[Federal Register Volume 87, Number 83 (Friday, April 29, 2022)]
[Rules and Regulations]
[Pages 25413-25429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-09102]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 410, 414, 488, and 493
[CMS-3368-F]
RIN 0938-AT83
Medicare Program; Accrediting Organizations--Changes of Ownership
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule adds new requirements and a specified process
to address change of ownership (CHOW) for Accrediting Organizations
(AOs) in regard to the transfer of the existing Centers for Medicare &
Medicaid Services (CMS) approval for the AO's accreditation programs to
the new AO owner. These regulations are intended to provide CMS with
the ability to receive notice when an AO is undergoing or negotiating a
CHOW, as well as to review the prospective new AO owner's capability to
perform its tasks after a CHOW has occurred, in order to ensure the
ongoing effectiveness of the transferred accreditation program(s) and
to minimize risk to patient safety.
DATES: This final rule is effective June 28, 2022.
FOR FURTHER INFORMATION CONTACT: Caroline Gallaher, (410) 786-8705.
SUPPLEMENTARY INFORMATION:
I. Background
Medicare-certified providers and suppliers participate in the
Medicare program by entering into a provider agreement with the
Medicare program. Medicare-certified providers and suppliers include
hospitals; ambulatory surgical centers (ASCs); skilled nursing
facilities (SNFs; home health agencies (HHAs); hospice programs, rural
health clinics (RHCs); critical access hospitals (CAHs); comprehensive
outpatient rehabilitation facilities (CORFs); laboratories; clinics,
rehabilitation agencies and public health agencies; and End Stage Renal
Disease (ESRD) dialysis facilities.. To participate in the Medicare
program, Medicare-certified providers and suppliers of health care
services must among other things, be substantially in compliance with
specified statutory requirements of the Social Security Act (the Act),
as well as additional regulatory requirements related to, among other
things, the health and safety of patients specified by the Secretary of
the Department of Health and Human Services (the Secretary). These
health and safety requirements are generally called conditions of
participation (CoPs) for most providers, requirements for SNFs,
conditions for coverage (CfCs) for ASCs and other suppliers, and
conditions for certification for RHCs and FQHCs. A Medicare-certified
provider or supplier that does not substantially comply with the
applicable health and safety requirements risks having its Medicare
provider agreement terminated.
Section 1865(a) of the Act allows most types of Medicare-certified
providers and suppliers to demonstrate compliance with the applicable
health and safety requirements through accreditation by a Centers for
Medicare & Medicaid Services (CMS)-approved accreditation program of a
national accreditation body, known as an Accrediting Organization (AO).
This is referred to as ``deemed'' accreditation, because, if an AO is
recognized by the Secretary as having standards for accreditation that
meet or exceed Medicare requirements, any provider or supplier
accredited by that AO's CMS-approved accreditation program is deemed by
CMS to be complying with the applicable Medicare conditions or
requirements.
We are responsible for providing continued oversight of national
AOs' Medicare accreditation programs to ensure that providers or
suppliers accredited by the AO meet the required quality and patient
safety standards. We must ensure that the AOs have formalized
procedures to determine whether the healthcare facilities deemed under
their accreditation programs meet the AO's accreditation standards
(which must meet or exceed the applicable Medicare program
requirements). We are also responsible for ensuring that the AO's
accreditation standards and practices for surveying providers and
suppliers meet or exceed our standards and practices for granting
approval.
Additionally, while accreditation by an AO is generally voluntary
on the part of Medicare-certified providers or suppliers, accreditation
is mandated by statute for four supplier-types in order to receive
payment from Medicare for the services furnished to Medicare
beneficiaries. These four supplier types are Advanced Diagnostic
Imaging (ADI) suppliers, Home Infusion Therapy (HIT) suppliers,
Diabetic Self-Management Training (DSMT) entities, and Durable Medical
Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) suppliers. We
describe these supplier types as ``non-certified'' because they are
enrolled in the Medicare program
[[Page 25414]]
but do not formally enter into a participation agreement with Medicare.
These requirements will affect all of the AOs that accredit
providers and suppliers, including those that are enrolled in the
Medicare program, and those that enter into a participation agreement
with Medicare. We believe that a change of ownership (CHOW) could occur
with an AO that accredits any category of provider or supplier.
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 us for a period not to exceed 6 years (See 42 CFR
488.5(e)(2)(i)). The AO must also reapply for renewed CMS approval of
its accreditation program(s) before the date the existing approval
period expires. This requirement ensures that accreditation provided by
these AOs continue to indicate that the providers or suppliers
accredited are meeting or exceeding Medicare standards. Regulations
implementing these provisions are found at 42 CFR 488.1 through 488.9.
We have an established process for the CHOW of Medicare-certified
providers and suppliers set forth at Sec. 489.18 and in Chapters 2 and
3 of the State Operations Manual (SOM), Publication 100-07. Although
the existing provider and supplier CHOW process does not apply to the
sale and transfer of AOs, it has served as an appropriate model for
what we are requiring for changes of ownership of AOs.
The Medicare regulations at Sec. 489.18, as well as the CMS SOM
(CMS Pub. 100-07), outline processes concerning how a CHOW of a
Medicare certified provider or supplier affects Medicare participation,
such as how a provider agreement is automatically assigned to a new
owner unless the new owner rejects assignment of the provider
agreement. A CHOW takes place when the responsible legal entity has
changed, and typically occurs when a Medicare provider has been
purchased (or leased) by another organization.
Section 489.18 and interpretive guidance in the SOM (Chapters 2 and
3) define what constitutes a CHOW, the required notice to be provided
by the current provider to CMS and contains a provision regarding the
automatic assignment of the provider agreement to the new owner. This
regulation also sets out the conditions that apply to assignment of the
provider agreement to the new owner. Section 489.18(a)(1) provides that
in the case of a partnership, the removal, addition, or substitution of
a partner, (unless the partners expressly agree otherwise) as permitted
by applicable state law, constitutes a CHOW. Section 489.18(a)(2)
provides that in the case of an unincorporated sole proprietorship, the
transfer of title and property to another party constitutes a CHOW.
Section 489.18(a)(3) provides that, in the case of a corporation, the
merger of the provider corporation into another corporation, or the
consolidation of two or more corporations, resulting in the creation of
a new corporation constitutes a CHOW. Transfer of corporate stock or
the merger of another corporation into the provider corporation does
not constitute a CHOW. In the new regulations at Sec. 488.5(f), which
would govern the CHOW process for AOs, we are incorporating via cross-
reference the definitions at Sec. 489.18(a)(1) through (3) of what
constitutes a CHOW, and applying them to AOs.
Section 489.18(d) provides that where there is a CHOW, the provider
agreement under the new owner is subject to all applicable statutes and
regulations, and to the terms and conditions under which it was
originally issued. This includes successor liability for Medicare
overpayments and penalties.
Generally, under the existing CHOW processes, with certain limited
exceptions, if a facility's new owner accepts the assignment of the
provider agreement and CMS Certification Number (CCN), the new owner
retains all the benefits and liabilities of that agreement. In such a
case the provider's Medicare participation continues without
interruption. If the purchaser (or lessee) elects not to accept
automatic assignment or transfer of the provider agreement, then that
rejection is considered to be a voluntary termination of the existing
provider agreement. Therefore, the purchaser or lessee is considered a
new applicant and must request initial certification as a new provider
and obtain a new provider agreement.
It is important to clarify that CMS does not approve the actual
business transaction between entities that result in the change of the
responsible legal entity. Instead, our role when a provider's or
supplier's ownership changes is to ensure that a new owner, who accepts
the automatic assignment of the existing provider agreement (a CHOW),
is eligible for Medicare participation. If so, we continue to treat the
provider as the same entity, with only the owner having changed. If the
new owner rejects automatic assignment of the provider agreement, then
it must seek initial Medicare enrollment and certification for the
facility, which may take several months. Pursuant to Sec. 489.18, a
new owner who rejects automatic assignment of the provider agreement,
cannot receive payment for any services it may provide for Medicare
beneficiaries between the date it acquires the facility and the date we
determine that it meets all Medicare requirements (including any of the
CoPs, CfCs, or other requirements).
The principles that apply when a Medicare-certified provider or
supplier undergoes a CHOW provide a general framework as to how CMS
will treat situations involving a CHOW for an AO, though there are some
important differences. For example, in a CHOW of a Medicare-certified
provider or supplier, CMS approval is not needed to transfer the
Medicare agreement of the provider or supplier that undergoes a CHOW,
if the new owner decides to accept assignment of the Medicare
agreement. The Medicare agreement is automatically transferred to the
new owner unless the new owner affirmatively rejects assignment, and
the new owner will accept the assigned agreement subject to all
applicable requirements, including health and safety standards and
liability for overpayments. However, in the case of a CHOW for an AO,
under this regulation, CMS' affirmative approval will be needed to
transfer the existing CMS approval for the AO's accreditation program
to a new owner. This policy reflects CMS' desire to ensure that an AO's
CHOW does not adversely impact its survey and accreditation procedures,
a change which could impact the health and safety of patients receiving
services from providers and suppliers.
Currently, the regulations governing AOs do not include any
provisions related to the CHOW process, including a process for
notifying CMS of pending CHOWs for AOs, or other procedures which would
allow us to review information about the proposed transfer of ownership
of accreditation program(s). The current regulations also do not
provide us with the authority to approve or deny the transfer of the
existing CMS approval for the accreditation program(s) to be
transferred. Under our current regulations, we are not typically made
aware of a sale or transfer of an AO until that AO applies for renewal
of CMS approval of the accreditation program(s) or unless we are
voluntarily notified of the CHOW by the AO (although we retain the
right to conduct comparability or validation surveys in accordance with
Sec. 488.8).
After review of the existing CMS regulations related to CHOWs, we
did not believe that we had the explicit
[[Page 25415]]
regulatory authority to prospectively review and approve or deny the
transfer of the existing Medicare-approval of accreditation programs.
The purpose of such a review would be to ensure that, after transfer,
the AO would continue to ensure that the entities it accredits met or
exceeded CMS requirements.
On May 2, 2019, we published in the Federal Register a proposed
rule entitled ``Accrediting Organizations--Changes to Change of
Ownership'' (84 FR 18748) (2019 proposed rule). In the proposed rule,
we stated that the current situation, whereby a change in ownership of
CMS-approved accreditation programs may occur without notice to CMS
does not provide an opportunity for us to review and approve or deny
the transfer of the existing CMS-approval of the accreditation programs
to be transferred. We further stated that this scenario had to be
addressed so that we could assure Medicare beneficiaries that the
standards and conditions for surveying facilities would continue to be
met by the accreditation programs that were transferred to new
ownership. We also stated that it was possible that the AO, after a
CHOW transaction, might not be viable or equipped to accredit
facilities under the transferred CMS-approved accreditation program(s),
due to the new owner's inability to enforce the health and safety
requirements of CMS. Without the authority to require AOs to provide us
with notice when they are contemplating or negotiating a CHOW, and the
authority to review the ability of the prospective new owner's
capability to perform the required accreditation tasks after a CHOW, we
are unable to confirm the ongoing effectiveness of the transferred CMS-
approved accreditation program(s).
This final rule adds new requirements and a specified process to
address CHOWs for AOs in regard to the transfer of the existing CMS
approval for the AO's accreditation programs to the new AO owner. These
regulations are intended to provide CMS with the ability to receive
notice when an AO is undergoing or negotiating a CHOW, as well as to
review the prospective new AO owner's capability to perform its tasks
after a CHOW has occurred, in order to ensure the ongoing effectiveness
of the transferred accreditation program(s) and to minimize risk to
patient safety.
To date, there have been two (2) AO CHOW requests submitted to CMS.
One was submitted approximately 20 years ago, and the other was
submitted on November 19, 2020. While we cannot predict the frequency
with which AO CHOW transactions will occur in the future, we believe
that they could occur more frequently than they have in the past.
Requirements for Issuance of Regulations
Section 902 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) amended section 1871(a) of the Act and
requires the Secretary, in consultation with the Director of the Office
of Management and Budget, to establish and publish timelines for the
publication of Medicare final regulations based on the previous
publication of a Medicare proposed or interim final regulation. Section
902 of the MMA also states that the timelines for these regulations may
vary but shall not exceed 3 years after publication of the preceding
proposed or interim final regulation except under exceptional
circumstances.
This final rule finalizes provisions set forth in the May 2, 2019
proposed rule. In addition, this final rule has been published within
the 3-year time limit imposed by section 902 of the MMA. Therefore,
this final rule is in accordance with the Congress' intent to ensure
timely publication of final regulations.
II. Provisions of the Proposed Regulations
In the 2019 proposed rule, we proposed new procedures for the CHOW
process for accrediting organizations. This proposed procedure would
enable CMS to determine whether the new AO would be able to meet the
appropriate Medicare requirements to be eligible for transfer of the
existing CMS-approval for the accreditation programs to be transferred
in the CHOW.
At Sec. 488.5, we proposed to add a new paragraph (f) that would
set out the requirements and processes for CMS review and approval or
denial of a transfer of the existing CMS-approval for accreditation
program(s) in a CHOW event.
We proposed at Sec. 488.5(f)(1)(i) that any CMS-approved AOs
negotiating or engaging in a CHOW transaction would have to provide
notice of this CHOW transaction to CMS. At proposed Sec.
488.5(f)(1)(ii) and (iii), we would require that this notice be
provided to CMS in writing no less than 90 days prior to the effective
date of the transfer of ownership. This notice requirement would allow
CMS to perform an evaluation of whether the AO, under the new
ownership, would (1) be viable or equipped to accredit facilities under
its existing CMS approval; (2) be able to enforce the health and safety
requirements of CMS for that program; (3) operate effectively; and (4)
continue to meet or exceed the Medicare standards.
We would further require the prospective new owner or transferee to
submit certain information to CMS in support of their request that the
existing CMS-approval for the accreditation programs to be transferred
in the CHOW. We proposed at Sec. 488.5(f)(2)(iii) to require the
prospective new owner or transferee to submit the following
information: (1) The name and address of the legal entity that would be
the owner of the new AO after the transfer was completed; (2) the three
most recent audited financial statements of the organization that
demonstrate that the organization's staffing, funding, and other
resources would be adequate to perform the required surveys and related
activities; (3) a transition plan that would summarize the details of
how the accreditation functions will be transitioned to the new owner.
Section 488.5(f)(2)(iii)(C) would require that the prospective new AO's
transition plan include the following information: (1) Changes to
management and governance structures including current and proposed
organizational charts; (2) a list of the CMS-approved accreditation
programs that will be transferred to the purchaser/buyer/transferee;
(3) employee changes, if applicable; (4) anticipated timelines for
action; (5) plans for notification to employees; and (6) any other
relevant information that CMS finds necessary.
At Sec. 488.5(f)(3)(i), we proposed to require the purchaser or
transferee to provide a written acknowledgement, which states that if
CMS approves the transfer of the existing CMS-approval of the
accreditation programs that are part of the CHOW transaction, the new
owner will become managerially, legally, and financially responsible
for the operations of all CMS-approved accreditation programs being
transferred. Upon the finalization of the CHOW transaction, the
purchaser or transferee would be completely responsible for the
management of the business operations of the AO, including, but not
limited to the day to day business operations, the survey and
accreditation processes, the oversight of accredited providers and
suppliers, the handling of complaints regarding accredited suppliers,
and compliance with all CMS requirements.
Furthermore, we proposed at Sec. 488.5(f)(3)(ii), to require the
purchaser or transferee to provide written acknowledgment stating that
they agree to operate the transferred CMS-approved accreditation
program(s)
[[Page 25416]]
under all the terms and conditions found at Sec. Sec. 488.5 through
488.9.
We proposed at Sec. 488.5(f)(3)(iii), that the purchaser or
transferee would be required to provide a written acknowledgement that
it would not operate the accreditation program(s) it acquired as CMS-
approved accreditation program(s) until it received a notice of
approval.
We proposed at Sec. 488.5(f)(4)(i), that the parties to the CHOW
would be required to notify the providers and suppliers affected by the
CHOW within 15 calendar days after being notified of CMS's approval or
disapproval for transfer of the existing CMS-approval for the
accreditation program(s) to be transferred in the CHOW. Additionally,
we proposed at Sec. 488.5(f)(4)(ii), that if the AO or accreditation
program(s) being acquired were under a performance review or under
probationary status at the time the CHOW notice was submitted, the
purchaser or transferee would have to acknowledge such status in
writing. We believe that the purchaser or transferee must understand
that when the CMS-approved accreditation program(s) are transferred
under the CHOW, all current terms and conditions, and responsibilities
are included in the transfer.
We proposed at Sec. 488.5(f)(5), that we would publish a notice in
the Federal Register, which would acknowledge the transfer of the CMS-
approved accreditation program(s) through a CHOW event. This notice
would also state that the purchaser would retain this CMS-approval for
the transferred accreditation programs under the new ownership. This
notice would be only intended to inform the public of the ownership
change; therefore, the notice would not solicit public comments.
Section 488.5(f)(5) would further provide that we would not publish
this notice after we have issued approval for the transfer, without
first receiving written confirmation that the CHOW has taken place.
We proposed at Sec. 488.5(f)(6), that in the event we did not
approve the transfer of the existing CMS approval for the accreditation
programs to be transferred, we would notify all parties to the CHOW
transaction in writing. The parties to the CHOW would include the
relevant staff of the transferor and the transferee. Therefore, this
notice would be sent to the relevant parties at the existing AO and the
prospective transferee but not to the providers and suppliers
accredited by the AO.
We proposed at Sec. 488.5(f)(7)(i), that, in the event we were not
made aware of a CHOW transaction, or did not approve the transfer of
the existing CMS approval for the accreditation program(s) that were to
be transferred, so long as the CHOW transaction was not completed, the
transferor AO (existing AO) would be able to continue operating their
accreditation programs under the existing CMS approval for said
accreditation programs. The exception to this policy would be in the
event that our review of the pending CHOW transaction revealed
performance and/or compliance issues with the transferor AO that were
previously unknown to CMS.
We also proposed at Sec. 488.5(f)(7)(ii), that CMS would be able
to withdraw the CMS approval of an AO's accreditation programs in
accordance with Sec. 488.8(c)(3)(ii) and (iii), if a CHOW transaction
was completed without notice to CMS and/or without obtaining CMS'
approval for the transfer the existing CMS approval of the
accreditation program(s) to the new owner.
We proposed at Sec. 488.5(f)(8), that in the event parties
completed the CHOW transaction, and the purchaser or transferee
attempted to operate the transferred accreditation programs under the
CMS-approval granted to the previous owner of the accreditation
program(s), notwithstanding CMS disapproval of the request to transfer,
CMS would withdraw the approval of the accreditation programs in
accordance with the procedures set out at Sec. 488.8(c)(3)(ii) and
(iii).
We proposed at Sec. 488.5(f)(9), that, in accordance with Sec.
488.8(g), if CMS withdrew the existing approval of transferred
accreditation program(s) because a CHOW transaction was completed
without notice to or the approval of CMS, an affected Medicare-
certified provider's or supplier's deemed status would continue in
effect for 180 calendar days after the removal of the existing CMS
accreditation approval, if the provider or supplier took the steps
stated in Sec. 488.8(g). First, the Medicare-certified provider or
supplier would be required to submit 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. Second, the
Medicare-certified provider or supplier would be required to provide
written notice to the State Survey Agency (SA) stating that it has
submitted an application for accreditation under another CMS-approved
accreditation program within the 60-calendar day timeframe specified in
Sec. 488.8(g). Failure to comply with the timeframe requirements
specified in Sec. 488.8(g) would place the affected Medicare-certified
provider or supplier under the SA's authority for continued
participation in Medicare and on-going monitoring.
The provisions of Sec. 488.8(g) would not apply to non-certified
suppliers, because the statute does not authorize SAs to engage in
oversight of these supplier types. Therefore, we proposed at Sec.
488.5(f)(10) that if CMS withdrew the existing approval of transferred
non-certified accreditation program(s) because a CHOW transaction was
completed without notice to or the approval of CMS, an affected non-
certified supplier's deemed status would continue in effect for 1 year
after the removal of the existing CMS accreditation approval if the
non-certified supplier submitted 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 and provided
written notice of such application to the CMS within such timeframe.
Failure to comply with the timeframe requirements would result in a CMS
determination that the provider or supplier was no longer accredited.
For non-certified suppliers such as ADI and DSMT suppliers, CMS-
approved accreditation is required as a condition for receipt of CMS
reimbursement for the services furnished to Medicare beneficiaries. If
these suppliers were suddenly left without CMS-approved accreditation
they would have to seek new accreditation from a CMS-approved AO. We
estimated that it would take no less than 6 to 9 months for these
suppliers to complete the reaccreditation process and obtain new CMS-
approved accreditation. We were concerned that during the time that
these suppliers were undergoing the reaccreditation process, they would
not be able to receive reimbursement from Medicare for any services
furnished to Medicare beneficiaries. For many of these suppliers,
Medicare beneficiaries make up a large portion of their client
population and provides a large source of revenue for them. Therefore,
these suppliers would be likely to suffer significant hardship if left
without CMS-approved accreditation for a 6 to 9 month period. Also, if
these suppliers were not able to provide services to Medicare
beneficiaries for an extended period of time, it could create access to
care issue for Medicare beneficiaries for the services provided by
these suppliers. For this reason, we proposed accreditation for a 1
year period after Federal Register notification that CMS's approval of
the non-certified supplier's
[[Page 25417]]
accreditation organization was being withdrawn. Because we proposed to
add the same requirements for ADI, HIT, DSMT suppliers, and clinical
laboratories, we would add cross references to the provisions in Sec.
488.5(f) for these suppliers so that they would be subject to the same
proposed requirements for a CHOW. Specifically, for DSMT suppliers at
Sec. 410.142, we proposed to add a new paragraph (k); for ADI
suppliers at Sec. 414.68, we proposed to add a new paragraph (j); for
HIT suppliers at Sec. 488.1030, we proposed to add a new paragraph
(g); and for laboratories at Sec. 493.553, we proposed to add a new
paragraph (e).
III. Analysis of and Responses to Public Comments
We received 8 public comments from an individual, accrediting
organizations and a hospital association. We have reviewed all of the
public comments received and considered the concerns raised by all
stakeholders. As a result, we have made several revisions to the
proposed regulation at Sec. 488.5(f) in response to public comments.
Specifically, we have modified Sec. Sec. 488.5(f)(1)(iii) and (iv) and
Sec. 488.5(f)(2)(iii)(D). See section IV ``Provisions of the Final
Regulations'' for detail description of these changes. A summary of the
comments received and our responses to those comments appear in the
paragraphs below.
A. Notification Requirements
1. Notice to CMS Requirements--Sec. 488.5(f)(1)
Comment: One commenter expressed support for the 90-day written
notification of intention to change ownership of an AO. The commenter
stated that this requirement reflects a reasonable timeframe for the
organization to notify CMS of whether negotiation or engagement in the
intent to change ownership is taking place.
Response: We thank this commenter for their support on the written
notification requirements.
Comment: One commenter recommended that CMS require AOs to notify
CMS of any ownership change within 15 days following the effective date
of ownership transfer. This commenter stated that, by that point, CMS
would have the authority to review characteristics of the new business
entity and make decisions regarding whether the new entity has the
necessary resources and structure to retain deeming authority.
Response: We thank this commenter for their comment, however, we
respectfully disagree with the commenter's position that CMS would not
have the authority to review characteristics of the new business entity
and make decisions regarding whether the new entity has the necessary
resources and structure to retain deeming authority until after the AO
is sold or transferred to the new owner. We believe that in the case of
a CHOW for an AO, the new owner might have an expectation that CMS's
approval of an accreditation program would be a transferable business
asset or an intrinsic part of the accreditation program that would
automatically transfer, along with the accreditation programs, to the
new owner as part of the CHOW process. However, this rule clarifies
that CMS approval of accreditation programs is not freely transferable,
without regulatory oversight, qualifications or conditions.
CMS approval is not a transferrable business asset, but a
governmental regulatory agency approval. Our approval of an
accreditation program is granted to the existing owner of the AO based
on that AOs ongoing circumstances, as described in the AO's initial and
renewal applications for deeming authority. Before we could agree to
transfer the existing approval of CMS accreditation program(s) to a new
AO owner, we would require information which provides us with the
assurance that the AO, under new ownership, would: (1) Be viable or
equipped to accredit facilities under its existing CMS approval; (2) be
able to enforce the health and safety requirements of CMS for that
program; (3) operate effectively; and (4) continue to meet or exceed
the Medicare standards. If CMS finds that these conditions are met,
then we would approve the transfer of the existing CMS approval for the
accreditation programs to be transferred to the new owner. We believe
that section 1865(a)(2) of the Act permits us to look at an AO's
resources and procedures at any time. Consequently, CMS has the
authority to perform a prospective review of the new owner's ability to
run the AO prior to the time of sale or transfer. The purpose of this
review is to ensure that the AO will have financial longevity, will
provide safe and effective accreditation that meets the CMS
requirements, and ensure that the providers and suppliers accredited by
the AO, under new ownership, will continue to provide safe and
effective healthcare to patients.
Further, we note that waiting until after the CHOW has occurred to
perform our review of the new owner's circumstances and qualifications
will likely be burdensome as well as a disservice to the AO itself. If
we were to find that an AO under new ownership was not accrediting
facilities in accordance with the CMS requirements, we will terminate
our approval for the transferred accreditation programs. Also, we will
investigate the providers and suppliers that were accredited between
the time that the new owner took over and the time that the CMS
approval for the accreditation programs was terminated. We will perform
this investigation because these providers and suppliers would have
been accredited under accreditation programs during the time the
programs were not being properly administered by the AO under the new
owner. These additional surveys will be burdensome for the providers or
suppliers being surveyed a second time, as well as for CMS and our
contractors.
Comment: One commenter suggested that the rule should require the
AO to notify CMS when an AO is contemplating undergoing or negotiating
a CHOW.
Response: We agree with this commenter. Sections 488.5(f)(1)(ii)
and 488.5(f)(1)(iii) require that written notice of the CHOW must be
provided by the AO to CMS no less than 90 days prior to the anticipated
effective date of the CHOW transaction.
2. Notification Requirements--Sec. 488.5(f)(4)
Comment: One commenter stated that if CMS approved the transfer of
ownership of an AO, the required 15 day notice that providers would
receive would be an inadequate amount of time for hospitals to review
and enter into new contracts with the new AO owner. This commenter
requested that CMS provide at least 3 months' notice to hospitals prior
to the change in ownership going into effect, to allow hospitals time
to engage with the new owner. This commenter also suggested that CMS
should consider both print and electronic communications to satisfy
these efforts (that is, U.S. mail, email, voicemail follow up by AOs).
Response: We understand this commenter's concern but respectfully
disagree. The purpose of the notice required by Sec. 488.5(f)(4) is to
notify the providers and suppliers that have been accredited by that AO
that CMS has approved the transfer of the existing CMS-approval for the
accreditation programs to be transferred in the CHOW to the new owner.
An approved transfer will not terminate any facility's existing
accreditation, which will expire at the end of the term set by the
transferor AO.
We are hopeful that requirements imposed under these proposed new
regulations will not affect the contracts
[[Page 25418]]
between the providers and suppliers and the AO. We are also hopeful
that the accredited providers and suppliers will not be required to
immediately enter into new contracts with the new AO since the new
owner will assume ownership of the AO subject to the AO's existing
contractual obligations. However, it will be up to the parties involved
to examine their own agreements prior to the CHOW. Unless the CHOW
agreement between the existing AO and transferee AO states otherwise,
we believe the CHOW will not affect the term of accreditation that was
granted to the providers and suppliers by the existing AO ownership,
provided that CMS does not withdraw approval for the accrediting
programs to be transferred. CMS' approval for the transfer of the
approval for the accreditation program(s) being transferred in a CHOW
will be contingent upon the new AO owners agreement to continue the
periods of accreditation for any providers or suppliers accredited
under those accreditation programs, prior to the time the CHOW
transaction took place. In other words, the new AO owner will be
required to assume ownership of the AO subject to the terms of existing
accreditations granted by the existing AO.
The caveat to this rule would be if CMS were to not approve the
transfer of the approval for the accreditation program to be
transferred in the CHOW. In such a case, if the CHOW still occurred,
the new AO would not have approval for the transferred accreditation
programs and the providers and suppliers accredited by the previous
owner of the AO would be required to seek accreditation from another
AO. Also, there is a possibility that a transferor's poor performance
could trigger withdrawal of the AO's deeming authority in accordance
with Sec. 488.8(g). In this case, as in all cases of involuntary
termination of an AO's accreditation program, an affected provider's or
supplier's deemed status would continue in effect for 180 calendar days
after the removal of the approval if the provider or supplier submitted
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.
3. Notification to Parties in the Event That CMS Does Not Approve the
Transfer of the Existing CMS Approval--Sec. 488.5(f)(6)
Comment: One commenter stated that it was important to include this
step in the provision; however, they stated that the language of Sec.
488.5(f)(6) was vague. This commenter suggested that Sec. 488.5(f)(6)
be revised to include language stating that CMS would notify all
providers and suppliers to the CHOW transaction in writing. The
commenter stated that the notice to the providers and suppliers should
include information about an AO program's current status.
Response: We appreciate the need for providers and suppliers to
have transparency about their AO's ownership, but believe that the
policies in this rule are sufficient to reach that end. Section
488.5(f)(4) provides that all parties to the CHOW transaction must
notify the providers and suppliers affected by such change within 15
calendar days of being notified of CMS's approval to transfer of the
existing CMS-approval for the accreditation programs to be transferred
in the CHOW transaction. We believe that this notice to providers and
suppliers required by Sec. 488.5(f)(4) is adequate because it must be
provided within 15 days after CMS has approved the transfer of the CMS
approval for the accreditation programs to be transferred in the CHOW.
Also, Sec. 488.5(f)(5) requires that, after CMS receives written
confirmation from the new owner that the CHOW has taken place, CMS
publishes a notice of approval in the Federal Register of the transfer
of the existing CMS approval for the accreditation program(s) to a new
owner. However, the notice required by Sec. 488.5(f)(5) will be
published only after CMS receives written confirmation from the new
owner that the CHOW has taken place because providers and suppliers
should not be notified by CMS of the CHOW until after it is approved by
CMS. If CMS does not approve the transfer of the CMS approval for the
accreditation programs or if the parties to the CHOW decide not to
proceed with the sale or transfer transaction, such premature notice
could cause providers and suppliers to panic or worry unnecessarily.
We believe between these two forms of notice, there is no reason
that the affected providers and suppliers would not be notified of the
CHOW. In addition AOs contemplating a CHOW may choose to notify
providers and suppliers at any time on their own.
We further disagree with this commenter's suggestion that the
notice required by Sec. 488.5(f)(6) should include information about
the current status of the AOs' programs. The purpose of this notice is
to inform the parties to the CHOW that CMS has disapproved the transfer
of the approval for the accreditation programs to be transferred in the
CHOW. This is outside the purpose of the notice required by Sec.
488.5(f)(6). Also, we believe that it would not be CMS's place to
provide information about the AO's current status to its accredited
providers and suppliers; CMS generally does not maintain current
information on accreditation organizations' client lists.
B. Documentation Requirements
Comment: One commenter stated that a transition plan plays no role
in the contemplated business negotiation and may not be readily
available 90 days prior to the effective date of ownership transfer.
Response: We thank the commenter for their input but respectfully
disagree. We believe that the new owner should have a transition plan
fully developed at least 90 days prior to the time that the CHOW takes
place so that it can be put into place immediately upon the sale or
transfer of the AO. We believe that it will be shortsighted of the new
owner to not develop a transition plan well in advance of the
anticipated effective date of the CHOW. We also believe that it will
have potentially negative consequences, not only for the AO but for the
providers and/or suppliers it accredits, for the new owner to wait
until after the CHOW takes place to develop the transition plan. If
this were the case, the AO under new ownership would lack organization
and direction until the transition plan was developed and implemented.
Comment: One commenter stated that the development of a transition
plan will engage employees in both the business operations and
accreditation operations departments within the AO(s).
Response: We agree with this commenter regarding this aspect of the
request for approval process and thank them for their comment.
C. Written Acknowledgements
1. Written Acknowledgement From the Purchaser/Buyer/Transferee--Sec.
488.5(f)(3)(ii)
Comment: One commenter stated that the requirement of Sec.
488.5(f)(3)(ii) that requires the purchaser/buyer/transferee to agree
to operate the transferred CMS approved accreditation program(s) under
all of the CMS imposed terms and conditions (to include program reviews
and probationary status terms) is an important step. This commenter
supports the expectation of the purchaser or transferee to provide full
disclosure of the understanding of specific conditions related to
operating a CMS-approved AO.
[[Page 25419]]
Response: We thank this commenter for their support of the written
acknowledgement provision.
2. Written Acknowledgement From the Purchaser/Buyer/Transferee--Sec.
488.5(f)(3)(iii)
Comment: This commenter stated that the requirement of Sec.
488.5(f)(3)(iii) that requires the purchaser/buyer/transferee to agree
not to operate the accreditation program(s) it acquired in the CHOW as
CMS approved accreditation programs until the effective date set forth
within the notice of approval from CMS expands on the importance of
full disclosure. The commenter supported the continued protection of
the process included in the transfer of ownership of an AO.
Response: We thank this commenter for their support of the proposed
written acknowledgement provision.
D. Proposed Regulatory Requirements
1. General Comments About the Proposed Regulatory Requirements
Comments: Several commenters expressed full support for our
proposal to establish the regulations at Sec. 488.5(f). One commenter
stated that being certain a process is in place so that CMS approves
new ownership of AOs is essential to mitigating risks to patients and
that proposal will establish even greater accountability for the AO and
will highlight CMS' role in the oversight of AOs. This commenter
further stated that our proposals exemplify the ongoing efforts CMS has
in order to safeguard patients by guaranteeing AOs are upholding the
standards required to maintain an approved accreditation program.
One commenter stated CMS should establish a standard process for
review and approval of a CHOW of an accrediting organization and that
this rule would provide important clarity for accrediting organizations
seeking to undergo an ownership change. Another commenter stated that,
generally, the proposed changes provide for increased oversight and
strengthen the program without placing extraordinary burden on AOs and
prospective merger or acquisition partners.
Response: We thank these commenters for their support of our
proposals.
Comment: One commenter did not support our proposal to establish
regulations related to CHOW of AOs. This commenter stated that the
proposed notification requirements regarding contemplated ownership
changes amount to unwarranted regulatory interference.
Response: We thank the commenter for sharing their concern but
respectfully disagree that this regulation amounts to unwarranted
interference. It is important to note that transfer of the CMS approval
of the accreditation programs held by the original owner of an
accreditation program is not a right that could automatically accrue to
the new owner of an AO. It is also not something that could be sold or
transferred to another owner like a piece of property or business
asset. Such CMS approval is granted to the original owner of the AO
accreditation programs based on the circumstances of the AO that exist
at the time of approval.
Therefore, transfer of the CMS approval for the accreditation
programs being transferred in a CHOW must be approved by CMS. In order
to give this approval, CMS must receive assurance that the AO under the
new ownership will be financially viable, and have long term stability
of operations. CMS must also ensure that the accreditation provided by
the AO, under new ownership, meets the CMS standards to ensure that the
healthcare providers and suppliers accredited by that AO are providing
safe and effective healthcare. This means that CMS would need to be
provided with specific information about the proposed new ownership in
order to obtain such assurance prior to the CHOW taking place.
The regulations at Sec. 488.5(f) allow CMS to obtain information
prior to the CHOW that will allow us to determine whether the AO, under
the new ownership, will maintain continuity of operations, will be able
to accredit facilities using the CMS accreditation standards, and
whether the facilities accredited by the new AO will provide safe and
effective patient care. CMS is finalizing these regulations in order to
create fair and transparent standards for the transfer of the CMS
approval for the accreditation programs to be transferred in a CHOW and
avoid any potential lapses in deeming authority that may come from a
post-transfer review. Without this regulatory authority, the new AO
would not be allowed to operate using the existing CMS approval for the
accreditation programs that were transferred in the CHOW. The new AO
owner/transferee will be required to submit an application to CMS
seeking approval of the transferred accreditation programs. During the
time frame that the application was pending CMS approval, the new AO
owner/transferee would not be able to provide accreditation services to
any providers or suppliers. The requirements of Sec. 488.5(f) will
enable us to decide whether to approve the transfer of the existing CMS
approval for the accreditation programs to be transferred, thus
avoiding a lapse in the CMS approval for these accreditation programs.
Comment: A commenter stated that CMS is inappropriately inserting
itself into the AO's financial transactions, which would interfere with
the AOs' ability to conduct business.
Response: We thank the commenter for their concern but respectfully
disagree. The purpose of this regulation is not to approve or deny the
sale or transfer transaction that takes place. The purpose of these
regulations is (1) to receive documents from the prospective new owner
of the AO, prior to the time that the CHOW takes place, in order for
CMS to determine whether the AO's accreditation programs under new
ownership would meet or exceed the CMS requirements; (2) to make a
prospective determination as to whether the AO, under the new
ownership, can assure us that the providers and suppliers accredited by
the AO, are providing safe and effective care; and (3) to determine
whether to transfer the existing CMS approval for an AO's accreditation
program to the prospective new owner of the AO. We believe these
functions are integral to CMS' ability to effectively regulate AOs and
ensure quality in Medicare-certified suppliers and providers. Beyond
ensuring accreditation program integrity and adherence to CMS'
requirements under the new ownership, we will have no part in AO
financial business.
Comment: One commenter stated that this proposed notification
process could create unnecessary work for CMS. They explained that not
all negotiations end in a successful transaction and that in the event
that a potential ownership change never came to fruition, CMS would
have spent resources reviewing documentation for a transaction that was
never finalized.
Response: We appreciate this commenter's concern on CMS' behalf. We
are primarily concerned with making sure there are assurances that an
AO's accreditation programs under new ownership would meet or exceed
our requirements and determine whether the providers and suppliers
accredited by that AO provide safe and effective care. If a sale or
transfer for the AO were to fall through, we expect the existing or
prospective new owner of the AO to notify CMS as soon as possible. This
will allow us to cease our review of the documents as early as possible
and thus limit any unnecessary work.
[[Page 25420]]
2. Deadline Requirement--Sec. 488.5(f)(1)
Comment: One commenter suggested that CMS specify in the final
regulation whether the timeframes are measured in business or calendar
days.
Response: We agree with this commenter and believe that the
distinction between calendar and business days has a significant impact
on the amount of time allowed.
In reviewing Sec. 488.5(f)(1)(iii) in the 2019 proposed rule, we
noted that only the 90 day deadline was listed but did not specify
whether this deadline was for calendar or business days. However, the
remainder of the deadlines contained in Sec. 488.5(f) did specify
whether these deadline are for calendar or business days. Therefore, we
have revised the requirement at Sec. 488.5(f)(1)(iii) by adding
``calendar days'' to the 90 day deadline.
Comment: One commenter pointed out that the proposed regulations do
not include a timeline related to the CMS review and approval or denial
of the proposed transfer. This commenter requested that CMS amend the
proposal to add that CMS will notify the parties of approval or denial
no more than 30 days after receipt of a complete application for
approval of transfer of the existing Medicare approval.
This commenter stated that a timeline should be in place because,
should the AO contemplate a CHOW arrangement, there would be
implications on planning, forecasting, and budgeting. The AO would face
significant costs throughout the duration of transition planning
including ongoing accounting, public relations, legal, and other
professional fees. In addition, in a CHOW, an AO may have other
operational issues to consider, including staffing requirements and
support before and after the ownership change.
Response: We agree with this commenter that having a deadline for
CMS' review of their request for approval of the CHOW would be helpful
for the planning, forecasting, and budgeting process related to a CHOW
and also for transitioning the AO to the new ownership. Therefore we
have added a provision at Sec. 488.5(f)(1)(iv) which requires that CMS
will complete their review of the AO's request for approval for the
transfer of the existing CMS approval for the accreditation programs to
be transferred in the CHOW within 90 days from receipt of said request.
3. Federal Register Notice Requirement--Sec. 488.5(f)(5)
We received no comments in regards to this section of the proposed
regulation, and are therefore adopting it without change.
4. Withdrawal of CMS Approval Due to Failure To Notify CMS of Intent To
Transfer Accreditation Programs--Sec. 488.5(f)(7).
Comment: One commenter stated that the provisions of Sec.
488.5(f)(7) serve an important role. This commenter further expressed
their support for the provision at Sec. 488.5(f)(7)(i) regarding CMS'
authority to withdraw approval if further review of the pending
transaction reveals issues with performance and/or compliance. This
commenter stated that if an AO does not notify CMS of the CHOW, but has
started the process, the AO may continue to operate under their current
approval but that this violation should prompt a CMS review of their
current approval status.
Response: We thank this commenter for their support regarding the
requirements in Sec. 488.5(f)(7). We further note that there are
several types of reviews that CMS can use when an AO attempts to or
does complete a CHOW without notice to and approval from CMS.
First, proposed Sec. 488.5(f)(7)(i) will allow CMS to perform a
review of a pending CHOW transaction of which CMS has not been made
aware. As in the case of other CHOW reviews, per Sec. 488.5(f)(7)(ii),
if our review revealed issues with the AO that were previously unknown
to CMS, CMS would take action accordingly.
Second, proposed Sec. 488.5(f)(8) provides that in the event that
the parties complete the CHOW, notwithstanding CMS disapproval, and the
purchaser/buyer/transferee attempts to operate the transferred
accreditation program(s) under the CMS-approval granted to the previous
owner, CMS will withdraw the existing approval of the transferred
accreditation program(s) in accordance with the procedures set out at
Sec. 488.8(c)(3)(ii) and (iii). Existing Sec. 488.8(c) provides the
standards for CMS-approved accreditation program review, including the
timeline for the AO's probationary period and withdrawal of CMS
approval at Sec. 488.8(c)(3)(ii) and (iii).
Therefore, in addition to the ability to cite the AO's failure to
meet Medicare's conditions and requirements under Sec. 488.5(f)(7)(i),
CMS can also initiate a program review under proposed Sec.
488.5(f)(8). We do not believe that any additional review processes are
necessary.
5. Withdrawal of CMS Approval for Accreditation Programs Which Are
Transferred Notwithstanding CMS' Disapproval of the Transfer--Sec.
488.5(f)(8)
Comment: One commenter supported the provision for the withdrawal
of CMS' approval for the accreditation program if the transfer is
disapproved, as proposed at Sec. 488.5(f)(8).
Response: We thank this commenter for their support of the proposed
withdrawal provision.
Comment: One commenter suggested that the notice of withdrawal of
an AO's Medicare approval should be provided directly to affected
providers by CMS and the AO. This commenter stated that this would make
this notice process consistent with the notice requirement when a CHOW
is approved.
Response: We understand this commenter's concern. We would like to
point out that if CMS does not approve a CHOW, we will not withdraw or
terminate an AO's Medicare participation, but instead will withdraw the
CMS approval for that AO's accreditation programs to be transferred in
the CHOW. If the transferee were to proceed with the CHOW, the AO,
under new ownership, will be permitted to file a new application
seeking CMS approval for these accreditation programs.
We do not believe that it is necessary to modify the regulations at
Sec. 488.5(f) to require CMS to provide notice of the disapproval of
the CHOW directly to the affected providers and suppliers for several
reasons. First, if the transferee elected not to proceed with the CHOW,
then the CMS approval would remain unchanged as per Sec.
488.5(f)(7)(i) Second, there are other AO oversight regulations which
require that such notice be given to providers and suppliers when CMS
withdraws approval for an AO's accreditation program. Existing Sec.
488.8(g)(1) provides that we will publish a notice in the Federal
Register if we were to withdraw the CMS approval of an AO. Also,
existing Sec. 488.8(e) provides that an AO whose CMS approval has been
withdrawn must notify, in writing, each of its accredited providers or
suppliers of the withdrawal and the implications for the providers' or
suppliers' deemed status no later than 30 calendar days after the
notice is published in the Federal Register. We believe that the notice
provided pursuant to Sec. Sec. 488.8(e)(1) and 488.8(g) are adequate
to ensure providers and suppliers receive timely notification of the
withdrawal of an AO's CMS approval.
[[Page 25421]]
We are therefore finalizing Sec. 488.5(f)(8) without change.
6. Requirements for Continuation of a Deemed Status Accreditation of
Medicare-Certified Providers and Suppliers After CMS Withdraws the
Existing Approval of the Transferred Accreditation Program(s)--Sec.
488.5(f)(9)
Comment: One commenter stated that if CMS proceeds in codifying
this process, it should extend the proposed timeframes for providers,
to allow sufficient time for providers to negotiate new contracts and
have orderly transitions from one AO to another AO, or to a SA.
Response: We appreciate this commenter's concern. The timeframes
set forth in Sec. 488.5(f)(9) are the same as those that are set forth
in Sec. 488.8(g) entitled ``Continuation of deemed status'' which
provides that ``[a]fter 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.'' We believe that having different timeframes in
Sec. 488.5(f)(9) for the same activities that are set forth in Sec.
488.8(g) for Medicare-certified providers and suppliers would be
inconsistent and confusing to providers and suppliers.
Comment: One commenter noted that the proposed rule provided that
if an AO did not appropriately seek approval from CMS prior to a change
in ownership, providers accredited by the now-former AO would only have
180 days of deemed status remaining. As an example, a hospital may have
only recently gone through their AO's survey process and could have
just recently been reaccredited for 3 years. Through no fault of their
own, they would have only 6 months prior to their loss of Medicare
certification status. By contrast, the proposed rule would provide 1
year of accreditation status to non-certified suppliers. This commenter
recommended that CMS grant Medicare-certified providers and suppliers
at least the same amount of time as non-certified suppliers (that is, 1
year) and allow for an extension process if additional time is needed.
This commenter further stated that the Ligature Risk Extension Request
process in CMS' draft guidance, DRAFT-QSO-19-12-Hospitals--
Clarification of Ligature Risk Interpretive Guidelines, released April
19, 2019, may provide a helpful model for seeking an extension.
Response: We appreciate this commenter's concern. The timeframe set
forth in Sec. 488.5(f)(9) for Medicare-certified providers and
suppliers are the same as those that are set forth in Sec. 488.8(g)
titled ``Continuation of deemed status.'' In fact, Sec. 488.8(g) are
referenced in Sec. 488.5(f)(9)(iii). As noted previously, we believe
using different timeframes would be inconsistent and confusing.
We proposed at Sec. 488.5(f)(10) that if CMS withdrew AO approval
of transferred non-certified accreditation program(s) because a CHOW
was completed without notice to CMS or receipt of CMS approval, an
affected non-certified supplier's deemed status would continue in
effect for 1 year after the removal of the existing CMS accreditation
approval if the non-certified supplier submitted 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
and provided written notice of such application to the CMS within such
timeframe. Failure to comply with the timeframe requirements would
result in a CMS determination that the supplier was no longer
accredited.
We proposed a 1 year period of time for the continuation of
accreditation for non-certified suppliers for several reasons. First,
the provisions of Sec. 488.8(g) do not apply to non-certified
suppliers. Second, in our view, giving non-certified suppliers
additional time compared to Medicare-certified provider and suppliers
(1 year as opposed to 180 days of continued accreditation status,
respectively), is appropriate due to the different circumstances of
Medicare and Medicare certified providers and suppliers as compared to
those of the non-certified suppliers. More specifically, non-certified
suppliers are not subject to inspection by the SA, because there is no
legal authority for the SA to do so. Therefore, they are not able to
use the SA for approval to participate in Medicare in the event that
they cannot obtain accreditation from an AO. We believe it is necessary
to grant the non-certified suppliers a longer period of extended
accreditation in which to achieve reaccreditation from another AO,
since they do not have the safety net of being certified by the state.
For non-certified suppliers such as ADI, DSMT, and HIT suppliers,
the accreditation process typically takes longer because it's usually
performed by a ``desk audit'' process. With a desk audit, the non-
certified supplier would be given a period of time in which to collect
and submit the information required for the desk audit. For example,
ADI suppliers must submit images for specific ADI procedures. They must
either gather images from procedures that have already been performed
or perform new procedures to obtain these images.
After the ADI supplier has obtained all of the images required for
accreditation, they would submit their accreditation package to the AO.
We estimate that the ADI AO's review the ADI supplier's accreditation
package takes up to one to several weeks, depending on the AO's
workload. Whereas, for Medicare-certified providers and suppliers,
accreditation is based on an on-site survey, which can be scheduled and
performed within a short period of time. Therefore, the accreditation
can be completed more quickly.
In addition, accreditation is a condition for receipt of Medicare
payment for non-certified suppliers, while this is not the case for
Medicare certified providers and suppliers. If their Medicare
accreditation lapses, the non-certified suppliers would no longer be
eligible to receive payment for services furnished to Medicare
beneficiaries. This could lead to financial hardship for these non-
certified suppliers that could cause them to refuse to serve Medicare
beneficiaries or cause them to go out of business. Both of these
scenarios would result in an access to care issues for Medicare
beneficiaries. For these reasons, we believe it is important that we
allow the non-certified suppliers a longer period of time in order to
obtain re-accreditation from another AO.
Comment: One commenter suggested that both the 60-day timeframe to
submit an application to a new AO and the 120-day timeframe to be
surveyed be extended. Another commenter expressed the belief that an
affected provider's or supplier's deemed status should continue for
longer than 180 days to allow sufficient time for them to make
decisions, establish budgets, prepare for and address findings on the
path to an accreditation determination by a new AO.
Response: This commenter seems to suggests that Sec. Sec.
488.5(f)(9) and 488.8(g) provide for 2 separate and distinct periods of
time or deadlines, consisting of an initial 60 day period in which the
provider or supplier must submit their application to another AO and
second and subsequent 120 day period in which the provider or supplier
must be surveyed.
[[Page 25422]]
We note that providers and suppliers actually have 180, rather than
120, days in which to receive accreditation. Section 488.5(f)(9)
provides that ``an affected Medicare-certified provider or supplier's
deemed status will continue in effect for 180 calendar days if the
Medicare-Certified provider or supplier takes the following steps set
forth is Sec. 488.8(g).'' Those steps include the provider or supplier
is required to file an application with another AO and provide notice
to the SA of the filing of this application within 60 days of the date
of receipt of notice of the withdrawal of the AOs CMS approval. This
deadline does not separate the 180 day period of continued
accreditation into two separate and distinct periods. Rather,
healthcare provider or supplier can file their application with another
AO as soon possible after being notified of withdrawal of their AO's
CMS approval. Conceivably, this application could be filed the day
after the provider or supplier received such notification. We believe
that if a provider or supplier has filed an AO application in the past,
they should be familiar with the information and documentation required
and therefore, should not wait until near the 60 day deadline to notify
the SA of the filing of their application with another AO.
We further believe that the 180-day timeframe is an adequate amount
of time for a Medicare-certified provider or supplier to obtain
reaccreditation from a new AO. In fact, the timeframes in Sec.
488.8(g) are referenced in Sec. 488.5(f)(9)(iii).
E. Change of Ownership of AOs
Comment: One commenter suggested that, CMS should also require
written disclosure of any potential or actual conflicts of interests
related to the new owner, as part of the documentation required to
request approval of a transfer to a new owner. This commenter expressed
the opinion that requiring this information would do the following: (1)
Give CMS the authority to review conflicts and, if necessary, require
corrective action as a condition of approval; (2) be an opportunity to
consider conflicts based on paid consultative services (the subject of
the Request for Information published in December 20, 2018,
``Accrediting Organizations Conflict of Interest and Consulting
Services'', CMS-3367-NC (83 FR 65331)); and (3) help CMS ensure that
the primary focus of accreditation by the new owner is to recognize
quality and that accreditation decisions will continue to be made in an
objective manner independent of the new owner's other financial or
programmatic interests.
Response: We agree with this commenter. Therefore, we have added a
requirement at Sec. 488.5(f)(2)(iii)(D) that requires the prospective
new owner of the AO to provide 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, as required by Sec. 488.5(f)(10) with the
information to be submitted with the AO's request for approval.
Comment: Several commenters expressed concern regarding the
confidentiality of proprietary merger/acquisition information and the
open-ended review timeline. Other commenters expressed concerned that
the proposed regulation did not include provisions protecting against
disclosure of sensitive information related to the potential CHOW.
Another commenter explained that parties to a merger or acquisition
have significant interest in maintaining the confidentiality of related
deliberations because uncontrolled disclosure could cause significant
harm to the interests of the parties involved and other stakeholders,
including CMS. This commenter expressed concern that if the CHOW
information is disclosed prematurely, it could create concern amongst
customers, potentially impacting the transaction, and creating
operational issues for both the accreditation organization and CMS who
may not yet be ready to field customer inquiries about the pending
change.
Another commenter expressed concern that the proposed rule contains
no explicit guarantee of the confidentiality of proprietary information
and intellectual property shared with CMS. This commenter stated that
as part of the valuation process in any ownership change, AOs will
share proprietary information and intellectual property that must
remain protected. Another commenter recommended that CMS consider
confidentiality concerns of the involved parties in any rulemaking that
requires advance notice to CMS. Several other commenters requested that
CMS modify the proposal with consideration for these concerns.
Response: We understand the concern expressed by these commenters.
We will make every effort to keep the information submitted by the
buyer/transferee in support of their request for transfer of the
existing CMS approval for the accreditation programs strictly
confidential. There is a possibility that CMS could receive a Freedom
of Information Act (FOIA) request for this information, however the
FOIA contains several statutory exemptions that allow agencies to
withhold records in responding to a FOIA request. Exemption 4 protects
``trade secrets and commercial or financial information'' that is
``privileged or confidential.'' See 5 U.S.C. 552(b)(4). CMS will
withhold or release information in accordance with applicable federal
law and its regulations at 45 CFR subpart D.
Comment: One commenter stated that CMS should consider ``change of
control'' principles in addition to ``CHOW'' as part of the proposed
rule.
Response: We thank the commenter for their input. We note that the
term ``change of control'' could refer to a change in the day-to-day AO
management activities, or a change to the managing control of the AO.
This term could also refer to a change in the ownership or partnership
interests in the AO. A change of management or managing control could
involve a change in the day-to day management staff, board of director
members or managing partners of the AO. A change in the ownership
interest in the AO could involve a change in the number of persons who
own an interest in the AO and/or a change in their percentage of
ownership of interest in the AO. A change in a partnership interest in
an AO could involve the addition of or removal of partners or a change
in the percentage of their partnership interest.
We do not believe that change of control should be included in the
regulations at Sec. 488.5(f) because, if a change of control issue
were to occur, we would not expect the daily operations of the AO to
change. We say this because, an AO undergoes a change of control they
are required to notify CMS of this change. Also if, as a result of the
change of control, the AO were to decide to make changes to its
accreditation standards and/or survey processes, the AO will be
required to submit these revised accreditation standards and/or survey
processes to CMS for a comparability review and CMS approval pursuant
to Sec. 488.8((b)(2). In addition, the AO will be required by Sec.
488.5(a)(19) to provide, with their initial or renewal application, 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
[[Page 25423]]
survey process. These proposed changes must be submitted within 30 days
after CMS's written notice and the AO may not implement them without
CMS approval. We believe that these requirements will be sufficient to
provide notice to CMS of any changes, in the event that an AO undergoes
a change of control.
Comment: One commenter suggested that the regulation should set out
the criteria CMS uses to assess an AO's ability to perform its tasks
after a CHOW has occurred.
Response: We appreciate this commenter's concern but respectfully
disagree. The regulation at Sec. 488.5(f)(2) states the specific
information the AO must submit to CMS for review. As we have noted
throughout this preamble, we review transaction information in order to
assess the new AO's financial resources and its ability to perform its
tasks after a CHOW has occurred, in order to insure the ongoing
effectiveness of the approved accreditation program(s) and to minimize
risks to patient safety. We believe that stating the information and
documents that will be reviewed and the purpose for this review
provides the AOs with enough information about CMS' intent for the
review and approval or disapproval of the transfer of the existing CMS-
approval for the accreditation programs to be transferred in the CHOW.
The review of the application to be submitted by the prospective new
owner of the AO is similar to the requirements at Sec. 488.5 in which
we request information to be submitted with an AO's initial or renewal
application for CMS approval of the AOs accreditation programs. We do
not state specific review criteria to be used for this application
review.
IV. Provisions of the Final Regulations
In this final rule, we are adopting the provisions in the May 2,
2019 proposed rule, with the following changes:
Revised Sec. 488.5(f)(1)(iii) to specify that the 90 day
deadline refers to calendar days.
Revised Sec. 488.5(f)(1)(iv) to specify that we will
complete our review of the AO's request for approval for the transfer
of the existing approval for the accreditation programs to be
transferred CHOW within 90 days from receipt of the request.
Revised Sec. 488.5(f)(2)(iii)(D) to require that the
prospective new owner of an AO provide us with 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, as required by Sec. 488.5(f)(10).
V. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including the use of automated
collection techniques.
We solicited public comment on each of the section 3506(c)(2)(A)-
required issues for the following information collection requirements
(ICRs).
A. Wage Data
In the 2019 proposed rule, to derive average costs, we used data
from the U.S. Bureau of Labor Statistics' (BLS) May 2020 ``National
Occupational Employment and Wage Estimates'' for all salary estimates
(http://www.bls.gov/oes/current/oes_nat.htm). In this final rule we
have updated the wage information to reflect the most current wage
information from the BLS for the May 2020 ``National Occupational
Employment and Wage Estimates'' (https://www.bls.gov/oes/current/oes_nat.htm).
In this regard, the following table presents the updated mean
hourly wage, the employer's benefits and other indirect costs
(calculated at 100 percent of salary), and the adjusted hourly wage.
---------------------------------------------------------------------------
\1\ https://www.bls.gov/oes/current/oes291141.htm.
\2\ https://www.bls.gov/oes/current/oes119111.htm.
\3\ https://www.bls.gov/oes/current/oes132011.htm.
Table--National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
Hourly wage
adjusted for
BLS occupation title Occupation Mean hourly benefits &
code wage other indirect
costs
----------------------------------------------------------------------------------------------------------------
Registered Nurse \1\............................................ 29-1141 $38.47 $76.94
Medical or Health Services Manager \2\.......................... 11-9111 57.12 114.24
Accountant or Auditor \3\....................................... 13-2011 39.26 78.52
----------------------------------------------------------------------------------------------------------------
As indicated, we are adjusting our employee hourly wage estimates
by a factor of 100 percent. This is necessarily a rough adjustment,
both because the employer's benefits and other indirect costs vary
significantly from employer to employer, and because methods of
estimating these costs vary widely from study to study. Nonetheless,
there is no practical alternative and we believe that doubling the
hourly wage to estimate total cost is a reasonably accurate estimation
method.
B. Documentation Requirements
At Sec. 488.5(f)(1), we require that the AO that is the subject of
the transaction provide notice to CMS that it intends to request
approval for a CHOW. This initial notice will be minimal, such as a
coversheet, email, or any type of formal notice and will be included in
the additional documentation requirements of Sec. 488.5(f)(2).
At Sec. 488.5(f)(2)(i) and (ii), we specify that the prospective
purchaser or transferee provide 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. Additionally, we require the
name and address of the legal entity that would be the owner of the new
AO. We believe that this information is
[[Page 25424]]
documentation that will be easily accessible and require minimal time
to gather and submit. Therefore, we have considered that the cost
burden for the AO to submit the financial statements and other
information deemed necessary by CMS will be approximately $76.94. We
believe it is likely that the AOs use a registered nurse (RN) to gather
information and we estimate the time to gather the financial statements
will not exceed 1 hour. The AO will incur a cost burden in the amount
of $76.94 for the preparation of the response to CMS (1 hour x $76.94).
At Sec. 488.5(f)(2)(iii), we require the prospective purchaser or
transferee to submit a transition plan that summarizes the details of
how the accreditation functions will be transitioned to the new owner.
While most existing AOs engaged in business transactions such as a CHOW
would have already developed a transition plan as proposed under
section II of the 2019 proposed rule, this process will be more time
consuming. The development of a transition plan will take approximately
45 hours of time to gather, obtain, or prepare all documentation for
submission. We estimate that the AO will have a total of three staff
work on transition plan. One of these staff persons will likely be
clinicians such as a RN. We further believe that the other will be in a
management position and serve in a management position. We believe that
this person's position will be equivalent to the U.S. Bureau of Labor
Statistics job category of Medical and Health Services Manager. We
believe that the other staff person working on this task will be
accountant or auditor.
We estimate that the RN, medical or health services manager, and
accountant or auditor would each spend 45 hours performing this task.
We estimate that the total time burden for this task will be 135 hours.
We further estimate that the cost burden for the work performed by
the RN will be $3,462.30 (45 hours x $76.94). We believe that the cost
burden for the work performed by the Medical and Health Services
Manager will be $5,140.80 (45 hours x $114.24 per hour). Also, we
estimate that the cost burden for the work performed by the auditor or
account will be $3,533.40 (45 hours x $78.52 per hour).
Finally, we estimate that the total cost burden for this task will
be $12,136.50 ($3,462.30 + $5,140.80 + $3,533.40).
Section 488.5(f)(2)(iii)(C)(6) requires the prospective new owner
of the AO to submit any other relevant information that CMS finds
necessary. This task would involve the following: (1) Review of CMS'
request for information regarding the CHOW; (2) collecting and
preparing this information for sending to CMS; and (3) sending the
requested information to CMS. In the 2019 proposed rule we had estimate
the time burden for this task to be 1 hour. However, in response to a
public comment received. We are increasing the time burden for this
task to 3 hours.
We believe that this task will be performed be a clinician such as
RN, as is generally the case in AO applications seeking deeming
authority. We estimate that the total cost burden incurred by the AO
for this task will be $230.82 (3 hours x $76.94).
C. Written Acknowledgements
At Sec. 488.5(f)(3), we specify that the purchasing AO to provide
several written acknowledgements. At Sec. 488.5(f)(3)(i), we require
the purchaser or transferee to provide written acknowledgement that it
understands the financial and legal responsibilities involved with the
CHOW process. We believe this written acknowledgement will be developed
by a health services manager, as they currently serve in roles for
submission of general accrediting approvals. We believe this will not
take more than 1 hour to prepare the required written notice.
We estimate that the total cost burden associated with this task
will be $114.24. ($114.24 x 1 hour).
At Sec. 488.5(f)(3)(ii), we require the purchasing AO to provide
written acknowledgement that it agrees to operate the new AO as defined
by CMS' standards under Sec. Sec. 488.5 and 488.9, as well as include
acknowledgements on any program reviews or probationary terms. This
will be a minimal cost burden as we are not defining a specific format
for the written acknowledgement. We believe that it will take no more
than 1 hour to prepare this written notice. We believe that this task
will be performed by a medical or health services manager. We estimate
that the cost burden associated with this task will be $114.24 (1 hour
x $114.24).
At Sec. 488.5(f)(3)(iii), we require the purchasing AO to provide
written acknowledgement that would not operate the accreditation
program until it received a notice of approval of the transfer of the
CMS approved accreditation program from CMS. Given this requirement is
minimal and the purchasing AO is already required to include a written
acknowledgment as outlined at proposed Sec. 488.5(f)(3)(ii), it is
likely that this written notice will include both acknowledgements;
therefore, we will include this in the hour of burden and cost
described under Sec. 488.5(f)(3)(ii).
At Sec. 488.5(f)(5), we require the purchasing AO to provide
documentation within 15 days after the sale confirming the CHOW. We
believe that it is a standard business practice that the sale or
transfer of a business and its assets be confirmed with some type of
documentation such as a bill of sale, deed, or financial documents.
Therefore, we believe that the burden to the AO for providing the
required proof of the sale of transfer of the AO will be minimal. This
will require the AO to provide CMS with a copy of already existing
sales documentation. Also, because the existing owner of the AO and
prospective new owner will be in the process of negotiating the sale or
transfer of the AO, we believe that the AO will have this information
readily available and easily accessible.
We estimate that it will require 30 minutes for the staff of the
new AO to provide a copy of the existing sales documentation to CMS via
an electronic method such as email. We believe that this task will be
performed by a medical or health services manager. We estimate that the
total cost burden for this requirement will be $57.12 (0.5 hour x
$114.24).
We want to emphasize that these anticipated costs and burdens are
only subject to those AOs seeking a CHOW. To date, there has been one
CHOW request of an AO submitted approximately 20 years and another
submitted in November 2020. While we cannot predict the frequency with
which AO CHOW transactions will occur in the future, we believe that
they should occur more frequently than they have in the past.
The requirements and burden will be submitted to OMB under (OMB
control number 0938-New).
D. Description of Time and Cost Burdens
[[Page 25425]]
----------------------------------------------------------------------------------------------------------------
Number of
Time per potential Triennial hour
Description of burden response respondents burden per Cost per Triennial cost
(hours) per every 3 response response burden
years (hours)
----------------------------------------------------------------------------------------------------------------
Burden Associated with proposed 0 1 0 $0 $0
Sec. 488.5(f)(1) \4\ (See
footnote 4 below)..............
Burden Associated with proposed 135 1 135 12,136.50 12,136.50
Sec. 488.5(f)(2)(iii)........
Burden Associated with proposed 3 1 3 230.82 230.82
Sec. 488.5(f)(2)(iii)(C)(6)..
Burden Associated with proposed 1 1 1 114.24 114.24
Sec. 488.5(f)(3)(i)..........
Burden Associated with proposed 1 1 1 114.24 114.24
Sec. 488.5(f)(3)(ii) &
488.5(f)(3)(iii)...............
Burden Associated with proposed 0.5 1 0.5 57.12 57.12
Sec. 488.5(f)(5).............
-------------------------------------------------------------------------------
Total....................... 140.5 1 140.5 12,652.92 12,652.92
----------------------------------------------------------------------------------------------------------------
E. Response to Public Comments
We received the following public comments in response to the burden
estimates:
---------------------------------------------------------------------------
\4\ The time and cost burden related to Sec. 488.4(f)(1) are
minimal have been combined with the time and cost burden for Sec.
488.5(f)(2) because the notification required by Sec. 488.5(f)(1)
would be submitted together with the documentation required by Sec.
488.5(f)(2).
---------------------------------------------------------------------------
Comment: One commenter stated that the development of a transition
plan will engage employees in both the business operations and
accreditation operations departments within the AO(s). This commenter
suggested that the estimated time and cost burden of $8,014 to allow
for the work performed by business operations.
Response: We agree with this commenter that there could be a
business person such as an accountant or auditor involved in the
preparation of the transition plan. Therefore, we have revised the
burden estimate for this task to include a time burden of 45 hours for
an additional person who would be an accountant or auditor. This change
increased the hourly burden estimate for the preparation of the
transition plan from 90 to 135 hours.
Comment: One commenter suggested that the estimated time burden of
1 hour for a development of a response to a CMS request for additional
information be increased to 8 hours. The commenter stated that while
one individual will prepare the response, it will require multiple
layers of internal review, approval, and communication as well as
delivery to CMS.
Response: We appreciate this commenter's input. We agree that there
will be layers of administrative review for any documentation
requirements. However, we do not believe that this administrative
review should be included in the burden estimate, because this is a
task that is performed in the normal course of business and therefore
will not be considered burden. Given the unpredictable nature of the
``CMS request for additional information'' we believe that the current
burden estimate of 1 hour to perform this task is too low.
If the AO provides all of the information required by Sec.
488.5(f)(2)(iii), CMS would need to request little, if any, additional
information. However, if the AO fails to provide some of the
information required by Sec. 488.5(f)(2)(iii), we believe that the
time spent by the AO to provide this information in response to a
request from CMS for additional information will still be covered under
our initial burden estimate for Sec. 488.5(f)(2)(iii). Therefore, we
do not agree with this commenter that the time required for the
prospective owner to submit ``additional documentation'' should be
increased to 8 hours. This request for additional information and/or
documentation would occur only after CMS has received and reviewed the
required documentation from the prospective new owner and found that
there was missing or incomplete information or that we needed
additional clarifying information.
We have increased the estimated time burden for this task to 3
hours. However, we note that this requirement would not be a regularly
occurring burden under these regulations but would only be required
when and if CMS needs additional information from the AO.
Comment: One commenter stated that the hours assigned for the
preparation of the CHOW application was estimated to be two staff (one
RN and one health services manager) for 2 hours each for a total of 4
hours. This commenter suggested that the amount of staff working in
this task should be increased to three (two RNs and one health services
manager), and the time spent on this task should be increased to 8
hours per each person for each a total of 24 hours.
Response: We thank the commenter for their concern. However, we did
not provide a specific burden estimate for the task of preparing an
application which will be performed by two RNs for a period of 2 hours
each. We did provide specific time and cost burden estimates for the
gathering and submission of required documentation set forth in Sec.
488.5(f)(1) and Sec. 488.5(f)(2)(iii). We have revised this burden
estimate in response to public comments received. We believe that this
burden estimates, as revised, provide an accurate estimate of the
burden related to the requirements of Sec. 488.5(f)(2).
VI. Regulatory Impact Statement
A. Overall Impact
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 and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the 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.
[[Page 25426]]
B. Burden for Change of Ownership Among Accrediting Organizations
The AOs which seek to sell or transfer or purchase another AO and
undergo a CHOW will incur time and cost burdens associated with the
preparation of the information they submit to CMS to request approval
of their new accreditation program under the CHOW. This includes the
preparation, gathering or obtaining of all the documentation required
at Sec. 488.5(f).
While we recognize that most existing AOs are familiar and have
majority of the documentation CMS is requesting at Sec. 488.5(f), we
believe that due to the need for the selling or transferring and
purchasing AOs to submit documentation for both entities, that this
will take approximately 2 hours of time to gather, obtain or prepare
all documentation required by Sec. 488.5(f). We believe that this task
will take approximately 2 hours because the AOs have previously
submitted an application to CMS requesting approval of their
accreditation program; therefore, will already be familiar with the
application process and requirements and should have the required
documentation readily available.
The AOs (selling or transferring and purchasing) will incur costs
associated with the preparation and submission of the requested
documents, development of the written acknowledgement letters, and
submission of the documents. The AO will incur costs for the wages of
all AO staff that work on the preparation of the CHOW application. We
estimate that the AO will have a total of three staff work on the
preparation of the application. We believe that two of the AO staff
that perform this task will be clinicians such as RN or medical or
health services manager, as they currently serve in roles for
submission of general accrediting approvals. We further believe that
the third AO staff person will be an accountant or auditor.
We estimate that the RN, medical or health services manager, and
accountant or auditor will each spend 45 hours performing this task.
The total estimated time burden for this task is 135 hours.
The mean hourly wage for a RN is $38.47 (https://www.bls.gov/oes/current/oes291141.htm). This wage, adjusted for the employer's benefits
and other indirect costs, is $76.94. We estimate that the total wages
incurred by the AO for the 45 hours spent by the RN performing this
task will be $3,462.30 ($76.94 x 45 hours).
The mean hourly wage for a medical or health services manager is
$57.12 (https://www.bls.gov/oes/current/oes119111.htm). This wage
adjusted for the employer's benefits and other indirect costs is
$114.24. We estimate that the total wages incurred by the AO for the 45
hours spent by the Medical or Health Services Manager performing this
task will be $5,140.80 ($114.24 x 45 hours).
The mean hourly wage for an accountant or auditor is $37.89.
(https://www.bls.gov/oes/current/oes132011.htm). This wage adjusted to
include employer's benefits and other indirect costs is $78.52. We
estimate that the total wages incurred by the AO for the 45 hours spent
by the Accountant performing this task will be $3,533.40 ($78.52 x 45).
We estimate that the total cost burden for this task will be
$11,598, which is calculated as follows:
45 hours x $76.94 per hour = $3,462.30
45 hours x $114.24 per hour = $5,140.80
45 hours x $78.52 per hour = $3,533.40
Total = $12,136.50
Furthermore, at Sec. 488.5(e)(8), we require the AOs to provide
additional information as requested by CMS to ensure the continuity of
oversight for facilities currently accredited. Therefore, there is
potential for AOs to incur a cost burden for the wages of the AO staff
that are involved with reviewing our additional requests for
information and the preparation of the documents and program standards.
The AO staff that review information requested by CMS regarding the
CHOW will be a clinician such as RN, as is generally the case with the
AO's preparation and submission of application materials. We estimate
that it will take 3 hours for the RN to perform this task.
As, stated previously, the adjusted wage for an RN is $76.94. We
estimate that the AO will incur a cost burden in the amount of $230.82
(3 hours x $76.94 per hour) for the preparation of the response to CMS.
We want to emphasize that these anticipated costs and burdens are
only subject to those AOs seeking a CHOW. To date, there has only been
one AO CHOW request submitted approximately 20 years ago and another
submitted in November 2020. While we cannot predict the frequency with
which AO CHOW transactions will occur in the future, we believe that
they should occur more frequently than they have in the past.
We solicited comments, specifically from stakeholders and AOs and
request AOs to submit their comments to include a breakdown of
potential costs they would estimate for this to be completed.
A summary of the comment received and our response to that comment
follow:
Comment: One commenter stated that they disagree with the
conclusion that the burden would not be substantial for the AO and any
other parties involved in a proposed CHOW because the cost estimates
provided based on hours are probably low.
Response: We have revised our time and cost burden estimates in
section V ``Collection of Information'' and section VI ``Regulatory
Impact Statement'' of this rule.
C. Anticipated Effects
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
less than $8.0 million to $41.5 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 final rule will not have a significant
economic impact on a substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare an
RIA 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 final 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 2022, that
threshold is approximately $165 million. This rule will have no
consequential effect on state, local, or tribal governments or on the
private sector.
[[Page 25427]]
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on state
and local governments, preempts state law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on state
or local governments, the requirements of Executive Order 13132 are not
applicable.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on April 20, 2022.
List of Subjects
42 CFR Part 410
Diseases, Health facilities, Health professions, Laboratories,
Medicare, Reporting and recordkeeping requirements, Rural areas, X-
rays.
42 CFR Part 414
Administrative practice and procedure, Biologics, Diseases, Drugs,
Health facilities, Health professions Medicare, Reporting and
recordkeeping requirements.
42 CFR Part 488
Administrative practice and procedure, Health facilities, Health
professions, Medicare, Reporting and recordkeeping requirements.
42 CFR Part 493
Administrative practice and procedure, Grant programs-health,
Health facilities, Laboratories, Medicaid, Medicare, Penalties,
Reporting and recordkeeping requirements.
For the reasons stated in the preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS
0
1. The authority citation for part 410 continues to read as follows:
Authority: 42 U.S.C. 1302, 1395m, 1395hh, 1395rr, and 1395ddd.
0
2. Section 410.142 is amended by adding paragraph (k) to read as
follows:
Sec. 410.142 CMS process for approving national accreditation
organizations.
* * * * *
(k) Change of ownership. An accreditation organization whose
accreditation program(s) is (are) approved and recognized by CMS that
wishes to undergo a change of ownership is subject to the requirements
set out at Sec. 488.5(f) of this chapter.
PART 414--PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES
0
3. The authority citation for part 414 continues to read as follows:
Authority: 42 U.S.C. 1302, 1395hh, and 1395rr(b)(l).
0
4. Section 414.68 is amended by adding paragraph (j) to read as
follows:
Sec. 414.68 Imaging accreditation.
* * * * *
(j) Change of ownership. An accreditation organization whose
accreditation program(s) is (are) approved and recognized by CMS that
wishes to undergo a change of ownership are subject to the requirements
set out at Sec. 488.5(f) of this chapter.
PART 488--SURVEY, CERTIFICATION, AND ENFORCEMENT PROCEDURES
0
5. The authority citation for part 488 continues to read as follows:
Authority: 42 U.S.C. 1302 and 1395hh.
0
6. Section 488.5 is amended by adding paragraph (f) to read as follows:
Sec. 488.5 Application and re-application procedures for national
accrediting organizations.
* * * * *
(f) Change of ownership. What Constitutes Change of Ownership. A
description of what could constitute a change of ownership with respect
to a national accrediting organization are those activities described
in Sec. 489.18(a)(1) through (3) of this chapter.
(1) Notice to CMS. Any CMS-approved accrediting organization that
is contemplating or negotiating a change of ownership must notify CMS
of the change of ownership.
(i) This notice requirement applies to any national accrediting
organization with CMS-approved accreditation program(s) that is the
subject of a potential or actual change of ownership transaction,
including accrediting organizations for Advanced Diagnostic Imaging
(ADI) suppliers; Home Infusion Therapy (HIT) suppliers; Diabetic Self-
Management Training (DSMT) entities, and clinical laboratories.
(ii) This notice must be provided to CMS in writing.
(iii) This notice must be provided to CMS no less than 90 calendar
days prior to the anticipated effective date of the change of ownership
transaction.
(iv) CMS will complete their review of the AO's request for
approval for the transfer of the existing CMS approval for the
accreditation programs to be transferred in the change of ownership
within 90 days from receipt of said AO's request.
(2) Information submitted with the request for approval for change
of ownership transaction. The person(s) or organization(s) acquiring an
existing CMS-approved accrediting organization or accreditation
programs (that is, purchaser, buyer or transferee) through a change of
ownership transaction must do the following:
(i) Seek approval from CMS for the purchase or transfer of the
existing CMS approval for the accreditation program(s) to be
transferred in the change of ownership event; and
(ii) Meet the requirements of paragraphs (f)(2)(iii) through (f)(4)
of this section to demonstrate that the entities that will be
accredited with the transferred accrediting program(s) continue to meet
or exceed the applicable Medicare conditions or requirements.
(iii) The following information must be submitted to CMS in the
purchaser's/buyer's/transferee's request for approval of a transfer of
the existing CMS approval for the accreditation program(s) to be
transferred in the change or ownership transaction:
(A) The legal name and address of the new owner;
(B) The three most recent audited financial statements of the
organization that demonstrate the organization's staffing, funding and
other resources are adequate to perform the required surveys and
related activities;
(C) A transition plan that summarizes the details of how the
accreditation functions will be transitioned to the new owner,
including:
(1) Changes to management and governance structures including
current and proposed organizational charts;
(2) A list of the CMS-approved accreditation programs that will be
transferred to the purchaser/buyer/transferee,
(3) Employee changes, if applicable,
(4) Anticipated timelines for action;
(5) Plans for notification to employees; and
(6) Any other relevant information that CMS finds necessary.
(D) The prospective new AO'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, as required by paragraph (f)(10) of this
section.
[[Page 25428]]
(3) Written acknowledgements. The purchaser/buyer/transferee must
provide a written acknowledgement to CMS, which states the following:
(i) If the application for the transfer of the existing CMS-
approval for the accreditation program(s) to be transferred in the
change of ownership transaction is approved by CMS, said purchaser/
buyer/transferee must assume complete responsibility for the operations
(that is, managerial, financial, and legal) of the CMS-approved
accreditation programs transferred, immediately upon the finalization
of the change of ownership transaction;
(ii) The purchaser/buyer/transferee agrees to operate the
transferred CMS-approved accreditation program(s) under all of the CMS
imposed terms and conditions, to include program reviews and
probationary status terms, currently approved by CMS; and
(iii) The purchaser/buyer/transferee must not operate the
accreditation program(s) it acquired in the change in ownership
transaction as CMS approved accreditation programs, until the effective
date set forth within the notice of approval from CMS.
(iv) The purchaser/buyer/transferee agrees to operate the
transferred CMS-approved accreditation program(s) under all of the
terms and conditions found at Sec. Sec. 488.5 through 488.9.
(4) Notification. The following written notifications are required
after the change of ownership transaction has been approved by CMS:
(i) All parties to the change of ownership transaction must notify
the providers and suppliers affected by such change within 15 calendar
days after being notified of CMS's approval of the transfer of the
existing CMS-approval for the accreditation programs to be transferred
in the change of ownership transaction.
(ii) If applicable, the purchaser/buyer/transferee must acknowledge
in writing to CMS that the accrediting organization or accreditation
program(s) being acquired through a purchase or transfer of ownership
was under a performance review or under probationary status at the time
the change of ownership notice was submitted.
(5) Federal Register notice. CMS will publish a notice of approval
in the Federal Register of the transfer of the existing CMS approval
for the accreditation program(s) to be transferred to the new owner,
only after CMS receives written confirmation from the new owner that
the change of ownership has taken place.
(6) Notification to parties in the event that CMS does not approve
the transfer of the existing CMS approval. In the event that CMS does
not approve the transfer of the existing CMS approval for the
accreditation program(s) to be transferred in the change of ownership
transaction, CMS will notify all parties to the change of ownership
transaction of such in writing.
(7) Withdrawal of CMS approval for transferred accreditation
programs due to failure to notify CMS of intent to transfer
accreditation programs. In the event that CMS was not made aware of or
did not approve the transfer of the existing CMS-approval for the
accreditation program(s) to be transferred under a change of ownership:
(i) The existing AO would be permitted to continue operating their
existing CMS-approved accreditation programs, if the change of
ownership transaction was not completed, unless our review of the
transaction revealed issues with the AO that were the subject of the
un-finalized change of ownership transaction that was previously
unknown to CMS.
(ii) If a change of ownership transaction was completed without
notice to CMS or the approval of CMS, CMS would be able to withdraw the
existing approval of the AO's accreditation programs in accordance with
Sec. 488.8(c)(3)(ii) and (iii).
(8) Withdrawal of CMS approval for accreditation programs which are
transferred notwithstanding CMS' disapproval of the transfer. In the
event that the parties complete the change of ownership transaction,
notwithstanding CMS disapproval and the purchaser/buyer/transferee
attempts to operate the transferred accreditation program(s) under the
CMS-approval granted to the previous owner, CMS will withdraw the
existing approval of the transferred accreditation program(s) in
accordance with the procedures set out at Sec. Sec. 488.8(c)(3)(ii)
and (iii).
(9) Requirements for continuation of a deemed status accreditation
of Medicare-certified providers and suppliers after CMS withdraws the
existing approval of the transferred accreditation program(s). If CMS
withdraws the existing approval of the transferred accreditation
program(s) because the change of ownership transaction was completed
without notice to CMS or the approval of CMS, an affected Medicare-
Certified provider or supplier's deemed status will continue in effect
for 180 calendar days if the Medicare-Certified provider or supplier
takes the following steps set forth is Sec. 488.8(g).
(i) The Medicare-certified provider or supplier must submit 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; and
(ii) The Medicare-certified provider or supplier must 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 in accordance with Sec. 488.8(g).
(iii) Failure to comply with the timeframe requirements specified
in Sec. 488.8(g) will place the provider or supplier under the SA's
authority for continued participation in Medicare and on-going
monitoring.
(10) Requirements for continuation of accreditation for non-
certified suppliers when CMS withdraws the existing approval of the
transferred accreditation program(s). If CMS withdraws its existing
approval from a transferred non-certified accreditation program for
Advanced Diagnostic Imaging (ADI) suppliers; Home Infusion Therapy
(HIT) suppliers; Diabetic Self-Management Training (DSMT) entities; or
clinical laboratories, because a change of ownership transaction was
completed without notice to or the approval of CMS, such affected non-
certified supplier's deemed status would continue in effect for 1 year
after the removal of the existing CMS accreditation approval, if such
non-certified supplier take the steps specified paragraphs (f)(10)(i)
and (ii) of this section--
(i) The non-certified supplier must submit 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;
and
(ii) The non-certified supplier must provide written notice to CMS
stating that it has submitted an application for accreditation under
another CMS-approved accreditation program within the 60-calendar days
from the date of publication of the removal notice in the Federal
Register.
(iii) Failure to comply with the above-stated timeframe
requirements will result in de-recognition of such provider or
supplier's accreditation.
0
7. Section 488.1030 is amended by adding paragraph (g) to read as
follows:
Sec. 488.1030 Ongoing review of home infusion therapy accrediting
organizations.
* * * * *
(g) Change of ownership. An accrediting organization that wishes to
undergo a change of ownership is subject to the requirements set out at
Sec. 488.5(f).
[[Page 25429]]
PART 493--LABORATORY REQUIREMENTS
0
8. The authority citation for part 493 is revised to read as follows:
Authority: 42 U.S.C. 263a, 1302, 1395x(e), the sentence
following 1395x(s)(11) through 1395x(s)(16).
0
9. Section 493.553 is amended by adding paragraph (e) to read as
follows:
Sec. 493.553 Approval process (application and reapplication) for
accreditation organizations and State licensure programs.
* * * * *
(e) Change of ownership. An accrediting organization that wishes to
undergo a change of ownership is subject to the requirements set out at
Sec. 488.5(f) of this chapter.
Dated: April 25, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2022-09102 Filed 4-27-22; 4:15 pm]
BILLING CODE 4120-01-P