complaint survey involving physical environment. AAAASF 
provided us with copies of documentation that it sent to its Medicare 
ASCs, dated August 25, 2003, advising its facilities that effective 
September 11, 2003, all AAAASF Medicare approved ASCs are required to 
meet the NFPA 2000 LSC.
     We requested AAAASF to develop a comprehensive performance 
evaluation program for its Medicare inspectors. AAAASF responded by 
implementing a Medicare Inspector Examination Process. At the 
conclusion of each Medicare Inspector Training Workshop, an examination 
will be administered to assess the inspectors' knowledge and 
application of AAAASF's Medicare standards. In addition, we requested 
that the AAAASF inspectors accompany a field preceptor for an onsite 
Medicare facility inspection as part of the inspector training process. 
The field preceptor would complete a competency evaluation to assess 
the inspector's knowledge of AAAASF's survey process. Lastly, AAAASF 
now requires all of its Medicare ASCs to complete a facility evaluation 
form. It is a questionnaire completed by the surveyed facility and is 
designed to evaluate the inspector's skills and knowledge as it relates 
to the application of AAAASF standards, the inspection process, and 
Medicare requirements. AAAASF states that these tools will facilitate 
the proper evaluation of its Medicare inspectors' ability to apply 
AAAASF standards and survey processes, and will allow AAAASF to 
identify training needs for its inspectors.
     We asked AAAASF to develop policies and procedures for 
monitoring complaints in its Medicare ASCs. AAAASF has a toll-free 
hotline that patients, patient family members, or guardians may use to 
advise AAAASF of any complaints they may have regarding its Medicare 
ASCs. Each Medicare ASC is required to post AAAASF complaint 
certificate in its facility. This certificate provides the contact 
information individuals need to advise AAAASF of any comments or 
questions regarding services provided at the facility. The AAAASF 
Investigative Committee reviews all complaints. AAAASF's complaint 
categories are ``patient death,'' ``patient safety,'' and ``clinical 
practices.'' AAAASF's complaint surveys are always unannounced. The 
AAAASF Medicare survey team is responsible for conducting the complaint 
surveys in accordance with AAAASF's Medicare standards and with 
specific direction from the Investigative Committee chair. The survey 
team must investigate complaints involving patient death no later than 
20 days after notifying the AAAASF office of the death. This allows the 
facility 10 days to respond to the request for information and allows 
AAAASF a maximum of 10 days to schedule the mandatory unannounced 
inspection. However, when investigating complaints involving patient 
safety or clinical practices, the survey team must complete its survey 
within 30 days after receipt of the initial complaint. This allows the 
facility 10 days to respond to the request for information and allows 
AAAASF a maximum of 20 days to schedule the mandatory unannounced 
inspection. The Investigative Committee Chair is responsible for 
advising the complainant of the result of AAAASF's investigation. The 
investigated facility will receive an outcome letter and a written 
investigation report. When applicable, the outcome letter will identify 
possible follow-up action (for instance, probation, suspension, or 
revocation of Medicare accreditation, follow-up visit, plan of 
correction, or no further action). Lastly, the outcome letter advises 
the facility of its rights to request a hearing in response to AAAASF's 
recommendations.
     We asked AAAASF to present documentation regarding its 
retention of facility files. AAAASF responded by submitting its 
policies and procedures for Record Retention and Maintenance. The 
policies and procedures state that facility records are maintained in 
both hard copy and database format. The hard copy file includes initial 
accreditation application records, surgeon credentials, Medicare 
accreditation onsite evaluations/outcomes and correspondence. AAAASF 
indicated that it purges its records periodically, however, and 
maintains the last 3 years' records for the facility including current 
credentials, correspondence, and evaluations.
     We asked AAAASF to clarify its procedures for scheduling 
Medicare accreditation surveys. AAAASF responded by submitting its 
policy, ``Procedure for Securing a Medicare Inspector.''

B. Term of Approval

    Based on the review and observations described in section III of 
this final notice, we determined that AAAASF's requirements for ASCs 
meet or exceed our requirements. Therefore, we recognize AAAASF as a 
national accreditation organization for ASCs that request participation 
in the Medicare program, effective November 26, 2004 through November 
26, 2009.

V. Regulatory Impact Statement

    We have examined the impact of this notice as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (September 19, 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 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

[[Page 68935]]

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 final notice recognizes AAAASF as 
a national accreditation organization for ASCs that request 
participation in the Medicare and Medicaid programs. There are neither 
significant costs nor savings for the program and administrative 
budgets of Medicare. Therefore, this notice is not a major rule as 
defined in Title 5, United States Code, section 804(2) and is not an 
economically significant rule under Executive Order 12866.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and Government agencies. 
Most hospitals and most other providers and suppliers are small 
entities, either by nonprofit status or by having revenues of $6 
million to $29 million in any 1 year. Individuals and States are not 
included in the definition of a small entity. For purposes of the RFA, 
States and individuals are not considered small entities. We are not 
preparing an analysis for the RFA because we have determined that this 
notice will not have a significant economic impact on a substantial 
number of small entities.
    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. We are not preparing an 
analysis for section 1102(b) of the Act because we have determined that 
this notice will not have a significant impact on the operations of a 
substantial number of small rural hospitals.
    In an effort to better assure the health, safety, and services of 
beneficiaries in ASCs already certified as well as provide relief to 
State budgets in this time of tight fiscal restraints, we deem ASCs 
accredited by AAAASF as meeting its Medicare requirements. Thus, we 
continue our focus on assuring the health and safety of services by 
providers and suppliers already certified for participation in a cost-
effective manner.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditure in any 1 year by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $110 million. This notice 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. Since this notice does not impose any costs on State or 
local governments, the requirements of E.O. 13132 are not applicable.
    In accordance with the provisions of Executive Order 12866, this 
notice was not reviewed by the Office of Management and Budget.

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

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

    Dated: October 22, 2004.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 04-25830 Filed 11-19-04; 8:45 am]
BILLING CODE 4120-01-P