[Federal Register Volume 71, Number 208 (Friday, October 27, 2006)]
[Notices]
[Pages 63019-63021]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-18044]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-4126-PN]


Medicare and Medicaid Programs; Reapproval of Deeming Authority 
of the Accreditation Association for Ambulatory Health Care, Inc. for 
Medicare Advantage Health Maintenance Organizations and Local Preferred 
Provider Organizations

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

ACTION: Proposed notice.

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SUMMARY: This notice announces our proposal to reapprove Medicare 
Advantage Deeming Authority of the Accreditation Association for 
Ambulatory Health Care, Inc. for health maintenance organizations and 
local preferred provider organizations for a term of 6 years. This new 
term of approval begins July 12, 2006, and ends July 11, 2012. This 
notice also announces a 30-day period for public comments on renewal of 
the application.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on November 27, 
2006.

ADDRESSES: In commenting, please refer to file code CMS-4126-PN. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of three ways (no duplicates, 
please):
    1. Electronically. You may submit electronic comments on specific 
issues in this regulation to http://www.cms.hhs.gov/regulations/ecomments. (Attachments should be in Microsoft Word, WordPerfect, or 
Excel; however, we prefer Microsoft Word.)
    2. By mail. You may mail written comments (one original and two 
copies) to the following address ONLY: Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Attention: CMS-4126-
PN, P.O. Box 8017, Baltimore, MD 21244-8017.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments (one original and two copies) before the 
close of the comment period to one of the following addresses. If you 
intend to deliver your comments to the Baltimore address, please call 
telephone number (410) 786-9994 in advance to schedule your arrival 
with one of our staff members. Room 445-G, Hubert H. Humphrey Building, 
200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    (Because access to the interior of the HHH Building is not readily 
available to persons without Federal Government identification, 
commenters are encouraged to leave their comments in the CMS drop slots 
located in the main lobby of the building. A stamp-in clock is 
available for persons wishing to retain a proof of filing by stamping 
in and retaining an extra copy of the comments being filed.)
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.

FOR FURTHER INFORMATION CONTACT: Shaheen Halim, (410) 786-0641.

SUPPLEMENTARY INFORMATION: 

[[Page 63020]]

I. Background

    Under the Medicare program, eligible beneficiaries may receive 
covered services through a managed care organization (MCO) that has a 
Medicare Advantage (MA) (formerly, Medicare+Choice) contract with the 
Centers for Medicare & Medicaid Services (CMS). The regulations 
specifying the Medicare requirements that must be met in order for an 
MCO to enter into an MA contract with CMS are located at 42 CFR part 
422. These regulations implement Part C of Title XVIII of the Social 
Security Act (the Act), which specifies the services that an MCO must 
provide and the requirements that the organization must meet to be an 
MA contractor. Other relevant sections of the Act are Parts A and B of 
Title XVIII and Part A of Title XI pertaining to the provision of 
services by Medicare certified providers and suppliers. Generally, for 
an MCO to be an MA organization, the MCO must be licensed by the State 
as a risk bearing organization as set forth in part 422 of our 
regulations. Additionally, the MCO must file an application 
demonstrating that it meets other Medicare requirements in part 422 of 
our regulations.
    Following approval of the MA contract, we engage in routine 
monitoring and oversight audits of the MA organization to ensure 
continuing compliance. The monitoring and oversight audit process is 
comprehensive and uses a written protocol that itemizes the Medicare 
requirements the MA organization must meet. As an alternative for 
meeting some Medicare requirements, an MA organization may be exempt 
from CMS monitoring of certain requirements in subsets listed in 
section 1852(e)(4)(B) of the Social Security Act (the Act) as a result 
of an MA organization's accreditation by a CMS-approved accrediting 
organization (AO). In essence, the Secretary ``deems'' that the 
Medicare requirements are met based on a determination that the AO's 
standards are at least as stringent as Medicare requirements. 
Therefore, MA organizations that are licensed as health maintenance 
organizations (HMOs) or preferred provider organizations (PPOs) and are 
accredited by an approved accrediting organization may receive, at 
their request, deemed status for the MA requirements in the following 
six areas: Quality Improvement, Information on Advance Directives, 
Antidiscrimination, Confidentiality and Accuracy of Enrollee Records, 
Access to Services, and Provider Participation Rules. At this time, 
Deeming does not include the Part D areas of review listed in Sec.  
422.156(b).
    Organizations that apply for MA deeming authority are generally 
recognized by the industry as entities that accredit MCOs that are 
licensed as an HMO or a PPO. As we specify at Sec.  422.157(b)(2) of 
our regulations, the term for which an AO may be approved by CMS may 
not exceed 6 years. For continuing approval, the AO must re-apply to 
CMS.
    Accreditation Association for Ambulatory Health Care, Inc. (AAAHC) 
was approved as an authorized AO for Medicare Advantage deeming on June 
15, 2002. AAAHC was granted a term of approval of 4 years beginning 
June 15, 2002, and ending on June 14, 2006. On June 13, 2006, we issued 
a letter to AAAHC with instructions regarding application for a renewal 
of term. On June 14, 2006, AAAHC submitted a letter of intent to renew 
its MA deeming authority, and subsequently submitted all materials 
requested by CMS for a complete renewal application. The materials 
requested by CMS included updates and/or changes to items listed in 
Federal regulations at 42 CFR 422.158(a) that are prerequisites for 
receiving deeming program approval by CMS, and which were furnished to 
CMS by AAAHC as part of its initial application for deeming authority 
in 2002.

II. Deeming Applications Approval Process

    Section 1852(e)(4)(C) of the Act provides a statutory timetable to 
ensure that our review of deeming applications is conducted in a timely 
manner. The Act provides us with 210 calendar days after the date of 
receipt of an application to complete our survey activities and 
application review process. At the end of the 210-day period, we must 
publish an approval or denial of the application in the Federal 
Register.

III. Deeming Approval Review and Evaluation

    As set forth in section 1852(e)(4) of the Act and our regulations 
at Sec.  422.158, the review and evaluation of the AAAHC's 
accreditation program (including its standards and monitoring protocol) 
were compared to the requirements set forth in part 422 for the MA 
program.

A. Components of the Review Process

    The review of AAAHC's application for approval of MA deeming 
authority included the following components:
1. Desk-Top Review
    We conducted a desk-top review of updated materials regarding 
AAAHC's managed care accreditation program, including--
     A description of AAAHC's survey process for managed care 
plans, including the frequency of surveys performed, whether the 
surveys are announced or unannounced, surveyor instructions, the review 
and accreditation status decision-making process, procedures used to 
notify accredited MA organizations of deficiencies and monitoring of 
the correction of deficiencies, and the procedures used to enforce 
compliance with accreditation requirements;
     Information about the individuals who perform network 
accreditation reviews, including the size and composition of the survey 
team, the methods of compensation, the education and experience 
requirements, the content and frequency of the in-service training, the 
evaluation system used to monitor performance, and conflict of interest 
requirements governing AAAHC staff and surveyors;
     A description of the data management and analysis system, 
the types (full, partial, or denial) and categories (provisional, 
conditional, temporary) of accreditation offered by AAAHC, the duration 
of each category of accreditation, and a statement identifying the 
types and categories that would serve as a basis for accreditation, if 
we grant AAAHC organization deeming authority;
     The procedures used to respond to and investigate 
complaints or identify other problems with accredited organizations, 
including coordination of these activities with licensing bodies and 
ombudsmen programs;
     A description of how AAAHC provides accreditation 
information to the general public;
     The policies and procedures for (1) withholding, denying 
and removing accreditation status, and the other actions AAAHC may take 
in response to noncompliance with their standards and requirements, and 
(2) how AAAHC treats accreditation of organizations that are acquired 
by another organization, have merged with another organization, or that 
undergo a change of ownership or management;
     Lists of all AAAHC-accredited MA organizations, managed 
care plans surveyed by AAAHC in the past 3 years, and managed care 
plans that were scheduled to be surveyed by AAAHC within 3 months of 
submitting their application.

[[Page 63021]]

2. Assessment of AAAHC's Standards and Methods of Evaluation
    As part of the application for renewal of term, AAAHC submitted a 
crosswalk that compared its standards and methods of evaluations with 
corresponding MA audit requirements in six areas: Quality Improvement, 
Access to Services, Antidiscrimination, Information on Advance 
Directives, Provider Participation Rules, and Confidentiality and 
Accuracy of Enrollee Records.
3. Past Performance and Results of Deeming Validation Review (Look-
behind Audit)
    We also considered AAAHC's past performance in the deeming program 
and results of recent deeming validation reviews, or look-behind audits 
conducted as part of continuing Federal oversight of the deeming 
program under Sec.  422.157(d).

B. Results of the Review Process

    Using the information listed in section III.A. of this notice, we 
determined that AAAHC's current accreditation program for managed care 
plans continues to be at least as stringent as the MA requirements 
contained in the six categories set forth in section 1852(e)(4)(C) of 
the Act and our methods of evaluation for those areas.

IV. Term of Approval

    Based on the review and observations described in section III of 
this proposed notice, we have determined that AAAHC's requirements for 
HMOs and local PPOs continue to meet or exceed our requirements. 
Therefore, we are proposing to recognize AAAHC as a national 
accreditation organization for HMOs and PPOs that request participation 
in the Medicare program. As a result, we are proposing to approve 
AAAHC's deeming program effective July 12, 2006 through July 11, 2012.

V. Regulatory Impact Statement

    We have examined the impact of this notice as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review) and the 
Regulatory Flexibility Act (RFA) September 19, 1980 (Pub. L. 96-354).
    Executive Order 12866 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 major rules with economically 
significant effects ($100 million or more in any 1 year). This notice 
would not reach the economic threshold and thus is not considered a 
major rule.
    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 in any 1 year. Individuals and States are not 
included in the definition of a small entity. We are not preparing an 
analysis for the RFA because we have determined that this notice would 
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 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds. We are not preparing an 
analysis for section 1102(b) of the Act because we have determined that 
this notice would not have a significant impact on the operations of a 
substantial number of small rural hospitals.
    This notice merely recognizes AAAHC as a national accreditation 
organization that has approval for deeming authority for HMOs or PPOs 
that are participating in the MA program.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. That threshold 
level is currently approximately $120 million. This notice would have 
no consequential effect on State, local, or tribal governments or on 
the private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. Since this notice would 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: Secs. 1851 and 1855 of the Social Security Act (42 
U.S.C. 1395w-21 and 42 U.S.C. 1395w-25).

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

    Dated: October 20, 2006.
Leslie V. Norwalk,
Acting Administrator, Centers for Medicare & Medicaid Services.
 [FR Doc. E6-18044 Filed 10-26-06; 8:45 am]
BILLING CODE 4120-01-P