[Federal Register Volume 80, Number 99 (Friday, May 22, 2015)]
[Rules and Regulations]
[Pages 29796-29840]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12087]



[[Page 29795]]

Vol. 80

Friday,

No. 99

May 22, 2015

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Part 401, 488 and 489





 Medicare and Medicaid Programs: Revisions to Deeming Authority Survey, 
Certification, and Enforcement Procedures; Final Rule

  Federal Register / Vol. 80 , No. 99 / Friday, May 22, 2015 / Rules 
and Regulations  

[[Page 29796]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 401, 488 and 489

[CMS-3255-F]
RIN 0938-AQ33


Medicare and Medicaid Programs: Revisions to Deeming Authority 
Survey, Certification, and Enforcement Procedures

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

ACTION: Final rule.

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SUMMARY: This final rule revises the survey, certification, and 
enforcement procedures related to CMS oversight of national accrediting 
organizations (AOs). The revisions implement certain provisions under 
the Medicare Improvements for Patients and Providers Act of 2008 
(MIPPA). The revisions also clarify and strengthen our oversight of AOs 
that apply for, and are granted, recognition and approval of an 
accreditation program in accordance with the statute. The rule also 
extends some provisions, which are applicable to Medicare-participating 
providers, to Medicare-participating suppliers subject to certification 
requirements, and clarifies the definition of ``immediate jeopardy.''

DATES: This final rule is effective on July 21, 2015.

FOR FURTHER INFORMATION CONTACT: 
    Cindy Melanson, (410) 786-0310 or Patricia Chmielewski, (410) 786-
6899.

SUPPLEMENTARY INFORMATION: 

Acronyms

ADI Advanced Diagnostic Imaging Services
AO Accrediting Organization
ASC Ambulatory Surgical Center
CAH Critical Access Hospital
CfC Condition for coverage
CFR Code of Federal Regulations
CMHC Community Mental Health Center
CMS Center for Medicare & Medicaid Services
CoP Condition of Participation
CORF Comprehensive Outpatient Rehabilitation Facility
EMTALA Emergency Medical Treatment and Labor Act
GAO Government Accountability Office
HHA Home Health Agency
HHS [Department of] Health and Human Services
LSC Life Safety Code
MIPPA Medicare Improvements for Patients and Providers Act of 2008
NF Nursing Facility
OIG Office of the Inspector General
OPT Provider of outpatient physical therapy and speech language 
pathology services
RHC Rural Health Clinic
SA State Survey Agency
SNF Skilled Nursing Facility
SOM State Operations Manual
The Act Social Security Act
TJC The Joint Commission

I. Background

    To participate in the Medicare program, providers and suppliers of 
health care services, must be substantially in compliance with 
specified statutory requirements of the Social Security Act (the Act), 
as well as any additional regulatory requirements specified by the 
Secretary of the Department of Health and Human Services (HHS). These 
requirements are generally called ``conditions of participation'' 
(CoPs) for most providers, ``requirements'' for skilled nursing 
facilities (SNFs), ``conditions for coverage'' (CfCs) for ambulatory 
surgical centers (ASCs) and other suppliers, and ``conditions for 
certification'' for rural health clinics (RHCs). A provider or supplier 
that does not substantially comply with the applicable requirements 
risks having its participation in the Medicare program terminated.
    In accordance with section 1864 of the Act, state health 
departments or similar agencies, under an agreement with CMS, survey 
institutional health care providers and suppliers to ascertain 
compliance with the applicable CoPs, CfCs, conditions of certification, 
or requirements (as applicable), and certify their findings to us. 
Based on these state survey agency (SA) certifications, we determine 
whether the provider or supplier qualifies, or continues to qualify, 
for participation in the Medicare program.
    Section 1865(a) of the Act allows ``provider entities'' which 
include all types of providers and suppliers subject to certification, 
with the exception of kidney transplant programs and end stage renal 
dialysis facilities, to demonstrate compliance with Medicare CoPs, 
requirements, CfCs, or conditions for certification through 
accreditation by a CMS-approved program of a national accrediting 
organization (AO). If an AO is recognized by the Secretary as having 
standards for accreditation that meet or exceed all applicable Medicare 
CoPs, requirements, CfCs, or conditions for certification, then any 
provider or supplier accredited by the AO's CMS-approved Medicare 
accreditation program may be deemed by us to meet the Medicare 
requirements.
    We are responsible for the review, approval and subsequent 
oversight of national AOs' Medicare accreditation programs, and for 
ensuring that providers or suppliers accredited by the AO meet the 
quality and patient safety standards required by the Medicare CoPs, 
requirements, CfCs, and conditions for certification. Any national AO 
seeking approval of an accreditation program in accordance with section 
1865(a) of the Act must apply for and be approved by CMS, for a period 
not to exceed 6 years. The AO must reapply for renewed CMS approval of 
an accreditation program before the date that its approval period 
expires. This allows providers or suppliers accredited under the 
program to continue to be deemed to be in compliance with the 
applicable Medicare CoPs, requirements, CfCs, and conditions for 
certification. Regulations implementing these provisions are found at 
Sec. Sec.  488.1 through 488.9.
    In accordance with Sec.  488.8(f), if we determine that an AO's 
accreditation program requirements are no longer comparable to Medicare 
requirements we may open a deeming authority review and give the AO up 
to 180 days to adopt comparable requirements. If at the end of the 
deeming authority review period, the AO's accreditation program has 
failed to adopt comparable requirements, we may give the AO conditional 
approval with a probationary period for up to one year. Within 60 days 
after the end of any probationary period, we will make a final 
determination as to whether or not an accreditation program continues 
to meet the Medicare requirements and will issue an appropriate notice 
(including reasons for the determination) to the AO and, in the case of 
a decision to terminate approval, to affected providers or suppliers.
    In addition, section 1834(e) of the Act requires that, beginning 
January 1, 2012, Medicare payment may only be made for the technical 
component of advanced diagnostic imaging (ADI) services paid under the 
physician fee schedule to a supplier who is accredited by an AO 
designated by the Secretary. Oversight of these AOs is limited to the 
requirements at Sec.  414.68, rather than those for accreditation 
programs based on section 1865 of the Act, codified at 42 CFR part 488, 
subpart A.
    Section 125 of the Medicare Improvements for Patients and Providers 
Act of 2008 (MIPPA) (Pub. L. 110-275, enacted on July 15, 2008), 
entitled ``Revocation of Unique Deeming Authority of The Joint 
Commission,'' removed prior subsection (a) of section 1865 of the Act 
and redesignated the remaining subsections. The effect of this removal 
was to give the Joint

[[Page 29797]]

Commission's (TJC) hospital accreditation program the same regulatory 
status as all other accreditation programs, that is, subject to CMS 
approval, in accordance with section 1865 of the Act. It also removed 
from section 1861(e) of the Act, which provides the definition of a 
hospital for Medicare purposes, references to TJC's hospital 
accreditation program and replaced them with references to 
accreditation programs recognized by the Secretary in accordance with 
section 1865(a) of the Act. Similar revisions were made to section 
1875(b) of the Act, which had the effect of expanding the requirement 
for us to report annually to Congress on the performance of TJC's 
hospital program to a requirement to report on all accreditation 
programs approved in accordance with section 1865 of the Act.
    Previously, in response to recommendations of the HHS Office of 
Inspector General (OIG) and the Government Accountability Office (GAO) 
to strengthen our oversight and ensure greater accountability of AOs, 
particularly for hospitals, the Secretary instructed CMS to respond 
appropriately.\1\ AOs and their CMS-approved Medicare accreditation 
programs significantly impact the health and safety of patients and the 
quality of care provided in Medicare-participating facilities across 
the country. We currently have 21 approved accreditation programs 
offered by nine national AOs. In fiscal year 2013, accredited 
facilities deemed to meet Medicare standards accounted for over 13,000 
Medicare-participating facilities (not including accredited clinical 
laboratories). With the MIPPA statutory amendments Congress provided us 
with additional authority to strengthen our oversight.
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    \1\ HCFA's Approval and Oversight of Private Accreditation 
Organizations (HEHS-99-197R), September 30, 1999. http://www.gao.gov/products/HEHS-99-197R.
    CMS Needs Additional Authority to Adequately Oversee Patient 
Safety in Hospitals (GAO-04-850) July 20, 2004. http://www.gao.gov/new.items/d04850.pdf.
    Hospital Oversight in Medicare: Accreditation and Deeming 
Authority. May 6, 2005. http://www.nhpf.org/library/issue-briefs/IB802_Accreditation_05-06-05.pdf.
    Moffett, M. & Bohara, A. Hospital Quality Oversight by the Joint 
Commission on Accreditation of Healthcare Organizations. Vol.31, 
No.4 (Fall 2005) pp 629-647.
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    Part 489 consists of regulations codifying Medicare provider 
agreement requirements found in section 1866 of the Act. Currently, 
certain provisions of part 489, such as the regulation governing the 
effective date of a Medicare agreement at Sec.  489.13, apply to both 
providers, as well as to supplier types that are subject to 
certification requirements. However, other provisions pertinent to 
termination of such Medicare agreements apply only to providers. Part 
489 also contains a definition of ``immediate jeopardy'', which applies 
to all types of certified providers and suppliers, but which employs 
terminology pertinent only to residential healthcare facilities.
    In the April 5, 2013 Federal Register, we published the proposed 
rule ``Medicare and Medicaid Programs: Revisions to Deeming Authority 
Survey, Certification, and Enforcement Procedures'', and provided for a 
60-day public comment period (78 FR 20564). In the May 24, 2013 Federal 
Register, we published a notice extending the deadline for the comment 
period from June 4, 2013, to July 5, 2013 (78 FR 31472).

II. Provisions of the Proposed Rule and Analysis of and Responses to 
Public Comments

A. Summary of the Proposed Rule

    To conform our regulations to the MIPPA revisions to section 1865 
of the Act, we proposed to eliminate the requirements at current Sec.  
488.5. That regulation currently addresses hospital accreditation by 
TJC (previously known as JCAHO) and AOA separately. The regulation also 
fails to reflect the statutory requirement at section 1865(a)(1) of the 
Act (as revised by MIPPA) that an AO's Medicare accreditation program 
meet or exceed all, that is, each, applicable requirement separately.
    We also proposed numerous revisions to clarify and reorganize the 
existing regulations, to eliminate potentially confusing and 
unnecessary duplication, as well as to strengthen our ongoing oversight 
processes, consistent with the recommendations of the OIG, and the GAO. 
All 21 CMS-approved AO Medicare accreditation programs have received 
extensive reviews in accordance with the application and reapplication 
processes described at part 488 in recent years. The high volume of 
comprehensive AO application and reapplication reviews that we 
conducted has provided us with an abundance of opportunities to apply 
the existing AO oversight regulations in a variety of circumstances. 
This experience has helped us to identify areas of our regulations that 
need revision to more clearly articulate our intentions. Furthermore, 
we have become aware of the need to clarify, reorganize, and amend our 
regulations to support a more efficient and effective oversight 
process. In several situations, we had to require an AO to implement 
corrective action(s) to ensure comparability with the Medicare 
requirements. We have also opened deeming reviews outside the normal 
reapplication process, and issued conditional approvals with a 
probationary period. We believe it is necessary to revise and expand 
our enforcement tools to strengthen our ability to address serious and 
pervasive areas of AO non-compliance with the Medicare requirements; 
ensure that the AO takes the necessary corrective actions to address 
areas of non-compliance; and ensure continuing compliance and 
comparability with Medicare requirements.
    To ensure that AOs are enforcing Medicare standards adequately, 
SAs, under the authority of section 1864 of the Act, often perform 
additional follow-up surveys on CMS' behalf to ensure that AOs are 
holding provider entities accountable for compliance with Medicare 
requirements. These Medicare validation surveys are of two types. The 
first is a comprehensive survey of a representative sample of provider 
entities' operations. The second is a ``substantial allegation 
validation survey'', carried out in response to an allegation from an 
outside party that a specific provider entity is in violation of 
Medicare CoPs, CfCs, or requirements. The scope of these surveys is 
limited to the matter that was the subject of the complaint.
    Currently, when a ``substantial allegation validation survey'' of 
an accredited provider or supplier finds substantial non-compliance 
with one or more of Medicare's conditions or requirements, we have 
limited flexibility in terms of our next steps. We may either proceed 
immediately to enforcement action based on that substantial allegation 
validation survey, or may require the SA to conduct another, full 
survey which assesses compliance with all of the CoPs or CfCs for that 
type of provider or supplier. We proposed to expand our flexibility to 
provide a third option for a SA to conduct another, more comprehensive 
survey, but not a full survey. This would allow us to make efficient 
use of survey resources while maintaining an effective enforcement 
process that is appropriate for each specific case.
    We also proposed to expand the scope of the AO oversight 
regulations at part 488, subpart A to include AOs with CMS-approved 
Medicare accreditation programs for ADI services. This proposed 
expansion was part of our initiative to broaden our quality oversight 
of both the CMS-approved

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AOs, as well as the suppliers of ADI services, which would include 
future rulemaking to develop and implement more detailed Medicare 
health and safety standards which the designated AOs must incorporate 
into their accreditation programs for suppliers of these services.
    We proposed to amend part 489 to use more appropriate terminology 
in the definition of ``immediate jeopardy'' and to extend certain of 
the provisions governing termination of provider agreements to 
certified suppliers.

B. Public Comments Received

    We received 50 timely pieces of correspondence in response to the 
April 5, 2013 proposed rule. Most of the comments came from AOs and 
hospital associations or individual hospitals, with a few comments from 
practitioner organizations and from groups of patient/resident 
advocates. This final rule discusses the provisions of the April 5, 
2013 proposed rule, summarizes the public comments received on each 
provision, sets out our response to those comments, and sets forth the 
provisions of our final rule.

1. General Comments

    Many commenters presented brief comments expressing opposition to 
the proposed rule, but their comments were so vague that we are unable 
to provide specific responses to them.
    Comment: Several commenters stated that the framework for oversight 
of hospital accreditation established with the creation of Medicare in 
1965 was a public-private partnership. One commenter stated that this 
``partnership'' presumed that TJC applied higher standards than the 
Medicare standards, and that SA surveys and certification were never 
intended to supplant accreditation or become the national benchmark for 
assessing the quality of care in accredited health care organizations. 
The commenter stated that the original partnership premise has been 
replaced by a contractor type of arrangement whereby government sets 
the terms for AOs at all levels of their processes, standards and 
functioning, replacing professionally recognized standards as the 
driver/gold standard. The commenter also stated that there are adverse 
consequences to the quality of care from CMS' enforcement approach to 
AO oversight. They stated that: AOs feared to make changes to their 
programs for fear of being out of step with the State Operations 
Manual; consistency among AOs was preferred to celebrating their 
differences that would lead to positive results; excessive CMS focus on 
too many unimportant issues would result in lost opportunities to work 
with AOs collaboratively on important quality and safety issues; 
increased consumption of government and private sector resources on 
administrative issues brought no value to health care; CMS's 
methodology was an implicit rejection of AOs' quality improvement since 
CMS expected accrediting organizations to cite any provider's deviation 
from a standard, no matter how small or infrequent. The commenter 
stated that the current scheme caused providers to drop accreditation 
because of frustration at being held to standards that mimic government 
standards or because accreditation did not protect them from being 
surveyed by an SA; that CMS had an inordinate focus on administrative 
metrics in the performance evaluation of AOs; that there was excess 
government spending on state investigation of complaints rather than 
trusting AOs to handle complaints; and that the system resulted in 
enormous spending by providers to address non-value driven or 
inappropriate State Operations Manual requirements. The commenter 
objected to CMS's refusal to allow AOs to provide Life Safety Code 
(LSC) waivers or equivalencies; to the general atmosphere of distrust 
between CMS and AOs; and to CMS's disproportionate emphasis on the 
results of validation surveys, which should be conducted by CMS staff 
rather than SA surveyors, who, they asserted, were often biased against 
AOs.
    Response: We disagree with the commenter. The statutory framework 
established in section 1865 of the Act, both before and after the MIPPA 
amendments, prescribes neither a ``partnership'' nor a ``contractor'' 
relationship between CMS and AOs. Instead, section 1865 of the Act 
establishes the criteria for our approval of a national AO's Medicare 
accreditation program(s), and provides specifically for SAs to conduct 
validation surveys to validate the oversight by AOs of certified 
providers and suppliers which they accredit. Section 1875(b) of the Act 
requires us to report to Congress annually on the operation and 
administration of AOs, explicitly including the validation surveys 
specified in section 1865 of the Act. Moreover, the MIPPA amendments of 
2008 clearly establish that all accreditation programs, including TJC's 
hospital accreditation program, are subject to the same CMS oversight. 
Furthermore, section 1864 of the Act establishes that surveys by SAs 
are the method by which CMS establishes a provider's or supplier's 
compliance with the applicable Medicare statutory definition and 
implementing regulations, with section 1865 of the Act creating a 
voluntary alternative option for providers or suppliers to substitute 
accreditation for a state survey in those cases where CMS has approved 
a national AO's Medicare accreditation program. There is no basis in 
the statute for the commenter's assertion that SA surveys and 
certification were never intended to ``supplant'' accreditation. 
Surveys conducted by SAs on our behalf assess compliance with the 
applicable Medicare requirements. While an AO's survey may also assess 
compliance with their own additional, more stringent standards, there 
cannot be any conflict between the standards of a Medicare 
accreditation program and those applied by state surveyors, since the 
express language of section 1865(a)(1) of the Act requires that we find 
that an AO's program meets or exceeds all applicable Medicare 
requirements.
    Likewise, the commenter's concern that an AO cannot issue waivers 
to the LSC requirements adopted in various CoPs or CfCs reflects a 
misunderstanding of our policy. We are not delegating this authority to 
either the SAs or AOs. The commenter's references to the State 
Operations Manual (SOM) also appear to be inappropriate, since this 
manual provides interpretive guidance for the certification regulations 
at part 488, as well as for the provider-specific CoPs, CfCs, 
requirements or conditions for certification. If the commenter believes 
that any particular provider/supplier-specific regulations are in need 
of revision, there are appropriate avenues outside the AO oversight 
process for pursuing those changes. In fact, we have published three 
regulations since 2012 with the express purpose of reducing unnecessary 
burdens on certified providers and suppliers (``Medicare and Medicaid 
Programs; Reform of Hospital and Critical Access Hospital Conditions of 
Participation'' published in the Federal Register on May 16, 2012 (77 
FR 29034); ``Medicare and Medicaid Program; Regulatory Provisions to 
Promote Program Efficiency, Transparency and Burden Reduction'' 
published in the Federal Register on May 16, 2012 (77 FR 29002); and 
``Medicare and Medicaid Programs; Regulatory Provisions to Promote 
Program Efficiency, Transparency, and Burden Reduction; Part II'' 
published in the Federal Register on May 12, 2014 (79 FR 27106), and 
many of the ideas for changes made via those regulations came from AOs, 
as well as regulated

[[Page 29799]]

providers and suppliers. Most importantly, the commenters' objections 
to the regulatory framework for our oversight of providers or suppliers 
seem to focus on the current substantive regulatory requirements for 
those specific providers or suppliers, and they are not suggesting that 
our proposed revisions created these issues.
    We did not propose to change the current regulatory framework to 
create a ``partnership'' relationship such as the one that the 
commenters would prefer, nor are we amending our proposal to do so in 
this final rule, because we believe a ``partnership'' approach would be 
inconsistent with the statutory requirements, as well as with the 
recommendations of both GAO and OIG to strengthen our oversight of AOs.
    Comment: Some commenters expressed general opposition to the 
regulation on the basis that it would subject AOs to standards and 
survey processes that can be out-of-date, ineffective or inappropriate 
to the delivery of high quality care. Commenters stated that the 
delivery of sophisticated, rapidly evolving, and technologically 
intensive services needs to be evaluated using state-of-the art 
knowledge and standards. Some of these commenters objected to AOs being 
held to requirements of the SOM, which is not subject to public notice 
or comment.
    Response: We believe the commenters' concerns appear to be with the 
substantive regulations underlying the SOM, since the manual does not 
by itself create requirements for Medicare providers and suppliers. The 
SOM provides interpretive guidance on the requirements established 
under the provider- and supplier-specific CoPs, requirements, CfCs or 
conditions for certification, as well as under part 488, governing 
survey, certification, and accreditation processes in general. These 
underlying regulations are subject to notice and public comment. 
Moreover, the provider- and supplier-specific regulations are often 
written in broad terms that require adherence to generally accepted 
standards of practice, to enable updates to guidance via the SOM that 
reflect changes in such standards of practice, without having to go 
through the more time-consuming process of revising regulations. All 
SOM revisions are subject to review to ensure that they do not exceed 
the authority of our regulations, and are guidance, not legal 
requirements in and of themselves. We occasionally may solicit input 
from members of the general public before we finalize such guidance. 
Further, as previously stated, we have over the past 2 years proposed 
and adopted numerous changes to the CoPs, requirements, CfCs, and 
conditions for certification to remove outdated and unnecessary 
requirements, and the SOM is generally revised to reflect these 
changes. It should be noted that we never object to an AO establishing 
accreditation requirements that exceed Medicare's requirements; 
problems arise only when an AO's standards are more permissive than, or 
in conflict with, the Medicare requirements. Since section 1865 of the 
Act requires an AO's program to meet or exceed all Medicare 
requirements, we are obligated either to not approve that program or to 
require changes to the program as a condition of approval or continued 
approval. To the extent that the commenters' concerns are with the 
underlying substantive Medicare requirements that an AO's standards 
must meet or exceed, it is beyond the scope of this regulation to 
address those concerns.
    Comment: One commenter stated support for the proposed rule, which 
he found reasonable. The commenter believes the proposed rule provided 
clarity and direction to AOs on a variety of issues.
    Response: We appreciate the commenter's support.
    Comment: One commenter stated that a historical anomaly gave a 
single hospital accreditor statutory recognition and allowed it to 
avoid many of the requirements imposed on other hospital accreditors 
that were subject to CMS oversight. As a result, the commenter, a 
different AO, stated, this made its own hospital accreditation program 
more rigorous, but also gave it a more burdensome, less flexible 
appearance. The commenter stated that health care systems with 
hospitals accredited under both AOs found it difficult to harmonize 
their processes due to these differences. The commenter stated it had 
expected that when the statute was changed in 2008 and all AOs came 
under CMS oversight that this problem would be corrected. However, the 
commenter stated that this was not the case, and that so-called legacy 
issues remain 5 years later. For this reason the commenter indicated 
its reluctance to unconditionally endorse the more demanding oversight 
requirements embodied in the proposed regulation until CMS demonstrates 
its willingness and ability to apply its requirements across the board 
to all AOs.
    Response: We are committed to treating all AOs subject to our 
oversight in the same manner. The commenter is correct that a number of 
legacy issues came to light that we had not identified during the 
initial application review process for the AO program affected by the 
MIPPA amendments, given the complexity of that hospital accreditation 
program. As legacy issues have been identified we have and will 
continue to work diligently to assure that all AOs are treated 
equitably and fairly.
    Comment: One commenter called the proposed rule a reflection of 
CMS's commitment to continuously improve its regulations so that they 
effective promote accountability, protect public health and safety, and 
improve operational efficiency. The commenter indicated their 
understanding of the need for tighter controls and strict application 
of standards and their appreciation of how this will effectuate the 
safe and consistent delivery of quality care to patients. The commenter 
also stated that the challenge is to understand how to preserve the 
innovative aspects of quality by balancing the necessarily prescriptive 
characteristics of accreditation with the ability to promote quality 
using multiple techniques, and expressed his hope that the proposed 
rule would leave room for some degree of flexibility as AOs continue to 
navigate this inherent and dynamic tension.
    Response: We appreciate the commenter's statements about the 
regulation. It is our intention to provide AOs the flexibility to 
innovate within the framework of assuring that the statutory 
requirements to meet or exceed the Medicare requirements are met.
    Comment: A group of commenters expressed concern that the proposed 
rule left open the possibility that CMS could potentially approve an 
AO's application for a Medicare-approved accreditation program for 
Medicare skilled nursing facilities. The commenters noted that section 
1865(a) of the Act exempts nursing homes from the categories of 
providers that are automatically afforded deemed status via Medicare-
approved accreditation programs, and sets a higher bar for deeming SNFs 
because of strong public sentiment that SNF/NF residents should be 
protected by a publicly accountable federal and state survey and 
enforcement system. The commenters cite the objections of TJC and the 
healthcare industry to the proposed rule as evidence why they do not 
believe we should allow powerful private entities to become entrenched 
in LTC facility certification. They further state that while the 
federal/state survey and certification system has not achieved its 
supporters' expectations, it is still a transparent system whose 
activities are visible to the public and accountable to beneficiaries, 
taxpayers and Congress. In the view of these commenters, deemed status 
promotes secrecy and prohibits

[[Page 29800]]

disclosure of information, involves an inherent conflict of interest 
for AOs, involves an inappropriate consultative, collaborative approach 
to surveys, lacks accountability to the public, and inappropriately 
separates the survey process from enforcement, since AOs must refer 
cases to CMS for enforcement. The commenters indicated their support of 
our intent to issue regulations to clarify and strengthen our oversight 
of AOs, but believe that the proposed regulations do not, and probably 
could not, address what they view are the inherent flaws in the 
structure, which favors resolution of compliance problems in a non-
public process after evaluation by private organizations that maintain 
a fiduciary relationship with providers. Another group of organizations 
representing long term care advocacy groups expressed similar concerns, 
and urged CMS to continue to refuse to permit deemed status for long 
term care facilities. This group also noted that AOs would be unable to 
comply with requirements under the Nursing Home Reform Law and the 
Nursing Home Transparency and Improvement provisions of the Affordable 
Care Act (Title VI, Subtitle B, sections 6101 through 6121), which 
among other things, establish a resident's right to examine the results 
of the most recent survey, and require states to post the survey 
reports of long term care facilities on the states' Web sites. They 
also suggest CMS could not maintain Nursing Home Compare without 
submission of survey report data and categorization of some long term 
care facilities as special focus facilities. This group also asserted 
that AOs miss serious problems, noting that research by another 
commenter on the proposed rule stated that four ``special focus 
facilities,'' that is, SNFs/NFs whose citation history has led CMS to 
identify them as having serious, systemic noncompliance issues 
warranting heightened attention and enforcement action, were currently 
accredited by an AO, suggesting that there is a serious discrepancy 
between the standards/survey process used by CMS and those of AOs.
    Response: We thank the commenters for their support of our effort 
to clarify and strengthen our oversight of AOs. The commenters' remarks 
about the inherent problems they see in permitting a role for private 
AOs in the Medicare certification process are outside the scope of this 
proposal, since the statute specifically permits AOs to play such a 
role. The primary purpose of our proposed revisions to part 488 was to 
ensure that the regulations are consistent with the statutory 
provisions at section 1865 of the Act.
    The statute distinguishes AO programs for skilled nursing 
facilities (SNFs) from other accreditation programs for which AOs seek 
CMS approval in two respects: (1) The statutory timeframe for 
completing our review of an AO's application for our approval does not 
apply to accreditation programs for SNFs (section 1865(a)(3)(B) of the 
Act); and (2) even if we find that an AO's SNF accreditation program 
meets or exceeds all applicable requirements, we nevertheless have the 
discretion to not approve that accreditation program. Unlike the 
situation with kidney transplant and end stage renal dialysis programs, 
which, in accordance with the provisions at section 1865(a)(1) of the 
Act, we may not consider for deemed status, the statute does not permit 
us to refuse to accept for review an AO's application for approval of a 
Medicare SNF accreditation program. Accordingly, we proposed revisions 
to the regulations to recognize the technical possibility that at some 
future date an AO may choose to submit an application for our approval 
of a Medicare SNF accreditation program.
    However, we emphasize that it was not the intent of our proposed 
revisions to signal any interest on our part in receiving AO 
applications for approval of a Medicare long term care facility 
accreditation program. We are on record in an earlier report to 
Congress as observing:

    ``A fundamental question is the appropriateness of allowing a 
private entity to perform an important public function. In some 
sense, Congress has already decided the ``appropriateness'' issue 
for skilled nursing facilities (SNFs) by granting the Secretary 
``discretion'' to grant deemed status provided that accreditation 
offers a reasonable assurance that Medicare conditions of 
participation or, for SNFs, requirements, are met. In another sense, 
probably due to the concerns expressed by deeming's opponents, 
Congress has circumscribed the ``appropriateness'' issue by 
exempting SNFs from those accredited provider types for which the 
Secretary ``must'' accord deemed status if it is found that private 
accreditation demonstrates compliance with Medicare conditions of 
participation or requirements. . . . Given that the studies produced 
overwhelming evidence that the [private AO] surveyors often miss 
serious deficiencies, in some cases even apparently unjustified 
deaths, the potential cost savings to deeming would not appear to 
justify the risk to the health and safety of the vulnerable nursing 
home population. . . . If future empirical studies produce 
convincing evidence that LEAP, other accrediting organizations, or a 
revised JCAHO survey meets all the criteria for comparability with 
the HCFA survey discussed in this report, then it might be time to 
revisit the issue of deeming.'' (Executive summary, HCFA Report to 
Congress: Study of Private Accreditation (Deeming) of Nursing Homes, 
Regulatory Incentives and Non-Regulatory Initiatives, and 
Effectiveness of the Survey and Certification System, July 1, 1998, 
accessed on line at https://archive.org/stream/reporttocongress00unit_11/reporttocongress00unit_11_djvu.txt 8/6/
2014).

    There has been no evidence since we issued that report that 
convinces us that we should reconsider our position. To the contrary, 
in our recent annual reports to Congress on the performance of AOs with 
CMS-approved accreditation programs we have continued to identify 
persistent disparities in identification of significant deficient 
practices by AOs when compared to SAs through the validation survey 
program. We continue to work with the AOs through our oversight 
activities to identify and address the sources of these disparities, 
but this more recent evidence is consistent with the position that we 
adopted in 1998.
    Further, the commenters raise important issues about the apparent 
contradictions between section 1865 of the Act's prohibition on 
disclosure of most accreditation surveys and other statutory provisions 
that require disclosure of all long term care facility surveys. Should 
we ever receive an application from an AO seeking our approval of a 
Medicare SNF accreditation program, these and other similar issues 
would weigh very heavily in any decision on our part whether to 
exercise our discretion to disapprove a Medicare SNF accreditation 
program, regardless of whether the AO's application suggested that its 
requirements met or exceeded the Medicare SNF requirements.
    Upon closer review we also acknowledge that the wording of one 
proposed provision did not adequately reflect the special statutory 
status of SNFs at section 1865(a)(3)(B) of the Act. Proposed Sec.  
488.5(f)(2) indicated that we would publish a final notice of our 
decision on an AO's application within 210 calendar days from the date 
we determined the application to be complete, and proposed Sec.  
488.5(f)(2)(ii) would require us to describe, if denying approval, how 
an organization failed to provide reasonable assurance that its 
accredited providers or suppliers meet the applicable Medicare 
requirements. However, section 1865(a)(3)(B) of the Act excepts SNFs 
from this process. Accordingly, in response to comments, we are 
revising the proposed provision at Sec.  488.5(e)(2) to indicate that 
the 210

[[Page 29801]]

day period to publish a final notice does not apply when the 
application is for a SNF accreditation program, and that we may 
disapprove a SNF accreditation application based either on its failure 
to provide reasonable assurances to CMS regarding the equivalence of 
its accreditation program, or based on our decision to exercise our 
discretion to not approve the AO's application for any other reason, in 
accordance with section 1865(a)(1)(B) of the Act.

2. Accreditation of Advanced Diagnostic Imaging Suppliers

    Comment: One commenter indicated concern for our proposal to 
include oversight of the accreditors of the technical component of ADI 
services under part 488. The commenter noted that ADI AOs are currently 
subject to oversight regulations at Sec.  414.68, which were only 
adopted in 2010 and which physician suppliers of ADI have been gaining 
familiarity. The commenter further noted that CMS proposed to retain 
those regulations in addition to applying the proposed regulations at 
part 488. The commenter indicated concern that the part 488 
requirements, which heretofore only applied to AOs for hospitals and 
other specified providers and suppliers, would significantly expand the 
rules applying to ADI accreditation, thus imposing undue burdens on 
both ADI physician suppliers and their patients. The commenter noted 
that physician practices are already struggling to keep up with 
numerous new federal rules and stated they should not be subjected to 
yet another swath of new requirements and/or increased fees via the 
accreditation process. The commenter objected to the following 
proposals: The disclosure of accreditation survey information in 
connection with a CMS enforcement action; loss of accredited status by 
physician ADI suppliers if CMS withdraws its approval of the ADI 
accrediting program without any assurance that the supplier would have 
enough time to obtain timely accreditation elsewhere, unlike the 
arrangement under Sec.  414.68; the requirement to notify of an SA that 
it has submitted an application for accreditation when SAs play no role 
in oversight of ADI suppliers; requirements for ADI suppliers to submit 
to validation surveys, permit photocopying of any records and grant 
immediate access to state survey entities or face termination of their 
Medicare participation, again when SAs have no role to play. The 
commenter urged us to carefully consider the inconsistencies between 
our 2010 rulemaking for ADI accreditation and this proposed rule, and 
to rescind our proposal in light of the practical difficulties of 
applying the standards of hospital accreditation to physician office-
based suppliers of ADI.
    Response: We do not agree that individual elements of increased AO 
oversight are inappropriate or overly burdensome for suppliers of the 
technical component of ADI services. We discussed in the proposed rule 
our initiative to broaden our quality oversight of both the CMS-
approved AOs, as well as suppliers of ADI services, indicating we 
anticipated future rulemaking to develop and implement Medicare health 
and safety standards for suppliers of ADI services that must be 
incorporated into all ADI accreditation programs. This initiative is 
consistent with the GAO's recommendations in its May, 2013 report, 
``Establishing Minimum National Standards and an Oversight Framework 
Would Help Ensure Quality and Safety of Advanced Diagnostic Imaging 
Services.'' However, we agree with the commenter that it is not 
appropriate to include ADI AOs and suppliers of the technical component 
of ADI services in the framework of part 488, which was designed to 
address issues related to SA surveys and voluntary accreditation of 
providers and suppliers that are subject to CoPs, CfCs, conditions for 
certification or long term care requirements to participate in the 
Medicare or Medicaid programs. Additionally the commenter is correct in 
noting that we did not propose to rescind Sec.  414.68, so that 
adoption of our proposed rule would leave ADI AOs subject to two 
different set of requirements. In light of these considerations, we are 
removing from this final rule all provisions that would have the effect 
of subjecting accreditors of suppliers of the technical component of 
ADI services to the provisions of part 488. At a future date we expect 
to propose Medicare health and safety standards for suppliers of ADI 
services that must be incorporated into all ADI accreditation programs, 
and also to propose revisions to Sec.  414.68 which we believe 
necessary to strengthen our oversight of ADI accreditors.
    In response to comments, we also note that our proposed definition 
did not clearly exclude physician practices, and it was never our 
intent to imply that they might be subject to the provisions of parts 
488 and 489. Also, the proposed definition incorrectly referred to 
transplant centers as a type of supplier when in fact they are neither 
a discrete provider or supplier type, but rather a part of a certified 
hospital that is subject to additional conditions. The proposed 
definition also excluded from the definition end stage renal dialysis 
facilities, which are subject to many of the provisions of part 488, 
even though they are not eligible by statute to participate in Medicare 
via deemed status.
    We have also had questions about what categories of supplier are 
subject to accreditation requirements. We believe that to ensure an 
accurate definition of the suppliers to which part 488 applies, it 
would be better to enumerate the covered supplier types. Accordingly, 
in this final rule we are withdrawing our proposed revision to the 
definition of ``supplier'' at Sec.  488.1 and will continue to rely 
upon the current definition.
    We are also removing the reference to ``1843(e) [sic]--Requirements 
for Advanced Diagnostic Imaging (ADI) Services'' at Sec.  488.2, 
Statutory basis.

3. Definitions (Sec.  488.1)

    Section 488.1 sets forth definitions for terms used in part 488. We 
proposed revisions at Sec.  488.1 as follows:
     We proposed deleting the definition of ``accredited 
provider or supplier.'' Use of this language has caused confusion both 
internally and externally. National AOs offer a variety of 
accreditation programs. However, not all programs are CMS-approved 
accreditation programs for the purpose of Medicare participation. We 
received no comments on this proposed revision.
     We proposed deleting the language, ``AOA stands for the 
American Osteopathic Association.'' The proposed revisions to subpart A 
would no longer refer to any specific AO. The proposed revisions 
instead are broader, referencing national AOs generically. We received 
no comments on this proposed revision.
     We proposed expanding the definition of ``certification'' 
to include the rural health clinic (RHC) conditions for certification; 
clarifying that each provider or supplier must meet its respective 
conditions or requirements to be certified; and deleting the language 
``for SNFs and NFs'' to eliminate redundancy. We received no comments 
on this proposed revision.
     We proposed adding a definition of ``conditions for 
certification'' to include the terminology for standards that RHCs must 
meet to participate in the Medicare program. We received no comments on 
this proposed revision.
     We proposed adding a definition of ``deemed status'' to 
increase clarity and reduce ambiguity when referring to the status of 
providers and suppliers accredited under a CMS-approved accreditation 
program and who are

[[Page 29802]]

participating in Medicare via this accreditation.
    Comment: One commenter found the following statement within the 
definition of ``deemed status'' confusing. The proposed definition 
reads: ``Deemed status is an alternative to regular surveys by the SA 
to determine whether or not it continues to meet the Medicare 
requirements.'' The commenter believes this might be especially 
confusing for health care organizations that might not be familiar with 
the deeming ``partnership.'' This commenter suggested instead including 
a statement in the definition saying that voluntary accreditation by a 
CMS-approved AO is an alternative to regular surveys by the SA.
    Response: We agree with the commenter that the definition could be 
clearer and are revising it in this final rule to indicate that it 
means that we have certified a provider or supplier for Medicare 
participation based on its having been accredited under an approved, 
applicable Medicare accreditation program, the AO has recommended it 
for certification based on its accreditation, and we have accepted this 
recommendation and found that all other participation requirements have 
been met.
     We proposed revising the definition of ``full review'' to 
clarify that the regulations at part 488 apply to all providers and 
suppliers, not just hospitals. We received no comments on this proposed 
revision.
     We proposed adding a definition of ``immediate jeopardy'' 
at Sec.  488.1 that would apply generically to all providers and 
suppliers subject to the certification requirements at part 488. The 
proposed definition matched the revision we proposed to the definition 
of ``immediate jeopardy'' at Sec.  489.3. Comments we received are 
included in our discussion of the part 489 proposed amendments.
     We proposed deleting the language, ``JCAHO stands for the 
Joint Commission on Accreditation of Healthcare Organizations,'' since 
the proposed revisions to subpart A do not refer to any specific AO. We 
received no comments on this proposed revision.
     We proposed adding a definition of ``national 
accreditation organization'' to specify that CMS requires a program for 
which an AO is seeking initial approval to already be fully implemented 
and operational nationally.
    Comment: We received several comments on this proposal. One 
commenter proposed that we modify that part of the definition that 
describes the providers and suppliers accredited by national AOs by 
replacing the phrase ``healthcare facility'' with ``healthcare 
organization''. The commenter stated this modification better describes 
organizations that are ``entities'' which may not be traditional bricks 
& mortar establishments with a physical building at which services are 
provided. Several commenters proposed modifying the definition to 
include a minimum quantitative threshold for accredited facilities to 
be considered ``national.'' Another commenter stated that CMS should 
not exceed the existing criteria that an accreditation program includes 
at least one facility in each of at least five states to be considered 
national.
    Response: We agree that the term ``health care facility'' could be 
misconstrued to refer only to providers or certified suppliers who 
provide their services in traditional bricks and mortar settings, 
rather than to those which provide services in the patient's home, such 
as home health agencies or hospices. To address this ambiguity, we 
believe it would be more precise to use the term ``provider entity,'' 
which is used in section 1865 of the Act, rather than the commenter's 
suggested term, ``healthcare organization.'' Section 1865(a)(4) of the 
Act defines a ``provider entity'' as ``a provider of services, 
supplier, facility, clinic, agency, or laboratory.'' Therefore, we are, 
in this final rule, revising the definition to replace the term 
``health care facility'' with ``provider entity.''
    We note that once an AO has a CMS-approved Medicare accreditation 
program for a specific type of provider or supplier, it must only 
accredit provider entities consistent with the organization's 
description as set out in its Medicare provider agreement. For example, 
a Medicare hospital accreditation program may not award one 
accreditation to two hospitals that each have a separate Medicare 
agreement (and thus are two provider entities), nor can it award two 
accreditations, one for each campus, of a two-campus hospital that 
participates in Medicare under one Medicare agreement (and thus is one 
provider entity).
    We do not require an AO seeking initial CMS approval of a new 
Medicare accreditation program to have already accredited at least one 
provider entity in at least five states, as the commenter suggested, 
for us to approve it. Not only do we not employ such an inflexible 
quantitative approach now, we do not agree with the commenters who 
recommended that we incorporate such an approach in the regulatory 
definition of a national AO. We require a program seeking initial 
approval to already be fully implemented, operational, and widely 
dispersed geographically throughout the country, but we do not 
establish a minimum or a specific geographic distribution for provider 
entities that the program must have already accredited. We expect an 
initial application to demonstrate that the AO is capable of scaling up 
over time to handle additional facilities. To avoid creating artificial 
barriers to entry by new AO programs, we believe there should be 
flexibility for us to review the application submitted by an applicant 
against these criteria, without our prescribing a more detailed and 
uniform formula that every applicant must satisfy.
     We proposed expanding the definition of ``provider of 
services or provider'' to include a clinic, rehabilitation agency or 
public health agency that furnishes outpatient physical therapy or 
speech language pathology services. This proposed change is consistent 
with the language at section 1861(p)(4) of the Act. We received no 
comments on this proposal.
     We proposed revising the definition of ``reasonable 
assurance'' by deleting the language ``taken as a whole.'' This 
proposed change would clarify the requirement that an AO's CMS-approved 
accreditation program has standards that meet or exceed all applicable 
Medicare conditions or requirements, consistent with language at 
section 1865(a)(1) of the Act.
    Comment: A number of commenters expressed concern with removing the 
language, ``taken as a whole,'' from the definition of ``reasonable 
assurance.'' The commenters interpreted the intent of the proposed 
definition to be a requirement for an exact, one-one correlation of the 
AO's standards and survey processes with those utilized by SAs in the 
SOM. Another commenter suggested that we add to the definition the 
following wording to indicate that requirements which are not identical 
may achieve the same patient safety goals: ``. . .although AO standards 
and Medicare requirements need not be identical.'' Still another 
commenter stated it opposes a requirement for a one-to-one match 
between AO requirements and the CoPs, and requests we modify the 
definition to clarify that AO requirements need not be identical to 
Medicare requirements but would be acceptable if they achieve the same 
patient safety.
    Response: We believe that the language, ``taken as a whole,'' is 
not consistent with section 1865(a)(1) of the Act, which requires that 
a national AO demonstrate that its Medicare accreditation program meets 
or exceeds all, that is, each, of the conditions or

[[Page 29803]]

requirements applicable under the Act. The same objection applies to 
the alternate language proposed by the commenters related to AO 
standards being acceptable if they achieve the same ``patient safety'' 
or ``patient safety goals.'' In fact, the CoPs, requirements, CfCs and 
conditions for certification applicable to the various types of 
providers and certified suppliers are generally referred to as the 
Medicare ``health and safety standards'' that we have determined to be 
necessary for the health, safety and well-being of patients and 
residents (see, for example, the terminology in section 1861(e)(9) of 
the Act, related to hospitals). Therefore, we believe that the 
statutory requirement for AOs to demonstrate that they meet or exceed 
each of the applicable Medicare requirements is the manner in which AOs 
demonstrate that their accreditation programs achieve patient safety 
goals.
    Further, when determining if all requirements are met or exceeded 
in an AO's program, we are required under section 1865(a)(2) of the Act 
to consider the AO's requirements for accreditation, its survey 
procedures, its ability to provide adequate resources for conducting 
required surveys and supplying information for use in enforcement 
activities, its monitoring procedures for provider entities found out 
of compliance and its ability to provide us with necessary information 
for validation. Our primary purpose for proposing to revise part 488 
was to align our regulatory requirements with the revised statutory 
requirements.
    We also note that the language, ``taken as a whole,'' in the 
current definition of ``reasonable assurance'' also contradicts the 
current Sec.  488.8(a)(1), which requires us, when reviewing an AO's 
application, to review and evaluate the ``equivalency'' of an AO's 
accreditation requirements to the comparable Medicare requirements. 
Likewise, the current regulation at Sec.  488.8(d)(1) requires us to 
compare the ``equivalency'' of an AO's accreditation requirements to 
the comparable Medicare requirements when we impose new requirements or 
change our survey process; when an AO proposes to adopt new 
requirements or change its survey process; or when our approval of the 
AO's program has been in effect for the maximum term specified in the 
final approval notice. In our review of an AO's standards, we have 
adhered to the requirements at Sec.  488.8, which we believe are 
consistent with the statutory requirements. Finally, even though an AO 
must demonstrate that its program meets or exceeds all applicable 
requirements, it is not our practice to insist that the AO's program 
exactly replicate the wording or organization of our regulations, or 
the procedures we establish for SAs. We require AOs to include in their 
applications a crosswalk in which they identify which of their 
requirements are comparable to each Medicare requirement. We then 
evaluate on a case-by-case basis whether accreditation program 
standards, survey and enforcement processes substantively are 
equivalent to or exceed the identified comparable Medicare standards, 
survey and enforcement procedures. We also review the submitted 
crosswalk to ensure that the AO has identified comparable requirements 
for every Medicare requirement. After due consideration of the 
comments, we are adopting in this final rule the definition of 
``reasonable assurance'' as proposed.
     We proposed updating the definition of ``SA'' for added 
clarity and precision. We received no comments on this proposal.
     We proposed revising the definition of ``substantial 
allegation of non-compliance'' to correct a previous error.
    Comment: One commenter suggested, for the definition of 
``substantial allegation of noncompliance'', that complaints only be 
submitted in writing and that they not be permitted to be anonymous, to 
allow an AO to gather and verify all necessary data and avoid spending 
resources on an unfounded allegation. Another commenter suggested 
revising the definition to include the following language: ``could or 
may materially affect the health and safety of patients . . .'' This 
commenter stated that the language in the current definition is so 
broad and vague that SAs conduct about 4000 complaint surveys annually 
in accredited hospitals, but over the past decade only 5 or 6 percent 
of these surveys have resulted in condition-level deficiency citations.
    Response: Part 488 establishes definitions and requirements that 
are applicable, depending on the context, to actions taken by an SA, 
AOs or CMS. The term ``substantial allegation of noncompliance'' is 
used in the current regulations at Sec.  488.7(a) (and in the final 
rule we are adopting at Sec.  488.9(a)) to describe one circumstance in 
which we may require an SA to conduct a validation survey of a deemed 
status provider entity. Validation surveys may be authorized either on 
a representative sample basis or in response to substantial allegations 
of noncompliance. We apply the term ``substantial allegation of 
noncompliance'' to describe the complaints we or SAs receive regarding 
a deemed status provider entity that are of a serious nature and which, 
if found to be true, would mean that the provider entity failed to 
comply with at least one of the Medicare conditions or requirements 
applicable to it. Such substantial noncompliance may be grounds for 
terminating the provider entity's Medicare agreement and participation 
in the Medicare program (with the exception of long-term care 
facilities, whose standards are enforced under sections 1819(h)(2) and 
1919(h)(2) of the Act). Section 1864(c) of the Act authorizes us to use 
SAs to investigate substantial allegations of noncompliance concerning 
a deemed status provider entity.
    It is our longstanding policy, reflected in the current definition 
of this term, that we and SAs accept complaints from a variety of 
sources, including anonymous sources, communicated in any of a wide 
variety of methods, not just in writing. It has been our experience 
that complaints can be a very effective means to focus survey activity 
to identify serious noncompliance by a provider or supplier. The 
definition for a substantial allegation of noncompliance is used to 
establish a threshold for us to authorize an SA investigation of a 
complaint concerning a deemed status provider entity. Thus, we believe 
the commenter who suggested that all complaints be in writing and that 
anonymous complaints not be accepted is misunderstanding the context in 
which this definition is used, given that the commenter's rationale for 
the suggested changes is that they would make it easier for AOs to 
gather and validate data related to complaints the AO investigates.
    For the suggestion that the word ``materially'' be added to the 
definition, we do not believe that this would add any more specificity 
or clarity. We believe that the language about the complaint raising 
doubts as to a provider's or supplier's compliance with any Medicare 
CoP, CfC, condition for certification, or other requirement is 
sufficiently clear. In recent years, we have provided additional 
guidance and training on the appropriate triage categories for 
complaints to both our regional offices, and to SAs, which receive most 
of the complaints. The fact that only 7.4 percent of complaint surveys 
(based on FY 2012 and FY 2013 data) resulted in citations of condition-
level noncompliance does not necessarily mean that the other complaints 
were not credible allegations that warranted further investigation.
    In the course of reviewing the comments on this definition we 
reviewed not only the current definition

[[Page 29804]]

found at Sec.  488.1 but also the statutory basis for a complaint-
driven validation survey in section 1864(c) of the Act. Section 1864(c) 
of the Act permits us to authorize a state to conduct a validation 
survey of a deemed status provider entity because of a ``substantial 
allegation of the existence of a significant deficiency or deficiencies 
which would, if found to be present, adversely affect health and safety 
of patients.'' We believe that our proposed definition should adhere 
more closely to this language by using the term ``would'', as does the 
definition currently found at Sec.  488.1, instead of ``could or may'' 
and are therefore reverting to the terminology found in the current 
rule. Further, since a provider entity could include providers that 
have ``residents'' instead of ``patients'', in the interest of clarity 
we believe the definition should also refer to ``residents,'' and are 
therefore revising the definition upon adoption to refer to both 
residents and patients We are also changing the phrase ``that is,'' 
when referring to sources of complaints, to ``such as,'' since the 
brief list that follows the phrase is clearly intended to provide 
examples and not be an all-inclusive list.
     We proposed modifying the definition of ``supplier'' to 
make it consistent with the definition of supplier as amended by 
section 901 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (Pub. L. 108-173) and to add a clarification 
that for the purposes of part 488 the term ``supplier'' does not 
include suppliers of durable medical equipment and supplies, kidney 
transplant centers, or end stage renal dialysis facilities. As 
indicated in our earlier response to comments about the inclusion of 
suppliers of the technical component of ADI services, we are in this 
final rule withdrawing our proposal to revise the definition of 
``supplier'' and reverting to the current definition, which enumerates 
the types of certified suppliers covered by part 488. There were no 
comments on this.
     We proposed deleting the definition of ``validation review 
period.'' The concept of a fixed review period would not be used in the 
proposed revisions at Sec.  488.8.
    Comment: One commenter objected to our proposal to delete the 
definition of the term ``validation review period,'' stating that it 
will be difficult to validate the AO survey if significant time has 
passed, since the provider may have undergone significant changes in 
practice, policies, procedures and processes.
    Response: We believe the commenter misunderstood the way in which 
the term ``validation review period'' is used in the current 
regulations, and thus the effect of our proposal to delete this term. 
The term ``validation review period'' under the current regulation 
refers to the 1 year period during which CMS conducts a review of the 
validation surveys and evaluates the results of the most recent surveys 
performed by an accrediting organization. After a ``validation review 
period,'' as set out in the current regulation at Sec.  488.8(d)(2), 
CMS will conduct a ``validation review'' if an AO has a disparity rate 
greater than 20 percent; CMS may also conduct a validation review if 
survey results suggest systemic problems in an AO's accreditation 
process. As discussed concerning our proposal for revisions at Sec.  
488.8, we proposed to replace the concept of a ``validation review'' 
with the broader concept of a ``performance'' review, making the 
definition of a ``validation review period'' unnecessary.
    However, we believe the commenter is referring, instead, to a 
maximum length for the time interval between an AO's survey of a 
provider or supplier and the SA's conduct of a representative sample 
validation survey of that provider or supplier. We are retaining our 
current policy, which permits us to use, when calculating the 
validation survey disparity rate for our annual report required under 
section 1875 of the Act, only those validation surveys conducted by SAs 
no more than 60 days after the conclusion of the AO's survey. We note 
that section 3242 of the SOM articulates the requirement for SAs to 
adhere to the 60-day timeframe for conducting a representative sample 
validation survey. After due consideration of these comments, we are, 
in this final rule, not incorporating a definition of a ``validation 
review period.''

4. Conditions of Participation; Conditions for Coverage; Conditions for 
Certification; and Long-Term Care Requirements (Sec.  488.3).

    Section 488.3 sets forth the conditions or requirements that a 
prospective provider or supplier must meet to be approved for 
participation in or coverage under the Medicare program. We proposed 
revising Sec.  488.3 to include the statutory citations and/or 
regulatory references for CAHs, RHCs, hospitals that provide extended 
care services, hospices, CORFs, CMHCs, OPTs, and ADIs. In addition, we 
proposed to revise Sec.  488.3(b) to address all providers as well as 
suppliers of services subject to certification. This proposal would 
also authorize the Secretary to consult with SAs and other 
organizations, which would include all AOs and other national standard-
setting organizations to develop CoPs.
    Comment: Many commenters expressed concerns that the proposed 
revisions to Sec.  488.3(b) reflect a change in policy that is 
inconsistent with the requirements under section 1863 of the Act for us 
to consult with appropriate SAs and national accrediting bodies when 
determining CoPs. One commenter stated that AOs have rigorous standards 
development processes and the ability to stay current with standards of 
medical practice in a way that the CoPs do not. Another commenter 
indicated that making consultation optional could lead to development 
of regulations that are not best practices and therefore negatively 
impact patient care.
    Response: Section 1863 of the Act requires us to consult with 
appropriate SAs and national accrediting bodies when determining CoPs 
for hospitals, psychiatric hospitals, SNFs, HHAs, CORFs, hospices and 
ASCs. By contrast, the current language at Sec.  488.3(b)(1) states, 
the Secretary, after consultation with the JCAHO or AOA, may issue 
Conditions of Participation for hospitals higher or more precise than 
those of either those accrediting bodies. This language was related to 
the now-deleted provision of section 1865 of the Act which concerned 
hospital accreditation by TJC, rather than to section 1863 of the Act. 
We note that it has been our longstanding position that the 
consultation required under section 1863 of the Act is adequately 
addressed through the public notice and comment process for adopting 
new or revised CoPs. It was our intent to broaden the option for 
consultation provided in Sec.  488.3(b) beyond the hospital CoPs, to 
include the regulations governing all providers, as well as those for 
suppliers of services subject to certification, not just hospitals. 
Additionally, we proposed to remove reference to specific AOs found in 
the current regulatory language, consistent with our policy of 
referring to national AOs generically throughout the proposed rule to 
reflect changes made by MIPPA. However, given that Sec.  488.3(b)(1) 
and (2) include provisions that clearly implement requirements under 
section 1863 of the Act, we agree with the commenters that Sec.  
488.3(b) should also be worded in a manner consistent with this 
section. We are, therefore revising, Sec.  488.3(b) to state under 
``Special conditions'' that there shall be consultation with SAs and 
national AOs.

[[Page 29805]]

5. CMS-Approved National Accreditation Programs for Providers and 
Suppliers (Sec.  488.4)

    We proposed to revise Sec.  488.4 as part of our effort to 
reorganize the application and reapplication process, delete 
redundancy, and reorganize the accreditation requirements in a more 
logical sequence as follows:
     We proposed at Sec.  488.4(a) to replace the requirements 
currently set out at Sec.  488.6(a), with some modifications. The 
current regulation specifically lists the eligible provider and 
supplier accreditation programs under which AOs may provide us with 
reasonable assurance that the AO's requirements are at least as 
stringent as the Medicare conditions or requirements. We proposed 
eliminating references to specific types of provider and supplier 
accreditation programs by simply stating that CMS-approved 
accreditation program for providers and suppliers with the exception of 
kidney transplant centers, end stage renal dialysis facilities, and 
suppliers of medical equipment and supplies may provide reasonable 
assurance to CMS that it requires providers and suppliers it accredits 
to meet the requirements that are at least as stringent as the Medicare 
conditions or requirements. Also, since this section addresses national 
accreditation programs for hospitals other than those offered by TJC 
and AOA, as well as accreditation programs for other types of providers 
and suppliers, we proposed deleting the reference to ``requirements 
concerning hospitals accredited by the JCAHO or AOA.''
     We stated in the preamble that we were proposing at Sec.  
488.4(b) a new provision, making it explicit that an AO's CMS-approved 
accreditation program would be approved in its entirety, and that an AO 
would not be permitted to make a recommendation to us for deemed status 
for a provider or supplier unless that provider or supplier satisfied 
all of the AO's requirements for accreditation. This would include both 
the AO accreditation program standards that may exceed the Medicare 
standards, as well as those that meet the Medicare standards.
    Comment: Several commenters indicated the provision described at 
Sec.  488.4(b) in the preamble of the proposed rule did not have any 
corresponding regulatory text. The regulatory text at Sec.  488.4(b) of 
the proposed rule indicates ``Reserved.''
    Response: The commenters are correct that we proposed to reserve 
Sec.  488.4(b). The discussion in the preamble was meant to describe 
the changes we proposed at Sec.  488.4(a)(1).
    Comment: Several commenters objected to our statement in the 
preamble that we were making explicit in proposed Sec.  488.4(a)(1) 
that an AO's CMS-approved accreditation program is approved in its 
entirety. Many commenters submitted similar comments stating that 
reviewing accreditation programs in their entirety represents an 
overreach of federal authority. The commenters also indicated their 
belief that if an AO finds that a provider or supplier meets all of its 
accreditation standards that correspond to Medicare conditions, it 
should be able to recommend deemed status even if the provider or 
supplier fails to meet other requirements of the accreditation program 
which exceed the Medicare requirements. One commenter indicated that 
this provision would set up a dual standard for non-accredited 
providers and suppliers, which only have to meet the Medicare 
conditions, and deemed status providers and suppliers that would have 
to meet the higher accreditation standards.
    Response: Section 1865(a)(1) of the Act refers to ``accreditation 
of a provider entity'' and authorizes us to accept such accreditation 
as demonstrating the provider's or supplier's compliance with Medicare 
conditions or requirements, if we find that the AO's accreditation 
program meets or exceeds all applicable requirements. If a provider or 
supplier fails to meet the standards for accreditation, then it does 
not satisfy the statutory requirement for deemed status. It does not 
matter which of the accreditation program standards the provider or 
supplier has failed to satisfy.
    We also note that it is a voluntary decision on the part of an AO 
whether it includes standards that exceed the Medicare requirements in 
the accreditation program that it submits to us for review when seeking 
approval as a Medicare accreditation program. We review the program 
that an AO submits to us, and when we approve a program for purposes of 
our granting Medicare deemed status to providers or supplier accredited 
under it, we approve it in its entirety. We do not take any position 
regarding whether standards exceeding CMS's are necessary or advisable, 
but likewise, we do not insist that they be removed so that the 
accreditation program is purely Medicare-specific. We believe the 
statutory language in section 1865 of the Act, which requires us to 
find that an accreditation program ``meets or exceeds'' all applicable 
Medicare standards, indicates an expectation that a program submitted 
for our review might contain elements that are not required under the 
Medicare standards.
    It would be contrary to the statute if CMS accepted deemed status 
based on satisfaction of only some of the accreditation requirements in 
its CMS-approved Medicare accreditation program, because the statute 
only allows us to recognize those facilities that have received 
accreditation. If a provider or supplier meets Medicare standards but 
fails to receive accreditation, it can ask for a state survey instead. 
Likewise, it would be arbitrary and contrary to our regulations at 
Sec.  488.8(d)(1)(ii) if an AO modified portions of a CMS-approved 
Medicare accreditation program subsequent to our approval without 
informing us. Although the AO may believe that its changes would not 
affect any accreditation provisions related to Medicare requirements, 
the determination of whether a revised program continues to meet or 
exceed Medicare standards is CMS's, rather than the AO's, to make. We 
have not delegated to the AO itself our responsibility under the 
statute to ensure that an accreditation program's standards, including 
any changes to them, continue to meet or exceed Medicare requirements. 
This is not a new policy on our part, because we believe it is required 
by our current regulations. We have only proposed to make this policy 
more explicit in our proposed regulations (at Sec.  488.5(a)(18)) due 
to the confusion experienced by a few AOs regarding this issue. Our 
role is to determine if the AO's standards meet or exceed all 
applicable Medicare requirements. On that basis we determine whether to 
approve the AO's program for Medicare deeming purposes, and, in the 
case of an AO's proposal to revise standards within its CMS-approved 
Medicare accreditation program, whether a program with the proposed 
revisions would continue to meet or exceed the substantive Medicare 
facility standards.
    In our view, this does not create a double standard with deemed 
status providers and suppliers having to satisfy higher standards to 
participate in Medicare. We note that the decision on the part of a 
provider or supplier to seek to demonstrate compliance with Medicare 
requirements through accreditation rather than survey by an SA is 
voluntary. We welcome the decision by many providers and suppliers to 
seek accreditation under programs that have requirements that exceed 
the Medicare standards, but this does not change the statutory 
requirement that they must be

[[Page 29806]]

accredited to be recommended for deemed status.
    In view of the changes we made to the definition of ``supplier,'' 
as discussed above, we are making conforming changes in this final rule 
to Sec.  488.4(a), indicating that we will not accept applications for 
approval of accreditation programs for kidney transplant centers within 
hospitals or for end stage renal dialysis facilities. We are also 
making a technical correction to replace potentially ambiguous language 
stating that AOs apply for our approval to accredit providers or 
suppliers with more precise language indicating that they apply for our 
approval of their accreditation programs.

6. Application and Reapplication Procedures for National Accreditation 
Organizations (Sec.  488.5).

    We proposed to revise Sec.  488.5 to clarify the requirement that 
an AO seeking our approval of a Medicare accreditation program be 
national in scope. We also proposed moving the regulatory language 
currently at Sec.  488.4 to Sec.  488.5, with modifications, as part of 
our effort to reorganize the accreditation requirements in a more 
logical sequence.
    Specifically, we proposed the following revisions:
     We proposed at Sec.  488.5(a) to replace the requirement 
currently set out at Sec.  488.4(a) concerning the application and 
reapplication procedures for an AO seeking our initial or continued 
approval of a Medicare accreditation program. We further proposed 
revising the current language to clarify that all of these provisions 
would apply to both initial applications for new accreditation 
programs, as well as reapprovals of existing CMS-approved accreditation 
programs, and to clarify that each application for approval would 
pertain to a single provider/supplier-specific accreditation program. 
We received no comments on the above proposed changes and are adopting 
them as proposed in this final rule.
     We proposed at Sec.  488.5(a)(1) to require an AO seeking 
either our initial approval of a new Medicare accreditation program or 
renewed approval of an existing program to demonstrate for that program 
that the organization meets the definition of a ``national AO.'' 
Section 1865 of the Act applies only to programs of national 
accreditation bodies. We stated in our proposal that this demonstration 
must be specific to each accrediting program for which new or renewed 
CMS approval is sought. We indicated as an example that an AO which has 
one or more existing CMS-approved programs and which seeks our initial 
approval of a new accreditation program must demonstrate that the new 
program has been implemented nationally. Several commenters addressed 
this provision in terms of the definition of a ``national AO'' and we 
addressed their comments in our discussion of Sec.  488.1 above. We are 
adopting this provision in this final rule without change.
     We proposed at Sec.  488.5(a)(1) to require an AO seeking 
either our initial approval of a new Medicare accreditation program or 
renewed approval of an existing program to demonstrate for that program 
that the organization meets the definition of a ``national AO.'' 
Section 1865 of the Act applies only to programs of national 
accreditation bodies. We stated in our proposal that this demonstration 
must be specific to each accrediting program for which new or renewed 
CMS approval is sought. We indicated as an example that an AO which has 
one or more existing CMS-approved programs and which seeks our initial 
approval of a new accreditation program must demonstrate that the new 
program has been implemented nationally. Several commenters addressed 
this provision in terms of the definition of a ``national AO'' and we 
addressed their comments in our discussion of Sec.  488.1 above. We are 
adopting this provision in this final rule without change.
     We proposed at Sec.  488.5(a)(2) to replace the 
requirement currently set out at Sec.  488.4(a)(1), concerning the AO's 
identification of the types of provider or supplier for which it is 
seeking approval. We indicated that this revision would clarify that 
each application for our approval must be specific to a particular type 
of provider or supplier and would be separate and distinct from 
applications for our approval of accreditation programs for other types 
of providers or suppliers. We received no comments on this proposed 
revision and are adopting it in this final rule as proposed.
     We proposed at Sec.  488.5(a)(3) to replace the 
requirement, currently set out at Sec.  488.4(a)(2), concerning the 
requirement that an AO submit a detailed comparison of its standards to 
Medicare requirements, and set out the components of an acceptable 
crosswalk. We received no comments on this proposed revision and are 
adopting it in this final rule as proposed.
     We proposed at Sec.  488.5(a)(4) to replace the 
requirement currently set out at Sec.  488.4(a)(3), which addresses the 
requirement that the AO must provide us a detailed description of its 
survey process in its application for our approval of an accreditation 
program. We proposed to leave the language of this provision unchanged. 
We received no comments on this proposed provision and are adopting it 
in this final rule as proposed.
     We proposed at Sec.  488.5(a)(4)(i) to replace the 
requirement currently set out at Sec.  488.4(a)(3)(i), concerning the 
frequency of surveys. We stated that the proposed revisions reflect 
existing policy requiring re-survey of an accredited provider or 
supplier no later than 36 months after the previous accreditation 
survey, and thus would not impose any new requirements. We indicated 
that we were proposing the revision to clarify the existing 
requirements.
    Comment: A commenter proposed expanding the definition of 
``survey'' to include a ``desk review'' for suppliers of advanced 
diagnostic imaging.
    Response: Since we are rescinding our proposal to apply the 
provisions of part 488 to accreditors of suppliers of the technical 
component of advanced diagnostic imaging services, it is not necessary 
to address in this final rule issues that are specific to such 
accreditation. For deemed status providers and suppliers, as defined in 
this final rule, a reaccreditation survey assessing compliance with all 
accreditation program standards must be conducted via an on-site 
survey.
    Comment: One commenter indicated that the current AO performance 
measure used by CMS to assess if triennial surveys are timely requires 
that, for ASCs surveyed for first-time participation in an AO's 
Medicare accreditation program, the start date [for accreditation] is 
the date an acceptable plan of correction has been received, and 
therefore the end date of the accreditation term and deemed status term 
is no later than 36 months after that date. The commenter notes the 
proposal would change the requirement to 36 months from the initial 
survey date. The commenter suggested this would result in an 
inconsistency with the current performance measures and will lead to 
unnecessary changes in the current AO reporting structure.
    Response: We proposed a maximum interval of 36 months from the 
``previous accreditation survey,'' which could encompass more than the 
last date the AO was on-site as part of its reaccreditation survey. The 
commenter may be confusing the special requirements that apply to 
accreditation surveys of initial applicants for Medicare participation 
for determining a participation effective date with the way in which we 
calculate the timeframe for when a triennial survey is due. However, in 
response to this

[[Page 29807]]

comment, we believe it would more accurately reflect our current 
practice and reduce confusion to use the phrase ``prior accreditation 
effective date'' and are making this revision in this final rule.
    Comment: One commenter proposed that we require that a minimum 
percentage of surveys commence during off-business hours, to further 
reduce the predictability of surveys.
    Response: We do not impose such an obligation on SAs, except in the 
case of long term care facilities, and we see no compelling reasons why 
we should do so for AOs for non-long term care provider or supplier 
types. While it might be possible to conduct a survey outside typical 
``business hours'' in health care facilities that provide care on a 24 
hours per day/7 days per week basis, such surveys in ambulatory care 
settings would generally eliminate the possibility of surveyors being 
able to observe how care is actually provided by the facility. Even in 
the case of other types of acute care facilities operating on a 24/7 
basis, there would be fewer opportunities to observe the wide range of 
health care services furnished than during daytime hours. If an AO has 
received a credible allegation of serious deficiencies that occur only 
during specific time periods, then it would be logical to conduct a 
survey during such periods, but we are not aware of such complaints 
specific to off-hours operations. We are making no changes in response 
to this comment.
     We proposed at Sec.  488.5(a)(4)(ii) a new provision to 
ensure surveys conducted by AOs were comparable to the Medicare 
requirements, consistent with section 1865(a)(2) of the Act. 
Specifically, we proposed that an AO be required to demonstrate the 
comparability of its survey process and guidance to the process and 
guidance that we require for SAs conducting a Federal survey for the 
same provider or supplier type; the operative guidance for each 
provider and supplier type is specified in our Publication 100-07, the 
SOM.
    Comment: One commenter representing health care services consumers 
indicated its support for requiring comparability of the survey 
process, to ensure surveys meet Medicare requirements. By contrast, a 
number of other commenters representing hospitals or AOs expressed 
their opposition to this proposal. Several of these commenters said 
that the SOM is outdated, and often includes language and practices 
that do not reflect the best practice in quality and safety standards. 
A number of these commenters also noted that the SOM represents 
subregulatory guidance and is not open for public comment and review, 
with one commenter expressing concern about the precedent set by 
holding private entities to sub-regulatory guidance they had no voice 
in creating. The commenter further expressed concerns that the proposed 
provision would require AOs to have comparably-sized survey teams and 
survey duration, which would greatly increase the cost of an 
accreditation survey. This commenter suggested that SAs typically 
maintain much larger survey teams and conduct longer surveys to meet 
the requirements set out in the SOM, and urged us to remove this 
requirement and continue to place the authority with AOs to use state-
of-the-art survey processes to evaluate compliance with Federal 
requirements. Another commenter suggested we follow the best practices 
established by AOs and not hold the latter to the SOM, instead letting 
them survey at greater detail and test innovative approaches. This 
commenter urged us to clarify that the term ``demonstrating 
comparability'' does not mean identical standards and survey processes 
related to the SOM. This commenter also expressed concerns that 
requiring comparably sized survey teams and survey duration would 
increase costs. Another commenter expressed similar cost-based 
concerns, and also was concerned about an adverse impact on current AO 
survey processes, such as tracer methodology, complaint surveys, 
frequency, and costs. Another commenter suggested that we establish a 
comment process for the SOM prior to final publication and a process 
for distributing the responses to the AOs. One commenter requested that 
we make it clear that we do not require one-to-one comparability 
between the SOM and AO procedures.
    Response: The SOM is a complex document that provides guidance for 
a number of different Medicare regulations. The commenters' references 
to what they view as outdated quality and safety standards seem to be 
referring to those parts of the SOM that provide our official policy 
interpreting the various provider/supplier-specific CoPs, CfCs, 
conditions for certification or requirements. Thus, this aspect of the 
objection to the proposed provision at Sec.  488.5(a)(4)(ii) concerning 
comparability of survey processes appears to be misplaced. We also note 
for the record that the SOM does not establish but instead implements 
existing regulatory requirements, and thus is subregulatory guidance 
that is not subject to the requirements for public notice and comment. 
Nevertheless, we often confer informally with AOs and other members of 
the general public when we revise our interpretive guidance for the 
applicable conditions, and have found their input to be invaluable in 
helping us develop and update such guidance.
    We also have noted that it is not uncommon for objections to be 
raised about ``the SOM'' which are really objections to the underlying 
regulatory requirements found in the various conditions or 
requirements. We take such concerns seriously and have made a number of 
regulatory changes to various providers and suppliers in recent years, 
to revise outdated regulations and remove unduly burdensome 
requirements that do not contribute to increased patient or resident 
quality and safety. However, we emphasize that an AO does not have the 
authority to modify in its Medicare accreditation program Medicare 
requirements that it disagrees with, nor is the AO application review 
process the appropriate venue for an AO to air, or us to resolve, its 
complaints about substantive provider/supplier-specific Medicare 
conditions of participation, conditions for coverage, conditions for 
certification, or long term care requirements. The purpose of the 
application review is to determine whether the applicant's 
accreditation program meets or exceeds existing Medicare standards.
    For the commenters' objections to survey process issues, such as 
survey team composition, survey frequency and duration, how complaints 
are handled, etc., we note that Section 1865(a)(1) of the Act requires 
us to make a finding that the AO's accreditation program meets or 
exceeds all applicable Medicare conditions or requirements, and section 
1865(a)(2) of the Act requires us, when making this finding, to 
consider a national AOs ``survey procedures'' and ``. . . its ability 
to provide adequate resources for conducting required surveys and 
supplying information for use in enforcement activities, its monitoring 
procedures for provider entities found out of compliance with the 
conditions or requirements. . . .'' The longstanding requirements under 
the existing regulations at Sec.  488.4(a)(3) implemented this 
statutory provision by requiring AOs to provide us with detailed 
information on their survey processes, including their forms, 
guidelines and instructions to surveyors, frequency of their surveys, 
the size and composition of their survey teams, the qualifications of 
their surveys, the way in which they train their surveyors, etc. 
Moreover, the existing regulations at Sec.  488.8(a)(2)(ii)

[[Page 29808]]

require us, when reviewing an application, to determine ``the 
comparability of survey procedures to those of SAs, including survey 
frequency, and the ability to investigate and respond appropriately to 
complaints against accredited facilities.'' It has been our practice to 
assess comparability by reviewing the information in the AO's 
application in light of the SOM survey process requirements for SAs, 
which implement survey process requirements found in parts 488 and 489 
of our regulations governing certification and provider agreements. Our 
proposal was only intended to make the role of the SOM in articulating 
and implementing the regulatory requirements for survey process more 
explicit. We believe commenters' concerns about our imposing survey 
processes that inhibit use of best, most efficient survey practices 
that are efficient are unfounded. In fact, it has been our practice to 
allow both SAs and AOs flexibility in determining the size and 
composition of their survey teams and the duration of their surveys, 
and considerable variation exists among both SAs and AOs in this 
regard. We not only have no objection to an AO's use of a tracer 
methodology, but we also have developed tools for state surveyors to 
employ tracers as one component of their surveys. We note, further, 
that many of the commenters represent hospital organizations that are 
accredited by TJC, whose hospital program was not subject to the 
comparability requirements of section 1865 of the Act prior to July 15, 
2010. This may account for their erroneous perception that our proposal 
represented a significant departure from current requirements and 
practices. Nevertheless, in consideration of the above comments, we are 
revising this provision upon adoption to require an AO to provide 
documentation demonstrating the comparability of its survey process and 
surveyor guidance to those required for SAs conducting federal surveys 
for the same provider or supplier type, in accordance with the 
applicable regulations. We are removing the explicit reference in this 
provision to the SOM as unnecessary, but this will not change our 
practice of assessing comparability in light of the SOM survey process 
requirements for SAs, which implement survey process requirements found 
in parts 488 and 489 of our regulations governing certification and 
provider agreements.
    Comment: One commenter expressed concern this provision would 
conflict with recent legislation in its State recognizing national AO 
accreditation in place of a State hospital licensure survey, 
recognizing that an AO can be more nimble in updating its accreditation 
standards than the State can in updating its licensure standards. The 
commenter stated the provisions of this rule would be a step back by 
forcing AOs to rely on outdated provisions that are part of the SOM.
    Response: We do not establish state licensure requirements. We 
believe this comment also is referring primarily to provider/supplier-
specific conditions or requirements rather than to survey process 
requirements. However, for both accreditation standards and survey 
processes, we are compelled by section 1865 of the Act to determine 
whether an AO's requirements meet or exceed all applicable Medicare 
requirements. It is not within our authority to consider the impact our 
determinations may have directly or indirectly on a state's licensure 
requirements.
     We proposed at Sec.  488.5(a)(4)(iii) to redesignate the 
requirement currently set out at Sec.  488.4(a)(3)(ii). This provision 
requires an accreditation organization to provide us with information 
on the content and frequency of survey personnel training. We proposed 
to leave unchanged the current language of this requirement. We 
received no comments on this proposed provision and are adopting it in 
this final rule as proposed.
     We proposed at Sec.  488.5(a)(4)(iv), consistent with the 
requirement currently set out at Sec.  488.4(a)(3), to require an AO to 
provide us a copy of its most recent survey report and any other 
survey-related information we require. We proposed to require 
documentation that the AO's survey reports identify for each 
accreditation deficiency cited the applicable Medicare requirement. We 
received no comments on this proposed provision and are adopting it in 
this final rule as proposed.
     We proposed at Sec.  488.5(a)(4)(v) to replace the 
requirement currently set out at Sec.  488.4(a)(3)(iii), concerning the 
survey review and accreditation decision-making process. We proposed to 
delete language that would be redundant with language being 
incorporated into the proposed revised regulatory language at Sec.  
488.5(a)(8). We received no comments on this provision and are adopting 
it in this final rule as proposed.
     We proposed at Sec.  488.5(a)(4)(vi) to replace the 
requirement currently at Sec.  488.4(a)(3)(iv) and to revise the 
existing language to specify that the AO must provide us a description 
of its provider or supplier notification procedures as well as its 
timelines for notifying surveyed facilities of noncompliance with 
accreditation program standards. We received no comments on this 
provision and are adopting it in this final rule as proposed.
     We proposed at Sec.  488.5(a)(4)(vii) a provision similar 
to the current requirement at Sec.  488.4(a)(3)(iv), regarding 
providing us information on the AO's procedures for monitoring the 
facilities found to be out of compliance. In our proposal, we added a 
requirement to provide information on timelines for monitoring 
corrections, and revised the provision to clarify the requirement and 
provide more specific and precise language. We indicated that the 
proposal was consistent with our longstanding practice and thus imposed 
no new burdens.
    Comment: One commenter expressed support for this provision, saying 
it would allow CMS to better monitor an AO and its actions.
    Response: We thank the commenter for their support. We are adopting 
this provision without change in this final rule.
     We proposed at Sec.  488.5(a)(4)(viii) to replace the 
requirement currently set out at Sec.  488.8(a)(3), which requires the 
AO to provide us a copy of its most recent accreditation survey for a 
specified provider or supplier, together with any other information 
related to the survey that we may require. We proposed modifying the 
language of this provision for consistency and clarity.
    Comment: One commenter requested clarification whether the proposed 
requirement would change the current process for providing survey 
information to CMS. Several commenters responded to this provision 
expressing concerns about disclosing survey and survey-related 
information to CMS. One commenter indicated that the proposed provision 
would provide CMS with broad authority to collect information related 
to a survey, including patient safety work product (PSWP) protected 
under the Federal Patient Safety and Quality Improvement Act (PSQIA). 
The commenter suggested CMS add clarifying language acknowledging that 
it may not be feasible for the AO to provide some information obtained 
from an accredited entity during a survey. The commenter also requested 
that we add the language ``when specifically requested by CMS'' since 
it does not believe routine submission of information to CMS is needed. 
Another commenter expressed concern that certain information protected 
from disclosure by federal standards would lose its protected

[[Page 29809]]

status if shared, and requested we add clarification that information 
required would only be related to the deemed status accreditation 
survey. By contrast, other commenters stated that CMS cannot monitor 
the work of AOs without seeing their most recent surveys for a provider 
and indicated the proposed provision would improve CMS's ability to 
obtain this information. The commenters suggested that failure of an AO 
to furnish us with copy of an accreditation survey be grounds for 
withdrawing deeming authority for that organization.
    Response: Consistent with the existing requirement at Sec.  
488.8(a)(3) we have, since 2009, required AOs to routinely submit 
information to us electronically, including survey information 
extracted from their survey reports. Since 2013, we have asked for 
these submissions to be made to us monthly. We have also required that 
AOs routinely submit to us, for initial surveys only, a copy of the 
actual survey report. In addition to this routine electronic submission 
of data from every survey report and survey reports for initial 
surveys, we also request, from time to time, a copy of the actual 
survey report, as well as additional supporting information, such as 
plans of correction for reaccreditation or complaint investigation 
surveys. The proposed revision to the regulation was not intended to 
alter current practice. Section 1865(b) of the Act prohibits us from 
disclosing accreditation surveys, except for home health surveys, but 
permits us to disclose surveys to the extent that they related to an 
enforcement action we take. With the exception of denials of 
certification to applicants for initial enrollment in the Medicare 
program, we generally use our enforcement discretion to not take 
enforcement action based solely on an accreditation survey. For 
example, if an AO notifies us that it has terminated accreditation due 
to a provider's or supplier's inability to demonstrate compliance, we 
instruct the SA to survey that provider or supplier as soon as 
possible, and use the results of the SA's survey to make enforcement 
decisions. Accordingly, with the exception of home health agency 
surveys, generally most accreditation surveys may not be disclosed by 
us to any third parties.
    For an AO not being permitted to disclose to CMS patient safety 
work product protected under the Patient Safety and Quality Improvement 
Act (PSQIA) (Public Law 109-41), we do not believe that the PSQIA was 
intended to inhibit our legitimate AO approval, validation and other 
oversight activities under part 488. Additionally, providers/suppliers 
cannot unilaterally declare the factual information used in developing 
a ``patient safety work product'' (PSWP) to be itself non-disclosable. 
Indeed, the Department's final rule implementing PSQIA, ``Patient 
Safety and Quality Improvement; Final Rule'' states explicitly that 
``nothing in the final rule or the statute relieves a provider from his 
or her obligation to disclose information from such original records or 
other information that is not patient safety work product to comply 
with state reporting or other laws.'' (73 FR 70732, 70786, November 21, 
2008.) An AO's survey report must include the factual evidence that 
supports the citations the AO makes for violations of its accreditation 
standards. Accordingly, we find it unlikely that AO survey reports or 
other material we might request would contain PSWP. We agree that the 
PSQIA does not permit an AO to re-disclose to us PSWP disclosed to the 
AO by a ``provider,'' as that term is defined in the PSQIA and its 
implementation regulation, and which encompasses both providers and 
suppliers that are certified for Medicare participation on the basis of 
their accreditation by the AO. We expect that accrediting 
organizations, in carrying out their surveys and appropriately 
documenting their findings, will generate survey reports that do not 
contain PSWP, and thus may be provided to us, as required under section 
1865 of the Act.
    For the commenter's suggestion that we add language, ``when 
specifically requested by CMS,'' we believe that our proposal could 
more effectively differentiate between the routine electronic 
submission we require of information extracted from each survey report 
from copies of the survey report, as well as other information related 
to the survey report which we request routinely in the case of surveys 
of initial applicants for Medicare participation, from case-specific 
circumstances where we request additional information. Accordingly, in 
this final rule we are revising this provision to state that an AO 
agrees, as a condition of CMS approval of its accreditation program, to 
provide us with information extracted from each accreditation survey as 
part of its data submissions required under Sec.  488.5(a)(11)(ii) and, 
upon request from us, a copy of the most recent AO survey tougher we 
any other information related to the survey that we may require.
     We proposed at Sec.  488.5(a)(4)(ix) to replace the 
requirement currently found at Sec.  488.4(b)(3)(vii), requiring an AO 
to notify us when it identifies an immediate threat to the health and 
safety of patients, that is, a situation that constitutes an 
``immediate jeopardy'' as that term is defined at Sec.  489.3. We 
proposed to revise the timeframe for notifying us from the current 
requirement of ten days to within one business day from the date the 
immediate jeopardy is identified. We indicated this proposed provision 
would ensure that we are notified of situations that may put the health 
and safety of patients receiving care in Medicare-participating 
facilities at serious risk of harm, and which would require us to take 
immediate action to enforce the Medicare requirements applicable to 
these facilities.
    Comment: One commenter noted a contradiction between our proposed 
requirement and the requirement for AOs accrediting suppliers of the 
technical component of advanced diagnostic imaging services at Sec.  
414.68(g)(14)(vi), which requires notification to CMS of an immediate 
jeopardy within 2 business days.
    Response: We agree that there was a conflict between our proposal 
and Sec.  414.68(g)(14)(vi). However, since we have removed all 
reference to accreditation of suppliers of the technical component of 
ADI services from part 488 in this final rule, there is no longer a 
conflict. AOs that accredit such suppliers continue to be subject to 
the requirement at Sec.  414.68(g)(14)(vi). We expect to propose 
changes to Sec.  414.68 in future rulemaking, to strengthen our 
oversight of AOs that accredit suppliers of the technical component of 
ADI services, making such oversight more consistent with part 488.
    Comment: Several commenters found the proposed shortening of the 
timeframe from 10 days to 1 business day problematic. One commenter 
suggested 2 days as an alternative. Another commenter said a one-day 
notification is feasible, but may result in omission of important 
information or details pertaining to the case, which could lead CMS to 
make uninformed decisions or conclusions. This commenter also suggested 
that CMS Regional Offices be held to the same requirement and should 
notify the pertinent AO when the SA or Regional Office declares an 
immediate jeopardy situation. Another commenter also suggested that its 
experience with follow-up requests from us for more detailed 
information calls into question the utility of requiring faster, but 
less detailed notification. On the other hand, another commenter 
applauded us for reducing the notification time, but believed that 1 
business day was too

[[Page 29810]]

long, given the possibility of greater harm to patients occurring. This 
group suggested we revise our proposal to require immediate 
notification.
    Response: We believe that once an immediate jeopardy has been 
determined by an AO to be present, regardless of whether or not the AO 
survey team also finds that the immediate jeopardy was removed while 
the team was on site, there is sufficient information within one 
business day for AOs to provide notification to CMS. As previously 
indicated, we generally exercise our enforcement discretion to require 
an SA survey before taking official enforcement action against a 
provider or supplier, and to arrange a timely state survey to determine 
whether there continues to be either an immediate jeopardy or even 
lower-level but substantial noncompliance requiring our enforcement 
action, we need prompt notice from an AO. We also note that since the 
original provision was adopted, email has generally replaced hard-copy 
mail as the primary means of communication between AOs and ourselves, 
and thus an extended 10-day time frame is no longer necessary. We do 
recognize that we frequently ask an AO to provide us with more detail 
about an immediate jeopardy after its initial notice to us before we 
authorize a state survey, and thus we believe it would be appropriate 
to extend the notification timeframe to 2 business days. For the 
comment calling for us to shorten the timeframe to immediate 
notification, we believe that this affords the AO too little time to 
complete its internal notification and decision-making processes. Since 
we expect that the AO will be taking appropriate action to require 
prompt correction of any immediate jeopardy situation, we believe that 
a small delay does not increase the risk of harm. Accordingly, we are 
revising the proposed provision in this final rule to require notice to 
us about an immediate jeopardy situation within two business days. This 
policy is consistent with the policy we have adopted for the technical 
component of advanced diagnostic imaging services.
     We proposed at Sec.  488.5(a)(5) to replace the 
requirement currently set out at Sec.  488.4(a)(4)(i), which requires 
AO applicants to provide us information on the size and composition of 
their survey teams for each type of accredited provider or supplier. We 
proposed to add to the existing provision language requiring the AO to 
furnish us information on its criteria for determining survey team size 
and composition, including variations for individual provider or 
supplier surveys. We stated that, within a given accreditation program 
there can be great variation in the size and complexity of individual 
health care facilities, and that we believe a uniform size and 
composition for the AO's survey teams would not be appropriate.
     We also proposed at Sec.  488.5(a)(6) a new provision that 
would help ensure that an AO maintains an adequate number of trained 
surveyors to meet the demand for surveys, both initial and re-
accreditation surveys. We reported that there have been instances where 
an AO could not maintain the required re-accreditation survey schedule 
interval for its existing accredited deemed status facilities because 
it was focusing its limited resources on meeting the demand of new 
customers for initial Medicare accreditation surveys. These AOs lacked 
sufficient personnel resources to handle both existing and new 
workloads.
    Comment: Several commenters objected to both of these proposed 
provisions, expressing concerns they would prescribe the size and 
composition of survey teams, thereby increasing the costs to 
facilities, which could cause more facilities to seek Medicare 
participation through SAs and thereby increase costs to the government. 
One commenter stated that CMS should evaluate AOs on the basis of their 
performance and not dictate processes used by the AOs. The commenter 
also stated its formula for determining survey team size is 
proprietary, and that increasing the survey team size will increase 
costs to providers/suppliers and the government. Another commenter said 
it would oppose this provision if CMS intends to prescribe a specific 
ratio of surveyors to accredited facilities, saying AOs vary greatly in 
their business operations and therefore may also vary in the number of 
facilities that can be supported by surveyors. This commenter suggested 
it should be sufficient for each AO to provider its rationale.
    Response: Section 1865(a)(2) of the Act requires us, when 
determining whether an AO meets or exceeds all applicable Medicare 
requirements, to consider, among other things, an AO's ``ability to 
provide adequate resources for conducting the required surveys . . .''. 
Under the existing requirement at Sec.  488.4(a)(4)(i), AOs are already 
required to furnish us information about the size and composition of 
their survey teams. In our proposed revisions, we refined these 
requirements to obtain information that would better enable us to 
assess an AO's ability to provide adequate resources, recognizing that 
variations in the size and complexity of facilities necessarily impact 
an AO's survey process, and that growth in an AO's accreditation 
program may require an adjustment in the overall number of surveyors 
the AO utilizes to accomplish its surveys. For example, the resources 
required to evaluate compliance in a 50-bed rural hospital are 
considerably different than those required to accomplish the same 
evaluation in a 600-bed urban academic medical center. Likewise, the 
overall survey resources required by an accreditation program which is 
increasing the number of facilities it accredits will be different than 
those required by an AO whose program is relatively static in size. 
Accordingly, the final rule will require AOs to give us information on 
how they adjust survey teams and composition to account for facility 
differences, and how they adjust the overall size of their survey staff 
to account for growth in their accreditation program and still fulfill 
their survey obligations. This information will enable us to evaluate 
more effectively the AO's ability to provide adequate resources, as 
required by the statute. The final rule does not mandate specific 
survey team sizes or composition which AOs must use, and thus we do not 
agree with those commenters who stated that it would increase costs to 
the facilities surveyed by AOs. We do not intend to impose a specific 
ratio of surveyors to accredited facilities on AOs by policy. However, 
we will review the information and rationale provided us by an AO in 
its application; if the rationale is not supported by the information 
in the provider's application or by performance data we have collected, 
in the case of a renewal application, we reserve the right to withhold 
our approval until the AO either provides us a more convincing 
rationale or revises its approach to assuring adequate survey 
resources.
    For the comment about focusing on AO performance rather than 
dictating internal AO processes, we note that it was through our 
ongoing evaluation of AO performance that we identified problems with 
several AOs, such as failure to identify serious noncompliance with the 
LSC requirements, or inability to perform timely reaccreditation 
surveys, which may be related to the survey resources the AO makes 
available to accomplish its required survey work. Therefore, we believe 
it is incumbent upon us to obtain more information from AO applicants 
for new or renewed approval about the way in which they assure adequate 
survey resources. We are making no changes in this final rule in

[[Page 29811]]

response to these comments and are adopting Sec.  488.5(a)(5) and (6) 
as proposed.
     We proposed at Sec.  488.5(a)(7) to replace the 
requirement currently set out at Sec.  488.4(a)(4)(ii) concerning 
furnishing us with information on the AO's education and experience 
requirements for its surveyors.
    Comment: We received one comment asking for clarification of the 
difference between ``surveyors'' and ``AO staff'' and also recommending 
that surveyors for ADI have experience in diagnostic imaging.
    Response: We consider ``surveyors'' to include all individuals who 
conduct on-site surveys, or inspections, of providers and suppliers 
seeking new or continued deemed status. Surveyors typically also have 
additional off-site responsibilities established by the AO. We believe 
the commenter's question relates to some of the unique circumstances 
pertaining to accreditation of suppliers of the technical component of 
ADI services. Given our decision to remove all reference to ADI 
services and their accreditation from part 488 in this final rule, we 
believe that it is not necessary to address the commenter's 
recommendation for ADI surveyor qualifications. We are not making any 
changes in response to this comment and are adopting this provision in 
this final rule as proposed.
     We proposed at Sec.  488.5(a)(8) to replace the 
requirement currently set out at Sec.  488.4(a)(4)(iii), which requires 
an AO applicant to provide us information concerning the content and 
frequency of in-service training of AO survey personnel. We received no 
comments on this proposed revision and are adopting it without change 
in this final rule.
     We proposed at Sec.  488.5(a)(9) to replace the 
requirement currently set out at Sec.  488.4(a)(4)(iv), which requires 
an AO applicant to provide us information concerning evaluation systems 
it uses to monitor the performance of individual surveyors and survey 
teams.
    Comment: One commenter expressed its opposition to the proposal 
since it believes it implies that the AO's surveyor evaluation system 
would require prior approval, which would restrict the AO's flexibility 
in adjusting evaluation processes to emerging trends and impair the 
evaluation of quality assurance processes.
    Response: This requirement is unchanged from the existing 
requirement at Sec.  488.4(a)(4)(iv), and thus we proposed no change 
from our current practice. We do not micromanage the process by which 
AOs review their surveyors' performance, but we must evaluate whether 
an AO has a credible process for evaluating on an ongoing basis the 
performance of its surveyors and survey teams. We are making no changes 
in response to this comment and are adopting the provision in this 
final rule as proposed.
     We proposed Sec.  488.5(a)(10) to replace the requirement 
currently set out at Sec.  488.4(a)(4)(v), which requires an AO to 
provide us detailed information its policies and procedures concerning 
the involvement of personnel in the survey or accreditation decision 
process who may have a financial or professional affiliation with the 
provider or supplier. We proposed to modify the provision to state more 
clearly that we expect an AO to have policies and procedures to avoid 
potential conflicts of interest by precluding the participation of 
individuals who have a professional or financial affiliation with a 
provider or supplier from participating in the survey or accreditation 
decision.
    Comment: Some commenters proposed adding a minimum timeframe of 2 
years after termination of a surveyor's affiliation with a provider or 
supplier during which the surveyor would be precluded from 
participating in a survey or accreditation decision for that provider 
or supplier. The commenters also proposed we require an AO to have 
different personnel on a survey team from that which previously 
surveyed the provider or supplier.
    Response: The commenters are focusing on prior affiliations and 
seems to presume that an AO's surveyors are full-time staff. Our 
proposal was focused on avoiding conflicts of interest where AO staff 
has current affiliations with providers or suppliers, since it is our 
understanding that few AOs employ full-time surveyors, but instead rely 
upon contracted surveyors who often have ongoing relationships with 
some providers and suppliers. However, we agree that it could also 
create the appearance of a conflict of interest for an individual to 
participate in a survey of a provider or supplier with which he or she 
was previously affiliated and that such appearance should also be 
avoided as much as possible. Nevertheless, we do not specifically 
mandate in regulation or policy that SAs preclude newly-hired staff 
from engaging in surveys or decisions affecting a prior employer for a 
specified period of time. In section 4008 of the SOM we establish a 
policy for conflicts of interest of SA employees engaged in federal 
survey and certification work, indicating that such conflicts may arise 
when public employees utilize their position for private gain or to 
secure unfair advantages for outside associates. We specifically state 
that it is not possible to list all situations that could be construed 
as potential conflicts of interest, but do provide some examples of 
potential conflicts, including having various relationships with a 
health care facility in the employing state. We also indicate in 
section 4008B of the SOM that state codes provide judicial or 
administrative remedies for abuses of influence and that employee 
actions would be handled in accordance with the applicable State 
procedures. Thus we do not prescribe uniform limitations or 
prohibitions that all states must incorporate. AOs might not be as 
likely as states to have conflict of interest policies absent our 
requirement that they do so, but this does not necessarily mean that we 
should specify in regulation the detailed content of such policies. We 
also believe that a 2-year ban on a surveyor's participation is 
excessive and might unduly limit an AO's (or state's) ability to use 
its staff resources effectively. Within CMS, for example, a newly-hired 
employee is precluded from participating in matters concerning a prior 
employer for one year. In summary, while we believe it is prudent for 
both AOs and states to avoid conflicts of interest involving previous 
as well as current affiliations, we believe we should not in this 
regulation specify in detail how to avoid such conflicts.
    We also do not require SAs to use different personnel for 
successive surveys of a provider or supplier; in fact, we believe it is 
more likely that SAs would have the same personnel conducting 
successive surveys than would AOs, given the national scope of an AO's 
operations. We also see no particular value to such a requirement; one 
might argue that familiarity of a surveyor with a facility might 
enhance their ability to identify deficient practices. In fact, some 
AOs have suggested that SAs tend to be more successful in identifying 
LSC deficiencies in providers or suppliers precisely because they have 
long-standing familiarity with the physical plants of facilities in 
their states.
    Comment: Commenters stated that the ``business-client 
relationship'' that exists between AOs and the facilities they survey 
creates an inherent conflict of interest and expressed concern that 
this provision does not address this more generic type of conflict of 
interest.
    Response: Section 1865 of the Act specifically allows for us to 
certify providers or suppliers as meeting the applicable conditions or 
requirements on the basis of accreditation of

[[Page 29812]]

providers or suppliers by private AOs. Thus, under the law the 
business-client relationship is not prohibited in those cases where we 
have reviewed the AO's Medicare accreditation program and found that it 
meets or exceeds all applicable requirements. We also note that we 
exercise continuing oversight over AOs, including making the 
determination whether or not to accept an AO's recommendation of a 
provider or supplier for deemed status.
    Comment: Several commenters proposed that we also preclude 
surveyors from participating in a survey or accreditation decision when 
they have a financial or professional affiliation with a competitor of 
the provider or supplier being surveyed.
    Response: We believe there is merit to the commenters' concerns, 
particularly given that few AOs employ full-time surveyors but instead 
rely upon contracted surveyors who often have ongoing relationships 
with some providers and suppliers. We expect AOs to be careful to avoid 
the appearance of conflicts of interest that could compromise 
confidence in the objectivity of their survey findings or accreditation 
decisions. At the same time, we are reluctant to attempt to specify in 
regulation a definition or methodology for determining which providers 
or suppliers are ``competitors'' of a provider or supplier being 
surveyed, since there are many varying factors that could influence 
whether there is a competitive relationship among providers and 
suppliers and to what extent that would deleteriously impact surveyors' 
objectivity.
    In light of the various commenters' concerns about potential 
conflicts of interest scenarios that go beyond the situation of a 
surveyor being involved in a survey or accreditation decision of a 
facility with which he or she has a current professional or financial 
affiliation, as well as our intent to not micro-manage the way in which 
either states or AOs avoid conflicts of interest, we are in this final 
rule revising this provision to state more generically that an AO must 
provide us its policies and procedures for avoiding conflicts of 
interest, including the appearance of conflicts of interest.
     We proposed at Sec.  488.5(a)(11) to replace the 
requirement currently set out at Sec.  488.4(a)(5), which addresses the 
requirement that the AO provide information on its data management 
system in its application. We proposed at Sec.  488.5(a)(11) to retain 
the existing language at Sec.  488.4(a)(5). In addition, we proposed a 
new provision at Sec.  488.5(a)(11)(i) to require submission of a 
detailed description of how the AO uses its data system to assure 
compliance of its accreditation program with the Medicare requirements.
     We also proposed at Sec.  488.4(a)(11)(ii) requirements 
replacing those at current Sec.  488.4(a)(9), which requires the AO to 
furnish us a list of all currently accredited facilities including type 
of accreditation and expiration date, and at Sec.  488.8(a)(2)(v), 
requiring us to determine the AO's ability to provide us electronic 
data in ACSII comparable code and reports necessary for effective 
validation and assessment of the AO's survey process. We indicated the 
regulatory text currently at Sec.  488.8(a)(2)(v) which requires an AO 
to include in its application a written presentation of its ability to 
submit information electronically ``in ASCII comparable code,'' is 
outdated and insufficient. We stated that the proposed modifications 
are necessary to ensure that we have the required data to provide 
effective oversight of an approved accreditation program.
    Comment: One commenter indicated its support for these provisions, 
while another indicated it appreciated that this provision would 
require AOs to devote more resources to articulating their plans for 
data use.
    Response: We thank the commenters for their support.
    Comment: One commenter proposed we add language indicating CMS will 
be judicious and prudent with its requests for data, acknowledging that 
each demand for data is resource intensive and can be costly.
    Response: We agree that we should not require AOs to submit data 
that are not necessary for us to support our evaluation of an AO's 
performance, and that we should be mindful of the need to avoid undue 
burdens on AOs. However, we do not agree that the regulations need 
further revisions to reflect this principle, since it already clearly 
links the data to be submitted to our evaluation of an AO's 
performance. Upon adoption we are, however, making non-substantive 
stylistic edits and changing the order of the last two sentences of 
this provision.
     We proposed at Sec.  488.5(a)(12) to replace the 
requirement currently set out at Sec.  488.4(a)(6), which requires an 
AO to provide us information on its procedures for responding to and 
investigating complaints, including coordination with appropriate 
licensing bodies and ombudsmen programs.
    Comment: One commenter proposed we mandate that AO procedures for 
investigating complaints, include timeframes for resolution and a 
process to communicate the results to the complainant. The commenter 
also proposed that complaint resolution timeframes be consistent with 
those utilized by SAs and the complaint procedures be made publicly 
available upon request.
    Response: We require in this provision that AOs seeking CMS-
approval of their accreditation program provide us information on their 
processes for responding to, and investigating complaints, including 
grievances, against accredited facilities. We compare their policies 
and procedures to those we require for SAs during the application 
process and determine whether all applicable Medicare requirements are 
met or exceeded.
    Comment: One commenter asked us to identify ombudsmen programs for 
advanced diagnostic imaging.
    Response: We are not aware of ADI ombudsmen programs, and since we 
have rescinded our proposal to apply part 488 to accreditors of 
suppliers of the technical component of ADI services, the question is 
largely moot. However, we are taking this opportunity to note that we 
believe the language of the regulation makes it clear that we expect 
AOs to coordinate with licensing bodies and ombudsman programs in their 
investigation of complaints when it is appropriate to do so. For 
example, if in the course of an investigation an AO identifies a matter 
that appears to warrant separate investigation and action by the state 
authority responsible for licensing health care professionals, we would 
expect the AO to make an appropriate referral. Likewise, if there is an 
ombudsman program for the type of provider or supplier the AO 
accredits, we would also expect it to make appropriate referrals to 
such ombudsman programs. To make our intent clearer we are revising 
this provision in this final rule to require referrals, when 
applicable, to appropriate licensing bodies and ombudsman programs.
     We proposed at Sec.  488.5(a)(13) to replace requirements 
currently set out at Sec.  488.4(a)(7) and (a)(8), with modifications. 
The current provision at Sec.  488.4(a)(8) require AOs to provide us a 
description of all types and categories of accreditation offered, 
including duration, etc. We proposed to modify this provision by 
deleting language and terminology specific to one particular AO. 
Furthermore, the current provision seems to require the AO to submit 
information on its accreditation programs that fall outside the 
parameters of its Medicare accreditation programs. Since we do not 
approve accreditation programs unrelated to

[[Page 29813]]

Medicare, we indicated that we believed that there was no reason to 
require AOs to submit such information to us, nor for us to have and 
review this non-relevant information.
    The current provision at Sec.  488.4(a)(7) requires an AO to submit 
information to us regarding its policies and procedures for 
withholding, or removing accreditation status or taking any other 
actions related to noncompliance with its standards. Since the granting 
of full or less than full accreditation status is an essential 
component of an AO's accreditation decision process, we stated it is 
necessary for us to receive information on the policies and procedures 
pertaining to these types of decisions.
    We also proposed to include within Sec.  488.5(a)(13), with 
modification, the requirement currently set out at Sec.  
488.4(b)(3)(i), which requires an AO to commit to notifying us of any 
facility that has had its accreditation revoked, withdrawn, or revised 
or that has had any other remedial or adverse action taken against its 
accreditation within 30 days of such action. We proposed to change the 
notification period to within three business days of the date of 
action. We proposed to reduce this timeframe since AOs transmit such 
information to us electronically. The 30-day timeframe was based on 
information being sent to us via hard copy mail. Given the 
instantaneous nature of the electronic notification, as well as our 
need to learn of such adverse actions in a timely manner so that, when 
applicable, we may initiate enforcement action, we indicated we believe 
it would be reasonable to require that the AO provide notice to us 
within three business days of its having taken the adverse action.
    Comment: We received no comments on proposed Sec.  488.5(a)(13) and 
Sec.  488.5(a)(13)(i). Several commenters made comments related to the 
proposal at Sec.  488.5(a)(13)(ii) to require notice to us within 3 
business days of any adverse action. Most of these commenters indicated 
that this proposal would not allow sufficient time for AOs to process 
appeals of its decisions by its accredited providers and suppliers and 
suggested that notice not be required until after appeals are completed 
and final decisions made. One commenter suggested that we clarify our 
use of the term ``withdrawal.'' This commenter indicated that if the 
term refers to involuntary withdrawal from accreditation, then the 
timeframe is appropriate. If the term includes a voluntary withdrawal 
from accreditation, then the timeframe is not appropriate, since the AO 
takes a number of steps, including attempting to change the 
organization's mind about remaining accredited. In this case the 
commenter proposed we set different reporting timeframes for 
involuntary versus voluntary withdrawals of accreditation. One 
commenter noted that ADI AOs currently provide only weekly reports to 
CMS and said CMS would need to increase the frequency of data 
transmissions for them to comply. By contrast another commenter 
suggested that the notification deadline be one day, noting that 3 
business days could be a total of 5 days, and that this delays CMS 
action against these agencies, leaving home health patients in 
situations where their health and safety might be seriously 
jeopardized.
    Response: By ``withdrawal'' we mean a voluntary decision on the 
part of the accredited provider or supplier to end its participation in 
the accreditation program. This is in contrast to an AO's revocation of 
accreditation, which we view as including both an action taken when an 
AO concludes that a provider or supplier is substantially noncompliant 
with accreditation standards and has not corrected its deficient 
practices within the timeframe specified by the AO, as well as an 
action taken by an AO to revoke a provider's or supplier's 
accreditation due to the provider's or supplier's nonpayment of 
accreditation fees. By ``revised'' we mean a change in a provider's or 
supplier's accreditation status, based on the formal accreditation 
status categories the AO employs. We intended this latter term to 
include both adverse changes that fall short of revocation, as well as 
positive changes reflecting a provider's or supplier's improved 
compliance. Reflecting upon the commenters' comments, we believe that 
our additional language ``any remedial or adverse action taken against 
it'' is vague and potentially duplicative, and thus should be removed. 
Our intent was for AOs to notify us when they have taken a final action 
concerning a change in the accreditation status of a deemed status 
provider or supplier. If an action is not final until after an appeals 
process, then notice would not be required until three business days 
after that process has concluded and a final AO determination has been 
made. If a voluntary withdrawal from accreditation is not effected 
until an AO completes a number of steps to try to reverse the 
provider's or supplier's decision, and the AO continues to accredit the 
provider/supplier during this process, then notice would not be 
required until 3 business days after the effective date that the AO 
ultimately processes the provider's or supplier's voluntary withdrawal. 
In this latter case we would expect that the AO's timeframe for 
pursuing a revised decision from its customer would not be unreasonably 
long, so as to call into question whether the provider/supplier 
continued to meet the AO's accreditation standards. For example, we 
anticipate that a provider/supplier might notify an AO of its intent to 
withdraw shortly before its next payment is due, which might also be 
shortly before its current 3-year accreditation expires. We believe it 
is important to have these providers/suppliers recertified via another 
survey, either by another AO the provider or supplier has concurrently 
chosen or, in the alternative, by an SA in a timely manner. In the case 
of an HHA, we must ensure that the statutorily-mandated maximum survey 
interval of no more than 36 months is maintained, and that SAs are 
afforded as much advance notice of their need to conduct a survey as 
possible.
    We do not believe that it would be reasonable to shorten this 
timeframe further, to 1 day. We note that the separate requirement at 
Sec.  488.4(a)(4)(ix) for AOs to notify us of any immediate jeopardy 
they identify should permit us to take prompt action when the health 
and safety of patients are threatened.
    For ADI AOs, this comment was one of the many that made us conclude 
that this type of accreditation could not reasonably be accommodated 
within the framework of part 488 and that we needed to remove ADI 
accreditation from this final rule. We have already established a 
weekly data submission schedule for ADI AOs to identify all suppliers 
of the technical components of ADI services that they accredit as of 
that week, to ensure that their Medicare claims can be appropriately 
and timely paid. We need to explore further with ADI AOs how best to 
incorporate into future rulemaking modifications of this process that 
include notice to us of the nature of the accreditation decisions 
underlying the week-to-week changes.
    In light of these clarifications, we are revising the provision to 
clarify that notice is required for any decision to revoke, withdraw, 
or revise the accreditation status of a specific deemed status provider 
or supplier within 3 business days' of the effective date the AO takes 
action.
     We proposed at Sec.  488.5(a)(14) to replace the 
requirement currently set out at Sec.  488.4(a)(9) concerning 
submission of information on currently accredited facilities as part of 
the AO's application. We proposed to modify the current language for 
clarity. We received

[[Page 29814]]

no comments on this proposal and are adopting it without change in this 
final rule.
     We proposed at Sec.  488.5(a)(15) to create a new 
requirement for an AO seeking renewed approval for a current CMS-
approved Medicare accreditation program. We proposed that the AO 
seeking renewed approval must demonstrate, as a condition of our 
acceptance of its application for renewal, that it demonstrated growth 
from its initial approval, as evidenced by there being at the time of 
its renewal application at least 50 health care facilities with deemed 
status based on the AO's CMS-approved Medicare accreditation program. 
We stated that we believe that an established AO accreditation program 
that has not been able to accredit a minimum of 50 health care 
facilities under its Medicare accreditation program since receiving 
initial CMS approval has failed to demonstrate sufficient 
infrastructure and scale to be sustained over time. Although we 
indicated we were willing to be flexible in accepting applications for 
initial approval from new national accreditation programs that were 
comparatively small, we stated we believe that an established CMS-
approved Medicare accreditation program that was not able to accredit 
at least 50 healthcare facilities during the period since its initial 
approval would have failed to demonstrate long-term national viability. 
Further, we indicated that we have limited resources available to 
conduct the detailed, comprehensive review of an AO's application 
required under section 1865(a)(2) of the Act. We indicated we believe 
these limited federal resources are best focused on those larger 
accreditation programs responsible for oversight of the quality of care 
provided in hundreds of accredited healthcare facilities, serving 
millions of patients, rather than on an accreditation program connected 
with a relatively small number of Medicare providers or suppliers.
    Comment: One commenter suggested that if an AO is truly national in 
scope, then it should be accrediting significantly more than 50 
facilities. This commenter also suggested the final rule should make 
clear the time interval for reaching the threshold. By contrast, all of 
the other commenters on this provision opposed this proposal. One 
commenter found the number to be both too large and arbitrary. Several 
commenters suggested that we consider all of an AO's approved programs 
when assessing its infrastructure and sustainability, rather than each 
individual Medicare accreditation program in isolation. They indicated 
that an AO with a small program could rely upon the infrastructure and 
capabilities of larger, similar types of programs. Another commenter 
noted that the pool of potential facility applicants for some 
accreditation programs might be limited, giving as an example 
psychiatric hospitals. One commenter noted that the provision could 
present a barrier for an AO to maintain approval of a program that 
focuses on rural areas or markets with fewer resources to support their 
health care facilities. Another indicated that introduction of a 
minimum number of facilities an AO must accredit would create a 
significant barrier for entry for AOs seeking to gain or retain deeming 
authority and is on its face anti-competitive. This commenter pointed 
out that, since accreditation is typically for 3 years, the opportunity 
to convert a facility from one AO to another is infrequent, so that it 
can take years for an AO to grow. The commenter also noted that 
sometimes health care systems seek a single AO for all of their 
facilities, making it vital for an AO to provide comprehensive 
services, even if one of their programs does not meet an arbitrary 
number that CMS has set. Another commenter indicated that requiring an 
AO to achieve a minimum of 50 accredited facilities during its initial 
approval period for an accreditation program is acceptable, but that 
thereafter the AO should be considered to have met the criteria even if 
its program falls below 50 facilities. This commenter mentioned that 
some facilities may flock to an AO to obtain initial deemed status only 
to drop accreditation in favor of the state agency when it is time for 
them to be recertified. The commenter indicated this might be an 
unlikely scenario, but could not be ruled out, given the economic 
realities for some providers, and AOs should not be disqualified due to 
temporary fluctuations.
    Response: We do not agree that our proposal would have created a 
significant barrier to entry for AO's seeking our initial approval. Our 
proposal would have established a minimum of 50 accredited facilities 
for each Medicare accreditation program for which an AO was seeking 
renewed approval. AOs seeking their first approval from us would not 
have been subject to this provision. When we approve an initial 
applicant, we typically provide a four-year approval and expect to see 
the AO's program grow during that first 4 years, to be sustainable over 
the longer term. Since accreditation programs typically provide a 
three-year accreditation, a program with fewer than 50 facilities might 
be conducting 16 or fewer surveys per year, making it difficult to 
ensure surveyor teams maintain their skill levels in conducting surveys 
for that type of provider or supplier.
    On the other hand, we recognize the merit of those commenters who 
pointed out that the market for a particular program might be more 
limited, as is the case with psychiatric hospitals or for programs 
focused on rural areas. We also agree that smaller AOs seeking to 
compete with larger AOs have a legitimate interest in providing ``one-
stop shopping'' for health care systems seeking deemed status for all 
the various types of providers and suppliers in their system. Finally, 
we acknowledge that the overall surveyor and administrative 
infrastructure of an AO that has several CMS-approved Medicare 
accreditation programs should be considered when assessing a given 
program's long-term sustainability. This does not entirely mitigate our 
concern about surveyors having more limited experience in understanding 
and applying the accreditation standards and survey methods for a small 
individual program. However, we agree that through the application 
review process for a renewal application we should be able to determine 
whether, all things considered, a program lacks adequate infrastructure 
and/or capabilities to warrant our renewed approval. Therefore we are 
not adopting the proposed provision at Sec.  488.5(a)(15) in this final 
rule. We are renumbering all of the subsequent provisions of Sec.  
488.5(a) accordingly.
     We proposed at Sec.  488.5(a)(16) to replace the 
requirement currently set out at Sec.  488.4(a)(10), which addresses 
the requirement for AOs to provide us with a list of accreditation 
surveys scheduled to be performed. We proposed to revise this 
requirement to state that the AO would need to provide us only its 
survey schedule for the 6-month period following submission of an 
application for CMS approval. Since we must complete the entire 
application review and publish a final notice announcing our decision 
within a 210-day statutory timeframe, we indicated that it would not be 
useful for a survey schedule to be submitted for a longer timeframe. We 
stated that we use this survey schedule to plan our survey observation 
as part of our review of the AO's application. We indicated that this 
requirement would apply to both initial and renewal applications and 
would be distinct from the requirement proposed at Sec.  488.5(a)(11) 
that an AO to submit survey schedules on a regular basis as

[[Page 29815]]

part of the data it agrees to provide us for our ongoing oversight.
    Comment: We received one comment suggesting that we include the 
phrase ``deemed status'' in front of ``accreditation'' in the phrase 
``all accreditation surveys.''
    Response: For an accreditation program for which an AO is seeking 
our initial approval, addition of the suggested phrase would not be 
appropriate, since none of the facilities accredited by the AO under 
that not-yet-approved program would have deemed status based on that 
accreditation program. Even for a renewal application, an AO might 
include a survey scheduled for a provider or supplier that does not 
have deemed status, either because it is seeking initial enrollment and 
certification in the Medicare program, or because it is already 
enrolled as a non-accredited provider or supplier, or with deemed 
status based on another AO's program. However, upon adoption as Sec.  
488.5(a)(15), we are revising this provision to make clear our intent 
that an AO applicant provide us a survey schedule only for surveys for 
the accreditation program under our review.
     We proposed at Sec.  488.5(a)(17) to replace the 
requirement currently set out at Sec.  488.4(b)(2), which requires an 
AO to provide a resource analysis demonstrating that it has the 
resources to support its accreditation program. We stated that our 
proposed modifications of the current language would more clearly 
identify the type of documentation an AO must provide to demonstrate 
the adequacy of its resources. We received no comments on our proposal, 
and other than renumbering this provision to be Sec.  488.5(a)(16), we 
are adopting this provision in this final rule as proposed.
     We proposed at Sec.  488.5(a)(18) a new provision that 
would address requirements related to AO providing written notification 
at least 90 days in advance to its currently deemed providers or 
suppliers when the AO elected to terminate its CMS-approved 
accreditation program voluntarily. We stated that the affected 
providers or suppliers would subsequently need to be surveyed by SAs, 
unless they sought and received accreditation from another CMS-approved 
Medicare accreditation program.
    Comment: One commenter indicated that an AO should be required to 
provide written notice to all patients or assure that the providers 
they accredit provide patients written notice, saying that patients 
have a right to know of any change in oversight of the provider.
    Response: We believe that it is both unnecessary and unduly 
burdensome to require written notification of each patient when there 
is a change in their provider's oversight, whether from one AO to 
another, or from an AO to SA supervision, or from SA supervision to an 
AO, regardless of whether the change is due to decisions in individual 
cases on the part of the provider/supplier or AO, or if it is due to a 
voluntary or involuntary termination of an AO accreditation program's 
approval for Medicare deemed status. We believe that for patients and 
residents of Medicare-participating providers and suppliers, the 
specific nature of the oversight of their participation in Medicare is 
not pertinent, since our approval of an AO's accreditation program 
indicates that it meets or exceeds all Medicare requirements. By 
contrast, we do believe it is important for patients to know whether a 
provider's participation in Medicare has been terminated, whether 
voluntarily or involuntarily. However, even in this case we do not 
require individual patient notifications. Particularly for acute care 
providers and suppliers that have rapid turnover in patients from day 
to day, an individual notice requirement would be impractical. In the 
case of a voluntary termination of a provider, we require at Sec.  
489.52(c) that the provider must provide notice to the public through a 
local newspaper at least 15 days before the voluntary termination is 
effective; and in the case of an involuntary termination of a provider, 
in accordance with the provisions at Sec.  489.53(d)(5), we similarly 
provide notice to the public.
    Comment: One commenter noted a contradiction between this provision 
and the one we proposed at Sec.  488.8(e), which would require an AO to 
give written notice to its accredited providers and suppliers in the 
event either of a voluntary or involuntary termination of its CMS-
approved accreditation program no later than 30 days after publication 
of the termination notice in the Federal Register. The commenter noted 
that the timeframes may be compatible, but questioned why there needed 
to be two different provisions. The commenter also urged that hospitals 
be provided as much notice as possible, at least 90 days, and to 
simplify the notice requirement so that providers know what to expect.
    Response: We agree that the interaction between proposed Sec.  
488.5(a)(18) and proposed Sec.  488.8(e) is confusing. We are, 
therefore, revising this provision to distinguish between notice 
requirements for voluntary and involuntary terminations and to make 
explicit that notice of a voluntary termination must be given to us as 
well. In the revised provision in this final rule an AO would agree to 
provide written notice to us and its accredited providers or suppliers 
at least 90 calendar days in advance of the effective date of its 
voluntary termination of its CMS-approved accreditation program, and in 
the case of an involuntary termination action by us, to give notice to 
its accredited providers or suppliers as required by Sec.  488.8(e). We 
are also requiring the AO to include in its notice the implications for 
the deemed status of its accredited providers or suppliers, in 
accordance with Sec.  488.8(g)(2). We are also making conforming 
changes at Sec.  488.8(e) to remove all reference to voluntary 
termination of a CMS-approved Medicare accreditation program by an AO.
     We proposed at Sec.  488.5(a)(19) to replace the 
requirements currently set out at Sec.  488.4(b)(3)(iii), which 
addresses the timeframe for AO notification to us regarding proposed 
changes in accreditation requirements. We indicated that we proposed to 
modify the current requirement by lengthening the advance notice period 
from 30 to 60 days, to provide adequate time for us to conduct a 
comprehensive, detailed review of the AO's proposed changes. We also 
proposed language clarifying that any proposed changes in a CMS-
approved accreditation program could not be implemented by the AO 
before we approved such changes. We stated that this policy would 
ensure that the accreditation program continued to meet or exceed the 
Medicare requirements.
    Comment: Numerous commenters expressed concerns with or opposition 
to our proposed changes. Some of the commenters made objections similar 
to those they raised about our proposal at Sec.  488.4(a)(1), 
concerning our approval of a program in its entirety. Various 
commenters suggested that an AO only be required to submit to us only 
those proposed standard changes related directly to the CoP; or be 
required to submit only ``proposed material changes''; other commenters 
expressed concerns that this provision would give us authority over 
``non-deeming aspects'' of an accreditation program's standards; or 
that this requirement would be ``contrary to the very essence of the 
originally-intended deeming relationship.''
    One commenter referenced our preamble statement, with regard to 
proposed Sec.  488.5(a)(13)(i), that we were revising the current 
language to clarify that there would be no requirement for an AO to 
submit information on its

[[Page 29816]]

accreditation programs that fell outside the parameters of its Medicare 
accreditation programs, and indicated that it agreed it would be 
inappropriate to require an AO to submit changes to their programs that 
were unrelated to Medicare deeming status. The commenter suggested we 
amend our proposal to require advance submission only of ``Medicare-
related standards.'' Another commenter indicated its support for the 
previous commenter's proposal.
    Several commenters indicated that not allowing an AO to adopt 
revised standards prior to our approval would slow down implementation 
of changes needed to meet an ever-changing health care environment and 
advances in the oversight of quality and safety.
    One commenter indicated that 60 days was a reasonable amount of 
time for an AO to prepare and CMS to review proposed changes, but 
expressed concern about the uncertainty created for the AO if it was 
prohibited from implementing its proposed changes until we gave our 
approval. This commenter indicated there could be potentially damaging 
and costly implementation effects if CMS did not give its approval in a 
timely fashion and noted that there was nothing in the proposed rule to 
hold us accountable for rendering timely decisions. The commenter 
suggested that we revise the proposal to state that unless we 
affirmatively rejected an AO's proposed changes within 60 days, the 
changes would be deemed approved and would take effect. The commenter 
also proposed as an alternative that we eliminate the 60 day advance 
notice requirement and replace it with a requirement that an AO submit 
proposed changes prior to implementation and not implement the changes 
until 30 days after receiving approval from CMS. The commenter stated 
that this would give CMS an open-ended review period, prevent 
implementation prior to approval, and not interfere with AOs' plans to 
roll-out a change. Another commenter requested that we establish a 
timeframe by which CMS would have to give its response to a proposed 
change.
    Response: We find many of the comments surprising, since we do not 
believe our proposal differs substantively, beyond the change from 30 
to 60 days, from the requirements under the current regulations, which 
are found at Sec.  488.4(b)(3)(iii) and Sec.  488.8(d)(1)(ii). Taken 
together, these provisions oblige an AO to submit its proposed changes 
to us 30 days in advance and oblige us to conduct a comparability 
review of the proposed changes to determine the equivalency of the AO's 
proposed revised requirements to the Medicare requirements. As we 
stated in our response to comments on proposed Sec.  488.4(a)(1), it 
would be arbitrary and contrary to the statute if, under the theory 
that its changes would not affect any accreditation provisions related 
to Medicare requirements, an AO modified portions of a CMS-approved 
Medicare accreditation program without providing us prior notice and 
our determination of whether the revised program continued to meet or 
exceed the Medicare standards, and could continue to be approved. We 
may not delegate to an AO our responsibility under the statute to 
determine whether an accreditation program, including any changes to 
it, meets or exceeds all Medicare requirements. This is not new policy 
on our part, because we believe it is required by the statute and our 
current regulations. We proposed to make this policy more explicit in 
our proposed regulations due to confusion a few AOs have had around 
this issue.
    The commenter who noted our preamble statement in reference to our 
proposal at Sec.  488.5(a)(13)(i) misunderstood our statement, or 
misapplied it in the context of proposed Sec.  488.5(a)(19). We are 
aware that some AOs offer multiple types of accreditation programs, and 
that CMS-approved Medicare accreditation programs may be a subset of 
their overall accreditation program offerings. Our preamble statement 
related to proposed Sec.  488.5(a)(13)(i) was intended to clarify that 
we do not require an AO to submit information to us on any 
accreditation program it offers which is not a Medicare accreditation 
program for which it is seeking our initial or renewed approval. Our 
statement was not intended to imply that an AO does not have to submit 
proposed changes within its CMS-approved Medicare accreditation 
program, and the express language of our proposal at Sec.  488.5(a)(19) 
makes clear that, in fact, we expect all proposed changes to a CMS-
approved Medicare accreditation program to be submitted to us in 
advance.
    We find merit in those comments that expressed concern about undue 
delays if our reviews are not timely. We believe that we should be 
accountable to AOs just as we expect them to be accountable to us. We 
also agree that the language of both the current and proposed 
regulations, by specifying a notice requirement tied to the effective 
date of an AO's proposed changes, can be a source of confusion. 
Accordingly, in this final rule we are revising this provision to: 
change the number to Sec.  488.4(a)(18), reflecting the prior revision; 
remove reference to the effective date of the changes; and indicate 
that the AO agrees to not implement the changes before receiving CMS 
approval, unless 60 calendar days after submission of the proposal has 
passed and CMS has not responded. We are also making conforming changes 
to Sec.  488.8(b)(1)(iv) to state that an AO may implement a change in 
its standards without jeopardizing its Medicare accreditation program 
if we do not notify the AO within 60 calendar days after receipt of 
their proposed revisions of the results of our comparability review, 
including whether or not the AO's Medicare accreditation program, as 
revised, would continue to have CMS approval.
     We proposed at Sec.  488.5(a)(20) to replace the 
requirement, currently set out at Sec.  488.4(b)(3)(iv), concerning AO 
submission of changes to its standards within 30 days of a change in 
our requirements. We proposed modifying the regulation text by deleting 
references to specific timeframes. We indicated this would provide us 
the flexibility to consider other factors when determining an 
appropriate timeframe for AOs to revise their program and submit their 
conforming changes to us. We stated these factors may include: the 
effective date of the applicable final rule, the effective date of our 
revised interpretive guidance or survey process, and the scope and 
magnitude of our changes that require corresponding AO changes. We 
further stated that AOs would benefit from our having the flexibility 
to provide them longer timeframes for response, when appropriate. In 
addition, we proposed adding language to ensure the AO program 
continues to meet or exceed the Medicare requirements, and specify the 
consequences for an AO's failure to submit timely comparable changes.
    Comment: One commenter requested clarification on how CMS will 
communicate these changes, asking if they would be published in the 
Federal Register as notices of proposed and final rules.
    Response: Our reference to changes to the ``applicable Medicare 
conditions or requirements'' refers both to changes in our regulations 
governing the various types of providers or suppliers, including 
applicable changes in our regulations at parts 488 and 489, as well as 
substantial revisions to our official interpretation of applicable 
regulatory requirements. All regulation changes are accomplished 
through Federal Register notices of proposed rulemaking and notice of 
adoption of a final rule. All changes to our official interpretation of

[[Page 29817]]

applicable regulatory requirements are distributed to SAs via Survey 
and Certification Policy memoranda, which are also distributed to 
affected AOs and are published online. These changes are then 
subsequently incorporated into our online SOM, Publication 100-07. Our 
proposal called for an AO to submit its proposed conforming changes to 
us within 30 calendar days or by the date specified in the CMS notice 
to the AO, whichever is later. We recognize, however, that the proposed 
regulatory language, by using the term ``notice,'' appears to have led 
some commenters to believe we were referring to Federal Register 
notices. To avoid future confusion we will revise the regulatory text 
to state: ``in response to a written notice from CMS to the 
organization of a change. The proposed changes must be submitted within 
30 calendar days of the date of the written CMS notice to the 
organization, or by the date specified in the notice, whichever is 
later.''
    Comment: Several commenters requested that the provision be 
modified to include a mechanism for AOs to request additional time in 
implementing changes to their programs in response to CMS-initiated 
changes. These commenters also proposed that we include a timeframe to 
complete our review of the AO's changes, with one commenter suggesting 
30 days.
    Response: We agree and are modifying our proposal in this final 
rule to indicate we will give due consideration to an AO's request for 
extension submitted prior to the deadline. We also are revising the 
final rule to indicate that the AO agrees not to implement its proposed 
changes without our prior written notice of continued program approval, 
except as provided for at Sec.  488.8(b)(1)(iv). That provision will 
state that an accreditation program's proposed changes in its standards 
will be deemed approved unless we provide the AO with a written notice 
of the results of our review no later than 60 days after receipt of the 
proposed changes.
    Comment: One commenter opposed our requiring AOs to obtain CMS 
approval prior to implementing any changes to a CMS-approved program, 
indicating this would cause delays in implementation and limit 
flexibility.
    Response: Section 1865 of the Act requires us to determine whether 
an AO's Medicare accreditation program meets or exceeds all applicable 
Medicare requirements. When those requirements change, it is necessary 
for us to determine whether the AO's program continues to meet or 
exceed the applicable Medicare requirements. We believe it would be 
even more time-consuming and disruptive if an AO were to implement 
changes that we subsequently determined no longer met Medicare 
standards. The AO would be faced, in this case, with then having to 
make and implement further program changes or else undergo a deeming 
review that could result in our terminating our approval of its program 
as a Medicare accreditation program. Accordingly we believe it is 
prudent for all parties if the AO agrees in its application to not 
implement changes that have neither been found nor deemed to warrant 
our continued program approval.
    In this final, rule we are adopting this provision revised to 
reflect the numbering change referenced above, to make clearer that the 
purpose of our review is to determine whether the proposed revised 
accreditation program meets the standards for our continued approval, 
to make explicit that we will give due consideration to timely requests 
for an extension of the deadline for submitting proposed revisions to 
us; and to cross-reference Sec.  488.8(b)(1)(iv), that permits a 
revised program to be deemed to have our continued approval if we do 
not issue a written determination within 60 days of receipt of 
notification.
     We proposed at Sec.  488.5(a)(21) to modify the 
requirement currently set out at Sec.  488.4(b)(3)(v), which requires 
the AO to permit its surveyors to serve as witnesses if CMS takes an 
adverse action based on accreditation findings. We proposed modifying 
the regulation by adding language to clarify the scope of the 
requirement.
    Comment: Two commenters expressed concerns with our proposal to 
change the current requirement for an AO to ``permit'' its surveyors to 
act as witnesses to a requirement for its surveyors to serve as 
witnesses. One indicated a surveyor should be able to refuse to be a 
witness. The other indicated that this provision would force an 
employer to condition an employee's hire on compelled speech, which 
could impact an individual's First Amendment rights. This commenter 
suggested the current provision could be strengthened without impacting 
an individual's rights, and proposed we used language such as ``make 
surveyors available'' or have CMS serve an AO with an administrative 
subpoena if a surveyor is reluctant to serve as a witness.
    Response: Although section 1865(b) of the Act clearly authorizes us 
to take enforcement action on the basis of a survey conducted by an AO 
with an approved Medicare accreditation program, in practice we 
generally exercise our enforcement discretion to take enforcement 
action based on SA surveys conducted for us. That is why we typically 
require an SA survey, when an AO reports an adverse accreditation 
action on its part, or when it reports finding an immediate jeopardy 
situation. However, one standard exception to this practice concerns AO 
surveys of prospective providers or suppliers seeking initial 
certification to participate in Medicare. Since we have for a number of 
years, in an effort to make efficient use of federal resources, 
established initial surveys for prospective providers and suppliers 
that have an accreditation option as the lowest work priority for SAs, 
we usually make initial certification decisions involving applicants 
who seek deemed status after reviewing AO survey reports. These initial 
certification decisions include denials of certification and 
determination of the effective date of the Medicare provider agreement 
or supplier approval, and both of these types of decisions may be 
appealed by the applicant at the administrative level. Generally such 
appeals actions do not require an AO's surveyors to appear as a 
witness, but we cannot exclude this as a possibility. Thus we proposed 
that an AO require its surveyors to be available to serve as a witness. 
Therefore, we are revising this provision to require an AO to permit 
surveyors to serve as witnesses, and to cooperate with CMS to make 
surveyors available when needed as witnesses. We are also renumbering 
this provision, consistent with our revisions above.
     We proposed at Sec.  488.5(b) to revise the requirement 
currently set out at Sec.  488.4(c), which provides that if we need 
additional information to make a determination for approval or denial 
of an AO's application for deeming authority, the AO will be notified 
and afforded the opportunity to provide such information. We stated 
that we proposed deleting the language, ``deeming authority,'' which 
has been a source of confusion both internally and externally. It has 
led healthcare facilities and others to mistakenly believe that the AO 
awards deemed status and participation in Medicare. We stated that this 
proposed removal clarifies that only CMS has the authority to grant 
``deemed status,'' not the AO. We received no comments on this proposal 
and are adopting it in this final rule without change.
    We proposed at Sec.  488.5(c)(1) to replace the requirement 
currently set out at Sec.  488.4(f), which addresses the provision that 
an AO may withdraw its application at any time before the final

[[Page 29818]]

notice is published in the Federal Register. We also proposed a new 
requirement at Sec.  488.5(c)(2) to address situations where an AO 
wishes to voluntarily terminate its CMS-approved Medicare accreditation 
program. We stated that in such case, the AO must notify us of its 
decision and provide an effective date of termination. We proposed that 
we would publish in the Federal Register a notice that includes the 
reason for the termination and the effective date. We stated that, in 
accordance with the requirements we proposed at Sec.  488.8(e), the AOs 
would have to notify, in writing, each of its providers or suppliers of 
its decision no later than 30 calendar days after the notice was 
published in the Federal Register. We received no public comments on 
these proposed revisions, but are making conforming changes to reflect 
the changes we are making in response to public comments to Sec.  
488.4(a)(17) and Sec.  488.8(e), to remove any reference to publishing 
a notice in the Federal Register.
     We proposed at Sec.  488.5(d) and Sec.  488.5(e) to 
replace the requirements currently set out at Sec.  488.4(h), which 
addresses requests for reconsideration, as well as those occasions when 
we permit an AO whose request for approval of an accreditation program 
has been denied to resubmit its application, including certain 
requirements to be met. Specifically, we proposed at Sec.  488.5(d) 
that if an AO has requested, in accordance with part 488 subpart D, a 
reconsideration of a disapproval, it may not submit an initial 
application for an accreditation program for another type of provider 
or supplier until the hearing officer's final decision has been 
rendered. We proposed at Sec.  488.5(e) to allow an AO to resubmit its 
application for an accreditation program after our initial denial if 
the AO revises its program to address the issues related to the 
previous denial, demonstrates that it can provide reasonable assurance 
that its accredited facilities meet the applicable Medicare program 
requirements, and resubmits the application in its entirety.
    Comment: We received no comments on our proposed Sec.  488.5(e), 
but did receive a comment on proposed Sec.  488.5(d) which requested 
that we remove it as contrary to the principle set out in the rest of 
the rule that each accreditation program is independent of other 
programs of an AO. The commenter stated that reconsideration of a 
denial should not be tied to an AO's ability to submit an initial 
application for a different program.
    Response: We agree with the commenter that an AO's ability to 
request a reconsideration of a denial should not be conditioned upon 
precluding that AO's submission of an initial application for a 
different program. As we indicated in the preamble to the proposed 
rule, it was not our intent to change the current regulatory 
requirement, but we agree that the language in the proposed Sec.  
488.5(e) does not accurately reflect our expressed intent. We are 
therefore revising these provisions in this final rule by deleting a 
separate paragraph (d) and renumbering and revising paragraph (e) to 
allow resubmission of an application for a program previously denied by 
us if the AO has revised the program to address the issues related to 
the denial, demonstrates reasonable assurance and resubmits the 
application in its entirety. We are also taking this opportunity to 
make a technical correction to change the terminology ``demonstrates 
reasonable assurance that its facilities meet the applicable Medicare 
program requirements'' to ``demonstrates reasonable assurance.'' The 
definition of ``reasonable assurance'' at Sec.  488.1 in this final 
rule already requires meeting the applicable Medicare program 
requirements, so the deleted language was superfluous. Consistent with 
the current requirement, we are also indicating that an AO that has 
requested reconsideration of our denial may not resubmit an application 
for that type of provider or supplier accreditation until the 
reconsideration is administratively final.
     We proposed at Sec.  488.5(f) a new proposed provision, 
entitled ``Public Notice and Comment,'' that would incorporate the 
timeframes for review of an AO request for CMS approval of an 
accreditation program that are set forth in section 1865(b) of the Act. 
Specifically, we proposed at Sec.  488.5(f)(1) to replace the 
requirement currently set out at Sec.  488.8(b)(1), concerning 
publication of a proposed notice announcing our receipt of an AO 
application in the Federal Register. To better capture the purpose of a 
proposed versus a final notice, we indicated that we proposed to revise 
the language or current provision by deleting reference to describing 
how the AO's accreditation program provides reasonable assurance that 
entities accredited by the organization meet the Medicare requirements, 
since this language is more appropriate for the provision concerning 
the final notice. In addition, we proposed to add language related to 
the timeframe for public comment, consistent with section 1865(a)(3)(A) 
of the Act. Further, we proposed at Sec.  488.5(f)(2) to replace the 
requirement currently set out at Sec.  488.8(b)(2), which requires us 
to publish a final notice announcing our decision to approve or 
disapprove an AO's accreditation program in the Federal Register. In 
accordance with section 1865(a)(3)(A) of the Act, the final notice must 
be published no later than 210 days after our receipt of a complete 
application. We stated that our proposed revision would streamline and 
simplify the language of the regulations, to more clearly communicate 
existing requirements. Finally, we proposed at Sec.  488.5(f)(2)(i) to 
replace the requirements currently set out at Sec.  488.8(b)(1), Sec.  
488.8(b)(2), and Sec.  488.8(c), which address the contents of the 
final notice. We stated that once a national AO's accreditation program 
is approved by us and this decision is published in the Federal 
Register, we could approve any provider or supplier that is surveyed 
for Medicare participation on or after the effective date of the final 
notice (assuming that all other federal requirements have been met).
    Comment: Two commenters responded to this provision by indicating 
the public cannot evaluate and comment on an applicant if it does not 
have the information in the application. One commenter requested that 
we publish in the final rule information on how to obtain a copy of an 
AO's application, while the other requested that the application be 
posted on the internet during the public comment period.
    Response: The information about an AO's application which the 
Secretary is required to disclose to the public in accordance with 
section 1865(a)(3)(A) of the Act is the identity of the AO making the 
request, and the nature of the request. We appreciate the commenters' 
interest in having more information to enable them to make comments to 
us. However, AOs regard the detailed information about their programs 
to be proprietary information which is exempted from disclosure under 
the Freedom of Information Act (5 U.S.C. 552(b)(4)) and HHS regulations 
(see, for example, 45 CFR 5.65), and thus we do not provide copies of 
the applications when requested to do so, nor would we be able to post 
these applications on our Web site.
    As discussed in our response to comments about the application of 
section 1865 of the Act to long term care facilities, we are making a 
technical correction to reflect the fact that the 210 day timeframe 
does not apply in the case of an application for a Medicare SNF 
accreditation program. We are also

[[Page 29819]]

making a technical correction to Sec.  488.5(e)(2)(i) and (ii), which 
discuss final notice provisions when we approve, re-approve or 
disapprove an accreditation program. We are removing superfluous 
language that is already incorporated into the definition of 
``reasonable assurance.'' We are also renumbering this paragraph as 
Sec.  488.5(e), as a resulting of our consolidation of proposed 
paragraphs (d) and (e) discussed above.
7. Providers or Suppliers That Participate in the Medicaid Program 
Under a CMS-Approved Accreditation Program (Sec.  488.6)
     We proposed to broaden and revise the standard's title. We 
stated that the proposed regulations at Sec.  488.6 would replace the 
requirement currently set out at Sec.  488.5(b) (78 FR 20570). As with 
the previous version of this provision in both Sec.  488.5(b) and Sec.  
488.6(b), eligibility for Medicaid participation may be established 
through Medicare deemed status for those providers and suppliers that 
are not required under Medicaid regulations to comply with any 
requirements other than Medicare participation requirements. Additional 
Medicaid eligibility requirements and state plan requirements, as 
applicable, would continue to apply. We received no comments on our 
proposal and are adopting it in this final rule. We have made one 
clarifying revision so that it more closely reflects the existing 
policy set out at Sec.  488.5(b) and Sec.  488.6(b).
8. Release and Use of Accreditation Surveys (Sec.  488.7)
     We proposed revising this standard's title to be more 
reflective of the standard's content. We proposed at Sec.  488.7 to 
replace the requirement currently set out at Sec.  488.6(c)(1), which 
states that an accredited provider or supplier must authorize its AO to 
release a copy of its most current accreditation survey, together with 
any information related to the survey that CMS may require (including 
corrective action plans) to us and the SA. We indicated that under the 
proposed revision the deemed status provider or supplier would be 
required to authorize release of a copy of its most recent 
accreditation survey only to us.
    We proposed other changes as part of our effort to reorganize and 
clarify the regulations, as follows:
     We proposed at Sec.  488.7(a) to replace the requirement 
currently set out at Sec.  488.6(c)(2), which indicates that we may 
determine that a provider or supplier does not meet the Medicare 
conditions on the basis of our own analysis of the accreditation survey 
or any other information related to the survey. We indicated that the 
language of this requirement would remain unchanged, although we note 
that we made two technical revisions, that is, referring to 
``conditions and requirements'' so that the provision would 
unambiguously apply to any type of provider or supplier accreditation 
program.
     We proposed at Sec.  488.7(b) to replace the requirement 
currently set out at Sec.  488.5(c)(3) regarding our authority and 
discretion to disclose an AO survey and information related to the 
survey when the accreditation survey is related to an enforcement 
action taken by CMS. All other disclosures of AO survey information are 
prohibited under section 1865(b) of the Act, with the exception of 
surveys of HHAs. We proposed to revise this provision to clarify its 
requirements.
    We also stated that we were taking the opportunity to clarify in 
the preamble that we recognize that, in accordance with the Patient 
Safety Act and Quality Improvement Act (PSQIA) (Pub. L. 109-41) and 
implementing regulations at 42 CFR 3.206(b)(8)(i) and (ii), an AO may 
not further disclose patient safety work product it receives when such 
work product complies with the requirements for patient safety work 
product protected under the PSQIA.
    Comment: A number of commenters indicated their opposition to the 
disclosure of accreditation surveys and related information. One 
commenter proposed that CMS provide any corrective action plan when 
releasing information about enforcement action.
    Response: Section 1865(b) of the Act prohibits our disclosure of 
any accreditation surveys conducted by AOs, with the exception of 
surveys conducted of HHAs. In the case of HHAs, routine disclosure is 
expressly permitted under the Act. However, for accreditation surveys 
of any type of provider or supplier, section 1865(b) of the Act also 
provides that we may disclose an accreditation survey and related 
information to the extent that such survey and information relate to an 
enforcement action we have taken. In such cases our policy is to 
disclose the information upon receipt of a written request. If we have 
received related corrective action plans developed by the provider/
supplier, we would include those in the disclosure.
    Comment: One comment from a group of organizations indicated that, 
given the large amount of public funding nursing homes receive, 
consumers have a right to know about quality of care in a nursing home. 
They also questioned how Nursing Home Compare could be maintained 
without AO survey results, stating that deemed status would undermine 
Nursing Home Compare. This group also recommended that we change the 
language of the regulation to say we ``must,'' upon written request, 
disclose surveys and information related to an enforcement action.
    Response: Section 1865(b) of the Act says that we ``may'' disclose 
an accreditation survey and other information related to an enforcement 
action we take, but does not require us to do so. The policy we 
proposed at Sec.  488.7(b) reflects the statute and continues the 
policy that our regulations have reflected at least since 1993, when 
the provision at Sec.  488.5(c)(3) was last amended. We do not believe 
it would be prudent for CMS to restrict the discretion permitted to us 
under the statute. Accordingly, we are not revising this final rule to 
state that we must make such a disclosure.
    With regard to public disclosure requirements related to surveys of 
nursing homes and the potential impact on Nursing Home Compare of not 
disclosing accreditation surveys, we believe these are among the many 
issues we would need to consider should we ever receive an application 
from an AO seeking our approval of a Medicare long-term care 
accreditation program.
    Comment: A number of commenters, mostly representing hospitals, 
expressed concern with the provision indicating that we may determine 
on the basis of our own investigation of the accreditation survey that 
a provider or supplier does not meet the applicable Medicare conditions 
or requirements. One commenter stated that, given the framework of the 
AO deeming structure and its checks and balances, CMS should not be 
second-guessing the decisions of the AOs. The commenter recommended 
instead that if CMS has concerns about a particular survey it should 
engage the AO in a conversation about those concerns. Several 
commenters found it unclear why CMS would keep this redundant 
requirement rather than trust the AOs to which CMS has delegated 
authority, and called for us to remove the provision. Another commenter 
indicated that it is not clear from the regulatory language what an 
``investigation'' of the accreditation survey would entail and whether 
CMS could issue a compliance decision to the accredited facility, 
regardless of whether any federal requirements were found to have not 
been met in a validation survey. The commenter indicated this lack of 
clarity about the requirements of the CMS ``investigation'' of an AO's 
survey posed a significant risk to hospitals for action by CMS and 
urged

[[Page 29820]]

clarification of the parameters of the ``investigation'' and 
articulation of the potential adverse actions to be taken against 
healthcare providers as a result of the review. Along similar lines, 
another commenter objected to this provision, saying the regulation 
would not require CMS to conduct a site visit prior to rendering a 
decision, and was vague and ambiguous regarding what other information 
could be used in the investigation, raising the possibility of 
inconsistent decisions that could be adverse to the provider. The 
commenter also objected to there being no guidance on how far back CMS 
could look when taking into account ``other information'' and asked 
whether it could be 2 years or even 5 years. Another commenter also 
asked for clarification of the phrase ``investigation of the 
accreditation survey,'' inquiring if CMS would make a decision about 
compliance with the Medicare requirements based only on an 
accreditation survey, especially those that had no condition-level 
findings.
    Response: This provision is a long-standing regulatory component of 
part 488. Section 1865(c) of the Act provides that if we find a 
provider entity has significant deficiencies, that entity shall not be 
deemed to meet the conditions or requirements. Neither approval of an 
AO's accreditation program nor a section 1864 agreement with an SA are 
delegations of authority to either AOs or SAs to make Medicare 
participation determinations. We state explicitly at Sec.  488.12 that 
SA ``certifications'' of a provider's or supplier's compliance or 
noncompliance are recommendations to CMS, and that CMS makes the 
determination on the basis of these recommendations on whether a 
provider or supplier is eligible for Medicare participation. Likewise 
the current, longstanding provision at Sec.  488.6(c)(2) states that we 
may determine that the provider or supplier does not meet the Medicare 
conditions based on our own investigation of the accreditation survey 
or related information. All AOs with current approved Medicare 
accreditation programs have been informed on more than one occasion 
that they must explicitly characterize their written notice to us 
concerning their positive accreditation decision for a specific 
facility as a ``recommendation'' for deemed status. Moreover, a recent 
decision of the Appellate Division of the Departmental Appeals Board 
(DAB) agreed with our reading of the statute that we are not compelled 
to accept an AO's recommendation of deemed status for a specific 
facility (Wesley Medical Center, LLC, d/b/a/Galichia Heart Hospital, 
Dk. No. A-14-44, DAB Decision No. 2580 (June 30, 2014))
    As we stated in our response to comments concerning proposed Sec.  
488.5(a)(21), typically we rely upon AO recommendations concerning 
deemed status, and therefore review an AO's survey report, when the AO 
recommends deemed status for a prospective provider or supplier seeking 
initial participation in the Medicare program. Generally, we have no 
prior survey or other information on such applicants, so that the issue 
of how far back we may look at prior information is moot. Limited 
exceptions may occur, such as when the applicant was previously 
enrolled in Medicare and involuntarily terminated for failure to comply 
with Medicare requirements. In accordance with Sec.  489.57(a), we are 
required in such cases to find that the reason for termination of the 
prior Medicare agreement has been removed and there is reasonable 
assurance it will not recur. Another exception would occur when an 
applicant for whom we recently denied participation based on either a 
state or AO survey is recommended for deemed status. In such cases we 
would review the AO's survey report in light of the survey findings on 
which we based our denial. Even if we were to begin relying directly 
upon AO surveys to take adverse enforcement action against current 
providers or suppliers, it is important to note that, in the case of 
non-long term care providers and suppliers, we take enforcement action 
based only on current noncompliance, so that the issue of a look-back 
timeframe would continue to be moot.
    To illuminate what we mean by an ``investigation,'' we provide the 
following examples of situations when, after our review, we have 
rejected an AO's deemed status recommendation and have denied a 
prospective provider's or supplier's application for certification and 
Medicare participation. We emphasize that this is not an exhaustive 
list and that other circumstances could arise that require our 
investigation. We have had instances where our review of an AO's survey 
report indicates that it conducted a focused survey instead of a full 
accreditation survey in the case of a facility with a new owner who has 
rejected assignment of the prior owner's Medicare agreement. Our 
regulations and policy clearly indicate that, when a new owner rejects 
assignment, that prior Medicare agreement with the seller is 
voluntarily terminated and the new owner has the same status as any 
other new applicant for Medicare participation, and must undergo a 
survey to evaluate compliance with all Medicare or, in the case of an 
applicant seeking deemed status, accreditation requirements.
    We have also had instances where an AO's survey report for a 
prospective provider or supplier indicated that deficiencies were 
identified that the AO did not find rose to substantial noncompliance 
with a Medicare condition. In these cases, the AO recommended deemed 
status after the facility agreed to an acceptable plan of correction. 
However, our review of the AO's survey report concluded that the AO's 
own description of one or more of the identified deficiencies clearly 
indicated substantial noncompliance, and that the AO should have 
advised us of this rather than awarding accreditation. In such 
circumstances, we would have denied the certification. In accordance 
with Sec.  489.13(c) the effective date of a positive accreditation 
decision may not be earlier than the date on which the applicant is 
found to meet all applicable conditions. Further, section 2005A4 of the 
SOM states that an AO must notify us of substantial noncompliance, so 
that we can issue a denial of certification. The provision also allows 
the AO to continue to work with the applicant for up to 6 months after 
our initial denial of certification, before we issue a final notice of 
denial to the Medicare Administrative Contractor, which in turn would 
deny enrollment. When we believe an AO's own survey report does not 
support its recommendation of deemed status, we often reach out to the 
AO to discuss the situation, but still do not certify an applicant with 
substantial noncompliance.
    Occasionally we obtain information that raises compliance issues 
not addressed by the AO's survey. For example, for hospitals or CAHs 
enrolling in Medicare, we collect extensive descriptive data via the 
Hospital/CAH Medicare Database Worksheet, Exhibit 286 in the SOM. This 
worksheet is not completed by the provider or AO, but is instead 
completed either by the SA, when it conducts a full survey, or by our 
regional office, usually by telephone call to the applicant, in the 
case of a deemed status hospital or CAH applicant for certification. 
There have been a few occasions when the applicant's responses raise 
significant questions about the manner in which it operates, and we 
have then followed up with the AO for more information. In rare 
instances where the AO's responses fail to clarify the situation, 
before issuing a denial of certification we have used an on-site survey 
by a state or federal

[[Page 29821]]

survey team to gather additional information to enable us to render an 
appropriate certification decision. After consideration of the public 
comments we are adopting proposed Sec.  488.7 in this final rule 
without change.
9. On-Going Review of Accreditation Organizations (Sec.  488.8)
    We proposed modifying the title of this standard with language that 
is more specific and clarifies that our oversight of accreditation 
programs is continuous. We also proposed further revisions at Sec.  
488.8 consistent with our effort to reorganize, streamline and clarify 
the regulations, as follows:
     We proposed at Sec.  488.8(a) to replace the requirement 
currently set out at Sec.  488.8(d), which addresses the continuing 
federal oversight of equivalency of an AO's approved accreditation 
program. We stated that the proposed revisions would ensure consistency 
with section 1875(b) of the Act, which requires our continuing 
oversight of the accreditation process of AOs approved in accordance 
with section 1865 of the Act and yearly reports to Congress concerning 
the operation of AO programs. The proposed revisions would replace the 
concept of a ``validation'' review with the broader concept of an 
ongoing AO ``performance'' review. We also proposed to remove reference 
at current Sec.  488.8(d)(2)(i) to a ``20 percent'' validation survey 
rate of disparity as a threshold for triggering a review that could 
result in our termination of an AO's program approval. We stated that 
our experience over the past few years has demonstrated that, although 
the rate of disparity between AO and SA representative sample 
validation surveys of the same facility within a 60-day time period may 
be one reliable measure of some aspects of AO performance, a single 
measure used in isolation does not provide a complete and accurate 
picture of AO performance. We indicated that, as described in the CMS 
annual report to Congress, ``Review of Medicare's Program for Oversight 
of Accreditation Organizations,'' we employ a multi-faceted approach 
that utilizes not only the representative sample validation survey 
disparity rate, but also a number of other quantitative measures of AO 
performance, as well as the results of our periodic qualitative reviews 
of AO standards or of AO renewal applications to develop a 
comprehensive assessment of an AO's performance. We indicated that we 
believe it is not appropriate to include in the regulation a 
requirement, based on only one calculation, which would trigger an 
automatic, formal review of an AO's accreditation program's continuing 
approval. Likewise, we believe our ability to open a formal review of 
an AO program should not be limited by tying such review to one data 
point. As a result, we proposed deleting the specific reference in the 
regulation to a 20 percent disparity rate triggering a formal 
validation review. We proposed instead to provide at Sec.  488.8(a) for 
an ongoing performance review of approved AO programs, and we 
identified at proposed Sec.  488.8(a)(2) the representative sample 
validation survey disparity rate as only one of several components that 
may trigger a performance review. Further, we proposed in Sec.  
488.8(c) to provide for a formal accreditation program review when a 
performance review revealed evidence of substantial non-compliance. We 
stated that we believed that the proposed revision would enable us to 
continue to make use of the disparity rate in our ongoing assessment of 
AO performance, but also to make use of other performance indicators. 
Additional indicators would enable us to reach a more comprehensive 
assessment of the quality of an AO's program. We indicated that this 
revision would also make clearer that a formal accreditation program 
review could be opened as the result of a variety of serious compliance 
concerns. We also proposed at Sec.  488.8(a)(1) through Sec.  
488.8(a)(3) to clarify that we would evaluate AOs' performance by 
looking at various aspects of their practices.
    Comment: One commenter expressed opposition to our proposal to 
change the heading of this requirement from ``validation'' review to 
``ongoing'' review, suggesting that the change would allow hospitals to 
be surveyed at any time for validation purposes, instead of as part of 
a random sample within 60 days of an AO's survey. The commenter stated 
that this would put deemed status and non-accredited hospitals on an 
unequal playing field, since hospitals choosing to be accredited by a 
private AO could be subject to a full validation survey beyond a 60-day 
period while hospitals surveyed by the state under contract to CMS are 
not governed by the same set of rules. The commenter further stated 
that the contracts between the states and CMS are confidentially 
negotiated and not transparent, and questioned why a hospital would 
have any incentive to work with an AO when it would be subject to a 
different set of standards. A number of other commenters also objected 
to our removing the ``fixed period'' during which a validation survey 
could be conducted.
    Response: The commenters misunderstand both our current 
requirements and our proposal. Although proposed Sec.  488.8 implements 
section 1875(b) of the Act, which requires us to conduct an ongoing 
``validation'' of an AO's accreditation process, we believe the term 
``validation'' in this context may be readily confused with the 
narrower concept of a validation survey analysis and disparity rate 
calculation, which is just one component of our overall process for 
validating, that is, evaluating, an accreditation program on an ongoing 
basis. The commenters assume incorrectly that we are making changes to 
when validation surveys may be conducted. That is not the case. It is 
important to note that section 1864(c) of the Act distinguishes between 
two types of validation surveys, as does the current provision at Sec.  
488.7: Representative sample validation surveys and validation surveys 
conducted in response to an allegation concerning a deemed status 
provider or supplier of substantial noncompliance with an applicable 
Medicare condition or requirement. The commenter appears to believe 
that only representative sample validation surveys are validation 
surveys, and we believe that the imprecise language at current Sec.  
488.8(d)(2) contributes to such confusion. In our annual report to 
Congress we calculate disparity rates only for representative sample 
validation surveys. As previously noted, section 3242 of the SOM 
requires SAs to conduct representative sample validation surveys no 
later than 60 calendar days after the scheduled end date of the AO's 
accreditation survey, and proposed Sec.  488.8 would have no impact on 
this policy. Thus the commenters' fears are unfounded. We do wish to 
reiterate, however, that substantial allegation surveys are complaint-
driven, and that a provider or supplier may undergo multiple state 
substantial allegation validation surveys within any given year 
depending on the number and nature of complaints. We also wish to 
clarify that state survey agencies are not our ``contractors'' in the 
sense that term is normally used for organizations from which federal 
agencies procure services. Instead, SAs are parties with whom we have 
entered into agreements under section 1864 of the Act, under which we 
pay the reasonable costs of the activities that states perform for us. 
The SOM, which is available to the public on our Web site at http://
www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-
Manuals-IOMs-Items/

[[Page 29822]]

CMS1201984.html?DLPage=1&DLSort=0&DLSortDir=ascending, contains all of 
the regulations and subregulatory guidance which establish our 
expectations for the functions states perform under a section 1864 
agreement. In addition, each year, based on the funding budgeted for 
state survey and certification activities in the federal budget, we 
communicate to the states how they should prioritize their federal 
workload, given the limitations on the resources available to cover 
their costs. Although we do not post these annual workload priorities 
on our Web site, they are certainly available in response to Freedom of 
Information Act requests. Thus we disagree that our relationships with 
the various SAs are not transparent. Finally, we do not understand the 
commenter's concern about hospitals that seek accreditation being 
subjected to different standards than those used by the states 
conducting validation surveys. It is true that hospitals, or any other 
type of deemed status provider or supplier, may be subject via 
accreditation to additional standards that exceed Medicare 
requirements. However, SAs do not evaluate providers' or suppliers' 
compliance with AO-only standards as part of their federal survey work. 
To the extent that a provider or supplier is cited as a result of a 
state validation survey for one or more deficiencies that an AO survey 
failed to identify, any seeming conflict is most likely the result of 
problems in an AO's accreditation survey process. We are always looking 
for ways in which we can better understand the source of these problems 
and help AOs understand what needs to be done so that their accredited 
facilities are always in compliance with the Medicare requirements, and 
do not find themselves surprised by different compliance expectations 
when the state conducts a survey. We believe that our proposal and our 
discussion of the comments we have received in this final rule also 
contribute to clarifying our expectations for AOs as well as providers 
and suppliers, and to removing providers' and suppliers' misconceptions 
about our requirements.
    Comment: One commenter proposed modifying the language of this 
provision to state that ongoing review of AOs is applied to CMS-
approved accreditation programs only. The commenter also stated that 
``onsite observations should be as minimally disruptive as possible and 
be limited in scope''.
    Response: We believe it is clear that the provisions of part 488 
apply only to those accreditation programs for which AOs are seeking or 
have already received our approval. We make every attempt to minimize 
disruption to the AO's operations when we make onsite observations, and 
we limit the scope of our observations to matters pertaining to the 
program under review.
    Comment: One commenter requested that CMS identify how it would 
conduct validation surveys of suppliers of the technical component of 
advanced diagnostic imaging.
    Response: In this final rule we do not apply the provisions of part 
488 to accreditation of the technical component of ADI suppliers, so 
the question is moot.
    Comment: We received no comments about our proposal to remove the 
20 percent representative sample survey disparity rate as an automatic 
trigger for our review of an AO's program. However, a number of 
commenters expressed concern that our reliance upon state validation 
surveys is seriously flawed. One commenter indicated that issues 
associated with the current validation survey framework include the 
following: (1) Assessment is one-way, in that CMS instructs its 
contractors, the SAs, to use the Medicare conditions as the standard to 
assess AO performance and that we assess only what the state found and 
the AO missed. The commenter pointed out that there is no analysis of 
what the AO found and the SA missed, creating an evaluation bias; (2) 
CMS must develop a new set of benchmarks, given that the way SAs and 
AOs make determinations of deficiencies differ too greatly. The 
commenter indicated the benchmarks need to be as outcome-based as 
possible, given that AOs should be given flexibility to innovate in 
their programs and processes; (3) there is variation among the states 
in how they conduct surveys and interpret findings. The commenter 
stated that patients and the public would be better served if all 
surveyors consistently focused on critically important issues that 
truly affect the delivery of safe, quality health care; (4) AOs 
consistently hear that states send in large survey teams, frequently 
including local fire marshals who are very familiar with a facility's 
physical plant, and that these teams stay at the facility longer than 
is feasible for AOs that must charge for their time onsite, and who 
therefore must balance their onsite time between clinical and 
infrastructure issues according to health and safety risk priorities; 
(5) there are differing interpretations of the severity of findings, 
with some AOs not scoring as deficiencies requiring improvement Life 
Safety Code (LSC) violations that are only low or medium categories of 
importance. The commenter stated that state surveys might generate a 
long list of such low-level deficiencies and then make a condition-
level finding; (6) CMS frequently determines that a facility's 
condition constitutes an ``immediate jeopardy situation'' based on a 
situation that occurred well before the CMS survey, while the commenter 
(an AO) only makes a determination of an ``immediate jeopardy 
situation'' if there is a situation that presents itself during the 
survey that could cause harm to patients or the public.
    Similarly, but in less detail, other commenters expressed 
objections to our reliance upon state representative sample validation 
surveys. One commenter called for us to establish a process for an AO 
to request reconsideration of a state's validation survey findings when 
the state's findings differ from the AO's findings. Another commenter 
said that state validation surveys are widely reported to be 
``punitive'' in nature and often do not accurately reflect a provider's 
compliance. The commenter also noted variation among states in the size 
and scope of the survey teams and how deficiencies are identified. The 
commenter urged development of performance metrics for how the surveys 
will be used to evaluate AO performance. Another commenter indicated 
that CMS uses unannounced validation surveys to evaluate the AO's 
performance. It indicated a clear validation survey process based on 
unambiguous and understandable performance indicators is necessary to 
accurately evaluate an AO's performance.
    Response: Section 1865(d) and section 1864(c) of the Act provide 
for validation surveys by SAs of providers and suppliers that have 
deemed status. Further, section 1875(b) of the Act specifically 
requires us to conduct a continuing ``validation'' of AO programs 
provided for in section 1865(a) of the Act and to report our findings 
annually. While we believe that the term ``validation'' in section 
1875(b) of the Act is intended to cover a wider range of AO performance 
than the results of validation surveys, we do not believe the Act 
provides us discretion to omit state validation surveys from our 
analysis of an AO's performance.
    With regard to the issue of the validation assessment being one-way 
and using the Medicare conditions as the standard, we note that section 
1864(c) of the Act provides for a state to conduct a survey of a deemed 
status provider or supplier when we direct it to do so either as 
representative sample survey or in response to substantial allegation 
of noncompliance. The state must conduct the survey in accordance

[[Page 29823]]

with the requirements of section 1864(a) of the Act and does not have 
the authority to consider anything other than the applicable Medicare 
conditions when assessing compliance. Further, for the assertion that 
our analysis of the results of validation surveys does not consider 
deficiencies that the AOs found and the state missed, we note that 
while it is certainly possible that a state could overlook a deficiency 
that an AO found, given that the state survey occurs up to 60 days 
after the AO's survey, it is also possible that the surveyed provider 
or supplier has corrected deficiencies that the AO identified prior to 
the state's survey. In addition, most AO accreditation programs have 
standards that exceed those of Medicare. Therefore, an analysis of 
deficiencies that AOs cited and SAs missed would be of limited value 
since SAs are not evaluating compliance on these same standards. 
Implicit in the commenter's statements about benchmarking based on 
outcomes rather than what states focus on, and on LSC deficiencies it 
believes are not important, is a concern of the commenter with the 
substantive regulations that constitute the applicable conditions for a 
specific provider or supplier type. However, neither a provider/
supplier nor an AO has the discretion to disregard Medicare 
requirements that it does not agree with, or considers ``less 
important.'' Section 1865(a) of the Act requires the AO's approved 
Medicare accreditation program to meet or exceed all applicable 
Medicare requirements. Likewise, we do not have the discretion to 
evaluate an AO's performance on any other basis than whether it meets 
or exceeds the applicable Medicare requirements. AOs or providers/
suppliers are free to express their concerns with various substantive 
Medicare requirements and we evaluate such concerns in determining 
whether to revise requirements where we have the discretion to do so. 
Indeed, we have revised various conditions in recent years to reduce 
undue burdens on Medicare providers and suppliers. Once we change a 
regulation, then an AO may change its standards and survey process 
accordingly.
    The allegation that states use larger survey teams and conduct 
longer surveys than do AOs has been raised in the past for hospital 
validation surveys. We reviewed our data concerning survey team size 
and hours and found that states tend to vary the size/length of survey 
according to the size of a hospital, as measured by the number of 
certified beds. We found no evidence that states fielded larger survey 
teams or conducted longer surveys when conducting validation surveys of 
deemed status hospitals as compared to their surveys of non-accredited 
hospitals. We note that section 1865(a)(2) of the Act requires us to 
consider in our review of an AO's Medicare accreditation program the 
AO's ability to provide adequate resources for conducting required 
surveys. Regardless of the size of accreditation survey teams, we 
require them to be able to accurately assess compliance with all 
Medicare requirements as a condition of our approval.
    We note that our methodology for calculating the representative 
sample validation survey disparity rate gives AOs the benefit of the 
doubt in a number of ways. We do not compare state and AO surveys where 
they state found only lower-level deficiencies; instead, we compare 
only those surveys where they state identified substantial 
noncompliance, on the theory that substantial noncompliance is likely 
systemic, and therefore, was likely already present when the AO 
conducted its survey up to 60 days earlier. However, despite comparing 
only this more limited subset of surveys, for the denominator in the 
disparity rate calculation we use all representative sample validation 
surveys conducted in the given fiscal year. We have been criticized in 
the past for this methodology and urged to calculate instead a 
``disagreement rate'' using for the denominator only those surveys 
where states found substantial noncompliance. We did in fact report a 
disagreement rate for several years in our report to Congress, but 
stopped doing so more recently because we believe it unfairly 
disregards those surveys in which neither the AO nor the state found 
substantial noncompliance. Our methodology in calculating the disparity 
rate gives AOs the benefit of the doubt in that we do not find a 
disparity between a state and an AO survey so long as the AO has 
identified a comparable deficiency, even if the AO does not indicate 
that the deficiency rises to the level of substantial noncompliance. We 
permit AOs considerable latitude, with the exception of initial 
Medicare surveys as required at Sec.  489.13, in how they categorize 
deficiencies and what kinds of enforcement actions they take within 
their accreditation programs based on the deficiencies they identify. 
Therefore, we accept all evidence in a survey report of their 
identification of comparable deficiencies when comparing their findings 
to state findings for the disparity rate analysis. We see no reason to 
establish a process for reconsideration of a state's survey findings; 
we also believe that there is no feasible method for implementing such 
a reconsideration process.
    In response to comments about the variability in state surveys, we 
acknowledge that there is variability and we employ a variety of 
mechanisms to assess and improve SA performance. As we noted 
previously, SAs are not contractors in the normal sense, but this does 
not mean that we do not provide ongoing oversight of their performance. 
We are also convinced that variability in SA performance is not 
relevant to the discussion of our use of validation survey results to 
evaluate AO performance. Consistently among the SAs and over time the 
largest source of disparate findings between states and AOs has been AO 
difficulties in assessing compliance with the LSC, compliance with 
which is designed to prevent fires in health care facilities and to 
reduce the adverse impact should a fire occur. Various AO practices may 
have contributed to their LSC compliance assessment difficulties, 
including purportedly issuing LSC waivers to providers, though they 
lack authority to do so, choosing not to issue citations requiring 
corrective action for what the AO considers to be minor LSC 
noncompliance, or focusing their survey activities on areas that they 
consider more important than fire protection requirements. 
Nevertheless, we expect all AOs with accreditation programs for 
providers or suppliers that are subject to LSC requirements to be able 
to assess compliance with the LSC.
    We disagree with the comment objecting to our view that a long list 
of minor LSC deficiencies cited by a state could end up with a finding 
of substantial noncompliance. In accordance with Sec.  488.26(b), the 
manner and degree to which a provider or supplier satisfies the 
standards within a requirement or condition is considered when 
determining compliance with that requirement or condition. For states 
or AOs assessing compliance for non-long term care providers and 
suppliers we have long interpreted this provision to mean that there 
could be substantial noncompliance as a result of various situations, 
including a situation where there is pervasive noncompliance on the 
part of a provider or supplier, even if every single instance of 
noncompliance on its own does not constitute substantial noncompliance. 
Such pervasive noncompliance is suggestive of systemic problems that 
need correction. If an AO systematically disregards what it views as 
``minor''

[[Page 29824]]

types of noncompliance, it risks missing underlying systemic weaknesses 
in a provider's or supplier's systems.
    We also disagree with the comment concerning state validation 
surveys being perceived as ``punitive'' in addition to being 
unannounced. We require both states and AOs to conduct unannounced 
surveys, and assuring compliance with our regulations is not 
``punishment'' but part of our responsibility to protect patients and 
their families. Further, to the extent that a state survey finds 
substantial noncompliance, we are required to take appropriate 
enforcement action to bring the provider or supplier back into 
compliance or to take adverse action if it fails to do so. We expect 
that AOs finding the same noncompliance also take swift action within 
their accreditation programs to bring the provider or supplier back 
into compliance or to take adverse accreditation action when an 
accredited provider or supplier fails to correct its deficient 
practices.
    Finally, for the comment about immediate jeopardy, the comment is 
not directly pertinent to the issue of validation surveys and our 
calculation of the disparity rate. As noted in this section of this 
final rule, in calculating the amount of the disparity, we do not 
consider the level of an AO's citation in its survey report so long as 
it identifies a deficiency comparable to the one that the state survey 
team found. Further, the comment incorrectly describes the criteria for 
immediate jeopardy situations, at least for non-long term care 
providers or suppliers. Since there are no approved long-term care 
accreditation programs, the comment incorrectly describes a supposed 
policy difference that currently exists between AO and state practices 
in citing an immediate jeopardy. For non-long term care providers and 
suppliers we assess only their current compliance, at the time of the 
survey, with the Medicare requirements. However, an event that occurred 
in the past and involved violations of our requirements may be evidence 
of current noncompliance with those requirements, unless there is also 
evidence to indicate that the provider or supplier identified and 
corrected the deficient practices associated with that event prior to 
the survey. In such cases there continues to be the potential for 
similar harm to patients or others in the future. In the case of a past 
event that clearly met the criteria for an immediate jeopardy 
determination, which we will discuss further in connection with our 
proposed revision to Sec.  489.3, failure of the provider or supplier 
to address the underlying causes of that event may indicate that the 
immediate jeopardy is still present. We have had discussions with 
individual AOs that appear to have misunderstood this concept, to make 
clear to them that it is inappropriate for them to conclude that a past 
event can never be evidence of an immediate jeopardy situation at the 
time of the survey.
    Comment: Several commenters requested clarification on the criteria 
that would trigger a program review other than the disparity rate, 
changes to CMS requirements, or changes to an AO's standards.
    Response: In our proposal we indicated that we would consider the 
AO's survey activity (for example, whether it was conducting timely re-
accreditation surveys), the results of validation surveys, and its 
continued fulfillment of the requirements in our proposal at Sec.  
488.5(a). We believe this provides considerable specificity as to the 
types of factors we consider. We proposed that our consideration would 
not be limited to these factors, however, because we are unable to 
anticipate all the situations that potentially could arise which might 
warrant our evaluation. After due consideration of the public comments 
we are in this final rule adopting Sec.  488.8(a) without change.
     We proposed at Sec.  488.8(b) to revise the requirement 
currently set out at Sec.  488.8(d)(1), which addresses the conditions 
under which we would assess the equivalency of an AO's approved program 
to the comparable CMS requirements. We proposed at Sec.  488.8(b)(1) to 
revise the requirement currently set out at Sec.  488.8(d)(1)(i), which 
addresses the need for us to conduct a comparability review when we 
impose new requirements or change our survey process. We proposed 
adding language to the existing requirement which would provide us the 
flexibility to consider multiple factors when determining an 
appropriate timeframe for AOs to revise their accreditation program and 
submit revisions to us. We indicated that these factors may include: 
The effective date of any final rule which would affect the substantive 
standards which are applied to various providers and suppliers; the 
effective date of any revised interpretive guidance or survey process 
affecting accredited providers or suppliers; and the scope and 
magnitude of such changes. In addition, we proposed new language to set 
out the consequences if an AO failed to submit comparable changes in a 
timely manner, that is, we may open an accreditation program review in 
accordance with Sec.  488.8(c). We indicated these proposed provisions 
would parallel revisions we proposed at Sec.  488.5(a)(20).
    We received comments on both this and the parallel provision at 
proposed Sec.  488.5(a)(20) (adopted in this final rule as Sec.  
488.5(a)(19)) concerning how CMS would communicate its notice of 
regulation changes to AOs, calling for addition of a provision allowing 
AOs to request an extension of the timeframe for it to respond, and 
calling for a timeframe for CMS to respond to the AO's proposed 
revisions. We addressed these concerns in more detail in our discussion 
of proposed Sec.  488.5(a)(20) (adopted in this final rule as Sec.  
488.5(a)(19)). Accordingly, we are making the same types of changes in 
this final rule at Sec.  488.8(b): We indicate that we will provide 
written notice of the changes to the AO and that we will specify in 
this notice a timeframe of not less than 30 calendar days from the date 
of our notice to submit its proposed equivalent changes. We are stating 
that we may extend the deadline after giving due consideration to a 
timely request by an AO for an extension; that we will provide written 
notice after completion of the comparability review as to whether the 
accreditation program, including the proposed revisions and 
implementation timeframe, continues to meet or exceed all applicable 
Medicare standards; and that if we fail to provide written notice of 
the results of our comparability review no later than 60 days after 
receipt of the AO's proposed revisions, then the revised program would 
be deemed to meet or exceed all applicable Medicare requirements and to 
have our continued approval. Finally, we are making a technical 
correction to indicate that the equivalency of the accreditation 
program's requirements is assessed in light of changes to comparable 
``Medicare'' requirements, rather than ``CMS'' requirements, since CMS 
operates a number of programs that are outside the scope of this 
regulation.
     We proposed at Sec.  488.8(b)(2) to revise the requirement 
currently set out at Sec.  488.8(d)(1)(ii) concerning circumstances in 
which an AO proposes to adopt new requirements or changes its survey 
process. Under the current regulations, an AO must provide written 
notification to CMS at least 30 days in advance of the effective date 
of any proposed changes in its accreditation requirements or survey 
process. We proposed expanding the timeframe to allow adequate time for 
us to conduct a comprehensive, detailed review of the AO's proposed 
changes. In addition, we proposed adding language to clarify that the 
AO may not implement any changes to its CMS-approved Medicare

[[Page 29825]]

accreditation program prior to receiving CMS approval. We stated that 
the purpose of the proposed new language was to ensure continuing 
comparability of the AO's accreditation program with the Medicare 
requirements. We indicated these changes would parallel comparable 
changes at proposed Sec.  488.5(a)(12)(i), which was actually a 
technical error, since there was no proposed Sec.  488.5(a)(12)(i), and 
the actual parallel provision was proposed at Sec.  488.5(a)(19), 
renumbered as Sec.  488.5(a)(18) in this final rule.
    We received comments about this provision in conjunction with our 
proposal for Sec.  488.5(a)(19). We responded to those comments in our 
discussion of proposed Sec.  488.5(a)(19), indicating we were, based on 
the comments, revising Sec.  488.5(a)(19), renumbered as Sec.  
488.5(a)(18), and making conforming changes to Sec.  488.8(b)(2). We 
are revising this provision in conformity with the comments to remove 
all reference to the effective date of the AO's proposed revisions in 
determining the timeframe for submission of these proposals to us, and 
to provide for a default approval process to allow an AO to implement 
its proposed changes. As noted previously, if we fail to provide 
written notice of our findings within 60 calendar days after our 
receipt of the AO's proposed revisions, the program as revised will be 
deemed to have our continued approval. Further, we have made a 
correction to add a provision parallel to that at Sec.  488.4(b)(1)(v), 
clarifying that if an AO implements changes without explicit or deemed 
approval, we may open a program review for that accreditation program.
     We proposed at Sec.  488.8(c) and Sec.  488.8(c)(1) to 
revise the requirement currently set out at Sec.  488.8(e), which 
provides that if a comparability or validation review indicates that an 
accreditation program is not meeting all applicable Medicare 
requirements, we will provide written notice to the AO indicating that 
its accreditation program approval may be in jeopardy and that an 
accreditation program review is being initiated. We proposed revising 
the standard's title to more accurately reflect the language of the 
standard that follows and deleting redundant language. We also proposed 
added language to broaden the regulation and allow us to consider other 
aspects of AO performance that may warrant the opening of a review of a 
CMS-approved accreditation program. We stated, for example, that if 
during a validation review, a question arose as to the ability of an AO 
to conduct re-accreditation surveys in a timely manner, or to provide 
us with timely and accurate data regarding deemed status facilities, we 
would add this matter to the review. We further proposed separating the 
existing standard into two separate parts to more clearly articulate 
the circumstances that may trigger our opening a review of a CMS-
approved accreditation program and the written notice we must provide 
the AO upon opening such a review. We further proposed at Sec.  
488.8(c)(1)(i) to relocate the requirement currently set out at Sec.  
488.8(e)(1), which requires that our notice to the AO include a 
statement of the requirements, instances, rates or patterns of 
discrepancies that were found in the course of a comparability or 
validation review, as well as other related documentation associated 
with the review. We proposed replacing this language with broader 
language that more clearly describes current practices related to an 
accreditation program review. We stated that the proposed revisions 
would address the information that we would be required to include in 
the written notice that we send the AO indicating that an accreditation 
program review is being initiated. We proposed at Sec.  488.8(c)(1)(ii) 
to revise the requirement currently set out at Sec.  488.8(e)(3), which 
requires that the notice of our comparability or validation review 
include a description of the process available if the AO wishes an 
opportunity to explain or justify the findings made during such review. 
We indicated that the proposed language would clarify that the AO would 
not be limited to only one opportunity to offer factual information and 
documentation. Instead, we stated, such opportunities would be 
available throughout the accreditation program review process. We 
proposed at Sec.  488.8(c)(1)(iii) to revise the requirement currently 
set out at Sec.  488.8(e)(4), which describes the possible enforcement 
actions that we may take based on findings from a validation review. We 
proposed deleting the language, ``from the validation review,'' and 
replacing it with the conforming language, ``based on the findings of 
the accreditation program review.'' Finally, we proposed at Sec.  
488.8(c)(1)(iv) to revise the requirement currently set out at Sec.  
488.8(f)(2). The current provision states that if CMS determines after 
review that the AO failed to adopt requirements comparable to CMS's, or 
to submit new requirements in a timely manner, the AO may be given 
conditional CMS approval of its accreditation program with a 
probationary period of up to 180 days to adopt comparable requirements. 
To clarify the existing requirements, we proposed revising this 
provision to include in our required notice to the AO a description of 
the possible actions an AO would have to take to address the identified 
deficiencies, including a timeline for implementation not to exceed 180 
calendar days from the date of issuance of the electronic version of 
our notice that an accreditation program review is being initiated.
    Comment: One commenter proposed that we strengthen this provision 
by changing the language from ``CMS may initiate a program review . . 
.'' to ``CMS must initiate . . .'' making this an automatic requirement 
whenever substantial non-compliance is determined to be present in a 
CMS-approved program. The commenter also proposed reducing the maximum 
timeframe for an AO to implement corrective action from 180 days to 60 
days, and also urged that we review any survey activity of the AO 
conducted during this 60-day period. The commenter indicated that 
allowing 180 days to correct identified deficiencies is much too long 
since that may subject patients to substandard care.
    Response: We appreciate the concerns of the commenter, but believe 
that reducing the timeframe for an AO to implement corrective action 
from 180 days to 60 days may not provide adequate time for the AO to 
identify and implement the systemic changes typically needed to effect 
sustained improvement. Depending on the nature of the AO program's 
deficiencies, we have the discretion to employ greater use of 
validation surveys during this period to ensure patient safety. We also 
note that we have the authority to immediately withdraw our approval of 
an accreditation program if we determine that continued approval poses 
an immediate jeopardy situation for the patients of the AO's accredited 
entities. For the commenter's suggestion that a program review be 
mandatory, we do not see the need to limit our discretion in this 
manner. A program review is a formal process that entails a 
comprehensive review of an AO's program. We also address specific 
problems we have identified in an AO's program outside the formal 
program review process, and have found this to be an efficient and 
effective way to correct such problems. Therefore, we believe it is 
essential for CMS to retain discretion about when to use a more focused 
approach and when to initiate a formal program review. After due 
consideration of the public comment, we are implementing this provision 
in this final rule without change.

[[Page 29826]]

     We proposed at Sec.  488.8(c)(2) to state explicitly that 
we review the AO's plan of correction for its acceptability. We 
received no comments on this provision and are in this final rule 
adopting it without change.
     We proposed at Sec.  488.8(c)(3) to replace the 
requirement currently set out at Sec.  488.8(f)(2). The current 
provision provides us authority to grant conditional ongoing approval 
of an AO's program with a probationary period of up to 180 days for the 
AO to adopt comparable requirements when the AO has failed to adopt 
requirements comparable to CMS's, or has failed to submit new 
requirements in a timely manner during a deeming review. We proposed 
expanding the current provision to clarify that a probationary period 
of up to 180 calendar days applies when an AO has failed to meet any of 
the applicable requirements of subpart A of part 488. We proposed 
further to clarify that an accreditation program review probationary 
period could not extend beyond the AO's term of approval. Finally, we 
proposed to clarify the differences between an accreditation program 
review and renewal application review related to a probationary period, 
versus a conditional approval with a probationary period.
     We proposed at Sec.  488.8(c)(3)(i) to revise the 
requirement currently set out at Sec.  488.8(f)(4), which provides that 
within 60 days after the end of any probationary period, we will make a 
final determination as to whether or not an accreditation program 
continues to meet the Medicare requirements and will issue an 
appropriate notice to the AO and affected providers or suppliers. We 
proposed clarifying this provision by deleting the language, ``make a 
final determination'' and replacing it with, ``issue a written 
determination.'' We further proposed deleting the language, ``criteria 
described at paragraph (a)(1) of this section,'' and replacing it with, 
``requirements of this subpart.''
     We proposed at Sec.  488.8(c)(3)(ii) to revise the 
requirement currently set out at Sec.  488.8(f)(5), which states that 
we may remove our recognition of an AO's program if the AO has not made 
improvements acceptable to us during the probationary period, with the 
removal of our approval effective 30 days from the date that we provide 
written notice to the AO. We proposed modifying this provision by 
expanding the timeframe to account for the process required to publish 
a notice in the Federal Register.
     We proposed at Sec.  488.8(c)(3)(iii) to revise the 
requirement currently set out at Sec.  488.8(f)(7), which requires us 
to publish a notice in the Federal Register when we withdraw our 
approval of an AO's accreditation program, including a justification 
for our decision. We proposed clarifying this provision by specifying 
that the effective date of our withdrawal of approval would be 60 
calendar days from the date of the Federal Register notice. We note as 
a point of information that, if an AO has requested reconsideration in 
accordance with Sec.  488.8(f) of our decision to withdraw our approval 
of its accreditation program, we would not publish a notice of our 
withdrawal of approval until and unless the final reconsideration 
decision issued in accordance with Sec.  488.211 reaffirms the 
withdrawal of approval. We received no comments on proposed Sec.  
488.8(c)(3), including paragraphs (c)(3)(i) through (iii) and are 
adopting it in this final rule without change.
     We proposed at Sec.  488.8(d) to revise the requirement 
currently set out at Sec.  488.8(g), which states that if we determine 
that continued approval of an AO's accreditation program poses an 
immediate jeopardy to the patients of the entities accredited by that 
organization, or such continued approval otherwise constitutes a 
significant hazard to the public health, we may immediately withdraw 
approval of that AO's accreditation program. We proposed clarifying 
this provision by deleting the language, ``deeming authority'' and 
replacing it with the conforming change, ``CMS-approved accreditation 
program.''
    Comment: One commenter proposed that withdrawal of our approval be 
automatic if an immediate jeopardy situation is found, stating that 
this would provide a greater incentive to AOs to remain in compliance.
    Response: We believe that an automatic withdrawal of our approval 
of an accreditation program is unnecessary and would be more vulnerable 
to challenge. We are confident that we will use our enforcement 
discretion appropriately to take prompt action should we ever make a 
determination that a CMS-approved accreditation program's continued 
approval puts patients in immediate jeopardy. After due consideration 
of the public comments we are adopting this provision in this final 
rule with one minor typographical correction.
     We proposed at Sec.  488.8(e) a new provision that would 
address an AO's responsibility to notify its providers or suppliers in 
the event that CMS withdraws approval of its accreditation program or 
the AO voluntarily terminates its program. We stated that this 
provision was necessary to ensure that providers or suppliers affected 
by an AO's loss of CMS approval for an accreditation program would be 
informed that they were no longer deemed to meet the Medicare 
requirements. We believe notification would afford affected providers 
or suppliers an opportunity to seek accreditation through another CMS-
approved AO accreditation program, or to continue participate in 
Medicare under the SA's jurisdiction.
    Comment: One commenter proposed extending notification to all 
patients impacted by CMS withdrawing approval of an AO's CMS-approved 
accreditation program. This notification would be in addition to CMS 
publishing a notice of such action in the Federal Register under this 
provision as well as the AO's requirement to notify affected providers 
and suppliers in accordance with the requirements at Sec.  
488.5(a)(18).
    Response: As we indicated in response to a similar comment on 
proposed Sec.  488.5(a)(18) (renumbered as Sec.  488.5(a)(17) in this 
final rule), we believe that it is not necessary to notify patients of 
a change in the organization responsible for overseeing their 
provider's or supplier's compliance with the Medicare requirements. 
Further, we believe that such a requirement would be unduly burdensome 
to both AOs and providers and suppliers.
    Comment: Several commenters noted that there might be a 
contradiction between this proposed provision and the one at proposed 
Sec.  488.5(a)(18), and that even if there is no contradiction, the two 
provisions create confusion that needs clarification.
    Response: We revised proposed Sec.  488.5(a)(18) (adopted as Sec.  
488.5(a)(17) in this final rule) to cross-reference Sec.  488.8(e) for 
notice requirements for involuntary termination. Further, in reviewing 
this proposed revision in light of the commenters' observations, we 
noted that Sec.  488.8(e) assumed that there would be a Federal 
Register notice of a voluntary termination by an AO of its CMS-approved 
Medicare accreditation program, even though there is currently no such 
requirement. To avoid confusion about the interaction between Sec.  
488.5(a)(17) and Sec.  488.8(e) we are removing all reference in the 
latter to voluntary terminations. We are also making a technical 
correction to clarify that, in accordance with Sec.  488.8(g)(1), there 
are consequences to a provider's or supplier's continued maintenance of 
its participation in Medicare on the basis of ``deemed status'' when we 
withdraw our approval of its AO's Medicare accreditation program.

[[Page 29827]]

     We proposed at Sec.  488.8(f) to revise the requirement 
currently set out at Sec.  488.8(h), which provides an AO that is not 
satisfied with CMS's determination to withdraw approval of its 
accreditation program the opportunity to request a reconsideration in 
accordance with subpart D of this part. We proposed clarifying this 
provision by deleting the language, ``deeming authority'' and replacing 
it with the conforming change, ``CMS-approved accreditation program.''
    Comment: One commenter proposed retaining the existing language 
referring to ``deeming authority'' and for CMS to publish a definition 
that communicates the intent of this language. The commenter states 
that changing this term to ``CMS-approved accreditation program'' will 
impact recognition, reputation, and marketing for AOs.
    Response: Consistent with our action in other areas of this rule, 
we have removed reference to ``deeming authority'' for AOs and instead 
refer to their Medicare accreditation programs as ``CMS-approved 
programs.'' We believe that the current language is misleading, since 
it implies that AOs have more authority than is permitted them under 
the Act and implementing regulations. Although an AO with a Medicare 
accreditation program we have approved may recommend its accredited 
providers and suppliers to us for deemed status, only CMS has the 
authority to actually grant deemed status to an accredited provider or 
supplier. After due consideration of the public comments, we are 
adopting this provision in this final rule without change.
     We proposed Sec.  488.8(g) to revise the requirement 
currently set out at Sec.  488.8(f)(8). The current requirement states 
that, after we remove approval of an AO's accreditation program, an 
affected provider's or supplier's deemed status continues in effect for 
60 days after removal of approval. It further states that we may extend 
the period for an additional 60 days if we determine that the provider 
or supplier submitted an application within the 60 day timeframe to 
another approved AO or to us so that compliance with Medicare 
conditions can be determined. We proposed revising this provision by 
expanding the timeframe for continued deemed status of a provider or 
supplier to 180 calendar days from the date of our publication of the 
notice of removal of our approval, so long as the provider or supplier 
applies for accreditation under another AO's approved program within 60 
calendar days of the Federal Register notice and also provides timely 
written notice to the SA of its accreditation application. We indicated 
that failure to adhere to these timeframes would result in placement of 
the provider or supplier under SA authority for its continued Medicare 
participation. We stated that our intent was to avoid duplication of AO 
and state survey resources.
    Comment: One commenter expressed its opposition to this provision, 
saying that suppliers of the technical component of advanced diagnostic 
imaging services should not have to submit notice to the SA when 
applying for another accreditation, since SAs do not oversee such 
suppliers. It proposed instead that the accreditation period of such 
suppliers be transferred to another AO when the original AO is no 
longer approved by CMS, stating that the suppliers should not be 
penalized when an AO loses its status with CMS.
    Response: We agree that it is not appropriate to require suppliers 
of the technical component of advanced diagnostic imaging services to 
notify SAs when they apply for accreditation with another AO, after we 
have removed our approval of the supplier's AO's ADI program. This is 
one of the many reasons we decided in this final rule to remove all 
reference to accreditation of suppliers of the technical component of 
ADI services from part 488. We will consider the commenter's 
alternative proposal for future rulemaking concerning ADI 
accreditation.
    Comment: Several commenters expressed appreciation for our proposal 
to lengthen the period of continued deemed status, but questioned why 
we did not instead extend deemed status until the provider's or 
supplier's next scheduled accreditation survey. Since all Medicare 
accreditation programs employ unannounced surveys, we presume the 
commenters intend that the provider's or supplier's deemed status would 
be continued until the expiration date of its accreditation under the 
terminated AO's program. The commenters indicated that we should take 
this approach, unless we found serious deficiencies in the AO's ability 
to assess providers on the basis of quality and safety. One commenter 
also suggested that we require AOs to notify providers or suppliers of 
their obligation to notify the SA.
    Response: If we remove our approval of an AO's Medicare 
accreditation program, generally it would mean that there is 
substantial evidence that the AO is unable to provide its accredited 
providers and suppliers adequate oversight. In this circumstance we 
believe it is necessary for us to move these providers and suppliers 
for oversight purposes as quickly as reasonably possible to another AO 
or to the SA's jurisdiction. Since another AO would need time to 
process an application, particularly if it were receiving multiple 
applications, and to conduct an accreditation survey, we believe it is 
appropriate to afford the provider or supplier sufficient time to 
accomplish the transition to another AO's program, and we believe that 
180 calendar days should be enough time to accomplish this. Since 
accreditation typically is granted for a 3-year period, we do not 
believe it would be appropriate to allow up to 3 years for this 
transition to occur.
    Comment: One commenter proposed that we require providers and 
suppliers to provide written notice to patients when it submits an 
application to another AO, that we place the provider or supplier under 
the oversight of the SA during the transition period between AOs, and 
that we provide patients with information on how to contact the SA with 
any complaints.
    Response: As we indicated in response to similar comments about 
other provisions, we believe it would be unduly burdensome to require 
notice to patients when a provider or supplier applies to another 
accreditation program, and we do not believe this information would be 
useful to patients. In our view it is also unnecessary to provide 
patients with special notice about how to contact the SA with any 
complaints, since it is already routine for patients to submit their 
complaints about certified providers and suppliers to the SA, 
regardless of whether they have deemed status or not, and, when 
appropriate, we authorize substantial allegation validation surveys to 
investigate the complaint. Therefore SA surveys are conducted when 
needed during the transition period. For this reason we also believe it 
is not necessary to formally remove the accredited providers' or 
suppliers' deemed status immediately upon termination of an AO's 
Medicare accreditation program. We agree with the commenter who 
suggested that AOs should be required to notify their accredited 
providers and suppliers of the need for the latter to notify the SA 
when they have filed a timely application for accreditation with 
another AO. We believe that the revised provision at Sec.  488.5(a)(17) 
adopted in this final rule accomplishes this.
    Commenters on this provision, as well as on the provisions we 
originally proposed at Sec.  488.5(a)(18), Sec.  488.5(a)(19), and 
Sec.  488.8(e), noted that we were inconsistent in sometimes applying 
requirements to the situations of both voluntary and involuntary

[[Page 29828]]

terminations of an AO's Medicare accreditation program. We have 
attempted to remove these inconsistencies wherever we have identified 
them. One such inconsistency is that, while we originally proposed at 
Sec.  488.8(e) to require AOs to notify their accredited providers and 
suppliers of both voluntary and involuntary terminations of their 
programs, proposed Sec.  488.8(g) addressed continued deemed status 
only in the case of involuntary terminations. We believe that it would 
not be fair to ``deemed status'' providers and suppliers to extend 
their deemed status only in the case of involuntary terminations, and 
that we should instead afford them similar flexibility in the case of 
an AO's voluntary termination of its Medicare accreditation program. 
Accordingly in this final rule we have reorganized the provision to 
contain two paragraphs, one addressing continued deemed status in the 
case of an involuntary termination, and one addressing it in the case 
of a voluntary termination. Since, as previously discussed, we do not 
publish Federal Register notices of an AO's decision to voluntarily 
terminate its approved Medicare accreditation program, in this revised 
provision, in accordance with public comments, we provide that the 180 
calendar day extension of deemed status would begin as of the effective 
date of the AO's voluntary termination. We are also taking this 
opportunity to add headings to Sec.  488.8(g)(1) to clarify the 
different circumstances addressed in each of these provisions.
     We proposed at Sec.  488.8(h) to revise the requirement 
currently set out at Sec.  488.9, concerning our onsite observation of 
an AO's operations. We proposed modifying the current provision, adding 
language that provides greater specificity and clarity. In addition, we 
proposed expanding the provision to give us greater flexibility in the 
timing of onsite visits to improve our oversight of approved AO 
accreditation programs.
    Comment: One commenter requested we provide as much advance notice 
as possible prior to an onsite visit, noting that the FDA provides 3 to 
4 months advance notice as well as optional dates. A number of 
commenters suggested we revise this provision to indicate that the on-
site visit will relate only to programs we have approved, that the 
scope be reasonable and that the visit not disrupt normal business 
operations. One commenter asked that we clarify and provide detail on 
``auditing meetings,'' and asked whether the process would be different 
than the one CMS has previously followed. Another commenter stated the 
provision is too broad, potentially intrusive and an over-reach of 
government authority. This commenter proposed that the provision be 
revised to indicate that CMS has the authority to conduct an onsite 
visit at an AO's corporate office at a mutually agreed time and that 
the onsite inspection could include, but would not be limited to, the 
review of relevant documents and interviewing staff. By contrast, 
another commenter said that our onsite inspections should not be 
optional and should be conducted during both the application review and 
the ongoing review process, on a regular basis.
    Response: Our proposal was not intended to modify our existing 
policy and practices for on-site inspections of accrediting 
organizations. Generally we work with an AO in advance to find a 
mutually convenient time for both our observation of surveys and our 
visit to their corporate offices, and we intend to continue to do so. 
However, we reserve the right to make an unannounced visit or survey 
observation, should there be circumstances that warrant our doing so. 
We also do not believe it is necessary to state in this provision that 
we only assess the performance of an AO's CMS-approved accreditation 
programs when we are on-site, since we believe that is clear in Sec.  
488.4. We are surprised by the comment that this provision is overly 
broad and overreaches our authority, since it is almost identical to 
the provision currently at Sec.  488.9, which was last adopted on 
November 23, 1993 and which has not been a source of controversy. In 
our proposal we changed the term ``validation review process'' to 
``ongoing review process,'' to conform to changes we made in Sec.  
488.8(a) through (c). We also added language making it explicit that we 
may conduct the onsite inspection at any time. Finally, we added 
language to make it explicit that we may observe accreditation surveys. 
The existing regulatory at Sec.  488.9 already contains the following 
language: ``. . . to verify the organization's representations and to 
assess the organization's compliance with its own policies and 
procedures. The onsite inspection may include, but is not limited to, 
the review of documents, auditing meetings concerning the accreditation 
process, the evaluation of survey results or the accreditation 
decision-making process, and interviews with the organization's 
staff.'' We believe verification of all of these aspects of a Medicare 
accreditation program is necessary for us to determine whether the 
program meets or exceeds all applicable Medicare requirements, as 
required under section 1865 of the Act. For the commenter who called 
for these inspections to be mandatory, we believe that this is a matter 
best left to enforcement discretion. For example, if an AO has two CMS-
approved Medicare accreditation programs with renewal dates in close 
proximity, to make efficient use of our limited resources, including 
travel resources, we have sometimes conducted only one corporate on-
site visit to address both programs, although we continue to conduct 
separate survey observations. We also note that it is already our 
practice to conduct on-site inspections outside the application review 
process, when circumstances warrant our doing so, and we would continue 
to have the authority to do so under the revised regulation. After 
consideration of the public comments, we are in this final rule 
adopting this provision without change.

10. Validation Surveys (Sec.  488.9)

    We proposed revising the title of this section, indicating that 
proposed Sec.  488.9 sets out the language currently at Sec.  488.7 
addressing validation surveys. We stated that the regulatory language 
would remain unchanged, with the exception of deleting language related 
to a plan of correction that no longer reflects current SA practice; 
and deleting language regarding compliance with the LSC that would be 
duplicative of proposed language at Sec.  488.12(a)(2). In addition, we 
proposed minor changes to conform this section to the rest of the final 
rule.
    Comment: Several commenters stated this provision broadened the 
scope of the statutory provision governing substantial allegation 
validation surveys. They cited the statutory language, which authorizes 
the Secretary to enter into an agreement with states to survey ``. . . 
because of substantial allegations of the existence of a significant 
deficiency or deficiencies which would, if found to be present, 
adversely affect health and safety of patients . . .'' and suggested 
that this language is narrower than a ``substantial allegation of 
noncompliance.'' One commenter provided as an example that there may be 
a substantial allegation that a provider is noncompliant in dating and 
timing medical record entries, but this type of noncompliance does not 
rise to the level of a significant deficiency that affects health and 
safety. The commenter went on to state that CMS conducts between 3500 
and 5000 complaint surveys in accredited

[[Page 29829]]

hospitals each year and yet only finds significant problems in 4 
percent to 6 percent of those surveys, which is a tremendous waste of 
resources for the federal government and an unnecessary burden for 
hospitals.
    Response: There has been no modification of our longstanding 
interpretation of the statutory language at section 1864(c) of the Act 
in our proposed rule and we are neither broadening nor narrowing the 
application of our statutory authority to conduct substantial 
allegation validation surveys. We note, however, that in response to 
similar comments we modified the definition of ``substantial allegation 
of noncompliance'' at Sec.  488.1 in response. We did not, however, 
remove reference to substantial noncompliance by a provider or supplier 
with any applicable Medicare condition or requirement, because we 
believe such noncompliance adversely affects the health and safety of 
patients and thus an allegation of such noncompliance should be 
investigated by the SA. The commenter who gave the example of hospital 
medical record noncompliance related to dating and timing entries not 
rising to the level of endangering patient health and safety 
misunderstands the definition of a substantial allegation of 
noncompliance, since the allegation would have to represent substantial 
noncompliance with the hospital Medical Records CoP to be a substantial 
allegation warranting a validation survey. We would evaluate whether 
the manner or degree of noncompliance alleged appeared to suggest such 
substantial noncompliance with the Condition before authorizing a 
validation survey, since there could be cases where systemic failure of 
hospital staff to date and time medical record entries could, in fact, 
endanger the health and safety of the hospital's patients. We further 
note that in our response to comments on our proposed definition of 
``substantial allegation of noncompliance'' at Sec.  488.1 we indicated 
that we are revising revised the definition in this final rule to 
follow the Act's use of the term ``would'' instead of our proposed 
terminology suggesting that an allegation if present ``could or may'' 
affect the health and safety of patients and residents. This should 
reassure commenters who expressed concerns about the scope of 
substantial allegation validation surveys.
    For wasting federal resources on substantial allegation validation 
surveys, we note for the record that the number of such surveys since 
FY 2012 has hovered around 3400, not 5,000, and that 7.4 percent have 
resulted in findings of substantial noncompliance. We also point out 
that the statutory and regulatory threshold for conducting a validation 
survey is not that an allegation must be accurate, but rather that if 
the alleged noncompliance was found to be present, it would represent 
substantial noncompliance. It is to be expected that a significant 
portion of substantial allegation surveys would not result in citations 
of substantial noncompliance, either because the allegation was never 
true, or because the provider or supplier corrected its deficient 
practices prior to our survey. We also note that we have been 
emphasizing in recent years to the states and our regional office staff 
that a complaint concerning a ``deemed status'' provider or supplier 
must meet the threshold of being a substantial allegation for a federal 
survey to be authorized. We also wish to point out that states often 
have broader authority to investigate complaints under their licensure 
authority, and that such state licensure complaint investigations are 
sometimes confused by providers or suppliers with federal substantial 
allegation validation surveys, since often the same personnel conduct 
both.
    Comment: One commenter stated that hospitals report that it appears 
the numbers of citations have a direct impact on whether a validation 
survey is completed and that surveys not based on a representative 
sample cannot truly validate the AO's performance. Along these lines 
another commenter indicated that facilities selected by CMS for 
validation surveys have the least number of AO findings and that to be 
a truly representative sample, the validation survey site selection 
should not consider the number of findings on the accreditation survey, 
unless those findings meet the basis for a substantial allegation 
survey.
    Response: We are puzzled as to what the commenters are referring, 
and their characterization of our selection process for validation 
surveys is inaccurate. At the time that we select providers or 
suppliers for inclusion in our representative sample for those 
validation surveys that are full surveys conducted within 60 days of 
the AO's accreditation survey the AO has not yet conducted its survey. 
Therefore, we do not and could not base our selection of the sample on 
an AO's findings.
    Comment: A number of commenters reiterated their general criticisms 
of validation surveys conducted by states by stating that there is 
variation among the SAs in their survey findings and that state surveys 
should not be used as the benchmark for judging AO surveys.
    Response: We addressed the substance of these criticisms in 
response to comments concerning Sec.  488.8(a)(2) and believe our 
response is applicable here as well.
    Comment: One commenter stated that validation surveys are essential 
to determine the adequacy of an AO's accreditation process and 
recommended that we require at least one validation survey annually for 
each year AO.
    Response: Between the two different types of validation surveys 
under our current oversight program every AO has undergone more than 
one validation survey per year, with the exception of AOs that have 
only recently been approved for their first Medicare accreditation 
program. Further, section 1875 of the Act requires us to report 
annually on the performance of each CMS-approved Medicare accreditation 
program. Therefore, we do not believe it is necessary to include in the 
regulation a specific requirement as to the minimum number of 
validation surveys to be performed each year.
    Comment: One commenter proposed CMS take immediate enforcement 
action related to deficiencies identified in a state substantial 
allegation validation survey instead of directing the SA to conduct 
another survey. The commenter indicated that a second survey is 
duplicative and wastes resources, and delays enforcement action that 
may negatively impact the health and safety of home health patients.
    Response: We generally agree that it is preferable for us to take 
prompt enforcement action when a validation survey identifies 
substantial noncompliance with Medicare requirements, and we revised 
Chapter 5 of the SOM, concerning complaint investigations accordingly. 
Specifically, in sections 5110.2-2 and 5110.3 we clarify that we have 
the discretion to proceed immediately with enforcement action. However, 
when the validation survey was a substantial allegation validation 
survey that was narrowly focused assessing compliance with only a few 
of the applicable conditions, we believe that it is important for us to 
have the flexibility to exercise our enforcement discretion to 
determine whether the provider or supplier complies with a broader 
range, or even all, of the other Medicare conditions. After considering 
the public comments we are in this final rule adopting this provision 
with one technical correction at Sec.  488.9(a)(2), to use the term 
``substantial allegation of noncompliance'' rather than ``substantial 
allegation,'' to match the term used in the definition at Sec.  488.1.

[[Page 29830]]

11. State Survey Agency Review: Statutory Provisions (Sec.  488.10)

    We proposed to revise Sec.  488.10 to implement section 125 of 
MIPPA (revising section 1865(a) of the Act) to clarify that our 
regulations apply to several types of providers and suppliers, not just 
hospitals. The regulation currently at Sec.  488.10(c) addresses the 
authority of the Secretary to enter into agreements with SAs for the 
purpose of conducting validation surveys. It further states, ``Section 
1865(d) provides that an accredited hospital which is found after a 
validation survey to have significant deficiencies related to the 
health and safety of patients will no longer be deemed to meet the 
conditions of participation.'' We proposed revising this provision by 
separating it into two separate provisions, Sec.  488.10(c) and Sec.  
488.10(d). We proposed modifying this provision by updating the 
regulatory citation to implement changes associated with section 125 of 
MIPPA. We further proposed modifying this provision to make it clear 
that the regulations would apply to all national AOs with CMS-approved 
accreditation programs, and all provider or supplier types.
    Comment: We received one comment from a commenter who stated that 
the statute requires that validation surveys fall into two categories 
and then quoted the exact language at section 1864(c) of the Act 
regarding the two types of validation surveys. The commenter called for 
our regulatory text to adhere more closely to the statutory language 
and recommended we reword the provision as follows: ``Section 1864(c) 
of the Act authorizes the Secretary to enter into agreements with SAs 
for the purpose of conducting validation surveys in institutions 
accredited by an accreditation program recognized by the Secretary on a 
selective sample basis, or where the Secretary finds that a survey is 
appropriate because of substantial allegations of the existence of a 
significant deficiency or deficiencies which would, if found to be 
present, adversely affect the health and safety of patients.''
    Response: Both the existing and the proposed regulations refer to 
the two different types of validation surveys referred to in the Act, 
using the same language: ``conducted on a representative sample basis, 
or in response to substantial allegations of noncompliance.'' We assume 
the commenter is building on comments related to proposed Sec.  488.9, 
which challenged the way in which substantial allegation validation 
surveys are characterized. Our responses to those comments apply here 
as well. After considering the public comments we are adopting this 
provision in this final rule without change.

12. State Survey Agency Functions (Sec.  488.11)

    We proposed to revise Sec.  488.11(b) by deleting the word, 
``accredited,'' and replacing it with ``deemed'' as a conforming change 
for increased clarity. We also proposed deleting the citation, ``Sec.  
488.7,'' and replacing it with ``Sec.  488.9.'' This change would be 
consistent with the proposed reorganization of the requirements.
    Comment: One commenter requested that we replace the term ``deemed 
facilities'' with ``deemed organizations,'' saying that not all health 
care providers operate out of a facility. This commenter also stated 
that the parameters for conducting validation surveys be the same as 
that which the commenter recommended for proposed Sec.  488.9, namely 
that surveys be conducted on a representative sample basis without 
regard to the number of findings on an AO's survey or in response to 
substantial allegations which would, if found to be present, adversely 
affect health and safety of patients.
    Response: We indicated our disagreement with the commenter's 
remarks concerning validation surveys in our response to the comments 
concerning proposed Sec.  488.9, and our responses there apply equally 
to what is substantially the same comment here. For the provider's 
suggestion to substitute ``organizations'' for ``facilities,'' we 
believe that term is too broad and vague. We also believe the 
commenter's assumption that the term health care facility refers only 
to an organization that provides health care services within a ``bricks 
and mortar'' building is incorrect. However, in reviewing this comment 
we realized that our proposed language also was not technically precise 
or consistent with the definitions in part 488. In this final rule, 
therefore, we are replacing the term ``deemed facilities'' with 
``deemed status providers and suppliers.''

13. Effect of Survey Agency Certification (Sec.  488.12)

    Currently Sec.  488.12 addresses provider or supplier certification 
recommendations made by the SA to CMS and Sec.  488.12(a)(2) addresses 
whether an accredited hospital is deemed to meet the Medicare CoPs or 
is subject to a full review by the SA. We proposed modifying this 
provision by inserting broader language to make it clear that the 
revised regulations pertain not to hospitals exclusively, but rather to 
all deemed status providers and suppliers. We further proposed 
modifying this provision for clarity and conforming changes. We 
received no comments on this proposal and are adopting it in this final 
rule without change.

14. Loss of Accredited Status (Sec.  488.13)

    We proposed a new provision at Sec.  488.13 entitled, ``Loss of 
Accreditation.'' We believe that this proposed section is necessary to 
address the consequences of a provider's or supplier's loss of 
accreditation, whether voluntary or involuntary, by an AO's CMS-
approved accreditation program. Voluntary loss of accreditation occurs 
when a provider or supplier chooses to withdraw from a CMS-approved 
accreditation program. Involuntary loss of accreditation occurs when an 
AO terminates a provider's or supplier's accreditation due to non-
compliance with the AO's CMS-approved accreditation program 
requirements, or to the provider's or supplier's non-payment of AO 
fees. We stated that the proposed new provision would address the 
timing of a SA survey in such circumstances. We received no comments in 
response to our proposal and are adopting it in this final rule without 
change.

15. Providers or Suppliers, Other Than SNFs and NFs, With Deficiencies 
(Sec.  488.28)

    We proposed to revise Sec.  488.28(a) to replace outdated language, 
such as referring to ``Medicare'' instead of the ``Health Insurance for 
the Aged and Disabled Program'' and to make explicit in the regulation 
our longstanding enforcement policy that in immediate jeopardy 
situations we may require a shorter timeframe for a provider or 
supplier to come into compliance. We stated that we believed it would 
be beneficial to make this practice explicit in this proposed rule.
    Comment: Several commenters expressed concerns related to how 
immediate jeopardy is cited.
    Response: These issues are addressed in section II.B.17. of this 
final rule in our discussion of the definition of ``immediate 
jeopardy'' at Sec.  489.3 in this final rule.
    We are also taking this opportunity to make a technical correction 
in this final rule, replacing the term ``the Secretary'' with ``CMS,'' 
to be consistent with our usage throughout this rule.

16. Statutory Basis (Sec.  489.1)

    We proposed to revise Sec.  489.1(b), which addresses the scope of 
part 489. We stated that this proposed revision

[[Page 29831]]

would expand which provisions of part 489 apply to suppliers that are 
subject to certification requirements as well as to providers. We 
indicated that currently Sec.  489.1(b) indicates that only the 
regulations at Sec.  489.13, governing the effective date of the 
provider agreement or supplier approval, are applicable to suppliers 
that require certification in accordance with Sec.  488.3 and Sec.  
488.12 to participate in Medicare, as well as to all providers. We also 
reported that various supplier-specific rules in this chapter that 
require certification also establish requirements related to 
termination of the certified supplier's participation agreement with 
the Medicare program. However, only some of these supplier-specific 
certification rules provide for termination of the agreement where the 
certified supplier places restrictions on the persons it will accept 
for treatment and fails to either exempt Medicare beneficiaries or 
apply the restrictions in the same way for Medicare beneficiaries as 
all other persons seeking care in the supplier facility. We stated that 
we believe that this non-discrimination provision should also apply as 
a basis for termination of all Medicare-certified suppliers.
    Likewise, we pointed out that neither the certified supplier-
specific rules governing termination of their agreements, nor the 
current termination of provider agreement rules at Sec.  489.53 provide 
for termination of the supplier agreement where the certified supplier 
denies immediate access to state surveyors or other authorized entities 
or refuses to allow photocopying of its records. We indicated that 
currently, the only enforcement remedy in the face of such denial or 
refusal by a certified supplier would be exclusion of the certified 
supplier from Medicare by the OIG under 42 CFR 1001.1301(a). We stated 
it would be quicker and more efficient for us to handle such a denial 
or refusal of access to the certified supplier facility or copying of 
its records in the same manner as is currently used for providers, that 
is, CMS termination of the Medicare agreement.
    Accordingly, we proposed amending Sec.  489.1(b) to expand the 
enumeration of provisions of part 489 that apply to suppliers subject 
to certification, as well as to providers. Because these provisions 
would apply only to those types of suppliers that require certification 
and not to all suppliers, we proposed to include language in revised 
Sec.  489.1(b) describing which types of suppliers would be affected, 
using the same language currently found at Sec.  489.13. We stated that 
this language would indicate that the affected types of suppliers 
participate in Medicare based on surveys conducted by the SA or CMS 
surveyors, or on the basis of accreditation under a CMS-approved AO's 
Medicare accreditation program.
    We also proposed redesignating the current language in Sec.  
489.1(b), which makes the effective date rules at Sec.  489.13 
applicable to certified suppliers as well as to providers, as new 
paragraph Sec.  489.1(b)(1). Further, we proposed adding a new 
paragraph at Sec.  489.1(b)(2) indicating that the termination 
provisions at Sec.  489.53(a), Sec.  489.53(a)(2), and Sec.  
489.53(a)(13) and proposed new Sec.  489.53(a)(18) (discussed in 
section II.B.18. of this final rule) would apply to certified suppliers 
as well as to providers.
    We received no comments on the proposed revisions. However, we are 
making a technical correction in this final rule to add the definition 
of ``immediate jeopardy'' at Sec.  489.3 as a provision that also 
applies to suppliers. Although this is clear in the wording of the 
definition itself, we believe to be consistent this should also be 
addressed in Sec.  489.1 and are revising this latter provision in this 
final rule accordingly.

17. Definitions (Sec.  489.3)

    We stated that the current regulations at Sec.  489.3 define the 
term ``immediate jeopardy'' as a situation in which the provider's non-
compliance with one or more requirements of participation has caused, 
or is likely to cause, serious injury, harm, impairment, or death to a 
``resident.'' We indicated that this definition is identical to the one 
at Sec.  488.301, which, in that context, applies only to long term 
care facilities, that is, NFs and SNFs. We also noted, however, that 
the current regulation at Sec.  489.53(d) addresses exceptions 
permitted for the required notice of termination which we must provide 
to the provider or supplier. We indicated that this regulation permits 
exceptions in the case of immediate jeopardy situations in hospitals 
that have violated the Emergency Medical Treatment and Labor Act 
(EMTALA) requirements at Sec.  489.24(a) through (e), as well as to 
immediate jeopardy situations in SNFs. Thus, it has been our 
longstanding policy that the definition of immediate jeopardy at Sec.  
489.3 applies to all types of certified health care facilities and not 
just long term care facilities. Nevertheless, we proposed to revise the 
definition of immediate jeopardy at Sec.  489.3 to make more explicit 
that it applies to all types of providers and as well as all types of 
suppliers subject to certification.
    Comment: One commenter proposed to expand the definition to include 
harm to staff and visitors as well as residents and patients, saying 
that there are hazardous environments in imaging centers with Magnetic 
Resonance Imaging (MRI) suites or Computed Tomography (CT) scanners.
    Response: We appreciate the commenter's concerns, but believe that 
it would inappropriately expand the scope of federal surveys to require 
assessment of potential harm to staff and visitors. An immediate 
jeopardy must involve non-compliance with a Medicare requirement, and 
these requirements are focused on the care services provided by a 
provider or supplier to patients or residents. We also suspect that it 
would ordinarily be the case that an environment that poses an 
immediate threat of serious harm to staff or visitors would also pose 
the same threat to patients or residents, and thus the protections 
afforded under our requirements to patients and residents would also 
benefit staff and visitors.
    Comment: A number of commenters took issue with including in the 
definition the phrase ``likely to cause'' serious injury, harm, 
impairment of death. Most commenters indicated that they believe there 
is a great deal of subjectivity in the application of this definition, 
and that as a result there is considerable variability among states and 
CMS regional offices in immediate jeopardy citation practices. Some of 
these commenters called for removing the phrase ``likely to cause'' and 
limiting immediate jeopardy citations to those that have actually 
caused serious harm. Another commenter suggested substituting the 
phrase ``more likely than not.'' Some commenters did not request a 
modification of the definition, but did ask for more specific guidance 
in the SOM about examples of immediate jeopardy situations.
    Response: Our proposal did not introduce the phrase ``likely to 
cause'' into the definition of immediate jeopardy; rather, this is a 
longstanding component of the existing definition. Moreover, we believe 
it is entirely appropriate and necessary for patient safety to treat as 
immediate jeopardy situations we identify that have the potential to 
cause serious harm if they are not addressed immediately, regardless of 
whether we are able to identify any harm already caused by the 
situation.
    The commenters who called for more guidance may not be aware of the 
SOM, Appendix Q, ``Guidelines for Determining Immediate Jeopardy''. 
Among the guidance contained in this document is a discussion of the 
three

[[Page 29832]]

components that must all be present to cite immediate jeopardy: 
Potential or actual harm that is serious; immediacy; and culpability on 
the part of the provider or supplier. The Appendix provides a detailed, 
albeit not exhaustive, list of triggers that should lead surveyors to 
consider whether there is immediate jeopardy, as well as examples of 
hypothetical and real cases. We acknowledge that there is some 
variability in the tendency to cite immediate jeopardy, but continue to 
work with SAs and our Regional Office staff to achieve greater 
consistency. After consideration of the public comments we are in this 
final rule adopting this provision without change.

18. Termination by CMS (Sec.  489.53)

    We proposed to revise Sec.  489.53(a), which addresses the basis 
for us to terminate a Medicare provider agreement. We proposed deleting 
the language ``with any provider'' from the heading for this provision 
since we are proposing that several of the termination provisions apply 
to certified suppliers, as well as providers. We proposed retaining 
language stating that we may terminate the agreement with any provider 
if we find that any of the failings enumerated in Sec.  489.53(a) is 
attributable to that provider. We further proposed adding language 
indicating that we may, in addition to applying the various provisions 
in this chapter governing the termination of agreements with suppliers, 
terminate agreements with those suppliers that fail to comply with the 
requirements set out in Sec.  489.53(a)(13) and proposed new Sec.  
489.53(a)(18).
    We proposed adding language in Sec.  489.53(a)(2) to indicate that 
when a provider or supplier places restrictions on the persons accepted 
for treatment services without either exempting Medicare beneficiaries 
from such restrictions, or applying the restrictions to Medicare 
beneficiaries in the same manner as to all other persons seeking care, 
this may be grounds for termination of the Medicare agreement. We 
stated that the current language at Sec.  489.53(a)(2) applies only to 
providers.
    We proposed adding language at Sec.  489.53(a)(13) to indicate that 
failure by a provider or supplier to permit photocopying of any records 
or other information by, or on behalf of us, as necessary, to determine 
or verify compliance with participation requirements, may be grounds 
for terminating the Medicare agreement. We stated that the current 
language at Sec.  489.53(a)(13) applies only to providers.
    Further, we proposed adding a new Sec.  489.53(a)(18) to state 
explicitly that denial of immediate access to an SA or other authorized 
entity for the purpose of determining, in accordance with Sec.  488.3, 
whether the provider or supplier meets the applicable requirements, 
CoPs, CfCs, or conditions for certification, may be grounds for 
termination of the provider agreement or supplier approval. We 
indicated that, consistent with the definition at 42 CFR 
1001.1301(a)(2), we interpret ``failure to grant immediate access'' to 
mean the failure to grant access at the time of a reasonable request or 
to provide a compelling reason why access may not be granted.
    Finally, we proposed a technical correction to Sec.  
489.53(d)(2)(i). We stated that Sec.  489.53(d) governs the timeframe 
for provision of a minimum 15-day advance notice of termination of a 
provider agreement by us to the affected provider, while Sec.  
489.53(d)(2) governs exceptions to the general timeframe in situations 
involving immediate jeopardy. We indicated that the first exception, at 
Sec.  489.53(d)(2)(i), applies to hospitals that have been determined 
by us to have an EMTALA violation which poses an immediate jeopardy. We 
explained that in these cases we are required to give the hospital a 
preliminary notice of termination in 23 days if the hospital does not 
correct its identified deficiencies or refute the finding, and a final 
notice of termination at least 2, but not more than 4, days before the 
effective date of termination. We proposed clarifying that this 
exception to the timing notice provision applies to a hospital that has 
been found to be in violation of any of the EMTALA requirements found 
at Sec.  489.24, paragraphs (a) through (f). We stated that the current 
regulation refers to hospitals with emergency departments found in 
violation of Sec.  489.24, paragraphs (a) through (e) rather than (a) 
through (f). We indicated that this proposed clarification would not 
change current EMTALA citation or enforcement practices.
    Comment: One commenter expressed concern that inclusion of the term 
``supplier'' would require physicians to accept all Medicare patients 
and that this is not authorized by statute. The commenter requested the 
provision be modified to indicate that it does not apply to physicians.
    Response: We believe that revised Sec.  489.1(b) makes it clear 
that the definition of ``immediate jeopardy'' at Sec.  489.3 and the 
provisions at Sec.  489.13, Sec.  489.53(a)(2), Sec.  489.53(a)(13), 
and Sec.  489.53(a)(18) apply only to supplier entities which, for 
participation in Medicare, are subject to a determination by us on the 
basis of a state or AO survey, that is, suppliers that must be 
certified by us as meeting CoP, CfC, conditions for certification, or 
long term care requirements to participate in the Medicare program. 
Thus, we believe it is clear that the provisions of part 489 do not 
apply to those types of suppliers that are not subject to our survey 
and certification requirements. We note in particular that physician 
suppliers are not subject to surveys or other certification 
requirements as a condition for their participation in the Medicare 
program, and that none of the provisions of Sec.  489.53 apply to 
physician suppliers.
    We are making a technical revision in this final rule at Sec.  
489.53(a)(13) to replace the word ``photocopying'' with ``copying.'' As 
more providers and suppliers move from paper medical records to 
electronic health records, we envision that it could in some cases be 
more efficient for surveyors as well as providers and suppliers if 
surveyors obtain digital electronic copies of pertinent medical 
records, or portions thereof, as well as of any other documents that 
they require as evidence to support their findings of noncompliance. We 
believe that the term ``photocopying'' is becoming outdated and that it 
is preferable to use the more generic term ``copying.'' We are adopting 
in this final rule the other provisions of Sec.  489.53 as proposed.

III. Collection of Information Requirements

    While this rule does contain information collection requirements, 
we believe they are exempt under 5 CFR 1320.3(c)(4). The requirements 
would affect less than 10 entities in a 12-month period. To date, there 
have only been a total of nine entities that meet the criteria 
necessary to become accrediting organizations with CMS-approved 
Medicare accreditation programs, with the ninth having just been added 
as recently as July, 2014. Should the number of eligible entities 
exceed 10, we will prepare an information collection request for OMB 
approval. As required by the Paperwork Reduction Act of 1995, we will 
announce the information collection request via the required Federal 
Register notices and allow the public ample time to review the request 
and submit comments.

IV. Regulatory Impact Statement

    We have examined the impact of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation

[[Page 29833]]

and Regulatory Review (January 18, 2011), the Regulatory Flexibility 
Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the 
Social Security Act, section 202 of the Unfunded Mandates Reform Act of 
1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on 
Federalism (August 4, 1999) and the Congressional Review Act (5 U.S.C. 
804(2).
    Executive Orders 12866 and 13563 direct 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 rule does 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 entities. 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 
$7.5 million to $38.5 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, and the Secretary 
certifies, that this rule will not have a significant economic impact 
on a substantial number of small entities.
    In addition, section 1102(b) of the Social Security 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 for Medicare payment regulations and 
has fewer than 100 beds. We are not preparing an analysis for section 
1102(b) of the Act because we have determined, and the Secretary 
certifies, that this rule will not have a significant impact on the 
operations of a substantial number of small rural hospitals.
    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. In 2014, that 
threshold level is currently approximately $141 million. This rule has 
no consequential effect on state, local, or tribal governments or on 
the private sector.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

V. Waiver of Proposed Rulemaking

    We generally publish a notice of proposed rulemaking in the Federal 
Register and invite public comment on the proposed rule in accordance 
with 5 U.S.C. 553(b) of the Administrative Procedure Act (APA). The 
notice of proposed rulemaking includes a reference to the legal 
authority under which the rule is proposed, and the terms and 
substances of the proposed rule or a description of the subjects and 
issues involved. This procedure can be waived, however, if an agency 
finds good cause that a notice-and-comment procedure is impracticable, 
unnecessary, or contrary to the public interest and incorporates a 
statement of the finding and its reasons in the rule issued.
    This final rule includes several technical corrections that were 
not included in the proposed rule and for which a notice-and-comment 
period is unnecessary, because they are purely technical and 
conforming, or because they clarify possible ambiguities in the 
proposed rule. Specifically, we are revising:
     Sec.  488.2 to correct our characterization of the 
statutory reference at section 1832(a)(2)(J) of the Act to refer to 
``Requirements for partial hospitalization services provided by CMHCs'' 
and at section 1881 of the Act to refer to ``Requirements for ESRD 
facilities'';
     Sec.  488.3(a)(2) to correct a reference to ``parts 482 
through 485'' to make the reference to ``parts ``482 through 486'', to 
cover other types of provider entities for which accreditation is 
permitted;
     Sec.  488.4(a) not only in response to comments, but also 
to make a technical correction by referring to a national accreditation 
program as having ``applied for CMS approval of a provider or supplier 
accreditation program,'' rather than for ``approval to accredit 
providers and suppliers'';
     Sec.  488.4(a)(11)(ii) to make stylistic changes and to 
change the order of two sentences in that provision;
     Sec.  488.5(a)(4)(i) to add the word ``an'' prior to the 
word ``agreement'';
     Sec.  488.5(a)(12) to clarify that referral to ombudsman 
or licensing bodies is expected when applicable;
     Sec.  488.5(d)(1)(ii), which was located at Sec.  
488.5(e)(2) in our proposal, to remove language that was superfluous 
because it is already contained in the definition of ``reasonable 
assurance'';
     Sec.  488.5(e)(2)(i) and (ii), which were located at Sec.  
488.5(f) in our proposal, to remove language that was superfluous 
because it is already contained in the definition of ``reasonable 
assurance'';
     Sec.  488.6 to restore language that was located at Sec.  
488.5(b) and Sec.  488.6(b) indicating that Medicare approval does not 
substitute for any additional requirements under Medicaid.
     Sec.  488.8(b)(1)(iv) to appropriately cite its reference 
to a prior paragraph in the same section;
     Sec.  488.8(b)(2)(iii) to enhance clarity and consistency 
by adding a provision parallel to that at Sec.  488.8(b)(1)(v) 
indicating we may open an accreditation program review in the event of 
failure to comply with the requirements of Sec.  488.8(b)(2)(i) and 
(ii).
     Sec.  488.9(d) to correct a typographical error, changing 
``publishes'' to ``publish''; and
     Sec.  488.9(a)(2) to refer to a ``substantial allegation 
of noncompliance'' rather than to a ``substantial allegation,'' to 
correspond to the term for which we provide a definition at Sec.  
488.1.
    The changes outlined in this section are purely technical, and a 
period of comment is unnecessary because the changes are either purely 
technical and conforming, or clarify possible ambiguities in the 
proposed rule. We do not believe any of these changes to be 
substantive. We believe it would be contrary to the public interest to 
delay codifying the technical corrections outlined in this section, and 
therefore find good cause to waive the notice of proposed rulemaking 
for the technical revisions and corrections.

List of Subjects

42 CFR Part 401

    Claims, Freedom of information, Health facilities, Medicare, 
Privacy.

42 CFR Part 488

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

42 CFR Part 489

    Health facilities, Medicare, Reporting and recordkeeping 
requirements.
    For the reasons set forth in the preamble, the Centers for Medicare 
&

[[Page 29834]]

Medicaid Services is amending 42 CFR chapter IV as set forth below:

PART 401--GENERAL ADMINISTRATIVE REQUIREMENTS

0
1. The authority citation for part 401 continues to read as follows:

    Authority: Secs. 1102, 1871, and 1874(e) of the Social Security 
Act (42 U.S.C. 1302, 1395hh, and 1395w-5).


Sec.  401.126  [Amended]

0
2. In Sec.  401.126, amend paragraph (b)(2)(i) by removing the 
reference ``Sec.  488.6'' and by adding in its place the reference 
``Sec.  488.5''.


Sec.  401.133  [Amended]

0
3. In Sec.  401.133, amend paragraph (d) by removing the references 
``Sec.  488.5, Sec.  488.6 or Sec.  493.506'' and by adding in its 
place the references ``Sec.  488.5 or Sec.  493.506''.

PART 488--SURVEY, CERTIFICATION, AND ENFORCEMENT PROCEDURES

0
4. The authority citation for part 488 is revised to read as follows:

    Authority: Secs. 1102, 1128l, 1864, 1865, 1871 and 1875 of the 
Social Security Act, unless otherwise noted (42 U.S.C 1302, 1320a-
7j, 1395aa, 1395bb, 1395hh) and 1395ll.

0
5. Section 488.1 is amended by--
0
a. Removing the definitions of ``Accredited provider or supplier'' and 
``AOA''.
0
b. Revising the definition of ``Certification''.
0
c. Adding the definitions of ``Conditions for certification'' and 
``Deemed status'' in alphabetical order.
0
d. Revising the definition of ``Full review''.
0
e. Adding the definition of ``Immediate jeopardy'' in alphabetical 
order.
0
f. Removing the definition of ``JCAHO''.
0
g. Adding the definition of National accrediting organization'' in 
alphabetical order.
0
h. Revising the definitions of ``Provider of services or provider'', 
``Reasonable assurance'', ``State survey agency'', and ``Substantial 
allegation of noncompliance''.
0
i. Removing the definition of ``Validation review period''.
    The revisions and additions read as follows:


Sec.  488.1  Definitions.

* * * * *
    Certification means a determination made by the state survey agency 
that providers and suppliers are in compliance with the applicable 
conditions of participation, conditions for coverage, conditions for 
certification, or requirements.
    Conditions for certification means the health and safety standards 
RHCs must meet to participate in the Medicare program.
* * * * *
    Deemed status means that CMS has certified a provider or supplier 
for Medicare participation, based on all of the following criteria 
having been met: The provider or supplier has voluntarily applied for, 
and received, accreditation from a CMS-approved national accrediting 
organization under the applicable Medicare accreditation program; the 
accrediting organization has recommended the provider or supplier to 
CMS for Medicare participation; CMS has accepted the accrediting 
organization's recommendation; and CMS finds that all other 
participation requirements have been met.
    Full review means a survey of a provider or supplier for compliance 
with all of the Medicare conditions or requirements applicable to that 
provider or supplier type.
    Immediate jeopardy means a situation in which the provider's or 
supplier's non-compliance with one or more Medicare requirements, 
conditions of participation, conditions for coverage or certification 
has caused, or is likely to cause, serious injury, harm, impairment, or 
death to a resident or patient.
* * * * *
    National accrediting organization means an organization that 
accredits provider entities, as that term is defined in section 
1865(a)(4) of the Act, under a specific program and whose accredited 
provider entities under each program are widely located geographically 
across the United States.
    Provider of services or provider refers to a hospital, critical 
access hospital, skilled nursing facility, nursing facility, home 
health agency, hospice, comprehensive outpatient rehabilitation 
facility, or a clinic, rehabilitation agency or public health agency 
that furnishes outpatient physical therapy or speech pathology 
services.
* * * * *
    Reasonable assurance means that an accrediting organization has 
demonstrated to CMS's satisfaction that its accreditation program 
requirements meet or exceed the Medicare program requirements.
* * * * *
    State survey agency refers to the state health agency or other 
appropriate state or local agency CMS uses to perform survey and review 
functions provided for in sections 1864, 1819(g), and 1919(g) of the 
Act.
    Substantial allegation of non-compliance means a complaint from any 
of a variety of sources (such as patient, relative, or third party), 
including complaints submitted in person, by telephone, through written 
correspondence, or in newspaper or magazine articles, that would, if 
found to be present, adversely affect the health and safety of patients 
or residents and raises doubts as to a provider's or supplier's 
compliance with any Medicare condition of participation, condition for 
coverage, condition for certification, or requirements.
* * * * *

0
6. Section 488.2 is amended by--
0
a. Adding the following statutory provisions in numerical order.
0
b. Revising the description of section 1883 of the Social Security Act.
    The additions and revisions read as follows:


Sec.  488.2  Statutory basis.

* * * * *
    1138(b)--Requirements for organ procurement organizations and organ 
procurement agencies.
* * * * *
    1820--Requirements for CAHs.
    1832(a)(2)(C)--Requirements for Organizations that provide 
outpatient physical therapy and speech language pathology services.
    1832(a)(2)(F)--Requirements for ASCs.
    1832(a)(2)(J)--Requirements for partial hospitalization services 
provided by CMHCs.
    1861(e)--Requirements for hospitals.
* * * * *
    1861(p)(4)--Requirements for rehabilitation agencies.
* * * * *
    1861(aa)--Requirements for RHCs and FQHCs.
    1861(cc)(2)--Requirements for CORFs.
    1861(dd)--Requirements for hospices.
* * * * *
    1861(ff)(3)(A)--Requirements for CMHCs.
* * * * *
    1863--Consultation with state agencies, accrediting bodies, and 
other organizations to develop conditions of participation, conditions 
for coverage, conditions for certification, and requirements for 
providers or suppliers.
* * * * *
    1875(b)--Requirements for performance review of CMS-approved 
accreditation programs.
* * * * *

[[Page 29835]]

    1881--Requirements for ESRD facilities.
    1883--Requirements for hospitals that furnish extended care 
services.
* * * * *

0
7. Section 488.3 is revised to read as follows:


Sec.  488.3  Conditions of participation, conditions for coverage, 
conditions for certification and long term care requirements.

    (a) Basic rules. To be approved for participation in, or coverage 
under, the Medicare program, a prospective provider or supplier must 
meet the following:
    (1) Meet the applicable statutory definitions in section 1138(b), 
1819, 1820, 1832(a)(2)(C), 1832(a)(2)(F), 1832(a)(2)(J), 1834(e), 1861, 
1881, 1883, 1891, 1913 or 1919 of the Act.
    (2) Be in compliance with the applicable conditions, certification 
requirements, or long term care requirements prescribed in part 405 
subparts U or X, part 410 subpart E, part 416, part 418 subpart C, 
parts 482 through 486, part 491 subpart A, or part 494 of this chapter.
    (b) Special conditions. The Secretary shall consult with state 
agencies and national AOs, as applicable, to develop CoP, CfC, 
conditions for certification and long term care requirements.
    (1) The Secretary may, at a state's request, approve health and 
safety requirements for providers or suppliers in the state that exceed 
Medicare program requirements.
    (2) If a state or political subdivision imposes requirements on 
institutions (that exceed the Medicare program requirements) as a 
condition for the purchase of health services under a state Medicaid 
plan approved under title XIX of the Act, (or if Guam, Puerto Rico, or 
the Virgin Islands does so under a state plan for Old Age Assistance 
under title I of the Act, or for Aid to the Aged, Blind, and Disabled 
under the original title XVI of the Act), the Secretary imposes similar 
requirements as a condition for payment under Medicare in that state or 
political subdivision.

0
8. Section 488.4 is revised to read as follows:


Sec.  488.4  General rules for a CMS-approved accreditation program for 
providers and suppliers.

    (a) The following requirements apply when a national accrediting 
organization has applied for CMS approval of a provider or supplier 
accreditation program and CMS has found that the program provides 
reasonable assurance for providers or suppliers accredited under the 
program:
    (1) When a provider or supplier demonstrates full compliance with 
all of the accreditation program requirements of the accrediting 
organization's CMS-approved accreditation program, the accrediting 
organization may recommend that CMS grant deemed status to the provider 
or supplier.
    (2) CMS may deem the provider or supplier, excluding kidney 
transplant centers within a hospital and ESRD facilities, to be in 
compliance with the applicable Medicare conditions or requirements. The 
deemed status provider or supplier is subject to validation surveys as 
provided at Sec.  488.9.
    (b) [Reserved]

0
9. Section 488.5 is revised to read as follows:


Sec.  488.5  Application and re-application procedures for national 
accrediting organizations.

    (a) Information submitted with application. A national accrediting 
organization applying to CMS for approval or re-approval of an 
accreditation program under Sec.  488.4 must furnish CMS with all of 
the following information and materials to demonstrate that the program 
provides reasonable assurance that the entities accredited under the 
program meet or exceed the applicable Medicare conditions or 
requirements. This information must include the following:
    (1) Documentation that demonstrates the organization meets the 
definition of a ``national accrediting organization'' under Sec.  488.1 
as it relates to the accreditation program.
    (2) The type of provider or supplier accreditation program for 
which the organization is requesting approval or re-approval.
    (3) A detailed crosswalk (in table format) that identifies, for 
each of the applicable Medicare conditions or requirements, the exact 
language of the organization's comparable accreditation requirements 
and standards.
    (4) A detailed description of the organization's survey process to 
confirm that a provider or supplier meets or exceeds the Medicare 
program requirements. This description must include all of the 
following information:
    (i) Frequency of surveys performed and an agreement by the 
organization to re-survey every accredited provider or supplier, 
through unannounced surveys, no later than 36 months after the prior 
accreditation effective date, including an explanation of how the 
accrediting organization will maintain the schedule it proposes. If 
there is a statutorily-mandated survey interval of less than 36 months, 
the organization must indicate how it will adhere to the statutory 
schedule.
    (ii) Documentation demonstrating the comparability of the 
organization's survey process and surveyor guidance to those required 
for state survey agencies conducting federal Medicare surveys for the 
same provider or supplier type, in accordance with the applicable 
requirements or conditions of participation or conditions for coverage 
or certification.
    (iii) Copies of the organization's survey forms, guidelines, and 
instructions to surveyors.
    (iv) Documentation demonstrating that the organization's survey 
reports identify, for each finding of non-compliance with accreditation 
standards, the comparable Medicare CoP, CfC, conditions for 
certification, or requirements.
    (v) Description of the organization's accreditation survey review 
process.
    (vi) Description of the organization's procedures and timelines for 
notifying surveyed facilities of non-compliance with the accreditation 
program's standards.
    (vii) Description of the organization's procedures and timelines 
for monitoring the provider's or supplier's correction of identified 
non-compliance with the accreditation program's standards.
    (viii) A statement acknowledging that, as a condition for CMS 
approval of a national accrediting organization's accreditation 
program, the organization agrees to provide CMS with information 
extracted from each accreditation survey for a specified provider or 
supplier as part of its data submissions required under paragraph 
(a)(11)(ii) of this section, a copy of all survey reports and related 
information for applicants seeking initial participation in Medicare, 
and, upon request from CMS, a copy of the most recent accreditation 
survey for a specified provider or supplier, together with any other 
information related to the survey as CMS may require (including 
corrective action plans).
    (ix) A statement acknowledging that the accrediting organization 
will provide timely notification to CMS when an accreditation survey or 
complaint investigation identifies an immediate jeopardy as that term 
is defined at Sec.  489.3 of this chapter. Using the format specified 
by CMS, the accrediting organization must notify CMS within two 
business days from the date the accrediting organization identifies the 
immediate jeopardy.
    (5) The criteria for determining the size and composition of the 
organization's survey teams for the type of provider or supplier to be 
accredited,

[[Page 29836]]

including variations in team size and composition for individual 
provider or supplier surveys.
    (6) The overall adequacy of the number of the organization's 
surveyors, including how the organization will increase the size of the 
survey staff to match growth in the number of accredited facilities 
while maintaining re-accreditation intervals for existing accredited 
facilities.
    (7) A description of the education and experience requirements 
surveyors must meet.
    (8) A description of the content and frequency of the 
organization's in-service training it provides to survey personnel.
    (9) A description of the organization's evaluation systems used to 
monitor the performance of individual surveyors and survey teams.
    (10) The organization's policies and procedures to avoid conflicts 
of interest, including the appearance of conflicts of interest, 
involving individuals who conduct surveys or participate in 
accreditation decisions.
    (11) A description of the organization's data management and 
analysis system for its surveys and accreditation decisions, including 
all of the following:
    (i) A detailed description of how the organization uses its data to 
assure the compliance of its accreditation program with the Medicare 
program requirements.
    (ii) A statement acknowledging that the organization agrees to 
submit timely, accurate, and complete data to support CMS's evaluation 
of the accrediting organization's performance. Data to be submitted 
includes, but is not limited to, accredited provider or supplier 
identifying information, survey schedules, survey findings, and notices 
of accreditation decisions. The organization must submit necessary data 
according to the instructions and timeframes CMS specifies.
    (12) The organization's procedures for responding to, and 
investigating, complaints against accredited facilities, including 
policies and procedures regarding referrals when applicable to 
appropriate licensing bodies and ombudsman programs.
    (13) The organization's accreditation status decision-making 
process, including its policies and procedures for granting, 
withholding, or removing accreditation status for facilities that fail 
to meet the accrediting organization's standards or requirements, 
assignment of less than full accreditation status or other actions 
taken by the organization in response to non-compliance with its 
standards and requirements. The organization must furnish the 
following:
    (i) A description of all types and categories of accreditation 
decisions associated with the program for which approval is sought, 
including the duration of each.
    (ii) A statement acknowledging that the organization agrees to 
notify CMS (in a manner CMS specifies) of any decision to revoke, 
withdraw, or revise the accreditation status of a specific deemed 
status provider or supplier, within three business days from the date 
the organization takes an action.
    (14) A list of all facilities currently accredited by the 
organization under the program for which CMS approval is sought, 
including the type and category of accreditation currently held by each 
provider or supplier, and the expiration date of each provider's or 
supplier's current accreditation.
    (15) A schedule of all surveys expected to be conducted by the 
organization for the accreditation program under review during the 6-
month period following submission of the application.
    (16) The three most recent audited financial statements of the 
organization that demonstrate that the organization's staffing, 
funding, and other resources are adequate to perform the required 
surveys and related activities.
    (17) A statement that it will:
    (i) Provide written notification to CMS and to all providers or 
suppliers accredited under a CMS-approved accreditation program at 
least 90 calendar days in advance of the effective date of a decision 
by the organization to voluntarily terminate its CMS-approved 
accreditation program, including the implications for their deemed 
status in accordance with Sec.  488.8(g)(2); and
    (ii) Adhere to the requirements for written notice to its 
accredited providers or suppliers at Sec.  488.8(e) in the case of an 
involuntary termination.
    (18) A statement that it will provide written notification to CMS 
of any proposed changes in the organization's CMS-approved 
accreditation program and that it agrees not to implement the proposed 
changes without prior written notice of continued program approval from 
CMS except as provided for at Sec.  488.8(b)(2).
    (19) A statement that, in response to a written notice from CMS to 
the organization of a change in the applicable conditions or 
requirements or in the survey process, the organization will provide 
CMS with proposed corresponding changes in the organization's 
requirements for its CMS-approved accreditation program to ensure 
continued comparability with the CMS conditions or requirements or 
survey process. The organization must comply with the following 
requirements:
    (i) The proposed changes must be submitted within 30 calendar days 
of the date of the written CMS notice to the organization or by a date 
specified in the notice, whichever is later. CMS will give due 
consideration to an organization's request for an extension of the 
deadline.
    (ii) The proposed changes will not be implemented without prior 
written notice of continued program approval from CMS, except as 
provided for at Sec.  488.8(b)(1)(iv).
    (20) A statement acknowledging that, as a condition for CMS's 
approval of an accreditation program, the organization will agree to 
permit its surveyors to serve as witnesses in a legal proceeding if CMS 
takes an adverse action against a provider or supplier on the basis of 
the organization's accreditation survey findings, and will cooperate 
with CMS to make surveyors and other staff available when needed.
    (b) Additional information needed. If CMS determines that 
additional information is necessary to make a determination for 
approval or denial of the organization's initial application or re-
application for CMS's approval of an accreditation program, CMS will 
notify the organization and afford it an opportunity to provide the 
additional information.
    (c)(1) Withdrawing an application. An accrediting organization may 
withdraw its initial application for CMS's-approval of its 
accreditation program at any time before CMS publishes the final notice 
described in paragraph (e)(2) of this section.
    (2) Voluntary termination of a CMS-approved accreditation program. 
An accrediting organization may voluntarily terminate its CMS-approved 
accreditation program at any time. The accrediting organization must 
notify CMS of its decision to voluntarily terminate its approved 
accreditation program at least 90 calendar days in advance of the 
effective date of the termination. In accordance with the requirement 
at Sec.  488.4(a)(17)(i), the accrediting organization must also 
provide written notice at least 90 days in advance of the effective 
date of the termination to each of its deemed status providers or 
suppliers.
    (d) Re-submitting a request. (1) Except as provided in paragraph 
(d)(2) of this section, an organization whose request for CMS's 
approval or re-approval of an accreditation program has been denied may 
resubmit its application if the

[[Page 29837]]

organization satisfies all of the following requirements:
    (i) Revises its accreditation program to address the issues related 
to the denial of its previous request.
    (ii) Demonstrates that it can provide reasonable assurance.
    (iii) Resubmits the application in its entirety.
    (2) If an accrediting organization has requested, in accordance 
with subpart D of this part, a reconsideration of CMS's determination 
that its request for approval of an accreditation program is denied, it 
may not submit a new application for approval of an accreditation 
program for the type of provider or supplier at issue in the 
reconsideration until the reconsideration is administratively final.
    (e) Public notice and comment. CMS publishes a notice in the 
Federal Register when the following conditions are met:
    (1) Proposed notice. When CMS receives a complete application from 
a national accrediting organization seeking CMS's approval of an 
accreditation program, it publishes a proposed notice. The proposed 
notice identifies the organization and the type of providers or 
suppliers to be covered by the accreditation program and provides 30 
calendar days for the public to submit comments to CMS.
    (2) Final notice. When CMS decides to approve or disapprove a 
national accrediting organization's application, it publishes a final 
notice within 210 calendar days from the date CMS determines the AO's 
applications was complete, unless the application was for a skilled 
nursing facility accreditation program. There is no timeframe for 
publication of a final notice for a national accrediting organization's 
application for approval of a skilled nursing facility accreditation 
program. The final notice specifies the basis for the CMS decision.
    (i) Approval or re-approval. If CMS approves or re-approves the 
accrediting organization's accreditation program, the final notices 
describes how the accreditation program provides reasonable assurance. 
The final notice specifies the effective date and term of the approval 
(which may not be later than the publication date of the notice and 
which will not exceed 6 years.
    (ii) Disapproval. If CMS does not approve the accrediting 
organization's accreditation program, the final notice describes, 
except in the case of a skilled nursing facility accreditation program, 
how the organization fails to provide reasonable assurance. In the case 
of an application for a skilled nursing facility accreditation program, 
disapproval may be based on the program's failure to provide reasonable 
assurance, or on CMS's decision to exercise its discretion in 
accordance with section 1865(a)(1)(B) of the Act. The final notice 
specifies the effective date of the decision.

0
10. Section 488.6 is revised to read as follows:


Sec.  488.6  Providers or suppliers that participate in the Medicaid 
program under a CMS-approved accreditation program.

    A provider or supplier that has been granted ``deemed status'' by 
CMS by virtue of its accreditation from a CMS-approved accreditation 
program is eligible to participate in the Medicaid program if they are 
not required under Medicaid regulations to comply with any requirements 
other than Medicare participation requirements.


Sec.  488.9  [Removed]

0
11. Section 488.9 is removed.


Sec.  488.7  [Redesignated as Sec.  488.9]

0
12. Section 488.7 is redesignated as new Sec.  488.9.

0
13. New Sec.  488.7 is added to read as follows:


Sec.  488.7  Release and use of accreditation surveys.

    A Medicare participating provider or supplier deemed to meet 
program requirements in accordance with Sec.  488.4 must authorize its 
accrediting organization to release to CMS a copy of its most current 
accreditation survey and any information related to the survey that CMS 
may require (including, but not limited to, corrective action plans).
    (a) CMS may determine that a provider or supplier does not meet the 
applicable Medicare conditions or requirements on the basis of its own 
investigation of the accreditation survey or any other information 
related to the survey.
    (b) With the exception of home health agency surveys, general 
disclosure of an accrediting organization's survey information is 
prohibited under section 1865(b) of the Act. CMS may publically 
disclose an accreditation survey and information related to the survey, 
upon written request, to the extent that the accreditation survey and 
survey information are related to an enforcement action taken by CMS.

0
14. Section 488.8 is revised to read as follows:


Sec.  488.8  Ongoing review of accrediting organizations.

    (a) Performance review. In accordance with section 1875(b) of the 
Act, CMS evaluates the performance of each CMS-approved accreditation 
program on an ongoing basis. This review includes, but is not limited 
to the following:
    (1) Review of the organization's survey activity.
    (2) Analysis of the results of the validation surveys under Sec.  
488.9(a)(1), including the rate of disparity between certifications of 
the accrediting organization and certifications of the SA.
    (3) Review of the organization's continued fulfillment of the 
requirements in Sec.  488.5(a).
    (b) Comparability review. CMS assesses the equivalency of an 
accrediting organization's CMS-approved program requirements to the 
comparable Medicare requirements if the following conditions exist:
    (1) CMS imposes new Medicare certification requirements or changes 
its survey process.
    (i) CMS provides written notice of the changes to the affected 
accrediting organization.
    (ii) CMS specifies in its written notice a timeframe, not less than 
30 calendar days from the date of the notice, for the accrediting 
organization to submit its proposed equivalent changes, including its 
implementation timeframe, for CMS review. CMS may extend the deadline 
after due consideration of a written request for extension by the 
accrediting organization, submitted prior to the original deadline.
    (iii) After completing the comparability review CMS provides 
written notification to the organization whether or not the 
accreditation program, including the proposed revisions and 
implementation timeframe, continues to meet or exceed all applicable 
Medicare requirements.
    (iv) If, no later than 60 calendar days after receipt of the 
organization's proposed changes, CMS does not provide the written 
notice to the organization required in paragraph (b)(1)(iii) of this 
section, then the revised program will be deemed to meet or exceed all 
applicable Medicare requirements and to have continued CMS approval.
    (v) If an organization fails to submit its proposed changes within 
the required timeframe, or fails to implement the proposed changes that 
have been determined by CMS or deemed to be comparable, CMS may open an 
accreditation program review in accordance with paragraph (c) of this 
section.
    (2) An accrediting organization proposes to adopt new requirements 
or to change its survey process.

[[Page 29838]]

    (i) An accrediting organization must provide written notice to CMS 
of any proposed changes in its accreditation requirements or survey 
process and must not implement any changes before receiving CMS's 
approval, except as provided below.
    (ii) If, no later than 60 calendar days after receipt of the 
organization's proposed changes, CMS does not provide written notice to 
the organization that the accreditation program, including the proposed 
revisions, continues or does not continue to meet or exceed all 
applicable Medicare requirements, then the revised program will be 
deemed to meet or exceed all applicable Medicare requirements and to 
have continued CMS approval.
    (iii) If an organization implements changes that have neither been 
determined by CMS nor deemed to be comparable to the applicable 
Medicare requirements, CMS may open an accreditation program review in 
accordance with paragraph (c) of this section.
    (c) CMS-approved accreditation program review. If a comparability 
or performance review reveals evidence of substantial non-compliance of 
an accrediting organization's CMS-approved accreditation program with 
the requirements of this subpart, CMS may initiate an accreditation 
program review.
    (1) If an accreditation program review is initiated, CMS provides 
written notice to the organization indicating that its CMS-approved 
accreditation program approval may be in jeopardy and that an 
accreditation program review is being initiated. The notice provides 
all of the following information:
    (i) A statement of the instances, rates or patterns of non-
compliance identified, as well as other related information, if 
applicable.
    (ii) A description of the process to be followed during the review, 
including a description of the opportunities for the accrediting 
organization to offer factual information related to CMS's findings.
    (iii) A description of the possible actions that may be imposed by 
CMS based on the findings of the accreditation program review.
    (iv) The actions the accrediting organization must take to address 
the identified deficiencies including a timeline for implementation not 
to exceed 180 calendar days after receipt of the notice that CMS is 
initiating an accreditation program review.
    (2) CMS reviews the accrediting organization's plan of correction 
for acceptability.
    (3) If CMS determines as a result of the accreditation program 
review or a review of an application for renewal of an existing CMS-
approved accreditation program that the accrediting organization has 
failed to meet any of the requirements of this subpart, CMS may place 
the accrediting organization's CMS-approved accreditation program on 
probation for a period up to 180 calendar days to implement corrective 
actions, not to exceed the accrediting organization's current term of 
approval. In the case of a renewal application where CMS has placed the 
accreditation program on probation, CMS indicates that any approval of 
the application is conditional while the program is placed on 
probation.
    (i) Within 60 calendar days after the end of any probationary 
period, CMS issues a written determination to the accrediting 
organization as to whether or not a CMS-approved accreditation program 
continues to meet the requirements of this subpart, including the 
reasons for the determination.
    (ii) If CMS has determined that the accrediting organization does 
not meet the requirements, CMS withdraws approval of the CMS-approved 
accreditation program. The notice of determination provided to the 
accrediting organization includes notice of the removal of approval, 
reason for the removal, including the effective date determined in 
accordance with paragraph (c)(3)(iii) of this section.
    (iii) CMS publishes in the Federal Register a notice of its 
decision to withdraw approval of a CMS-approved accreditation program, 
including the reasons for the withdrawal, effective 60 calendar days 
from the date of publication of the notice.
    (d) Immediate jeopardy. If at any time CMS determines that the 
continued approval of a CMS-approved accreditation program of any 
accrediting organization poses an immediate jeopardy to the patients of 
the entities accredited under that program, or the continued approval 
otherwise constitutes a significant hazard to the public health, CMS 
may immediately withdraw the approval of a CMS-approved accreditation 
program of that accrediting organization and publish a notice of the 
removal, including the reasons for it, in the Federal Register.
    (e) Notification of providers or suppliers. An accrediting 
organization whose CMS approval of its accreditation program has been 
withdrawn must notify, in writing, each of its accredited providers or 
suppliers of the withdrawal of CMS approval and the implications in 
accordance with paragraph (g)(1) of this section for the providers' or 
suppliers' deemed status no later than 30 calendar days after the 
notice is published in the Federal Register.
    (f) Request for reconsideration. Any accrediting organization 
dissatisfied with a determination to withdraw CMS approval of its 
accreditation program may request a reconsideration of that 
determination in accordance with subpart D of this part.
    (g) Continuation of deemed status. (1) Involuntary termination. 
After CMS removes approval of an accrediting organization's 
accreditation program, an affected provider's or supplier's deemed 
status continues in effect for 180 calendar days after the removal of 
the approval if the provider or supplier submits an application to 
another CMS-approved accreditation program within 60 calendar days from 
the date of publication of the removal notice in the Federal Register. 
The provider or supplier must also provide written notice to the SA 
that it has submitted an application for accreditation under another 
CMS-approved accreditation program within this same 60-calendar day 
timeframe. Failure to comply with the timeframe requirements specified 
in this section will place the provider or supplier under the SAs 
authority for continued participation in Medicare and on-going 
monitoring.
    (2) Voluntary termination by accrediting organization. When an 
accrediting organization has voluntarily terminated its CMS-approved 
accreditation program and provides its accredited providers and 
suppliers the notice required at Sec.  488.5(a)(17), an affected 
provider's or supplier's deemed status continues in effect for 180 
calendar days after the termination effective date if the provider or 
supplier submits an application to another CMS-approved accreditation 
program within 60 calendar days from the date of the notice from the 
accrediting organization. The provider or supplier must also provide 
written notice to the SA that it has submitted an application for 
accreditation under another CMS-approved accreditation program within 
this same 60-calendar day timeframe. Failure to comply with the 
timeframe requirements specified in this section will place the 
provider or supplier under the SAs authority for continued 
participation in Medicare and on-going monitoring.
    (h) Onsite observations of accrediting organization operations. As 
part of the application review process, the ongoing review process, or 
the continuing oversight of an accrediting organization's performance, 
CMS may conduct at any time an onsite inspection of the accrediting 
organization's

[[Page 29839]]

operations and offices to verify the organization's representations and 
to assess the organization's compliance with its own policies and 
procedures. The onsite inspection may include, but is not limited to, 
the review of documents, auditing meetings concerning the accreditation 
process, observation of surveys, the evaluation of survey results or 
the accreditation decision-making process, and interviews with the 
organization's staff.

0
15. Newly designated Sec.  488.9 is revised to read as follows:


Sec.  488.9  Validation surveys.

    (a) Basis for survey. CMS may require a survey of an accredited 
provider or supplier to validate the accrediting organization's CMS-
approved accreditation process. These surveys are conducted on a 
representative sample basis, or in response to substantial allegations 
of non-compliance.
    (1) For a representative sample, the survey may be comprehensive 
and address all Medicare conditions or requirements, or it may be 
focused on a specific condition(s) as determined by CMS.
    (2) For a substantial allegation of noncompliance, the SA surveys 
for any condition(s) or requirement(s) that CMS determines is related 
to the allegations.
    (b) Selection for survey. (1) A provider or supplier selected for a 
validation survey must cooperate with the SA that performs the 
validation survey.
    (2) If a provider or supplier selected for a validation survey 
fails to cooperate with the SA, it will no longer be deemed to meet the 
Medicare conditions or requirements, but will be subject to a review by 
the SA in accordance with Sec.  488.10(a), and may be subject to 
termination of its provider agreement under Sec.  489.53 of this 
chapter.
    (c) Consequences of a finding of non-compliance. (1) If a CMS 
validation survey results in a finding that the provider or supplier is 
out of compliance with one or more Medicare conditions or requirements, 
the provider or supplier will no longer be deemed to meet the Medicare 
conditions or requirements and will be subject to ongoing review by the 
SA in accordance with Sec.  488.10(a) until the provider or supplier 
demonstrates compliance.
    (2) CMS may take actions for the deficiencies identified in the 
state validation survey in accordance with Sec.  488.24, or may first 
direct the SA to conduct another survey of the provider's or supplier's 
compliance with specified Medicare conditions or requirements before 
taking the enforcement actions provided for at Sec.  488.24.
    (3) If CMS determines that a provider or supplier is not in 
compliance with applicable Medicare conditions or requirements, the 
provider or supplier may be subject to termination of the provider or 
supplier agreement under Sec.  489.53 of this chapter or of the 
supplier agreement in accordance with the applicable supplier 
conditions and any other applicable intermediate sanctions and 
remedies.
    (d) Re-instating deemed status. An accredited provider or supplier 
will be deemed to meet the applicable Medicare conditions or 
requirements in accordance with this section if all of the following 
requirements are met:
    (1) It withdraws any prior refusal to authorize its accrediting 
organization to release a copy of the provider's or supplier's current 
accreditation survey.
    (2) It withdraws any prior refusal to allow a validation survey, if 
applicable.
    (3) CMS finds that the provider or supplier meets all applicable 
Medicare CoP, CfC, conditions of certification, or requirements.
    (e) Impact of adverse actions. The existence of any performance 
review, comparability review, deemed status review, probationary 
period, or any other action by CMS, does not affect or limit conducting 
any validation survey.

0
16. Section 488.10 is amended by revising paragraphs (b) through (d) to 
read as follows:


Sec.  488.10  State survey agency review: Statutory provisions.

* * * * *
    (b) Section 1865(a) of the Act provides that if an institution is 
accredited by a national accrediting organization recognized by the 
Secretary, it may be deemed to have met the applicable conditions or 
requirements.
    (c) Section 1864(c) of the Act authorizes the Secretary to enter 
into agreements with state survey agencies for the purpose of 
conducting validation surveys in institutions accredited by an 
accreditation program recognized by the Secretary.
    (d) Section 1865(c) provides that an accredited institution that is 
found after a validation survey to have significant deficiencies 
related to health and safety of patients will no longer meet the 
applicable conditions or requirements.

0
17. Section 488.11 is amended by revising paragraph (b) to read as 
follows:


Sec.  488.11  State survey agency functions.

* * * * *
    (b) Conduct validation surveys of deemed status providers and 
suppliers as provided in Sec.  488.9.
* * * * *

0
18. Section 488.12 is amended by revising paragraph (a)(2) to read as 
follows:


Sec.  488.12  Effect of survey agency certification.

* * * * *
    (a) * * *
    (2) A provider or supplier accredited under a CMS-approved 
accreditation program remains deemed to meet the Medicare conditions or 
requirements, or will be placed under the jurisdiction of the SA and 
subject to further enforcement actions in accordance with the 
provisions at Sec.  488.9.
* * * * *

0
19. Section 488.13 is added to read as follows:


Sec.  488.13  Loss of accreditation.

    If an accrediting organization notifies CMS that it is terminating 
a provider or supplier due to non-compliance with its CMS-approved 
accreditation requirements, the SA will conduct a full review in a 
timely manner.

0
20. Section 488.28 is amended by revising paragraph (a) to read as 
follows:


Sec.  488.28  Providers or suppliers, other than SNFs and NFs, with 
deficiencies.

    (a) If a provider or supplier is found to be deficient in one or 
more of the standards in the conditions of participation, conditions 
for coverage, or conditions for certification or requirements, it may 
participate in, or be covered under, the Medicare program only if the 
provider or supplier has submitted an acceptable plan of correction for 
achieving compliance within a reasonable period of time acceptable to 
CMS. In the case of an immediate jeopardy situation, CMS may require a 
shorter time period for achieving compliance.
* * * * *

PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL

0
21. The authority citation for part 489 is revised to read as follows:

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


0
22. Section 489.1 is amended by revising paragraph (b) to read as 
follows:


Sec.  489.1  Statutory basis.

* * * * *
    (b) Although section 1866 of the Act speaks only to providers and 
provider agreements, the following rules in this part also apply to the 
approval of supplier entities that, for participation in Medicare, are 
subject to a determination by CMS on the basis of a

[[Page 29840]]

survey conducted by the SA or CMS surveyors; or, in lieu of an SA or 
CMS-conducted survey, accreditation by an accrediting organization 
whose program has CMS approval in accordance with the requirements of 
part 488 of this chapter at the time of the accreditation survey and 
accreditation decision, in accordance with the following:
    (1) The definition of immediate jeopardy at Sec.  489.3.
    (2) The effective date rules specified in Sec.  489.13.
    (3) The requirements specified in Sec.  489.53(a)(2), (13), and 
(18), related to termination by CMS of participation in Medicare.
* * * * *

0
23. Section 489.3 is amended by revising the definition of ``Immediate 
jeopardy'' to read as follows:


Sec.  489.3  Definitions.

* * * * *
    Immediate jeopardy means a situation in which the provider's or 
supplier's non-compliance with one or more requirements, conditions of 
participation, conditions for coverage, or conditions for certification 
has caused, or is likely to cause, serious injury, harm, impairment, or 
death to a resident or patient.
* * * * *

0
24. Section 489.53 is amended by revising paragraphs (a) introductory 
text, (a)(2), (a)(13), and (d)(2)(i) introductory text and adding a new 
paragraph (a)(18) to read as follows:


Sec.  489.53  Termination by CMS.

    (a) Basis for termination of agreement. CMS may terminate the 
agreement with any provider if CMS finds that any of the following 
failings is attributable to that provider, and may, in addition to the 
applicable requirements in this chapter governing the termination of 
agreements with suppliers, terminate the agreement with any supplier to 
which the failings in paragraphs (a)(2), (13) and (18) of this section 
are attributable:
* * * * *
    (2) The provider or supplier places restrictions on the persons it 
will accept for treatment and it fails either to exempt Medicare 
beneficiaries from those restrictions or to apply them to Medicare 
beneficiaries the same as to all other persons seeking care.
* * * * *
    (13) The provider or supplier refuses to permit copying of any 
records or other information by, or on behalf of, CMS, as necessary to 
determine or verify compliance with participation requirements.
* * * * *
    (18) The provider or supplier fails to grant immediate access upon 
a reasonable request to a state survey agency or other authorized 
entity for the purpose of determining, in accordance with Sec.  488.3, 
whether the provider or supplier meets the applicable requirements, 
conditions of participation, conditions for coverage, or conditions for 
certification.
* * * * *
    (d) * * *
    (2) * * *
    (i) Hospitals. If CMS finds that a hospital is in violation of 
Sec.  489.24(a) through (f), and CMS determines that the violation 
poses immediate jeopardy to the health or safety of individuals who 
present themselves to the hospital for emergency services, CMS--
* * * * *

    Dated: March 18, 2015.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: May 12, 2015.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2015-12087 Filed 5-21-15; 8:45 am]
 BILLING CODE 4120-01-P