[Federal Register Volume 71, Number 227 (Monday, November 27, 2006)]
[Rules and Regulations]
[Pages 68708-68725]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-20131]



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Part IV





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 405, 412, 422, and 489



Medicare Program; Notification of Hospital Discharge Appeal Rights; 
Final Rule

  Federal Register / Vol. 71, No. 227 / Monday, November 27, 2006 / 
Rules and Regulations  

[[Page 68708]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 412, 422, 489

[CMS-4105-F]
RIN 0938-AO41


Medicare Program; Notification of Hospital Discharge Appeal 
Rights

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

ACTION: Final rule.

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SUMMARY: This final rule sets forth requirements for how hospitals must 
notify Medicare beneficiaries who are hospital inpatients about their 
hospital discharge rights. Notice is required both for original 
Medicare beneficiaries and for beneficiaries enrolled in Medicare 
Advantage (MA) plans and other Medicare health plans subject to the MA 
regulations. (For purposes of this preamble, these entities will 
collectively be known as ``Medicare health plans''). Hospitals will use 
a revised version of the Important Message from Medicare (IM), an 
existing statutorily required notice, to explain the discharge rights. 
Hospitals must issue the IM within 2 days of admission, and must obtain 
the signature of the beneficiary or his or her representative. 
Hospitals will also deliver a copy of the signed notice prior to 
discharge, but not more than 2 days before the discharge. For 
beneficiaries who request an appeal, the hospital will deliver a more 
detailed notice.

EFFECTIVE DATE: These regulations are effective on July 1, 2007.

FOR FURTHER INFORMATION CONTACT:

Eileen Zerhusen, (410) 786-7803, (For issues related to Original 
Medicare).
Tim Roe, (410) 786-2006, (For issues related to Medicare Advantage).

SUPPLEMENTARY INFORMATION: 

I. Background

    In recent years, we have published several rules regarding hospital 
discharge notice policy, as well as rules regarding required notices in 
other provider settings when Medicare services are terminated. (See our 
proposed rule published April 5, 2006 in the Federal Register (71 FR 
17052) for a description of these rules.) In accordance with section 
1866 of the Social Security Act (the Act), hospitals currently must 
deliver, at or about the time of admission, the ``Important Message 
from Medicare'' (IM) to all hospital inpatients with Medicare to 
explain their rights as a hospital patient, including their appeal 
rights at discharge. In addition, a hospital must provide a Hospital-
Issued Notice of Noncoverage (HINN) to any beneficiary in original 
Medicare that expresses dissatisfaction with an impending hospital 
discharge. Similarly, Medicare health plans are required to provide 
enrollees with a notice of noncoverage, known as the Notice of 
Discharge and Medicare Appeal Rights (NODMAR), when an enrollee 
disagrees with the discharge decision (or when the individual is not 
being discharged, but the Medicare health plan no longer intends to 
cover the inpatient stay). See section III of this preamble for more 
information about the HINN and NODMAR, under ``Existing Notices.''
    On April 5, 2006, CMS published a proposed rule in the Federal 
Register (71 FR 17052) proposing revised discharge notice requirements 
for hospital inpatients who have Medicare. The provisions of that 
proposed rule, the related public comments and our responses, and the 
final regulations in this regard are set forth below.

Requirements for Issuance of Regulations

    Section 902 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) amended section 1871(a) of the Act and 
requires the Secretary, in consultation with the Director of the Office 
of Management and Budget, to establish and publish timelines for the 
publication of Medicare final regulations based on the previous 
publication of a Medicare proposed or interim final regulation. Section 
902 of the MMA also states that the timelines for these regulations may 
vary but shall not exceed 3 years after publication of the preceding 
proposed or interim final regulation except under exceptional 
circumstances.
    This final rule responds to comments on the April 5, 2006 proposed 
rule. In addition, this final rule has been published within the 3-year 
time limit imposed by section 902 of the MMA. Therefore, we believe 
that the final rule is in accordance with the Congress's intent to 
ensure timely publication of final regulations.

II. Provisions of the Proposed Regulations

    As noted above, on April 5, 2006, we published a proposed rule 
regarding hospital discharge notice requirements under both the 
original Medicare and the Medicare Advantage program. The proposed rule 
set forth a two-step notice process for hospital discharges similar to 
the process in effect for Medicare service terminations in home health 
agencies (HHAs), skilled nursing facilities (SNFs), swing beds, 
comprehensive outpatient rehabilitation facilities (CORFs), and 
hospices. In general, we proposed to require hospitals to deliver, 
prior to discharge, a standardized, largely generic notice of non-
coverage to each Medicare beneficiary whose physician concurs with the 
discharge decision. Hospitals or Medicare health plans, as applicable, 
would also deliver a more detailed discharge notice to beneficiaries 
who exercised their right to appeal the discharge. The specific details 
of the proposal are set forth below.

Proposed Sec.  405.1205

    We proposed to add a new Sec.  405.1205, to require hospitals to 
deliver a standardized, largely generic discharge notice to original 
Medicare beneficiaries.
    We proposed in Sec.  405.1205 that hospitals would be required to 
deliver a standardized notice of non-coverage to beneficiaries on the 
day before the planned discharge from an inpatient hospital stay. The 
notice would include: (1) The date that coverage of inpatient hospital 
services ends; (2) the beneficiary's right to request an expedited 
determination including a description of the expedited determination 
process as specified in Sec.  405.1206, and the availability of other 
appeal procedures if the beneficiary fails to meet the deadline for an 
expedited determination; (3) the beneficiary's right to receive more 
information as provided in Sec.  405.1206(e); (4) the date that 
financial liability for continued services begins; and (5) any other 
information required by CMS.

Proposed Sec.  405.1206

    We proposed to replace existing Sec.  405.1206 with a new provision 
similar to the notice requirement associated with the expedited review 
process for home health, hospice, skilled nursing, swing bed, and CORF 
settings set forth in Sec.  405.1202. Proposed section 405.1206 set 
forth the responsibilities of the hospitals, Quality Improvement 
Organizations (QIOs), and beneficiaries relative to the expedited 
determination process. Most notably, we proposed in Sec.  405.1206 that 
hospitals would be required to deliver a detailed notice to 
beneficiaries if beneficiaries exercise their right to request an 
expedited determination. The hospital would be required to deliver the 
detailed notice by the close of business of the day of the QIO's 
notification of the beneficiary's request for an expedited 
determination.

[[Page 68709]]

    The detailed notice would include: (1) A detailed explanation why 
services are either no longer reasonable and necessary or are otherwise 
no longer covered; (2) a description of any applicable Medicare 
coverage rule, instruction, or other Medicare policy, including 
citations to the applicable Medicare policy rules or information about 
how the beneficiary may obtain a copy of the Medicare policy; (3) facts 
specific to the beneficiary and relevant to the coverage determination 
that are sufficient to advise the beneficiary of the applicability of 
the coverage rule or policy to the beneficiary's case; and (4) any 
other information required by CMS.

Proposed Sec.  422.620 and Sec.  422.622

    In these two sections, we proposed to replace the existing NODMAR 
notice and review regulations for Medicare health plan enrollees with 
notice requirements that largely parallel those proposed for 
beneficiaries in original Medicare. That is, proposed Sec.  422.620 
would require the hospitals to deliver the standardized, largely 
generic notice to all enrollees who are hospital inpatients, on the day 
before a planned discharge. The content of the notice would be 
essentially the same as under original Medicare. Similarly, Sec.  
422.622 would require the Medicare health plan to deliver a detailed 
notice to those enrollees who request an immediate QIO review of the 
discharge decision. Again, the timing and content requirements 
paralleled those in proposed Sec.  405.1206.
    Section 422.622 also specified the procedural responsibilities of 
Medicare health plans, hospitals, and QIOs as well as any possible 
liability for hospitals and Medicare health plans during the immediate 
QIO review process.

Conforming Changes Proposed to Sec.  489.27 and Sec.  412.42

    Finally, we proposed to make conforming changes to two related 
existing regulatory provisions. First, we proposed to amend the 
provider agreement requirements in Sec.  489.27(b) to cross-reference 
the proposed notice requirements. Thus, proposed Sec.  489.27(b) would 
specify that delivery of the hospital discharge notices consistent with 
proposed Sec.  405.1205 and Sec.  422.620 is required as part of the 
Medicare provider agreement. The other conforming change would affect 
Sec.  412.42(c), which involves limitations on charges to beneficiaries 
in hospitals operating under the prospective payment system.
    As revised, proposed Sec.  412.42(c)(3) would simply include a 
cross-reference to the notice and appeal provisions set forth in Sec.  
405.1205 and Sec.  405.1206. This change would clearly establish that 
the provision of the appropriate expedited review notices would be one 
of the prerequisites before a hospital could charge a beneficiary for 
continued hospital services.

III. Analysis of and Responses to Public Comments

    We received approximately 500 public comments on the proposed rule 
from healthcare professionals and professional associations, hospitals, 
State and national hospital associations, beneficiary advocacy groups, 
and managed care organizations.
    Comments centered on the details of the proposed notice procedures 
and the relationship between those procedures and the current hospital 
discharge and notification processes, including the IM. In general, 
healthcare professionals, hospitals, and hospital associations strongly 
opposed the proposed notification process. Patient advocacy groups 
generally supported the rule as proposed. Managed care organizations 
also opposed the notice process and pointed out MA-specific issues with 
the rule. Summaries of the public comments received on the proposed 
provisions and our responses to those comments are set forth below.

The Proposed Notice Process

    Comment: The overwhelming majority of commenters strongly opposed 
the hospital discharge notification procedures set forth in the April 
5, 2006 proposed rule. Only a few commenters supported the process.
    Those commenters supporting the proposed process stated that it 
would provide Medicare beneficiaries with a timely notice of the right 
to challenge a discharge decision that may be premature and harmful to 
that beneficiary's health. They believe that the proposed changes would 
serve as a check against existing financial incentives for hospitals 
and health plans to discharge beneficiaries too early. These commenters 
supported the proposed requirement that the generic notice be delivered 
on the day before discharge, stating that it gives beneficiaries the 
information they need to initiate an appeal at the time they need it, 
and allows beneficiaries enough time to consider their right to appeal 
and obtain the help of representatives, if needed. Several of these 
commenters suggested the generic notice be given 2 days in advance of 
discharge or even earlier when possible.
    As noted, however, the vast majority of commenters opposed the 
proposed process. These commenters focused their objections on two key 
issues--the overall need for the new notice and the timing of its 
delivery.
Need for Notice Process
    Many commenters noted that, because hospitals are already required 
to deliver the Important Message from Medicare (IM) to all Medicare 
inpatients, the proposal actually constituted a 3-step notice process 
that adds unnecessary burden to hospitals and managed care plans. Many 
commenters stated that the current notice process--delivery of the IM 
at or near admission, and a Hospital Issued Notice of Noncoverage 
(HINN) if the beneficiary disputes the discharge decision--adequately 
informs beneficiaries of their appeal rights. They saw no compelling 
reason to warrant the implementation of the proposed notice process. 
Other commenters noted that there are problems with the current notice 
delivery process that CMS should address before deciding to add another 
notice. These commenters agreed with many others that CMS should 
strengthen the current notice delivery process, rather than adding an 
additional notice at discharge. Specifically, some commenters stated 
that the IM is often handed to the beneficiary at admission without any 
explanation, along with many other papers. Thus, more often than not, 
the IM ends up unread. Additionally, several commenters noted that the 
current process is not enforced by CMS and recommended that CMS 
sanction hospitals that are not complying with notice delivery 
requirements.
    Many commenters made recommendations for improving the current 
notice delivery process including revising the IM to be a more complete 
notice of discharge appeal rights (similar to the proposed generic 
notice), or replacing the IM with the proposed generic notice and 
providing it at or near admission. Several commenters suggested we 
allow the generic notice to be given at admission or during the course 
of the hospital stay, and some commenters recommended that the hospital 
review the information with the beneficiary and that the beneficiary 
sign the notice.
Timing of the Generic Notice
    Commenters also strongly objected to the requirement that hospitals 
provide the proposed generic notice on the day before discharge, as 
proposed in Sec.  405.1205 and Sec.  422.620. They indicated that, 
given the rapidly changing conditions of most hospital patients, it is 
often difficult or impossible to predict the exact date of

[[Page 68710]]

discharge a day in advance. Commenters pointed out that physicians 
often make discharge decisions and write the discharge order on the day 
of discharge. Several commenters stated that they cannot assume 
physician concurrence until the discharge order is written.
    Many commenters pointed out that although hospitals begin the 
discharge planning process at admission, hospital staff, physicians 
(and health plans, if applicable) must wait for the results of blood 
work and other diagnostic tests and are constantly monitoring patients 
for signs of clinical progress before the discharge decision can be 
made. Commenters offered many clinical examples in support of this 
contention, including the following: Surgical patients' diets are 
gradually progressed from liquids to solids based on their tolerance, 
which varies from patient to patient; patients on oxygen therapy must 
be evaluated frequently to determine if it is appropriate to wean and 
later to determine if home oxygen is appropriate; patients receiving 
medications such as narcotics or steroids must be weaned from these 
medications and observed for complications, and patients cannot be 
expected to respond in a predictable manner.
    In addition, many commenters pointed out that giving a notice on 
the day before discharge to a beneficiary experiencing a short stay (1 
or 2 day stay) would in practice necessitate that the discharge notice 
be given at admission, when the course of treatment may not be known. 
Others stated that many of these beneficiaries also are waiting for 
test results and the discharge decision will depend on the results of 
those tests.
    Other commenters stated that predicting the discharge date a day or 
more in advance would be particularly difficult for beneficiaries with 
complicated cases, since many of these beneficiaries are under the care 
of more than one physician while in the hospital, requiring 
coordination among specialists regarding the discharge decision.
    For beneficiaries who need to be placed in facilities such as a SNF 
or psychiatric facility, discharge will depend on that facility's 
acceptance of the beneficiary, and the hospital may not know about 
placement 24 hours in advance in order to give a notice. In addition, 
commenters noted that it is not unusual for a physician to discharge a 
patient earlier than anticipated because of that individual's progress, 
making notice delivery on the day before discharge impossible.
    Commenters also stated that it often takes time to reach the 
representative of a beneficiary who is incompetent or unable to make 
informed decisions. Some commenters said representatives are often more 
available near the time of admission than on the day before discharge.
    Response: We have carefully considered the numerous comments 
regarding the extent to which a new notice is needed and the timing of 
such a notice. We recognize that the proposed generic notice clearly 
contains nearly the same information as IM, which is already delivered 
at or near admission as required by Section 1866(a)(1)(M) of the Social 
Security Act (the Act). Moreover, we fully appreciate, as many 
commenters pointed out, the difficulties inherent in predicting the 
precise date of discharge in advance in the hospital setting. At the 
same time, we are committed to ensuring that all Medicare beneficiaries 
are made aware of their hospital discharge rights in an effective 
manner.
    As the comments made clear, a hospital's frequent inability to 
predict a discharge in advance in acute care settings constitutes the 
fundamental obstacle to the 24-hour advance notice proposal. This 
problem is particularly pronounced for patients with complicated 
medical concerns, those under the care of more than one physician, and 
those requiring subsequent placement in other facilities. Clearly, 
discharge decisions are normally made by physicians, and physicians 
generally depend on test results, other outcome-related indicators, and 
observations gained from patient rounds in making these decisions. Many 
of these indicators may not become evident or available sufficiently 
early to permit 24-hour advance notice on a routine basis.
    Thus, we considered other alternatives to the proposed ``24-hour 
notice'' requirement that could still ensure that beneficiaries are 
made aware of their discharge appeals rights in time to exercise them, 
without adversely affecting the hospital discharge process or the 
availability of hospital beds. This is consistent with our commitment 
in the proposed rule to consider comments on all aspects of hospital 
notice procedures. One option that we considered carefully was to 
establish the 24-hour advance notice requirement as a general rule, but 
allow for exceptions when this requirement was impractical, such as the 
situations described above where a beneficiary's discharge date could 
not reliably be predicted in advance. We concluded, however, that such 
a standard would be highly subjective and difficult to administer, 
given the variety of reasons why a discharge decision could be made on 
the day of discharge, while still potentially leaving a large 
proportion of hospital patients unaware of their discharge rights until 
they would have little or no time to exercise them.
    Moreover, we also had to take into account the high percentage of 
short stays in the hospital setting. (The most recent available CMS 
data--2003 data from the 2005 CMS Statistical Supplement--regarding 
acute inpatient hospital admissions show that over 43 percent of 
hospitals stays are 3 days or less in duration, and nearly 30 percent 
are 2 days or less.) In those situations, given the statutory 
requirement that hospitals deliver an IM to each patient at or about 
the time of admission, requiring a generic discharge notice as well 
would be of questionable value because they would be given at about the 
same time. As many commenters pointed out, the proposed generic notice 
contains much of the same information as the IM. Thus, requiring 
hospitals to deliver both notices at roughly the same time would place 
an administrative burden on hospitals without any apparent benefit to 
patients.
    Based on all these considerations, we decided not to adopt an 
exception-based standard. Instead, we considered additional 
alternatives for meeting our goal of designing hospital notice 
procedures that balance a beneficiary's need to be informed about his 
or her appeal rights in an appropriate manner and at an appropriate 
time, and take into account the statutory requirements associated with 
the IM, but do not impose impractical requirements on hospitals, or 
interfere with appropriate discharge decision-making practices. As many 
commenters recommended, we concluded that the most viable approach 
would be to build on the existing requirement that hospitals deliver 
the IM to all beneficiaries, which already takes into account hospital 
discharge processes. Accordingly, under Sec.  405.1205(b)(Sec.  
422.620(b) for MA enrollees), this final rule establishes a revised 
version of the IM as the advance written notice of hospital discharge 
rights.
    As revised, the IM will contain virtually all of the elements that 
would have been included in the proposed standardized generic notice, 
with the exception of the discharge date. Thus, the revised IM will 
continue to meet the requirements of section 1866(a)(1)(M) of the Act, 
including a statement of patients' rights, information about when a 
beneficiary will and will not be liable for charges for a continued 
stay in a

[[Page 68711]]

hospital, as well as a more detailed description of the QIO appeal 
rights that corresponds to the content of the proposed generic notice. 
We have revised requirements for notice content at Sec.  405.1205(b) 
and Sec.  422.620(b) to reflect these changes. Proposed Sec.  489.27 
has also been revised accordingly. However, similar to the generic 
notice, the revised IM must be signed by the beneficiary (or 
representative, if applicable) to indicate that he or she has received 
the notice and comprehends its contents. The hospital must provide the 
original, signed notice to the beneficiary and retain a copy of the 
signed notice. As with the proposed generic notice, we anticipate that 
the revised IM will also include language stressing the importance of 
discussing discharge planning issues with physicians, plans, or 
hospital personnel to try to minimize the potential for disputes. The 
precise language of the revised IM will be subjected to public review 
and comment through the Office of Management and Budget's Paperwork 
Reduction Act process.
    Sections 405.1205(b) and 422.620(b) also establish the time frames 
for notice delivery. Specifically, hospitals must deliver the advance 
written notice at or near admission, but no later than 2 calendar days 
after the beneficiary's admission to the hospital. We believe that 
requiring this revised IM be delivered and signed at or near the time 
of admission gives the hospital flexibility in developing processes to 
deliver the notice in a timely manner and makes the IM a more 
meaningful notice for beneficiaries and representatives, allowing them 
ample time to consider acting on those rights.
    At the same though, we continue to believe that it is important for 
beneficiaries to receive information about their discharge rights at or 
near the time of discharge when they may need to act on this 
information. Therefore, Sec.  405.1205(c), and Sec.  422.620(c) for 
Medicare health plan enrollees also requires that hospitals deliver a 
copy of the signed IM to each beneficiary before discharge. The notice 
should be given as far in advance of discharge as possible, although 
not more than 2 calendar days before the day of discharge. This time 
frame would be consistent with the suggestions of several commenters 
who advocated for delivery of discharge rights notices 2 days before 
discharge.
    This follow-up notice would serve as a reminder of the earlier 
notification about the beneficiary's discharge rights. It would not be 
required if the initial delivery and signing of the IM took place 
within 2 days of discharge. This means that hospitals will have some 
flexibility to tailor their notice delivery practices to meet their own 
needs, with the possibility of eliminating the need to deliver a copy 
of the notice for stays of up to 5 days. (We note that the average 
hospital length of stay in an acute care setting for a Medicare 
beneficiary is approximately 5 days and, again, large numbers of 
beneficiaries experience stays ranging from overnight to 2 or 3 day 
stays.) Although the follow-up notice often would not be needed in 
short-stay situations, it would serve as an important reminder of 
beneficiary rights in longer stay cases. Thus, all individuals will 
receive the original notice at or near admission, in addition to 
receiving a copy of the signed notice if the original notice is 
delivered more than 2 days before discharge.
    Section 405.1206(b)(1) and Sec.  422.622(b)(1), will allow 
beneficiaries to request an expedited determination at any time up 
through the day of discharge, either in writing or by telephone. 
However, we believe that the better alternative will be for 
beneficiaries to be aware of their rights as early as possible and then 
communicate with their physicians, plans and appropriate hospital staff 
to reach a consensus on their appropriate discharge date.
    Given that there is no longer a noon deadline for a beneficiary to 
request an expedited QIO determination, we recognize that such requests 
could be made near or after the close of the business day. Thus, we 
have revised the appropriate sections to specify that the subsequent 
deadline for the hospital or plan to provide beneficiaries with 
detailed notices as soon as possible but no later than noon of the day 
after the QIO notifies the hospital or plan that the beneficiary has 
requested QIO review. We have also specified that the hospital or plan 
must submit necessary information to the QIO as soon as possible, but 
no later than noon of the day after the QIO notifies the hospital or 
plan of the request. We note that a beneficiary's liability protection 
would continue throughout this process.
    In summary, we believe that the revised notification process being 
set forth in this final rule will offer several advantages over the 
proposed approach, while still containing many similar elements and 
achieving the same goals. The process is consistent with the existing 
IM requirements--while also establishing much greater hospital 
accountability (and enforceability) for delivering the IM--promotes 
beneficiary understanding of their discharge rights, and gives 
hospitals appropriate discretion in notice delivery practices and, more 
importantly, in discharge decision-making, rather than letting notice 
delivery rules dictate when patients are discharged.

Consequences of the 24-Hour Notice Requirement

    Many commenters believed that if hospitals were not able to deliver 
the generic notice on the day before discharge, that patients would be 
entitled to stay an additional day in order to meet the 24-hour 
requirement. We received many comments regarding what commenters 
believed would be the consequences of this additional day.
    Comment: Many commenters addressed the perceived consequences of 
their belief that, in most cases, hospitals would not be able to give 
the notice until the actual day of discharge. In general, commenters 
indicated that beneficiaries would then be entitled to stay another day 
in order to decide if they want to appeal. Commenters contended that 
delaying discharge an additional day to allow hospitals to satisfy the 
notice requirement conflicted with the discharge planning process set 
forth at section 1861(ee)(2) of the Act, which directs the Secretary to 
develop guidelines to ensure a smooth and timely discharge to the most 
appropriate setting. Several commenters pointed to the Joint Commission 
on Accreditation of Healthcare Organizations (JCAHO) requirements at 
LD.3.15 that require hospital leadership to mitigate impediments to 
efficient patient flow throughout the hospital. Other commenters stated 
that the Hospital Conditions of Participation (COP) for patients' 
rights at Sec.  482.13 already makes clear that a patient has the right 
to make informed decisions, and has the right to a process for 
submitting grievances, including concerns about quality of care and 
premature discharge.
    Many commenters feared that the proposed process and the 
possibility of an additional day would severely impact the hospital's 
bed capacity, ability to move patients within and outside of the 
hospital, and costs. Many commenters believed that this requirement 
would cause unnecessary delays in a patient's discharge or transfer to 
a more appropriate level of care.
    Several commenters gave the example of the Medicare beneficiary who 
has secured a bed in another facility such as a skilled nursing 
facility (SNF). If the hospital were not able to provide the generic 
notice until the day of discharge, and Medicare beneficiaries were able 
to stay an additional day to ensure they received the notice at least 
24 hours in advance of discharge,

[[Page 68712]]

commenters said, this beneficiary would risk losing that bed and 
finding another bed could take several more days. Commenters believed 
that hospitals would then be required to provide additional notices to 
this beneficiary and work within new timeframes.
    Response: We agree with the commenters that to the extent that 
hospitals are not able to deliver the generic notice until the day 
beneficiaries are ready to be discharged, the proposed 24-hour notice 
requirement could potentially affect the hospital's compliance with the 
requirement for a smooth and timely discharge to a more appropriate 
setting. As noted above, we find persuasive comments regarding the 
fluidity of the discharge process. Thus, as explained in detail above, 
we have modified the proposed notification procedures to attempt to 
mitigate the potential for disruption of the discharge planning 
process.

Existing Notices

    Comment: Hospitals asked whether the existing HINN and NODMAR would 
continue to be necessary.
    Response: Currently, hospitals or plans issue a HINN or NODMAR at 
discharge only when the patient disagrees with the discharge decision. 
In this context, the HINN and NODMAR are used to tell a patient why a 
hospital or plan believes their stay will no longer be covered, to 
provide information about the QIO review process, and to describe the 
patient's potential liability. Under the process set forth in this 
final rule, ALL individuals will be provided with information upon 
admission about the QIO review process and associated liability, and 
individuals who disagree with the discharge decision will receive 
detailed information about why the hospital or plan believes their stay 
will no longer be covered. Thus, with this new process, the HINN and 
NODMAR will no longer be used to notify patients of their right to a 
QIO review of a stay. In the vast majority of cases, a beneficiary will 
agree to the discharge decision. In almost all other cases, 
beneficiaries who disagree with the discharge decision will initiate a 
QIO review, so that their stay can continue without liability until the 
QIO confirms the discharge decision or determines that the stay should 
continue. Only in the extremely rare instance where patients decide to 
remain in the hospital past the ordered discharge date and do not 
choose to initiate a review would they be notified of liability via a 
traditional liability notice akin to the existing HINN. (Note that the 
term ``HINN'' actually refers to several different notices, used under 
various circumstances, to inform patients under original Medicare that 
all or part of a hospital stay may not be covered by Medicare. For 
example, a HINN is also used in pre-admission situations. This final 
rule addresses only HINNs now used at the end of a hospital stay when a 
patient disputes a discharge decision. Under these circumstances, the 
HINN is no longer needed.) The NODMAR will be discontinued.

Aligning Hospital Discharge Notice Processes With Those of Other 
Settings

    We received multiple comments on our proposal to align hospital 
discharge notice processes with those used in other settings such as 
HHAs, SNFs, and CORFs.
    Comment: Many commenters indicated that it was unrealistic and of 
little value to achieve consistency between hospital discharge notice 
processes and those of other providers such as SNFs and HHAs. 
Commenters stated that hospitals are fundamentally different from these 
non-hospital settings because of hospitals' focus on the provision of 
acute medical care. The commenters stated that hospital lengths of stay 
are generally shorter, the conditions of acutely ill patients are more 
unpredictable, there is a greater volume of discharges per day, and 
they contended that discharge decisions are generally made on the day 
of discharge often based on the availability of diagnostic tests 
results. Conversely, commenters stated that SNFs and other settings 
have more predictable patient outcomes and longer lengths of stay that 
allow advance notice of discharge under most circumstances. Moreover, 
they pointed out that in the non-hospital setting, beneficiaries could 
be liable for additional days if they request a review; conversely, in 
the hospital setting, beneficiaries may stay without additional 
liability while the QIO's decision is pending. Finally, unlike 
hospitals, other providers are not required to provide the IM that 
already includes an explanation of the discharge appeal rights. Thus, 
they urged that CMS reconsider its proposed hospital notice approach.
    A few commenters did support aligning the provider notice 
procedures. These commenters believe that uniformity among appeals 
notice process in all settings would increase public understanding and 
utilization of the QIO appeal process. The commenters noted that 
protections against premature discharge are even more necessary in the 
hospital setting than in other settings because of the vulnerability 
and acute care needs of hospital patients. Further, they argued, 
inpatient hospital providers are at least as capable of complying with 
these requirements, as are SNFs and other outpatient providers.
    Response: We agree that there are notable differences between the 
hospital setting and the other provider settings where an expedited 
determination notice process is in effect. As commenters pointed out, 
the critical differences for purposes of this rule are the presence of 
the IM in the hospital setting, the shorter and less predictable 
lengths of stay, and the statutory liability protections afforded to 
hospital inpatients in accordance with section 1869(c)(3)(C)(iii)(III) 
of the Act. We found the comments on these issues to be especially 
persuasive. Thus, in developing this final rule, we have attempted to 
set forth a process that better takes into account the unique 
circumstances of the hospital setting.

Discharge Planning Process

    Many commenters stated that the hospital notice requirements needed 
to take into consideration the discharge planning requirements in the 
Conditions of Participation (COPs).
    Comment: A number of commenters stated that the existing discharge 
planning process carried out by hospitals already informs beneficiaries 
of discharge plans and facilitates smooth transitions to post-hospital 
settings. The commenters stated that the discharge planning COP at 
Sec.  482.43 addresses the development of a discharge plan and requires 
that the patient and representative be involved in the discharge 
planning process. Commenters also stated that discharge decisions are 
made by physicians, not hospitals.
    Commenters noted that discharge planners are very effective at 
developing individualized discharge plans, making arrangements for 
post-hospital care, and preparing patients and caregivers for 
discharge. Commenters also pointed out that because discharge planners 
are involved in arranging patients' post-hospital care, they are able 
to identify patients early on who will have special needs at discharge 
and work with them (or their representatives) to address their issues. 
Thus, many commenters questioned the need for written discharge 
notices, given the extensive discharge planning process already 
required in hospitals. Alternatively, several commenters suggested that 
we add language to the notice that informs beneficiaries of the 
discharge planning process.
    Response: We recognize the important work of hospital discharge 
planners in

[[Page 68713]]

the development of individualized discharge plans and preparing 
patients for post-hospital care, and we agree that any process to 
notify beneficiaries of their appeal rights must be consistent with the 
discharge planning process required by section 1861(ee)(2) of the Act 
and the COPs at Sec.  482.43. However, we note that while hospitals 
must have in effect discharge planning procedures that apply to all 
patients, discharge planning generally focuses on identifying 
individuals who are likely to have special or ongoing needs following 
discharge. Obviously, not all hospital inpatients will require post-
hospital care, therefore some patients will have very limited 
involvement with the discharge planning process. Thus, we are not 
convinced that it is appropriate to rely on the discharge planning 
process as the mechanism for ensuring all patients receive timely 
notification of discharge rights under the Medicare program. Instead, 
we believe that the Medicare discharge notice should be able to stand 
alone, or complement discharge planning.
    To reflect the importance of discharge planning, we intend to 
incorporate language into the revised IM about planning for discharge 
and encouraging beneficiaries to talk to their physician or other 
hospital staff if they have a concern about being discharged. If 
beneficiaries are still not satisfied with their discharge decision, 
they can request a QIO review.

Liability

    Many commenters were concerned about the prospect of hospitals 
being financially liable for additional patient care days during the 
QIO process.
    Comment: Many commenters asked that CMS clarify who would be liable 
for the extended days during the appeal. They stated that because the 
beneficiary will have no liability, Medicare should pay the hospital 
for the additional days or the additional days should be incorporated 
into the DRG payment. A few commenters stated that the liability 
protections set forth in section 1879(a)(2) of the Act should relieve 
the hospital of any liability because the hospital would not have known 
that payment would not be made for hospital services beyond the planned 
day of discharge.
    Response: This rule has no effect on existing policy with respect 
to liability during a QIO review. All operating costs incurred during 
the beneficiary's inpatient stay are considered part of the overall DRG 
payments.

Impact on Number of Appeals

    Many commenters believe that this notification process would 
increase in the number of appeals to the QIO.
    Comment: Many commenters believe that once beneficiaries become 
aware of their right to a review without liability, there will be a 
large increase in the number of beneficiaries appealing and staying 
additional days during the review. Many commenters stated these extra 
days could seriously affect hospital processes, have a significant 
effect on hospital costs. Longer lengths of stay, they contended, would 
hinder the hospital's ability to move patients through the system, 
seriously affecting bed capacity. Hospitals would not be able to accept 
new admissions, would experience backups in already crowded emergency 
rooms, and would not be able to move patients out of post-anesthesia 
care units or intensive care units. Most importantly, commenters said, 
the longer Medicare beneficiaries remain in the hospital, the greater 
their risk of hospital-acquired infections, falls and other negative 
outcomes.
    Several commenters said CMS should assess whether the 1 to 2 
percent estimate of the number of beneficiaries who currently request 
QIO reviews in the nursing home or home health settings would hold up 
in the hospital setting where liability is not an issue for 
beneficiaries while their appeal to the QIO is pending.
    Response: The right to a QIO review without beneficiary liability 
is a longstanding statutory feature of the Medicare inpatient hospital 
prospective payment system. To the extent that commenters are correct 
that beneficiaries are not aware of the existing QIO review right, 
there could be an increased use of the process under the new notice 
rules. However, we view this contention as evidence of the need for a 
more effective notice process, as opposed to an argument against 
notification.
    At the same time, however, we have historically believed, based on 
the limited evidence available, that hospital beneficiaries who are 
notified of their discharge rights are not significantly more likely to 
exercise them. For example, as discussed in previous rulemaking, the 
proportion of Medicare health plan enrollees that disputed their 
discharge historically has been no higher than that of original 
Medicare beneficiaries, despite the more stringent notice requirements 
under the Medicare + Choice program (68 FR 16664). Moreover, several 
commenters noted, and we agree that the vast majority of inpatients 
welcome their discharge. Therefore, we believe that the revised notice 
process will not increase the number of requests for a QIO review nor 
have a significant impact on hospital bed capacity, patient access, or 
hospital revenue.

Impact on Beneficiaries

    Many commenters were concerned about the impact of the proposed 
notice process on beneficiaries, and the possibility that some 
beneficiaries would use the process to game the system. Some commenters 
offered suggestions on how to better educate beneficiaries about their 
rights.
    Comment: Many commenters were concerned that the notices in the 
proposed process would confuse beneficiaries and increase their anxiety 
level during an already stressful time. Many commenters stated that 
beneficiaries are under an inordinate amount of stress during a 
hospital stay and that issuing a notice regarding potential financial 
liability would only serve to alarm them. Several other commenters 
stated that the notices as written would be difficult for many frail 
elderly Medicare beneficiaries to understand. Other commenters stated 
that beneficiaries are already overwhelmed by the number of notices 
they receive and that an additional notice would exacerbate the 
problem. Still other commenters stated that many beneficiaries these 
days are cautious about signing forms.
    Conversely, some commenters felt that Medicare beneficiaries 
generally are not aware of their right to appeal a discharge and that 
the current process for communicating the information to them is not 
effective.
    Response: We believe that it is important for Medicare 
beneficiaries to understand their discharge appeal rights and be able 
to act on them. Moreover, based on the often conflicting comments 
received on the proposed rule, we believe that not all beneficiaries 
are made aware of these rights uniformly under the current process. We 
recognize that liability issues in particular can be difficult for 
beneficiaries to understand, and we intend to make sure the revised IM 
is as clear as possible in this regard. We also intend to consumer test 
the notices prior to requesting OMB approval. Finally, it is important 
to keep in mind that hospitals will be expected to review the notices 
with beneficiaries (or representatives when appropriate), answer any 
questions and, if necessary, help them to initiate the QIO review 
process. We believe these efforts will serve to reduce confusion and 
enhance beneficiaries' understanding of their rights and their ability 
to act on them.

[[Page 68714]]

    Comment: Many commenters stated that this proposed process would 
encourage beneficiaries who do not want to leave the hospital to 
``game'' the system in order to stay for reasons other than medical 
necessity. These commenters said that some beneficiaries might want to 
remain in the hospital, either for reasons of convenience, because the 
hospital offers a more secure and comfortable environment, or because a 
bed is not available in a setting of their choice. Additionally, a few 
commenters pointed out that beneficiaries who do not meet the 3-day 
qualifying stay for a nursing facility might use the appeal process to 
get the extra day(s) in order to qualify.
    Response: We understand that hospitalized beneficiaries and their 
family members may be anxious about discharge for many reasons. 
Nevertheless, we expect the vast majority of beneficiaries who exercise 
their statutory right to a QIO review to do so for legitimate purposes. 
As discussed above, we also recognize the benefits of an effective 
discharge planning process in identifying those beneficiaries who may 
have concerns about their discharge and in working with these patients 
early on in order to facilitate a smooth discharge.
    Finally, in accordance with Sec.  409.30, a 3-day qualifying stay 
must be for medically necessary hospital or inpatient CAH care. 
Therefore, if a patient has not met the 3-day qualifying stay and 
requests a review, the QIO will determine whether the decision to 
discharge was the correct one.
    Thus, we do not expect significant numbers of individuals to use 
this process to ``game'' the system, although we note that opportunity 
has always existed. Again, we believe that patients should be informed 
of their statutory rights.
    Comment: Some commenters recommended that, instead of adding to the 
number of notices that hospitals are required to deliver, we educate 
consumers about their discharge rights through other methods. Several 
commenters recommended specific measures such as educational campaigns, 
mailings, or printing appeal rights on the back of the Medicare card. 
Comments were mixed as to whether Medicare beneficiaries are 
knowledgeable about their rights or are confused by the complexity of 
the program and the large number of notices they already receive.
    Response: The IM is a statutorily required notice that hospitals 
are required to deliver at or about the time of an individual's 
admission as an inpatient to the hospital. Neither educational 
campaigns nor mailings can meet that requirement. We do agree with 
commenters, however, that it is necessary to educate beneficiaries 
about their discharge appeal rights using other means. Currently, 
information about these rights is in the ``Medicare and You Handbook'' 
and the Medicare health plans' ``Evidence of Coverage'' (EOC), and we 
will work with hospitals, beneficiary advocates, and other partners to 
help educate beneficiaries about their rights.

Burden

    We received a large number of comments on the burden estimates for 
both the proposed generic and detailed notices.
    Comment: The vast majority of commenters believed that the 5-minute 
time estimate by CMS for the delivery of the generic notice was much 
too low, and did not acknowledge the time necessary to complete the 
notice, explain it to the beneficiary, answer questions, or contact a 
representative, particularly in cases where the beneficiary's 
competency is at issue or there is a language barrier. Generally, 
commenters offered a range of 10 to 30 minutes to complete the notice, 
deliver and explain the notice and obtain a signature, with more time 
required when interpreters or representatives were involved.
    In addition, some commenters thought the time required to complete 
the detailed notice would be comparable to the current notification 
process that utilizes the HINN and NODMAR. A few commenters stated that 
the detailed notice could take from 120 to 180 minutes to fill out, 
accounting for additional tasks such as calling the QIO, or providing 
evidence to the QIO for its review in their estimate. Also included in 
this estimate was the burden associated with having to research 
specific Medicare coverage rules and citations.
    Response: Although this final rule no longer requires issuance of 
the separate generic notice, as specified in the proposed rule, we have 
taken these comments into consideration in estimating the time required 
for delivery of a revised, signed IM. Thus, we now estimate the average 
time for IM delivery at 12 minutes--which represents an 11 minute 
increase over the estimated time for delivery of the current IM. We 
note that this estimate reflects an ``average'' amount of time needed 
to deliver the notice; some beneficiaries will be able to read the 
notice easily and others will need more time and assistance. Further, 
we estimate that delivery of the signed copy of the IM that may be 
required for longer hospital stays should only take an average of 3 
minutes to deliver to the beneficiary or representative because it is 
essentially a review of information received at or near admission and 
questions regarding the process can also be referred to the QIO.
    Regarding the detailed notice, in response to suggestions that it 
would be especially difficult for hospital staff to research and list 
specific citations to applicable Medicare policy rules, we no longer 
require the notice to list specific citations to the applicable 
Medicare policy rules. We have, however, maintained the requirements 
that the detailed notice explain why services are no longer necessary 
and describe relevant Medicare coverage rules, instruction or other 
policy. Commenters recognized that the detailed notice essentially 
replaces the HINN and NODMAR processes when beneficiaries and enrollees 
do not agree with the discharge. Therefore, we believe that the 
detailed notice will not constitute a new burden, but will essentially 
replace the time associated with filling out and delivering the HINN 
and NODMAR. We believe that, in addition to the time it currently takes 
to complete the HINN and NODMAR, an extra 60 minutes is sufficient for 
filling out and delivering the detailed notice. We intend to permit, in 
guidance, that hospitals and plans may use predetermined language 
regarding medical necessity and other Medicare policy. Both the IM and 
the detailed notice will be published for public comment through the 
OMB Paperwork Reduction Act process. Therefore, we welcome further 
input on the form and content of the detailed notice through the OMB 
approval process.

QIOs

    Several commenters noted that the current QIO schedule for hospital 
reviews could delay the appeal process.
    Comment: Several commenters stated that QIOs do not currently 
review hospital stays on weekends, which could cause additional delay 
in the processing of these appeals.
    Response: QIO reviews of disputed hospital discharges are a long-
standing feature of the Medicare program. However, we will work closely 
with the QIOs to ameliorate any difficulties associated with the notice 
procedures. We note that the QIO review process for other providers 
requires QIO involvement 7 days a week.

[[Page 68715]]

Information Technology (IT)

    Some commenters were concerned that the notice process would affect 
their IT systems.
    Comment: A few commenters stated that hospitals, especially larger 
centers, would have to develop or change their IT process to, for 
example, track ``next day'' discharges, based on the proposed rule. 
Several commenters stated that the proposed rule was contrary to the 
movement toward electronic medical records.
    Response: As described above, based on the comments, we have 
revised the requirement for delivery of the notice so that it may be 
delivered up to 2 days prior to discharge. We believe this added 
flexibility will relieve hospitals of any burden of developing an IT 
process to track ``next day'' discharges. We also agree that the 
movement toward electronic medical records is an important advancement. 
However, given that section 1866(a)(1)(M) of the Act requires a written 
statement of rights, there is still a need for a hard copy delivery of 
the IM. Hospitals may choose to store the signed copy of the notice 
electronically.

Delivery to a Representative

    Several commenters asked that we allow hospitals to provide 
notification to representatives via a telephone call.
    Comment: Several commenters requested that CMS clarify what ``valid 
delivery'' means if a beneficiary is incompetent and a representative 
must be contacted. Other commenters suggested that we allow telephone 
notification to beneficiary representatives.
    Response: We intend to provide guidance regarding how hospitals and 
health plans may deliver the appropriate notice in cases where a 
beneficiary's representative may not be immediately available.

Managed Care

    Several commenters noted there were specific issues with regulation 
in terms of managed care and also commented on the scope of the 
regulation and coordination issues among hospitals, plans and the QIO.
    Comment: Several commenters pointed out coordination issues among 
Medicare health plans, hospitals, and QIOs, regarding the proposed 
process. Several commenters specifically described issues of 
coordination regarding delivery of the proposed detailed notice. One 
commenter stated that an MA private-fee-for-service (PFFS) plan may not 
have knowledge of the hospital stay to comply with these rules. Another 
commenter stated that plans may not have a contract with the treating 
hospital in order to delegate responsibility for the detailed notice 
delivery. Other commenters stated that plans are too far removed from 
the hospital setting to have the information to fill out and deliver a 
meaningful detailed notice in a timely manner. Some stated that it 
would be unworkable for the plan to provide the detailed notice by 
close of business of the day the beneficiary contacts the QIO. In this 
case, commenters suggested requiring plans to provide written 
explanation of the discharge decision to the enrollee by the close of 
business on the day following notification of the plan by the QIO. Some 
commenters pointed out difficulties hospitals have following two 
different sets of regulations, one for original Medicare and one for 
MA.
    Response: We believe, consistent with the immediate QIO review 
process in the non-hospital settings at Sec.  422.622, that Medicare 
health plans are in the best position to deliver the detailed notices 
regarding their specific policies and the criteria that they applied in 
evaluating an enrollee for discharge. Moreover, in view of the fact 
that Medicare health plans are responsible for making coverage 
determinations for their enrollees, we believe it is appropriate that 
plans be responsible for preparing and delivering the detailed notice 
in a timely manner. Therefore, we are maintaining the requirement that 
the plan be responsible for delivery of the detailed notice. Although 
we expect that the plans will deliver the detailed notice as soon as 
possible, we have revised the timeframe for delivery of the detailed 
notice as well as any information the QIO needs to complete the review, 
to noon of the day following the QIO's notification of the enrollee's 
request, as discussed previously.
    We recognize that the PFFS model presents unique challenges to 
plans in terms of notice delivery requirements. We believe hospitals, 
as part of their daily business practices, should be informing all 
plans, including PFFS plans, of an enrollee's admission as soon as 
possible, and have a financial interest in doing so. Therefore, we are 
maintaining requirements that plans participate in the discharge 
process and deliver the detailed notice to their enrollees when 
appropriate.
    In addition, we have attempted to create a consistent notification 
and appeal process by aligning the regulations for original Medicare 
and the MA program. Thus, we have reordered the requirements at Sec.  
422.620 and Sec.  422.622 to parallel those at Sec.  405.1205 and Sec.  
405.1206. For example, QIO requirements at Sec.  422.622 have been 
revised to parallel those at Sec.  405.1206, and requirements that 
hospitals provide information needed for the QIO review at Sec.  
422.622 now parallel those at Sec.  405.1206. We believe this will 
strengthen beneficiary rights regarding hospital discharges and make 
the QIO review process easier to understand and administer.
    Comment: Some commenters asked if these rules apply to Medicare 
Cost Plans.
    Response: In accordance with 42 CFR 417.600(b), Medicare Cost Plans 
are subject to the regulations at 42 CFR part 422, Subpart M. 
Therefore, these rules apply to them to the same extent that they apply 
to all other Medicare health plans.
    Comment: Some commenters expressed concern that MA organizations 
might be responsible for additional costs if hospitals fail to provide 
a timely generic notice on the day before discharge and the enrollee 
needed to stay an extra day to request an appeal.
    Response: As discussed in detail above, we have removed the 24-hour 
requirement for delivery of the generic notice and replaced the generic 
notice with a signed IM given at or near admission. Under this revised 
approach, a patient will not need to stay in a hospital an extra day 
merely to request an appeal. We believe our revised approach addresses 
the commenters' concern.

Definition of Discharge

    We received a few comments on the definition of discharge provided 
in proposed Sec.  405.1205 and Sec.  422.620.
    Comment: Some commenters asked that we clarify the definition of 
discharge. Specifically, they asked that we clarify that a transfer to 
another hospital does not constitute a discharge. Commenters suggested 
that, for purposes of the proposed notice process, the definition of 
discharge should not include beneficiaries who exhaust Part A benefits.
    Response: In response to these comments, we have revised the 
definition of discharge in both Sec.  405.1205 and Sec.  422.620 to 
state that a discharge is the formal release of a beneficiary or 
enrollee from an inpatient hospital. This definition is consistent with 
the definition at Sec.  412.4 for hospitals paid under the prospective 
payment system. We removed the term ``complete cessation of coverage'' 
from the proposed definition in order to reduce confusion about 
beneficiaries who exhaust Part A days. We believe

[[Page 68716]]

that the number of beneficiaries who exhaust Part A days during a 
hospital stay is low. However, if this were to occur, hospitals would 
not be required to issue a follow up copy of the signed IM. Current 
guidance states that the HINN may be used voluntarily by hospitals to 
notify beneficiaries who exhaust Part A days (See Transmittal 594, 
Section V) and Medicare health plans would give the Notice of Denial of 
Medical Coverage. Under this new process, hospitals would use a 
liability notice akin to the HINN for this purpose. Hospitals will be 
required to deliver the IM at or near admission, thus all beneficiaries 
and enrollees will receive information on their right to a QIO review.

Content of Notices

    We received many comments that the wording of the generic notice 
does not reflect hospital processes and is not beneficiary friendly.
    Comment: Many commenters stated that the generic notice was 
alarmist and focused too much on termination of Medicare payment and 
financial liability and not enough on the fact that the discharge 
decision was made based on whether the beneficiary could safely go home 
or could safely receive care in another setting. For example, they 
believed that the use of the words such as ``liability,'' 
``noncoverage'' and ``immediate review'' might upset some beneficiaries 
who are facing discharge. In the commenters opinion, hospitals must 
give beneficiaries the confidence they need to transition to a 
different level of care and the wording of the notice would cause 
beneficiaries to doubt the discharge decision unnecessarily.
    Response: As discussed above, the process set forth in this final 
rule no longer entails a new, generic notice. However, we have taken 
these comments into consideration as we have developed the revised IM. 
For example, as discussed above, we intend to include information about 
discharge planning in the IM.
    Please note that the precise wording and content of the notices is 
generally not subject to the rulemaking process, but instead is subject 
to OMB's Paperwork Reduction Act process. Thus, we intend to republish 
these notices through that process, providing an additional opportunity 
for public input prior to implementation.

Other Recommendations

    Many commenters made other recommendations for how CMS could get 
feedback on the proposed notification process.
    Comment: Some commenters recommended that CMS pilot the proposed 
process and notices. Others said that the notices themselves should be 
tested with beneficiaries. Other commenters recommended that CMS 
convene a national workgroup to review the hospital notices and 
recommend changes.
    Response: The process set forth here builds on existing hospital 
notice requirements regarding a patient's right to a QIO review of a 
discharge decision. Thus, we do not believe that a pilot of either the 
proposed process or the proposed notices is appropriate or necessary. 
However, as noted above, there will be ample opportunity for public 
input on the notices through the PRA process. We also intend to carry 
out consumer testing of the notices prior to implementation of the new 
process.

Scope

    Several commenters asked for clarification on issues related to the 
scope of the rule.
    Comment: Several commenters asked if the notification process would 
be applicable to observation stays.
    Response: The notice requirements set forth in this rule apply only 
to inpatient hospital stays.
    Comment: Several commenters stated that Medicare beneficiaries who 
are transferred from an acute hospital to another hospital should not 
receive the generic notice because they are still using their hospital 
Medicare benefit days. Other commenters recommended that no notice be 
required in the following situations: when a beneficiary is moved to 
the same level of care or to a hospital that provides more complex 
medical/surgical care, when there is an emergency transfer from a 
psychiatric hospital to an acute care hospital for an acute problem, 
when a beneficiary is discharged to a rehabilitation hospital, 
psychiatric hospital or skilled nursing facility when the hospital has 
been waiting for a bed in one of those facilities. Another commenter 
requested that CMS distinguish between inter-hospital transfers and 
intra-hospital transfers.
    Response: Although this comment was made in response to the 
proposed generic notice that is required to be given prior to 
discharge, we believe that it is important to restate that, in the 
context of the final rule, hospitals are required to deliver the IM at 
or near admission to all beneficiaries and enrollees with a copy at or 
near discharge except in short stay situations. For purposes of this 
rule, and consistent with the revised definition of discharge at Sec.  
405.1205 and Sec.  422.620, any patient who is formally released from a 
hospital, whether that patient is going to another inpatient hospital, 
to a lower level of care such as a SNF (even a swing bed within the 
hospital), or to home, is considered discharged from that hospital.
    Comment: A few commenters said that the proposed notice process 
conflicted with other federal regulations that prohibit Medicare 
beneficiaries from being treated differently from other hospital 
patients. These commenters stated that the notice requirements give 
Medicare beneficiaries rights to which other patients are not entitled. 
None of these commenters cited a specific rule.
    Response: Although the hospital conditions of participation do 
establish standards that hospitals must meet for all patients, these 
final notice requirements stem directly from sections 1866(a)(1)(M) and 
section 1869(c)(3)(C)(iii)(III) of the Act and are only applicable to 
Medicare beneficiaries. However, without further specifics on which 
federal regulations the commenters are talking about, we are unable to 
address these comments.

IV. Provisions of the Final Regulations

    The key provisions of this final rule are as follows:
     Section 405.1205(a) defines the scope of this rule for 
original Medicare and, as stated above, includes a revised definition 
of discharge consistent with Sec.  412.4.
     Section 405.1205(b) states that hospitals must deliver 
valid, written notice of hospital discharge rights using a standardized 
notice specified by CMS.
    As discussed earlier, this section has been revised to reflect the 
substitution of the IM for the generic notice and describes the revised 
notice delivery timeframes, the required content of the notice, and 
valid delivery requirements, including beneficiary signature, as stated 
above.
     Section 405.1205(c) outlines the requirements for the 
follow-up copy of the signed notice, as previously described, including 
timeframes for delivery of the copy.
     Section 405.1206(a) describes a beneficiary's right to 
request an expedited determination.
     Section 405.1206(b) explains the process for requesting an 
expedited determination by a QIO including the timeframes for 
requesting such an appeal, which as discussed in earlier sections, has 
been amended to require that a beneficiary must submit a request for a 
QIO review no later than the day of discharge.
    This paragraph also explains the conditions for financial liability

[[Page 68717]]

protections including when the beneficiary makes an untimely request 
for a QIO review.
     Section 405.1206(c) states that the burden of proof lies 
with the hospital to demonstrate that discharge is the appropriate 
decision, and Sec.  405.1206(d) describes the procedures that the QIO 
must follow in reviewing a discharge, including notification 
requirements for timely and untimely requests.
     Section 405.1206(e) explains the responsibilities of 
hospitals in the expedited determination process, including the 
delivery and content requirements of the detailed notice. Although a 
description of the applicable Medicare coverage rules or other Medicare 
policy is still required, as discussed above, we have removed the 
requirement that the notice must list specific citations to the 
applicable Medicare policy rules.
     Section 405.1206(f) describes the specific financial 
liability protections and limitations, including the beneficiary's 
right to pursue a reconsideration or appeal through the general claims 
appeals process.
     Section 405.1208 describes the process for when a hospital 
requests a QIO review because the physician does not concur with the 
hospital's determination that inpatient hospital care should end. We 
have made one technical change in this paragraph by adding a cross 
reference to Sec.  405.1206(f)(4), in order to clarify beneficiary 
liability when the QIO concurs with the hospital's determination.
     Section 412.42(c)(3) includes a cross-reference to the 
notice and appeal provisions set forth in Sec.  405.1205 and Sec.  
405.1206 and clearly establishes that the provision of the appropriate 
expedited review notices would be one of the prerequisites before a 
hospital could charge a beneficiary for continued hospital services.
     Section 422.620(a) defines the scope of this rule for MA 
enrollees and, as indicated above, includes a revised definition of 
discharge consistent with Sec.  412.4.
     Section 422.620(b) requires hospitals to deliver valid, 
written notice of hospital discharge rights using a standardized notice 
specified by CMS. This section describes the revised provisions 
regarding notice delivery timeframes, the content of the notice, and 
valid delivery requirements, including enrollee signature.
     Section 422.620(c) outlines the requirements for the 
follow-up copy of the signed notice previously discussed, including 
timeframes for delivery of the copy.
     Section 422.622(a) describes an enrollee's right to 
request an immediate review by a QIO.
     Section 422.622(b) explains the process for requesting an 
immediate review including the timeframes for requesting such an appeal 
and the conditions for financial liability protections, including when 
the enrollee makes an untimely request for a QIO review.
     Section 422.622(b)(1), as described above, states that an 
enrollee must submit a request for a QIO review no later than the day 
of discharge.
     Section 422.622(c) states that the burden of proof lies 
with the MA organization to demonstrate that discharge is the 
appropriate decision, and Sec.  422.622(d) describes the procedures 
that the QIO must follow, including notification requirements for 
timely and untimely requests.
     Section 422.622(e) explains the responsibilities of the MA 
organizations and hospitals in the immediate review process, including 
the delivery and content requirements of the detailed notice. Although 
a description of the applicable Medicare coverage rules or other 
Medicare policy is still required, as stated above, we have removed the 
requirement that the notice must list specific citations to the 
applicable Medicare policy rules.
     Section 422.622(f) describes the specific financial 
liability protections and limitations, including the enrollee's right 
to pursue a reconsideration or appeal through the standard appeal 
process.
     Section 489.27(a) has been revised to state that hospitals 
must furnish each Medicare beneficiary or enrollee the notice of 
discharge rights under section 1866(a)(1)(M) of the Act in accordance 
with Sec.  405.1205 and Sec.  422.620. We have also made two technical 
changes to Sec.  489.27(b) to add cross references to requirements for 
other notices associated with expedited or immediate QIO reviews in 
both the hospital and non-hospital settings.
    First, current Sec.  489.27 contains a cross reference to Sec.  
405.1202. We inadvertently omitted this reference from the proposed 
rule, so we are adding it back in this final rule. Second, we are 
adding a reference to Sec.  405.1206, the detailed notice in this rule. 
Therefore, Sec.  489.27(b) states that hospitals and other providers 
participating in the Medicare program must provide the applicable 
notices in advance of discharge or termination, as required under Sec.  
405.1200, Sec.  405.1202, Sec.  405.1206, and Sec.  422.624.

V. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 30-day notice in the Federal Register and solicit public 
comment when 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 Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    The information collection requirement associated with 
administering the hospital discharge notice is subject to the PRA.
    Several commenters addressed the burden associated with the 
proposed notice provisions, and these comments are discussed in detail 
above in section III of this final rule. As discussed there, this final 
rule contains changes to these provisions based on public comments. Our 
estimates of the revised information collection requirements are set 
forth below, and we welcome further comments on these issues during the 
Paperwork Reduction Act approval process.

Section 405.1205 Notifying Beneficiaries of Hospital Discharge Appeal 
Rights

    As discussed in detail in section III of this preamble, this final 
rule does not include the proposed requirements with respect to 
delivering a separate, standardized generic notice. Instead, we have 
modified the existing IM in order to provide the information about 
discharge appeal rights. The IM is currently approved under OMB 
 0938-0692 and will be revised to reflect any additional 
burden and the following PRA requirements associated with this final 
rule.
    The hospital must provide, explain, and obtain the beneficiary 
signature (or that of his or her representative) on the IM within 2 
calendar days of admission, followed by delivery of a copy of the 
signed IM no more than 2 calendar days before discharge, in accordance 
with the requirements and procedures set forth

[[Page 68718]]

in this rule. If the date the signed IM is delivered falls within 2 
calendar days of discharge, no additional copy is given.
    Since the IM is already required by statute to be provided to all 
Medicare beneficiaries who are admitted to the hospital (at an 
estimated delivery time of 1 minute per notice) and the notice would be 
disseminated during the normal course of related business activities, 
we estimate that, to explain the form and obtain a signature, it would 
take hospitals an extra 11 minutes on average to explain and provide a 
signed IM. We thus use an average of 12 minutes, meaning that some 
beneficiaries will be able to read and understand the notice in less 
time, and some beneficiaries will need more time and assistance reading 
and understanding the notice. In 2003, there were approximately 11.3 
million fee-for-service Medicare inpatient hospital discharges. The 
total annual burden associated with this requirement is 2,071,667 
hours. We estimate that approximately 60 percent of the beneficiaries 
will receive a copy of the signed IM in order to meet the requirements 
that a copy of the IM also be delivered no more than 2 days before 
discharge. We estimate that it will take 3 minutes to deliver a copy of 
the signed IM to the roughly 6.78 million beneficiaries. We estimate 
that the total annual burden associated with the requirement will be 
339,000 hours.

Section 405.1206 Expedited Determination Procedures for Inpatient 
Hospital Care

    Section 405.1206(b) requires any beneficiary wishing to exercise 
the right to an expedited determination to submit a request, in writing 
or by telephone, to the QIO that has an agreement with the hospital. We 
project that 1 percent of the 11.3 million fee-for-service 
beneficiaries who are discharged from inpatient hospital settings, 
(that is, 113,000 beneficiaries) will request an expedited 
determination. This estimate is based on our experience with the non-
hospital expedited determination process in both original Medicare and 
MA, where approximately 1 percent of patients request an expedited 
review. However, we believe that this estimate may be high, given 
previous use of a standard discharge notice, the NODMAR in managed care 
settings showed an appeal rate of less than .5 percent.
    The burden associated with this requirement is the time and effort 
it would take for the beneficiary to either write or call the QIO to 
request an expedited determination. We estimate it would take 5 minutes 
(average) per request. Therefore, the total estimated burden hours 
associated with this requirement is 9,417 hours.
    Section 405.1206(e) requires hospitals to deliver a detailed notice 
of discharge to the beneficiary and to make available to the QIO (and 
to the beneficiary upon request) a copy of that notice and any 
necessary supporting documentation. Hospitals are presently responsible 
for providing the Hospital Issued Notice of Non-Coverage (HINN) when a 
beneficiary disagrees with the discharge. Therefore, we believe that 
the detailed notice will not constitute a new burden, but will 
essentially replace the time associated with filling out and delivering 
the HINN. We believe that, in addition to the time it currently takes 
to complete the HINN, an extra 60 minutes is sufficient for filling out 
and delivering the detailed notice.
    Therefore, for these 113,000 cases, we estimate that it would take 
providers an average of 60 extra minutes to prepare the detailed 
termination notice and to prepare a case file for the QIO. Based on 
113,000 cases, the total annual burden associated with this proposed 
requirement is approximately 113,000 hours.

Section 422.620 Notifying Enrollees of Hospital Discharge Appeal Rights

    The hospital must provide, explain, and obtain the enrollee's 
signature (or that of the representative) on the IM within 2 days of 
admission, followed by delivery of a copy of the signed IM no more than 
2 calendar days before discharge in accordance with the requirements 
and procedures set forth in this rule. If the date the signed IM is 
delivered falls within 2 calendar days of discharge, no additional copy 
is given.
    Again, we estimate that it would take hospitals an average of 11 
extra minutes to explain and provide a signed IM. In 2003, there were 
approximately 1.7 million Medicare health plan inpatient hospital 
discharges. The total annual burden associated with this proposed 
requirement is 311,667 hours.
    As mentioned above, we estimate that it will take 3 minutes 
(average) to deliver a copy of the signed IM to approximately 60 
percent of the 1.7 million inpatient enrollees. We estimate that the 
total annual burden associated with delivering a copy to 1.02 million 
enrollees will be 51,000 hours.

Section 422.622 Requesting Immediate QIO Review of Decision To 
Discharge From Inpatient Hospital Care

    This section states that an enrollee who wishes to appeal a 
determination by a Medicare health plan or hospital that inpatient care 
is no longer necessary, may request QIO review of the determination. On 
the date the QIO receives the enrollee's request, it must notify the 
plan that the enrollee has filed a request for immediate review. The 
plan in turn must deliver a detailed notice to the enrollee.
    Again, we project that 1 percent of affected enrollees that is, 
17,000 enrollees, will request an immediate review. We estimate that it 
will take 5 minutes (average) for an enrollee who chooses to exercise 
his or her right to an immediate review to contact the QIO. For these 
17,000 cases, the total estimated burden is 1,417 hours.
    As specified in Sec.  422.622(c) and (d), Medicare health plans 
would be required under this rule to deliver a detailed notice to the 
enrollee and to make a copy of that notice and any necessary supporting 
documentation available to the QIO (and to the enrollee upon request). 
Plans are presently responsible for providing the NODMAR when an 
enrollee disagrees with the discharge or he or she is being moved to a 
lower level of care. Therefore, we believe that the detailed notice 
will not constitute a new burden, but will essentially replace the time 
associated with filling out and delivering the NODMAR. We believe that, 
in addition to the time it currently takes to complete the NODMAR, an 
extra 60 minutes is sufficient for filling out and delivering the 
detailed notice.
    Therefore, we estimate that it would take plans an extra 60 minutes 
to prepare the detailed notice and to prepare a case file for the QIO. 
Based on 17,000 cases, the total annual burden associated with this 
requirement is approximately 17,000 hours.
    The information above is summarized in the table below:

[[Page 68719]]



                                  Aggregate Hourly Burden for This Requirement
----------------------------------------------------------------------------------------------------------------
                                                     Time per        Fee-for-
                     Notices                         delivery         service      Managed care    Annual burden
                                                     (minutes)     beneficiaries     enrollees         hours
----------------------------------------------------------------------------------------------------------------
First IM........................................              11    11.3 million     1.7 million       2,383,334
Copy of IM......................................               3    6.78 million    1.02 million         390,000
Detailed Notice.................................              60         113,000          17,000         140,834
                                                 ---------------------------------------------------------------
    Total Burden................................  ..............  ..............  ..............       2,914.168
----------------------------------------------------------------------------------------------------------------

    The aggregate new hourly burden estimate associated with this final 
rule is 2,914,168 hours per year. The burden increase is mainly due to 
the extra 11 minutes on average to explain and provide a signed IM. As 
discussed above, the estimate of the hourly burden associated with the 
new IM does not include the burden associated with current OMB 
0938-0962, which is now estimated at 1 minute per delivery. 
There are no current burden estimates for delivery of the HINN or the 
NODMAR. As noted above, the actual burden will be developed through the 
PRA process.
    If you comment on these information collection and record keeping 
requirements, please mail copies directly to the following:

Centers for Medicare & Medicaid Services, Office of Strategic 
Operations and Regulatory Affairs, Division of Regulations Development, 
Attn.: Melissa Musotto, CMS-4105-F, Room C5-14-03, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10235, New Executive Office Building, Washington, DC 
20503, Attn: Carolyn Lovett, CMS Desk Officer, CMS-4105-F, [email protected]. Fax (202) 395-6974.

VI. Regulatory Impact Statement

A. Overall Impact

    We have examined the impact of this final rule 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 (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 final rule will 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 government 
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. For purposes of this RFA, all 
providers affected by this regulation are considered to be small 
entities.
    We did not prepare analyses for either the RFA or section 1102(b) 
of the Act because we have determined that this final rule will not 
have a significant economic impact on a substantial number of small 
entities. (We estimate a total cost of approximately $15,200 per 
provider as discussed below.) Although a regulatory impact analysis is 
not mandatory for this final rule, we believe it is appropriate to 
discuss the possible impacts of the new discharge notice on 
beneficiaries, enrollees, and hospitals, regardless of the monetary 
threshold of that impact. Therefore, a brief voluntary discussion of 
the anticipated impact of this final rule is presented below.
    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 do not expect these 
entities to be significantly impacted.
    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 final rule did not 
require an assessment under the Unfunded Mandates Reform Act.
    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 regulation will not impose any costs on State 
or local governments, the requirements of E.O. 13132 are not 
applicable.

B. Overview of the Changes

    This final rule sets forth new requirements for hospital discharge 
notices for all Medicare inpatient hospital discharges. This final rule 
specifies that hospitals must provide, explain, and have signed by the 
beneficiary (or his or her representative) the modified Important 
Message for Medicare (IM) within 2 calendar days of admission, followed 
by delivery of a copy of the signed IM no later than 2 calendar days 
prior to discharge (if 2 or more days have passed since the original IM 
was signed). Additionally, a detailed notice must be delivered if the 
beneficiary requests a QIO review of the decision. As discussed above, 
these notices would replace existing notice requirements under which 
only those beneficiaries who express dissatisfaction with a hospital's 
(or Medicare health plan's, if applicable) discharge determination or 
whose level of care is being lowered in the same facility, receive a 
notice of describing the right to a QIO review in detail. In general, 
we believe that these changes will enhance the rights of all Medicare 
beneficiaries who are hospital inpatients without imposing undue 
paperwork or

[[Page 68720]]

financial burdens on hospitals or Medicare health plans.

C. Notifying Beneficiaries and Enrollees of Hospital Discharge Appeal 
Rights (Sec.  405.1205 and Sec.  422.620)

    We project that providers will be responsible for explaining and 
delivering (and obtaining the beneficiary's or representative's 
signature) the IM to approximately 13 million Medicare beneficiaries 
per year. This includes about 11.3 million fee-for-service 
beneficiaries and 1.7 million MA enrollees. The IM is already required 
by statute to be provided to all Medicare beneficiaries at an estimated 
time of 1 minute per notice. Therefore, as discussed above, we estimate 
that it will take approximately 11 extra minutes on average to explain 
and deliver a signed IM, at a cost of approximately $5.50 (based on no 
more than $30 per hour rate if the notice is delivered by health care 
personnel). Based on an estimated 13 million notices annually, we 
estimate the cost of delivering these new notices to be roughly $71.5 
million. We estimate that it will take 3 minutes to deliver a copy of 
the IM to 7.8 million beneficiaries (we assume that 60 percent of 
inpatient stays will involve delivering a signed copy of the IM since, 
for short stays, hospitals may only need to deliver the IM once). We 
estimate that the cost of delivering these copies will be $11.7 
million. Since there are roughly 6,000 affected hospitals, the total 
average costs associated with this provision would be roughly $13,900 
per provider. We believe that this impact is significantly outweighed 
by the benefits of establishing a clear, consistent, accountable 
process for ensuring that all Medicare beneficiaries are made aware of 
their statutory discharge rights on a timely basis, without interfering 
with the hospital discharge process.

D. Providing Beneficiaries and Enrollees With a Detailed Explanation of 
the Discharge Decision (Sec.  405.1206 and Sec.  422.622)

    As discussed in section V of this final rule (Information 
Collection section), we project that providers will be responsible for 
delivering detailed notices to approximately 1 percent of the 13 
million Medicare beneficiaries per year, or 130,000 beneficiaries and 
enrollees. The detailed notice will provide a detailed explanation of 
why services are either no longer reasonable and necessary or are 
otherwise no longer covered; a description of any relevant Medicare 
(and Medicare health plan as applicable) coverage rule, instruction, or 
other Medicare policy, and information about how the beneficiary may 
obtain a copy of the Medicare policy, facts specific to the beneficiary 
and relevant to the coverage determination that are sufficient to 
advise the beneficiary of the applicability of the coverage rule or 
policy to his or her case; and any other information required by CMS. 
Hospitals and plans are presently responsible for providing the HINN or 
the NODMAR when a beneficiary disagrees with the discharge or he or she 
is being moved to a lower level of care. As discussed earlier, the 
detailed notice will essentially replace the HINN and NODMAR. 
Therefore, we believe that, in addition to the time it currently takes 
to complete the HINN and NODMAR, an extra 60 minutes is sufficient for 
filling out and delivering the detailed notice. We estimate the per-
notice cost will average $30, based on a $30 per hour rate if the 
notice is prepared and delivered by health care personnel. Based on an 
estimated 130,000 notices annually, we estimate the aggregate cost of 
delivering these notices to be roughly $3.9 million. Since there are 
roughly 6000 affected hospitals, the average costs associated with this 
provision would be about $650 per provider.
    We do not anticipate that the provisions of this final rule will 
have a significant financial impact on individual hospitals. We note 
that the actual discharge notices must be approved through OMB's 
Paperwork Reduction Act process and are also subject to public comment.
    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 405

    Administrative practice and procedure, Health facilities, Health 
professions, Kidney diseases, Medical devices, Medicare, Reporting and 
recordkeeping requirements, Rural areas, X-rays.

42 CFR Part 412

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

42 CFR Part 422

    Administrative practice and procedure, Health facilities, Health 
maintenance organizations (HMO), Medicare Advantage, Penalties, 
Privacy, Provider-sponsored organizations (PSO), Reporting and 
recordkeeping requirements.

42 CFR Part 489

    Health facilities, Medicare, Reporting and recordkeeping 
requirements.

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

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

0
1. The authority citation for part 405 continues to read as follows:

    Authority: Secs. 1102, 1861, 1862(a), 1866, 1869, 1871, 1874, 
1881 and 1886(k) of the Social Security Act (42 U.S.C. 1302, 1395cc, 
1395ff, 1395x, 1395y(a), 1395hh, 1395kk, 1395rr and 1395ww(k)), and 
sec. 353 of the Public Health Service Act (42 U.S.C. 263a).

Subpart J--Expedited Determinations and Reconsiderations of 
Provider Service Terminations, and Procedures for Inpatient 
Hospital Discharges

0
2. Section 405.1205 is added to read as follows:


Sec.  405.1205  Notifying beneficiaries of hospital discharge appeal 
rights.

    (a) Applicability and scope. (1) For purposes of Sec.  405.1204, 
Sec.  405.1205, Sec.  405.1206, and Sec.  405.1208, the term 
``hospital'' is defined as any facility providing care at the inpatient 
hospital level, whether that care is short term or long term, acute or 
non acute, paid through a prospective payment system or other 
reimbursement basis, limited to specialty care or providing a broader 
spectrum of services. This definition includes critical access 
hospitals.
    (2) For purposes of Sec.  405.1204, Sec.  405.1205, Sec.  405.1206, 
and Sec.  405.1208, a discharge is a formal release of a beneficiary 
from an inpatient hospital.
    (b) Advance written notice of hospital discharge rights. For all 
Medicare beneficiaries, hospitals must deliver valid, written notice of 
a beneficiary's rights as a hospital inpatient, including discharge 
appeal rights. The hospital must use a standardized notice, as 
specified by CMS, in accordance with the following procedures:
    (1) Timing of notice. The hospital must provide the notice at or 
near admission, but no later than 2 calendar days following the 
beneficiary's admission to the hospital.
    (2) Content of the notice. The notice must include the following 
information:
    (i) The beneficiary's rights as a hospital inpatient including the 
right to benefits for inpatient services and for post-hospital services 
in accordance with 1866(a)(1)(M) of the Act.
    (ii) The beneficiary's right to request an expedited determination 
of the

[[Page 68721]]

discharge decision including a description of the process under Sec.  
405.1206, and the availability of other appeals processes if the 
beneficiary fails to meet the deadline for an expedited determination.
    (iii) The circumstances under which a beneficiary will or will not 
be liable for charges for continued stay in the hospital in accordance 
with 1866(a)(1)(M) of the Act.
    (iv) A beneficiary's right to receive additional detailed 
information in accordance with Sec.  405.1206(e).
    (v) Any other information required by CMS.
    (3) When delivery of the notice is valid. Delivery of the written 
notice of rights described in this section is valid if--
    (i) The beneficiary (or the beneficiary's representative) has 
signed and dated the notice to indicate that he or she has received the 
notice and can comprehend its contents, except as provided in paragraph 
(b)(4) of this section; and
    (ii) The notice is delivered in accordance with paragraph (b)(1) of 
this section and contains all the elements described in paragraph 
(b)(2) of this section.
    (4) If a beneficiary refuses to sign the notice. The hospital may 
annotate its notice to indicate the refusal, and the date of refusal is 
considered the date of receipt of the notice.
    (c) Follow up notification. (1) The hospital must present a copy of 
the signed notice described in paragraph (b)(2) of this section to the 
beneficiary (or beneficiary's representative) prior to discharge. The 
notice should be given as far in advance of discharge as possible, but 
not more than 2 calendar days before discharge.
    (2) Follow up notification is not required if the notice required 
under Sec.  405.1205(b) is delivered within 2 calendar days of 
discharge.


0
3. Section Sec.  405.1206 is revised to read as follows:


Sec.  405.1206  Expedited determination procedures for inpatient 
hospital care.

    (a) Beneficiary's right to an expedited determination by the QIO. A 
beneficiary has a right to request an expedited determination by the 
QIO when a hospital (acting directly or through its utilization review 
committee), with physician concurrence, determines that inpatient care 
is no longer necessary.
    (b) Requesting an expedited determination. (1) A beneficiary who 
wishes to exercise the right to an expedited determination must submit 
a request to the QIO that has an agreement with the hospital as 
specified in Sec.  476.78 of this chapter. The request must be made no 
later than the day of discharge and may be in writing or by telephone.
    (2) The beneficiary, or his or her representative, upon request by 
the QIO, must be available to discuss the case.
    (3) The beneficiary may, but is not required to, submit written 
evidence to be considered by a QIO in making its decision.
    (4) A beneficiary who makes a timely request for an expedited QIO 
review in accordance with paragraph (b)(1) of this section is subject 
to the financial liability protections under paragraphs (f)(1) and 
(f)(2) of this section, as applicable.
    (5) A beneficiary who fails to make a timely request for an 
expedited determination by a QIO, as described in paragraph (b)(1) of 
this section, and remains in the hospital without coverage, still may 
request an expedited QIO determination at any time during the 
hospitalization. The QIO will issue a decision in accordance with 
paragraph (d)(6)(ii) of this section, however, the financial liability 
protection under paragraphs (f)(1) and (f)(2) of this section does not 
apply.
    (6) A beneficiary who fails to make a timely request for an 
expedited determination in accordance with paragraph (b)(1) of this 
section, and who is no longer an inpatient in the hospital, may request 
QIO review within 30 calendar days after the date of discharge, or at 
any time for good cause. The QIO will issue a decision in accordance 
with paragraph (d)(6)(iii) of this section; however, the financial 
liability protection under paragraphs (f)(1) and (f)(2) of this section 
does not apply.
    (c) Burden of proof. When a beneficiary (or his or her 
representative, if applicable) requests an expedited determination by a 
QIO, the burden of proof rests with the hospital to demonstrate that 
discharge is the correct decision, either on the basis of medical 
necessity, or based on other Medicare coverage policies. Consistent 
with paragraph (e)(2) of this section, the hospital should supply any 
and all information that a QIO requires to sustain the hospital's 
discharge determination.
    (d) Procedures the QIO must follow. (1) When the QIO receives the 
request for an expedited determination under paragraph (b)(1) of this 
section, it must immediately notify the hospital that a request for an 
expedited determination has been made.
    (2) The QIO determines whether the hospital delivered valid notice 
consistent with Sec.  405.1205(b)(3).
    (3) The QIO examines the medical and other records that pertain to 
the services in dispute.
    (4) The QIO must solicit the views of the beneficiary (or the 
beneficiary's representative) who requested the expedited 
determination.
    (5) The QIO must provide an opportunity for the hospital to explain 
why the discharge is appropriate.
    (6)(i) When the beneficiary requests an expedited determination in 
accordance with paragraph (b)(1) of this section, the QIO must make a 
determination and notify the beneficiary, the hospital, and physician 
of its determination within one calendar day after it receives all 
requested pertinent information.
    (ii) When the beneficiary makes an untimely request for an 
expedited determination, and remains in the hospital, consistent with 
paragraph (b)(5) of this section, the QIO will make a determination and 
notify the beneficiary, the hospital, and the physician of its 
determination within 2 calendar days following receipt of the request 
and pertinent information.
    (iii) When the beneficiary makes an untimely request for an 
expedited determination, and is no longer an inpatient in the hospital, 
consistent with paragraph (b)(6) of this section, the QIO will make a 
determination and notify the beneficiary, the hospital, and physician 
of its determination within 30 calendar days after receipt of the 
request and pertinent information.
    (7) If the QIO does not receive the information needed to sustain a 
hospital's decision to discharge, it may make its determination based 
on the evidence at hand, or it may defer a decision until it receives 
the necessary information. If this delay results in extended Medicare 
coverage of an individual's hospital services, the hospital may be held 
financially liable for these services, as determined by the QIO.
    (8) When the QIO issues an expedited determination, the QIO must 
notify the beneficiary, the physician, and hospital of its decision by 
telephone, followed by a written notice that must include the following 
information:
    (i) The basis for the determination.
    (ii) A detailed rationale for the determination.
    (iii) An explanation of the Medicare payment consequences of the 
determination and the date a beneficiary becomes fully liable for the 
services.
    (iv) Information about the beneficiary's right to a reconsideration

[[Page 68722]]

of the QIO's determination as set forth in Sec.  405.1204, including 
how to request a reconsideration and the time period for doing so.
    (e) Responsibilities of hospitals. (1) When a QIO notifies a 
hospital that a beneficiary has requested an expedited determination, 
the hospital must deliver a detailed notice to the beneficiary as soon 
as possible but no later than noon of the day after the QIO's 
notification. The detailed notice must include the following 
information:
    (i) A detailed explanation why services are either no longer 
reasonable and necessary or are otherwise no longer covered.
    (ii) A description of any applicable Medicare coverage rule, 
instruction, or other Medicare policy, including information about how 
the beneficiary may obtain a copy of the Medicare policy.
    (iii) Facts specific to the beneficiary and relevant to the 
coverage determination that are sufficient to advise the beneficiary of 
the applicability of the coverage rule or policy to the beneficiary's 
case.
    (iv) Any other information required by CMS.
    (2) Upon notification by the QIO of the request for an expedited 
determination, the hospital must supply all information that the QIO 
needs to make its expedited determination, including a copy of the 
notices required as specified in Sec.  405.1205 (b) and (c) and 
paragraph (e)(1) of this section. The hospital must furnish this 
information as soon as possible, but no later than by noon of the day 
after the QIO notifies the hospital of the request for an expedited 
determination. At the discretion of the QIO, the hospital must make the 
information available by phone or in writing (with a written record of 
any information not transmitted initially in writing).
    (3) At a beneficiary's (or representative's) request, the hospital 
must furnish the beneficiary with a copy of, or access to, any 
documentation that it sends to the QIO, including written records of 
any information provided by telephone. The hospital may charge the 
beneficiary a reasonable amount to cover the costs of duplicating the 
documentation and/or delivering it to the beneficiary. The hospital 
must accommodate such a request by no later than close of business of 
the first day after the material is requested.
    (f) Coverage during QIO expedited review--(1) General rule and 
liability while QIO review is pending. If the beneficiary remains in 
the hospital past midnight of the discharge date ordered by the 
physician, and the hospital, the physician who concurred with the 
discharge determination, or the QIO subsequently finds that the 
beneficiary requires inpatient hospital care, the beneficiary is not 
financially responsible for continued care (other than applicable 
coinsurance and deductible) until the hospital once again determines 
that the beneficiary no longer requires inpatient care, secures 
concurrence from the physician responsible for the beneficiary's care 
or the QIO, and notifies the beneficiary with a notice consistent with 
405.1205 (c).
    (2) Timely filing and limitation on liability. If a beneficiary 
files a request for an expedited determination by the QIO in accordance 
with paragraph (b)(1) of this section, the beneficiary is not 
financially responsible for inpatient hospital services (other than 
applicable coinsurance and deductible) furnished before noon of the 
calendar day after the date the beneficiary (or his or her 
representative) receives notification (either orally or in writing) of 
the expedited determination by the QIO.
    (3) Untimely request and liability. When a beneficiary does not 
file a request for an expedited determination by the QIO in accordance 
with paragraph (b) of this section, but remains in the hospital past 
the discharge date, that beneficiary may be held responsible for 
charges incurred after the date of discharge or as otherwise stated by 
the QIO.
    (4) Hospital requests an expedited review. When the hospital 
requests a review in accordance with Sec.  405.1208, and the QIO 
concurs with the hospital's discharge determination, a hospital may not 
charge the beneficiary until the date specified by the QIO.
    (g) Effect of an expedited QIO determination. The QIO determination 
is binding upon the beneficiary, physician, and hospital, except in the 
following circumstances:
    (1) Right to request a reconsideration. If the beneficiary is still 
an inpatient in the hospital and is dissatisfied with the 
determination, he or she may request a reconsideration according to the 
procedures described in Sec.  405.1204.
    (2) Right to pursue the general claims appeal process. If the 
beneficiary is no longer an inpatient in the hospital and is 
dissatisfied with this determination, the determination is subject to 
the general claims appeal process.
0
4. In Sec.  405.1208 the following amendments are made:
0
A. In paragraph (a), redesignate the text after the heading ``General 
rule'' as paragraph (a)(1) and add a new paragraph (a)(2) to read as 
set forth below:
0
B. In paragraph (e)(1), in the third sentence, remove the words 
``paragraph (d)(1) of this section'' and add in their place, ``Sec.  
405.1204(b)(1)''.


Sec.  405.1208  Hospital requests expedited QIO review.

    (a) General rule. (1) * * *
    (2) When the hospital requests review, and the QIO concurs with the 
hospital's discharge determination, a hospital may not charge a 
beneficiary until the date specified by the QIO in accordance with 
405.1206(f)(4).
* * * * *

PART 412--PROSPECTIVE PAYMENT SYSTEM FOR INPATIENT HOSPITAL 
SERVICES

0
5. The authority citation from part 412 continues to read as follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh), Sec. 124 of Pub. L. 106-113, 113 Stat. 
1515, and Sec. 405 of Pub. L. of 108-173, 117 Stat. 2266, 42 U.S.C. 
1305. 1395.

0
6. Section 412.42(c) is amended by--
0
A. Republishing the introductory text.
0
B. Revising paragraphs(c)(2) and (c)(3) to read as follows:


Sec.  412.42  Limitations on charges to beneficiaries.

* * * * *
    (c) Custodial care and medically unnecessary inpatient hospital 
care. A hospital may charge a beneficiary for services excluded from 
coverage on the basis of Sec.  411.15(g) of this chapter (custodial 
care) or Sec.  411.15(k) of this chapter (medically unnecessary 
services) and furnished by the hospital after all of the following 
conditions have been met:
* * * * *
    (2) The attending physician agrees with the hospital's 
determination in writing (for example, by issuing a written discharge 
order). If the hospital believes that the beneficiary does not require 
inpatient hospital care but is unable to obtain the agreement of the 
physician, it may request an immediate review of the case by the QIO as 
described in Sec.  405.1208 of this chapter. Concurrence by the QIO in 
the hospital's determination will serve in lieu of the physician's 
agreement.
    (3) The hospital (acting directly or through its utilization review 
committee) notifies the beneficiary (or his or her representative) of 
his or her discharge rights in writing consistent with Sec.  405.1205 
and notifies the beneficiary, in accordance with Sec.  405.1206 of this 
chapter (if applicable) that in the hospital's opinion, and with the 
attending physician's concurrence

[[Page 68723]]

or that of the QIO, the beneficiary no longer requires inpatient 
hospital care.
* * * * *

PART 422--MEDICARE ADVANTAGE PROGRAM

0
7. The authority citation for part 422 continues to to read as follows:

    Authority: Secs. 1102, 1866, and 1871 of the Social Security Act 
(42 U.S.C. 1302, 1395cc, and 1395hh).

0
8. Section 422.620 is revised to read as follows:


Sec.  422.620  Notifying enrollees of hospital discharge appeal rights.

    (a) Applicability and scope. (1) For purposes of Sec.  422.620 and 
Sec.  422.622, the term hospital is defined as any facility providing 
care at the inpatient hospital level, whether that care is short term 
or long term, acute or non acute, paid through a prospective payment 
system or other reimbursement basis, limited to specialty care or 
providing a broader spectrum of services. This definition also includes 
critical access hospitals.
    (2) For purposes of Sec.  422.620 and Sec.  422.622, a discharge is 
a formal release of an enrollee from an inpatient hospital.
    (b) Advance written notice of hospital discharge rights. For all 
Medicare Advantage enrollees, hospitals must deliver valid, written 
notice of an enrollee's rights as a hospital inpatient including 
discharge appeal rights. The hospital must use a standardized notice, 
as specified by CMS, in accordance with the following procedures:
    (1) Timing of notice. The hospital must provide the notice at or 
near admission, but no later than 2 calendar days following the 
enrollee's admission to the hospital.
    (2) Content of the notice. The notice of rights must include the 
following information:
    (i) The enrollee's rights as a hospital inpatient, including the 
right to benefits for inpatient services and for post hospital services 
in accordance with 1866(a)(1)(M) of the Act.
    (ii) The enrollee's right to request an immediate review, including 
a description of the process under Sec.  422.622 and the availability 
of other appeals processes if the enrollee fails to meet the deadline 
for an immediate review.
    (iii) The circumstances under which an enrollee will or will not be 
liable for charges for continued stay in the hospital in accordance 
with 1866(a)(1)(M) of the Act.
    (iv) The enrollee's right to receive additional information in 
accordance with section Sec.  422.622(e).
    (v) Any other information required by CMS.
    (3) When delivery of notice is valid. Delivery of the written 
notice of rights described in this section is valid if--
    (i) The enrollee (or the enrollee's representative) has signed and 
dated the notice to indicate that he or she has received the notice and 
can comprehend its contents, except as provided in paragraph (b)(4) of 
this section; and
    (ii) The notice is delivered in accordance with paragraph (b)(1) of 
this section and contains all the elements described in paragraph 
(b)(2) of this section.
    (4) If an enrollee refuses to sign the notice. The hospital may 
annotate its notice to indicate the refusal, and the date of refusal is 
considered the date of receipt of the notice.
    (c) Follow up notification. (1) The hospital must present a copy of 
the signed notice described in paragraph (b)(2) of this section to the 
enrollee (or enrollee's representative) prior to discharge. The notice 
should be given as far in advance of discharge as possible, but not 
more than 2 calendar days before discharge.
    (2) Follow up notification is not required if the notice required 
under 422.620(b) is delivered within 2 calendar days of discharge.
    (d) Physician concurrence required. Before discharging an enrollee 
from the inpatient hospital level of care, the MA organization must 
obtain concurrence from the physician who is responsible for the 
enrollee's inpatient care.


0
9. Section 422.622 is revised to read as follows:


Sec.  422.622  Requesting immediate QIO review of the decision to 
discharge from the inpatient hospital.

    (a) Enrollee's right to an immediate QIO review. An enrollee has a 
right to request an immediate review by the QIO when an MA organization 
or hospital (acting directly or through its utilization committee), 
with physician concurrence determines that inpatient care is no longer 
necessary.
    (b) Requesting an immediate QIO review. (1) An enrollee who wishes 
to exercise the right to an immediate review must submit a request to 
the QIO that has an agreement with the hospital as specified in Sec.  
476.78 of this chapter. The request must be made no later than the day 
of discharge and may be in writing or by telephone.
    (2) The enrollee, or his or her representative, upon request by the 
QIO, must be available to discuss the case.
    (3) The enrollee may, but is not required to, submit written 
evidence to be considered by a QIO in making its decision.
    (4) An enrollee who makes a timely request for an immediate QIO 
review in accordance with paragraph (b)(1) of this section is subject 
to the financial liability protections under paragraph (f) of this 
section, as applicable.
    (5) When an enrollee does not request an immediate QIO review in 
accordance with paragraph (b) of this section, he or she may request 
expedited reconsideration by the MA organization as described in Sec.  
422.584, but the financial liability rules of paragraph (f) of this 
section do not apply.
    (c) Burden of proof. When an enrollee (or his or her 
representative, if applicable) requests an immediate review by a QIO, 
the burden of proof rests with the MA organization to demonstrate that 
discharge is the correct decision, either on the basis of medical 
necessity, or based on other Medicare coverage policies. Consistent 
with paragraph (e)(2) of this section, the MA organization should 
supply any and all information that a QIO requires to sustain the 
organization's discharge determination.
    (d) Procedures the QIO must follow. (1) When the QIO receives the 
enrollee's request for an immediate review under paragraph (b), the QIO 
must notify the MA organization and the hospital that the enrollee has 
filed a request for an immediate review.
    (2) The QIO determines whether the hospital delivered valid notice 
consistent with Sec.  422.620(b)(3).
    (3) The QIO examines the medical and other records that pertain to 
the services in dispute.
    (4) The QIO must solicit the views of the enrollee (or his or her 
representative) who requested the immediate QIO review.
    (5) The QIO must provide an opportunity for the MA organization to 
explain why the discharge is appropriate.
    (6) When the enrollee requests an immediate QIO review in 
accordance with paragraph (b)(1) of this section, the QIO must make a 
determination and notify the enrollee, the hospital, the MA 
organization, and the physician of its determination within one 
calendar day after it receives all requested pertinent information.
    (7) If the QIO does not receive the information needed to sustain 
an MA organization's decision to discharge, it may make its 
determination based on the evidence at hand, or it may defer a decision 
until it receives the necessary information. If this delay results in 
extended Medicare coverage of an individual's hospital services, the MA

[[Page 68724]]

organization may be held financially liable for these services, as 
determined by the QIO.
    (8) When the QIO issues its determination, the QIO must notify the 
enrollee, the MA organization, the physician, and hospital of its 
decision by telephone, followed by a written notice that must include 
the following information:
    (i) The basis for the determination.
    (ii) A detailed rationale for the determination.
    (iii) An explanation of the Medicare payment consequences of the 
determination and the date an enrollee becomes fully liable for the 
services.
    (iv) Information about the enrollee's right to a reconsideration of 
the QIO's determination as set forth in Sec.  422.626(f), including how 
to request a reconsideration and the time period for doing so.
    (e) Responsibilities of the MA organization and hospital. (1) When 
the QIO notifies an MA organization that an enrollee has requested an 
immediate QIO review, the MA organization must, directly or by 
delegation, deliver a detailed notice to the enrollee as soon as 
possible, but no later than noon of the day after the QIO's 
notification. The detailed notice must include the following 
information:
    (i) A detailed explanation of why services are either no longer 
reasonable and necessary or are no longer covered.
    (ii) A description of any applicable Medicare coverage rule, 
instruction, or other Medicare policy including information about how 
the enrollee may obtain a copy of the Medicare policy from the MA 
organization.
    (iii) Any applicable MA organization policy, contract provision, or 
rationale upon which the discharge determination was based.
    (iv) Facts specific to the enrollee and relevant to the coverage 
determination sufficient to advise the enrollee of the applicability of 
the coverage rule or policy to the enrollee's case.
    (v) Any other information required by CMS.
    (2) Upon notification by the QIO of a request for an immediate 
review, the MA organization must supply any and all information, 
including a copy of the notices sent to the enrollee, as specified in 
Sec.  422.620(b) and (c) and paragraph (e)(1) of this section, that the 
QIO needs to decide on the determination. The MA organization must 
supply this information as soon as possible, but no later than noon of 
the day after the QIO notifies the MA organization that a request for 
an expedited determination has been received from the enrollee. The MA 
organization must make the information available by phone (with a 
written record made of any information not transmitted initially in 
writing) and/or in writing, as determined by the QIO.
    (3) In response to a request from the MA organization, the hospital 
must supply all information that the QIO needs to make its 
determination, including a copy of the notices required as specified in 
Sec.  422.620(b) and (c) and paragraph (e)(1) of this section. The 
hospital must furnish this information as soon as possible, but no 
later than by close of business of the day the MA organization notifies 
the hospital of the request for information. At the discretion of the 
QIO, the hospital must make the information available by phone or in 
writing (with a written record of any information not transmitted 
initially in writing).
    (4) Upon an enrollee's request, the MA organization must provide 
the enrollee a copy of, or access to, any documentation sent to the QIO 
by the MA organization, including written records of any information 
provided by telephone. The MA organization may charge the enrollee a 
reasonable amount to cover the costs of duplicating the documentation 
for the enrollee and/or delivering the documentation to the enrollee. 
The MA organization must accommodate such a request by no later than 
close of business of the first day after the day the material is 
requested.
    (f) Coverage during QIO expedited review. (1) An MA organization is 
financially responsible for coverage of services as provided in this 
paragraph, regardless of whether it has delegated responsibility for 
authorizing coverage or discharge determinations to its providers.
    (2) When the MA organization determines that hospital services are 
not, or are no longer, covered,
    (i) If the MA organization authorized coverage of the inpatient 
admission directly or by delegation (or the admission constitutes 
emergency or urgently needed care, as described in Sec.  422.2 and 
Sec.  422.112(c)), the MA organization continues to be financially 
responsible for the costs of the hospital stay when an appeal is filed 
under paragraph (a)(1) of this section until noon of the day after the 
QIO notifies the enrollee of its review determination, except as 
provided in paragraph (b)(5) of this section. If coverage of the 
hospital admission was never approved by the MA organization or the 
admission does not constitute emergency or urgently needed care as 
described in Sec.  422.2 and Sec.  422.112(c), the MA organization is 
liable for the hospital costs only if it is determined on appeal that 
the hospital stay should have been covered under the MA plan.
    (ii) The hospital may not charge the MA organization (or the 
enrollee) if--
    (A) It was the hospital (acting on behalf of the enrollee) that 
filed the request for immediate QIO review; and
    (B) The QIO upholds the non-coverage determination made by the MA 
organization.
    (3) If the QIO determines that the enrollee still requires 
inpatient hospital care, the MA organization must provide the enrollee 
with a notice consistent with Sec.  422.620(c) when the hospital or MA 
organization once again determines that the enrollee no longer requires 
acute inpatient hospital care.
    (4) If the hospital determines that inpatient hospital services are 
no longer necessary, the hospital may not charge the enrollee for 
inpatient services received before noon of the day after the QIO 
notifies the enrollee of its review determination.
    (g) Effect of an expedited QIO determination. The QIO determination 
is binding upon the enrollee, physician, hospital, and MA organization 
except in the following circumstances:
    (1) Right to request a reconsideration. If the enrollee is still an 
inpatient in the hospital and is dissatisfied with the determination, 
he or she may request a reconsideration according to the procedures 
described in Sec.  422.626(f).
    (2) Right to pursue the standard appeal process. If the enrollee is 
no longer an inpatient in the hospital and is dissatisfied with this 
determination, the enrollee may appeal to an ALJ, the MAC, or a federal 
court, as provided for under this subpart.

PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL

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

    Authority: Secs. 1102, 1819, 1861, 1864(m), 1866, 1869, and 1871 
of the Social Security Act (42 U.S.C. 1302, 1395i-3, 1395x, 
1395aa(m), 1395cc, and 1395hh).


0
11. Section 489.27 is revised to read as follows:


Sec.  489.27  Beneficiary notice of discharge rights.

    (a) A hospital that participates in the Medicare program must 
furnish each Medicare beneficiary or enrollee, (or an individual acting 
on his or her behalf), timely notice as required by section 
1866(A)(1)(M) of the Act and in accordance with Sec.  405.1205 and 
Sec.  422.620. The hospital must be able to demonstrate compliance with 
this requirement.

[[Page 68725]]

    (b) Notification by hospitals and other providers. Hospitals and 
other providers (as identified at 489.2(b)) that participate in the 
Medicare program must furnish each Medicare beneficiary, or 
representative, applicable CMS notices in advance of discharge or 
termination of Medicare services, including the notices required under 
Sec.  405.1200, Sec.  405.1202, Sec.  405.1206, and Sec.  422.624 of 
this chapter.

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

    Dated: October 13, 2006.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: November 15, 2006.
Michael O. Leavitt,
Secretary.
[FR Doc. E6-20131 Filed 11-24-06; 8:45 am]
BILLING CODE 4120-01-P