[Federal Register Volume 72, Number 17 (Friday, January 26, 2007)]
[Notices]
[Pages 3854-3856]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-1274]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-4126-FN]


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

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

ACTION: Final notice.

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SUMMARY: This notice announces our decision to approve Medicare 
Advantage Deeming Authority of the Accreditation Association for 
Ambulatory Health Care, Inc. for health maintenance organizations and 
local preferred provider organizations for a term of 6 years.

[[Page 3855]]


DATES: Effective Date: This final notice is effective July 12, 2006 
through July 11, 2012.

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

SUPPLEMENTARY INFORMATION:

I. Background

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

II. Deeming Applications Approval Process

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

III. Proposed Notice

    On October 27, 2006, we published a proposed notice (71 FR 63019) 
announcing reapproval of Medicare Advantage Deeming Authority of the 
Accreditation Association for Ambulatory Health Care, Inc. In the 
proposed notice, we detailed our evaluation criteria. Under section 
1852(e)(4) of the Act and our regulations at Sec.  422.158, we 
conducted a review and evaluation of the AAAHC's accreditation program 
(including its standards and monitoring protocol) in accordance with 
the criteria specified by our regulation, which includes, but are not 
limited to the following:

A. Components of the Review Process

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

[[Page 3856]]

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

B. Results of the Review Process

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

IV. Provisions of the Final Notice

    No comments were received in response to the proposed notice 
published October 27, 2006. Therefore, based on the review and 
observations described in section III of this final notice, we have 
determined that AAAHC's requirements for HMOs and local PPOs continue 
to meet or exceed our requirements. We recognize AAAHC as a national 
accreditation organization for HMOs and PPOs that request participation 
in the Medicare program, and we approve AAAHC's deeming program 
effective July 12, 2006 through July 11, 2012.

V. Collection of Information Requirements

    This final notice does not impose any information collection and 
record keeping requirements subject to the Paperwork Reduction Act 
(PRA). Consequently, it does not need to be reviewed by the Office of 
Management and Budget (OMB) under the authority of the PRA. The 
requirements associated with granting and withdrawal of deeming 
authority to national accreditation organizations, codified in 42 CFR 
part 488, ``Survey, Certification, and Enforcement Procedures,'' are 
currently approved by OMB under OMB approval number 0938-0690.

VI. Regulatory Impact Statement

    We have examined the impact of this notice as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review) and the 
Regulatory Flexibility Act (RFA) September 19, 1980 (Pub. L. 96-354).
    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, when regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects; distributive impacts; and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more in any 1 year). This notice 
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 governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
$6 million to $29 million in any 1 year. Individuals and States are not 
included in the definition of a small entity. We are not preparing an 
analysis for the RFA because we have determined that this notice will 
not have a significant economic impact on a substantial number of small 
entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds. We are not preparing an 
analysis for section 1102(b) of the Act because we have determined that 
this notice will not have a significant impact on the operations of a 
substantial number of small rural hospitals.
    This notice merely recognizes AAAHC as a national accreditation 
organization that has approval for deeming authority for HMOs or PPOs 
that are participating in the MA program.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. That threshold 
level is currently approximately $120 million. This notice will not 
have a consequential effect on State, local, or tribal governments or 
on the private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. Since this notice will not impose any costs on State or 
local governments, the requirements of E.O. 13132 are not applicable.
    In accordance with the provisions of Executive Order 12866, this 
notice was not reviewed by the Office of Management and Budget.

    Authority: Secs. 1851 and 1855 of the Social Security Act (42 
U.S.C. 1395w-21 and 42 U.S.C. 1395w-25).

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

    Dated: December 14, 2006.
Leslie V. Norwalk,
Acting Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. E7-1274 Filed 1-25-07; 8:45 am]
BILLING CODE 4120-01-P