Federal Register, Volume 89 Issue 32 (Thursday, February 15, 2024)

[Federal Register Volume 89, Number 32 (Thursday, February 15, 2024)]
[Proposed Rules]
[Pages 11996-12064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-02137]

[[Page 11995]]

Vol. 89

Thursday,

No. 32

February 15, 2024

Part III

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 488 and 489

Medicare Program; Strengthening Oversight of Accrediting Organizations
(AOs) and Preventing AO Conflict of Interest, and Related Provisions;
Proposed Rule

Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 /
Proposed Rules

[[Page 11996]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 488 and 489

[CMS-3367-P]
RIN 0938-AU88

Medicare Program; Strengthening Oversight of Accrediting
Organizations (AOs) and Preventing AO Conflict of Interest, and Related
Provisions

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would set forth a number of provisions to
strengthen the oversight of accrediting organizations (AOs) by
addressing conflicts of interest, establishing consistent standards,
processes and definitions, and updating the validation and performance
standards systems. Additionally, this proposed rule would revise the
psychiatric hospital survey process, add a limitation on terminated
deemed providers and suppliers when reentering the program, and
provides technical corrections for End-Stage Renal Disease facilities
and Kidney Transplant Programs. This proposed rule also solicits
comments from stakeholders and AOs to refine and revise the AO
oversight standards and processes. In addition, this proposed rule
includes a request for information on the timeframes and expectations
for the submission of AO applications.

DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on April 15, 2024.

ADDRESSES: In commenting, refer to file code CMS-3367-P.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to https://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-3367-P, P.O. Box 8010,
Baltimore, MD 21244-8010.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-3367-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Caroline Gallaher, (410) 786-8705 or
Beth Chalick-Kaplan, (410) 786-6550.

SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that website to
view public comments. CMS will not post on Regulations.gov public
comments that make threats to individuals or institutions or suggest
that the commenter will take actions to harm an individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this rule may be found at https://www.regulations.gov/.

Severability of Provisions

To the extent a court may enjoin any part of the rule as finalized,
the Department intends that other provisions or parts of provisions
should remain in effect. Any provision of the rule as finalized held to
be invalid or unenforceable by its terms, or as applied to any person
or circumstance, shall be construed so as to continue to give maximum
effect to the provision permitted by law, unless such holding shall be
one of utter invalidity or unenforceability, in which event the
provision shall be severable from this section and shall not affect the
remainder thereof or the application of the provision to persons not
similarly situated or to dissimilar circumstances.

Table of Contents

I. Executive Summary
A. Purpose
B. Summary of the Major Provisions
II. Background
A. Legislative History
B. Regulatory Overview of CMS's Rules Regarding AO Programs
C. Congressional Report on the Oversight of National AOs and CMS
Approved Accreditation Programs
D. CMS Validation Survey Pilot
E. Overview of Transparency and Oversight of Accrediting
Organizations
F. Prior Rulemaking--Accrediting Organizations Conflict of
Interest Request for Information (RFI)
G. Conflict of Interest--The AO Owner's, Surveyor's and Other
Employee's Interest in or Relationship With a Health Care Facility
That the AO Accredits
III. Request for Public Comment on Whether It Is a Conflict of
Interest for AO Board Members or Advisors To Have an Interest in or
Relationship With a Health Care Facility That the AO Accredits
IV. Provisions of the Proposed Rule
A. Proposal To Add Definition of ``Unannounced Surveys'' to
Sec. 488.1
B. Conflict of Interest
C. Proposal To Require the AOs That Accredit Medicare-Certified
Providers and Suppliers To Use the Medicare Conditions; and
Strengthened Survey Process Comparability (Proposed Sec.
488.4(a)(1) and (2))
D. Proposal To Revise the AO Crosswalk Requirements at Sec.
488.5(a)(3)
E. Proposal To Strengthen the Comparability of the Survey
Process Between the AOs and the States
F. Proposal To Revise the AO Application Documentation
Requirements Related to the Survey Processes (Sec. 488.5(a)(4);
Sec. 488.5(a)(4)(iii); Sec. 488.5(a)(4)(v); Sec.
488.5(a)(4)(vii); Sec. 488.5(a)(4)(xi); Sec. 488.5(a)(5); Sec.
488.5(a)(6); Sec. 488.5(a)(12); Sec. 488.5(a)(13))
G. Proposal To Require AOs To Provide CMS With Survey Findings
(Sec. 488.5(a)(4)(viii))
H. Proposal To Require That AO Surveyors Must Take the CMS
Online Surveyor Basic Training
(Sec. 488.5(a)(8)(ii)
I. Proposal To Establish Criteria for ``National in Scope'' to
Sec. 488.1
J. Proposal To Revise the Definition of ``Rate of Disparity''
and To Use the Process and Outcome Disparity Rates as Performance
Measures (Sec. 488.1)
K. Proposal To Require AOs To Submit a Publicly Reportable Plan
of Correction for Unacceptable Performance Measure Scores (Sec.
488.8(a)(2))
L. Proposal To Revise the AO Survey Validation Program (Sec.
489.9)
M. Proposal To Revise the Psychiatric Hospital Survey Process
N. Limitation on Terminated Deemed Providers/Suppliers Seeking
Re-Entry Into Medicare/Medicaid (Sec. 489.57, Sec. 488.4(b) &
Sec. 488.5(a)(21))
O. Proposal for Technical Correction for End-Stage Renal Disease
(ESRD) Facilities and Kidney Transplant Programs (Sec. 488.4(a)(4))
V. Request for Information Regarding Timeframes and Expectation for
the Submission of AO Applications
VI. Collection of Information Requirements

[[Page 11997]]

A. ICR Related to Conflict of Interest Proposals
B. ICRs Associated With the Requirement That AOs Incorporate the
Medicare Conditions
C. ICRs Associated With the Requirement That AOs Use Survey
Processes That Are Comparable to That Used by CMS and the SAs
D. ICR Related to Requirement That the AO Surveyors Take the CMS
Online Surveyor Training
E. ICR Associated With the Establishment of a Definition for
``National in Scope''
F. ICR Associated With the Proposed Revision of the AO
Performance Measures and To Require a Publically Reportable Plan of
Correction
G. ICR Associated With the Revision of the Definition of
``Disparity Rate
H. Burden Reduction Associated With the Revision of the AO
Validation Program
I. ICR Associated With the Revision of the Psychiatric Hospital
Accreditation Process
J. Burden Associated With Limitations to Terminated Deemed
Providers Seeking Re-Enrollment and Certification in Medicare/
Medicaid Programs
K. Summary of Estimated Burden
VII. Response to Comments
VIII. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Detailed Economic Analysis
D. Alternatives Considered
E. Regulatory Flexibility Act (RFA)
F. Unfunded Mandates Reform Act (UMRA)
G. Federalism
Regulations Text

I. Executive Summary

A. Purpose

The Centers for Medicare & Medicaid Services (CMS) seeks to protect
the health and safety of patients that receive services from Medicare
and Medicaid-participating providers that are accredited by CMS-
approved accrediting organizations (AOs). We continue to review and
revise our health and safety requirements and survey processes to
ensure that they are effective in driving quality of care for
beneficiaries receiving services from these accredited providers and
suppliers.
In 2015, we published a final rule in the Federal Register
entitled, ``Medicare and Medicaid Programs: Revisions to Deeming
Authority Survey, Certification, and Enforcement Procedures'' (80 FR
29795), hereinafter referred to as the ``2015 AO final rule'' to
clarify and strengthen the oversight of AOs, specifically to provide
additional criteria for AOs that apply for, and are granted,
recognition and approval of an accreditation program (see section II
``Background'' of this proposed rule for additional background
information). Over the past 5 years, CMS has continued to evaluate the
effectiveness of these regulatory changes and the performance of AOs.
This proposed rule proposes multiple provisions to further strengthen
our oversight and enforcement capabilities of the AOs. The need for
these provisions is based on multiple factors, which include: (1)
direct observation and review of the AOs' accreditation programs for
those AOs with CMS-approved deeming programs; (2) media reports and
complaints against facilities that are deemed; (3) the CMS validation
program and analysis of disparity rates between state survey agency
(SAs) and the AOs; and (4) our performance evaluations of AOs. The
preamble discusses each of the proposed provisions (see section IV
``Provisions of the Proposed Rule'') in this proposed rule. More
specifically, the preamble provides background and analysis of why CMS
is proposing additional provisions and revisions to existing
requirements. CMS is responsible for the oversight of the national AOs'
Medicare accreditation programs, and for ensuring that providers or
suppliers under CMS-approved deeming programs by the AOs meet the
minimum quality and patient safety standards required by the Medicare
conditions (refer to section II of this proposed rule for additional
information). Based on several years' experience and data analysis, we
are proposing the following provisions as described in the preamble to
strengthen our oversight of AOs.

B. Summary of the Major Provisions

We propose at Sec. 488.1 to add the definitions of
``geographic regions'', ``national in scope,'' ``outcome disparity
rate,'' ``process disparity rate,'' and ``unannounced survey''. In
addition, we propose to revise the definition of ``national accrediting
organization,'' and remove the definition of ``rate of disparity.''
We propose to establish a new requirement at Sec.
488.4(a)(1) that would require the AOs that accredit Medicare-certified
providers and suppliers to incorporate the language of the applicable
Medicare Conditions of Participation (CoPs), Conditions for Coverage
(CfCs), conditions for certification, or requirements (collectively
referred to as ``Medicare conditions'') set forth in the applicable CMS
regulations for each provider and supplier type as their minimum
accreditation requirements. However, the AOs would be free to establish
additional accreditation requirements that exceed Medicare conditions,
as permitted by section 1865(a)(1) of the Social Security Act (the
Act).
We propose to add language at Sec. 488.4(a)(2) regarding
use of a comparable survey process approved by CMS, as outlined and
contemplated in Sec. 488.5.
We propose to add a new regulation at Sec. 488.4(b) that
would state that if Medicare terminates the participation agreement of
a Medicare-certified provider or supplier, then CMS would no longer
recognize the facility's AO accreditation for deemed compliance. At
proposed Sec. 488.4(b)(2), we would require a terminated provider or
supplier to meet all requirements set forth at Sec. 489.57 before
their new agreement for participation in the Medicare/Medicaid program
can be approved.
We propose to require AOs to develop a crosswalk between
their accreditation standards and the Medicare conditions, at proposed
Sec. 488.5(a)(3).
We propose to revise the existing language at Sec.
488.4(a)(4) to strengthen our process of evaluating the comparability
of survey processes of AOs that accredit Medicare-certified providers
and suppliers with the SAs' survey processes.
We propose to strengthen the requirements at Sec.
488.5(a)(4), Sec. 488.5(a)(4)(iii), Sec. 488.5(a)(4)(v), Sec.
488.5(a)(4)(vii), Sec. 488.5(a)(4)(xi), Sec. 488.5(a)(5) and Sec.
488.5(a)(6) related to the comparability of survey processes as
mentioned above. We also propose changes under Sec. 488.5(a)(5)(viii)
related to survey reports. These strengthened requirements would be
applicable to their initial and renewal applications provided to CMS
one year after the effective date of the rule.
We propose at Sec. 488.5(a)(8)(i) through Sec.
488.5(a)(8)(iv) to require AOs that accredit Medicare-certified
providers and suppliers have their surveyors complete the CMS online
surveyor training.
We propose to add a requirement at Sec. 488.5(a)(10) that
the AOs must provide, as part of their initial and renewal
applications, specific policies and procedures that would address how
the AOs prevent and address conflicts of interest. We propose that AOs
provide information on a number of specific policies and procedures.
We propose to also revise requirements under Sec.
488.5(a)(12) related to the AO procedures for investigating and
responding to complaints against accredited facilities.
We propose revisions to Sec. 488.5(a)(13) related to the
AO's accreditation status decision-making

[[Page 11998]]

process, in order to strengthen the comparability of the survey
processes.
We propose to add a new requirement at Sec. 488.5(a)(21)
that would require the AOs to submit a statement with its initial or
renewal application certifying that, in response to a written notice
from CMS notifying the AO that one of its accredited providers or
suppliers has been involuntarily terminated from the Medicare/Medicaid
program, the AO agrees to terminate or revoke its accreditation of the
terminated provider or supplier within 5-business days from receipt of
said written notice.
We propose at Sec. 488.5(a)(22) to require the AOs to
submit a declaration from each surveyor disclosing any interests or
relationships the surveyor may have in or with another survey agency or
health care facility the AO accredits (as defined in Sec.
488.5(a)(10)).
We propose at Sec. 488.8(a)(2) to expand the types of
validation activities included in the performance review.
We propose at Sec. 488.8(a)(4) to require AOs to submit a
plan of correction that would be subject to a public reporting
requirement, when the AO's performance on survey activities identify
disparity concerns, either through the outcome disparity rates or
process disparity rates.
We propose at new subsection Sec. 488.8(i) to place
restrictions on the fee-based consulting services provided by AOs to
the health care providers and suppliers they accredit. At Sec.
488.8(i)(1), we propose that an accrediting organization or its
associated fee-based consulting division or company may not provide
fee-based consulting services to any health care provider or supplier
prior to an initial accreditation survey. At Sec. 488.5(i)(2), we
propose to prohibit AOs from providing fee-based consulting services to
health care providers and suppliers they accredit within 12 months
prior to the next scheduled re-accreditation survey of that provider or
supplier. At Sec. 488.5(i)(3), we propose that AOs may not provide
fee-based consulting services to a health care provider or supplier in
response to a complaint received by the AO regarding that provider or
supplier.
At Sec. 488.8(i)(4), we set forth circumstances in which
the restrictions to the provision of AO fee-based consulting services
would not apply.
We propose at Sec. 488.8(i)(5) to require AOs to provide
specific information to CMS on a bi-annual basis about the fee-based
consulting services they provide.
We propose at Sec. 488.8(i)(6) to impose penalties on AOs
for the provision of prohibited fee-based consulting services.
We propose at Sec. 488.8(k) that when an AO owner,
surveyor, or other employee, currently or within the previous 2 years,
has an interest in or relationship with a health care facility that the
AO accredits, the AO would be required to take steps to prevent the
surveyor from having any involvement with the survey of that facility,
having input into the results of the survey and accreditation for that
facility; having involvement with the pre and post survey activities
for that facility; or having contact with or access to the records for
the survey of that health care facility.
We propose at Sec. 488.9(b) to revise the types of
validation programs by adding a new type of validation survey to be
conducted by SA or CMS surveyors.
We propose a new paragraph (z) at Sec. 489.20 to require
as a basic commitment of the provider if they are terminated and then
seek a new provider agreement, they would follow the terms of proposed
new Sec. 489.57(b) noted below.
We propose to add a new paragraph (b) at Sec. 489.57, to
require that Medicare-certified providers or suppliers that have been
involuntarily terminated from the Medicare and/or Medicaid program must
meet several requirements before their new agreement for Medicare
participation will be approved. Proposed Sec. 489.57(b)(1) would
require the terminated provider or supplier to be under the oversight
of the SA for a reasonable assurance period for a length of time to be
determined by CMS for the purpose of demonstrating compliance with the
Medicare conditions. Proposed Sec. 489.57(b)(2) would require the
provider or supplier to remain under the exclusive oversight of the SA
until the SA has certified and/or CMS has determined its full
compliance with all Medicare conditions and the new agreement for
participation in the Medicare/Medicaid program has been approved.
Proposed Sec. 489.57(b)(3) would require that during the time period
in which a provider or supplier is terminated from the Medicare
program, is under the oversight of the SA, and during the time the new
agreement for Medicare participation is pending, CMS will not accept or
recognize deeming accreditation from a CMS-approved accrediting
organization.
We also propose to remove the reference at Sec.
488.4(a)(4) that currently excludes ESRD facilities from the
opportunity for accreditation, to reflect a change included in the
Bipartisan Budget Act of 2018 (Pub. L. 115-123). Consistent with this
same provision, we also propose to remove the reference restricting
transplant programs from an accreditation option.
We are soliciting comments on whether CMS should limit the
number of times an AO can submit an incomplete initial application for
a new accreditation program. We seek comment on this question because
we recently received several incomplete applications which required
multiple pass backs due to the applicant's failure to provide
information about issues, such as their financial viability, survey
processes which appeared not to be operationalized, or similar
concerns.

II. Background

A. Legislative History

To participate in the Medicare program, providers and suppliers of
health care services must, among other things, be in substantial
compliance with the applicable statutory requirements of the Social
Security Act (the Act), as well as CMS' regulatory requirements related
to the health and safety of patients. These health and safety
requirements are generally called Conditions of Participation (CoPs)
for most providers; Requirements for Participation for skilled nursing
facilities (SNFs) and Medicaid Nursing Facilities (NFs) (collectively,
long-term care facilities); and Conditions for Coverage or Conditions
for Certification (CfCs) for Ambulatory Surgical Centers (ASCs), Rural
Health Clinics (RHCs), Federally Qualified Health Centers (FQHCs),
dialysis facilities (or End-Stage Renal Disease [ESRD] facilities), and
some types of suppliers (collectively referred herein as Medicare
conditions). A Medicare-certified provider or supplier that does not
comply with the Medicare conditions risks having its Medicare provider
or supplier agreement terminated. Medicaid service providers or
suppliers that are required by CMS or the State to have Medicare
approval would also be affected.
In accordance with section 1864 of the Act, the SAs or other
appropriate local agencies, under an agreement with the Secretary of
the Department of Health and Human Services (the Secretary), perform
surveys of health care providers and suppliers to assess their
compliance with the applicable Medicare conditions for the purpose of
certification for participation in the Medicare/Medicaid program. There
are several types of surveys conducted, including initial
certification, recertification, and complaint surveys. The SAs and CMS
also perform surveys

[[Page 11999]]

in certain circumstances for the providers and suppliers that are
accredited by an AO and deemed to meet Medicare requirements. For
example, the SA performs complaint surveys for health care providers
that are accredited by an AO, if the complaint was received by the SA
directly. The SA also performs surveys of AO-accredited health care
providers that have had their participation in the Medicare program
terminated, that wish to be surveyed by the SA instead of an AO, and
for the purpose of validation of the results of an AO's surveys. Rules,
regulations, and guidance for the certification process performed by
the Sas are discussed in the CMS State Operations Manual (SOM) \1\ or
communicated via Quality, Safety & Oversight (QSO) policy
memorandums.\2\
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\1\ CMS Internet Only Manual, Pub. 100-07, available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs-Items/CMS1201984.
\2\ https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Policy-and-Memos-to-States-and-Regions.
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Some provider types may only be surveyed by the SA and cannot use
AOs while others cannot be surveyed by SAs pursuant to statute but can
only be accredited by a CMS-approved AO. We refer readers to section
IV, ``Provisions of this Proposed Rule'' for additional information.
Based on the SA's certification of a provider's compliance or
noncompliance and recommendation, CMS determines whether the provider
or supplier qualifies, or continues to qualify, for participation in
the Medicare program. Additionally, section 1865(a) of the Act allows
most health care facilities to demonstrate their compliance with the
Medicare conditions through accreditation by a CMS-approved program of
an AO, in lieu of being surveyed by SAs for certification. This is
referred to as ``deeming'' accreditation. This is because CMS-approved
AOs are recognized by the Secretary as having accreditation programs
with accreditation standards that meet or exceed those of Medicare.
Therefore, any provider or supplier that is accredited by an AO under a
CMS approved accreditation program is deemed by CMS to have also
complied with the applicable Medicare conditions or requirements. The
AOs perform initial, re-accreditation, follow-up, and certain complaint
surveys.
In December, 2020, Division CC, section 407 of the Consolidated
Appropriations Act of 2021 (CAA 2021), amended Part A of Title XVIII of
Act to add a new section 1822 to the Act, and amended sections 1864(a)
and 1865(b) of the Act, establishing new hospice program survey and
enforcement requirements. CMS issued implementing regulations for SAs
and AOs in the CY 2022 Home Health Prospective Payment System Rate
Update (HH PPS) final rule (86 FR 62240). The HH PPS rule finalized
changes to increase and improve transparency, oversight, and
enforcement for hospice programs under SA and AO oversight.
Additionally, the HH PPS final rule in part requires hospice programs
to measure and reduce inconsistency in the application of survey
results among all surveyors. The HH PPS final rule requires: (1) AOs
with CMS-approved hospice programs to use the same survey deficiency
reports as the SAs (Form CMS-2567, ``Statement of Deficiencies'' or a
successor form) to report survey findings; (2) comprehensive training
and testing of SA and AO hospice program surveyors; and (3) prohibits
SA and AO surveyors from surveying hospice programs for which they have
worked in the last 2 years from which they would have a perceived or
actual conflict of interest.
CMS is responsible for: (1) providing ongoing oversight of the AOs'
accreditation programs to ensure that providers or suppliers accredited
by the AOs meet the required Medicare conditions; (2) ensuring that the
AOs have formalized procedures to determine whether the health care
facilities deemed under their accreditation programs meet the AO's
accreditation standards (which must meet or exceed the applicable
Medicare program requirements); and (3) ensuring that the AO's
accreditation standards and practices for surveying providers and
suppliers meet or exceed the Medicare conditions and practices for
granting approval.
For some provider and supplier types, accreditation is voluntary
and seeking deemed status through an accreditation organization is an
option, not a requirement for these Medicare-certified providers and
suppliers. A provider or supplier has the choice to seek deeming status
and accreditation from an AO with a CMS-approved program or
certification through the SA survey process. A nationally-recognized AO
may have accreditation services which are not specifically related to
Medicare-participation or Medicare conditions and an AO may offer
accreditation services to a provider or supplier which Medicare does
not recognize for deeming status, such as long-term care facilities.
The AO may also provide accreditation with a deeming option, which is
that their deemed program is recognized and approved by CMS to meet or
exceed the Medicare program requirements. We refer readers to section
IV.C ``Proposal to Require the AOs that Accredit Medicare-Certified
Providers and Suppliers to Use Medicare Conditions; and Strengthened
Survey Process Comparability'' of this proposed rule for additional
context.
AOs typically charge health care facilities a fee for the
accreditation services they provide. AOs generally offer at least two
accreditation options, which include non-CMS approved accreditation,
and accreditation for the purpose of participating in the Medicare
program. By ``non-CMS approved accreditation'' we mean accreditation
that is offered by the AOs with an accreditation program that is not
approved by Medicare and which is not used for Medicare purposes. Such
accreditation could be used for individual State accreditation purposes
or additional professional accreditations that a provider or supplier
seeks for business purposes, such as the Joint Commission's (TJC's)
Nursing Care Center accreditation for skilled nursing facilities, which
is not recognized by CMS as an option for deemed status.
This proposed rule would apply only to the AOs with CMS-approved
programs that accredit Medicare-certified providers and suppliers and
those entities they accredit. The provisions of this proposed rule
would not apply to the following parties: (1) health care providers and
suppliers that are not accredited by AOs, such as but not limited to,
nursing homes and comprehensive outpatient rehabilitation facilities
(CORFs); (2) health care providers and suppliers that are certified by
the SAs, such as those who elect not to be deemed through an AO; (3)
AOs that accredit non-certified suppliers; (4) non-certified suppliers;
and (5) AOs that accredit laboratories (under the Clinical Laboratory
Improvement Amendments of 1988 (CLIA)).

B. Regulatory Overview of CMS's Rules Regarding AO Programs

The current regulations at 42 CFR 488.4 set forth the general
provisions for CMS approved accreditation programs for Medicare-
certified providers and suppliers. Section 488.5 sets out application
and re-application procedures for national AOs that seek to obtain CMS
approval of their accreditation programs, often called ``deeming
authority.''
The AO application and re-application procedures set forth at Sec.
488.5 for Medicare-certified providers and suppliers task CMS with the

[[Page 12000]]

responsibilities of approval and oversight of the AOs' accreditation
programs while ensuring that the accredited providers and suppliers
meet or exceed the Medicare conditions.
CMS conducts a thorough review of each accreditation program
application that is submitted by an AO for CMS approval. This review
establishes the ``comparability'' of the AOs accreditation standards
with Medicare, to determine whether the AO's standards meet or exceed
the Medicare conditions. The application review process also includes a
review of the AO's survey processes and procedures, the AO's surveyor
training, and their policies and procedures for the oversight and
enforcement of provider or supplier entities they accredit. The
application review team also reviews the qualifications of the AO
surveyor staff. In addition, CMS reviews the AO's financial status, to
determine their solvency and potential for longevity of operations.
Section 488.5(e)(1) requires that we publish a notice in the
Federal Register when we receive a complete initial or renewal
application from a national AO seeking CMS approval of its
accreditation program. The Federal Register notice identifies the
organization and the type of providers or suppliers to be covered by
the accreditation program and provides a 30-day public comment period.
CMS has 210 days from the receipt of a complete application to publish
notice of approval or denial of the application. Upon approval, any
provider or supplier subsequently accredited by the AO's approved
program would be deemed by CMS to have met the applicable Medicare
conditions and would be referred to as having ``deemed status.''

C. Congressional Report on the Oversight of National AOs and CMS
Approved Accreditation Programs

We are required by section 1875(b) of the Act to submit an annual
Report to Congress \3\ on CMS' oversight of national AOs and their CMS-
approved accreditation programs. This report contains information
related to the AOs' activities in a fiscal year (FY) and provides a
comparison of these activities to the activities of previous years.
Within this report, we also measure the ``disparity rate,'' which is a
comparison rate based on AO findings of non-compliance during an
accreditation survey and the SA findings of non-compliance for the same
facilities found during a look-back validation survey.
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\3\ The most recent Report to Congress may be accessed at:
https://www.cms.gov/files/document/qso-22-06-ao-clia.pdf.
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There are three levels of adverse findings on a SA survey, which
include immediate jeopardy (IJ), condition-level and standard-level
deficiencies. Sections 488.1 and 489.3 define immediate jeopardy as a
situation in which the provider's or supplier's non-compliance with one
or more of Medicare requirements, conditions of participation,
conditions of coverage or certification ``has caused or is likely to
cause, serious injury, harm, impairment, or death to a resident or
patient.'' When investigating a potential immediate jeopardy situation,
surveyors must find that there is non-compliance by the provider or
supplier, that serious harm has occurred or is likely to occur, and
that immediate action needs to be taken by the provider/supplier. (See
Appendix Q of the SOM for additional guidance.) A condition-level
deficiency means that for that particular Medicare condition of
participation, also known as a CoP, the facility's noncompliance is
such that it substantially limits the provider or supplier's capacity
to furnish adequate care or which adversely affects the health and
safety of patients (Sec. 488.24). There can be noncompliance with a
Medicare condition at a regulatory standard level that does not rise to
the level of noncompliance with the condition. For example, a hospital
may fail to have written policies and procedures regarding the
evacuation of patients during an emergency (as required at Sec.
482.15(b)(3)) but complies with the remaining standards set forth at
Sec. 482.15 (a) through (f) such as having policies and procedures for
alternate source power, provisions, tracking of patients and staff and
has a communication plan and training and testing program. In this
situation, the hospital generally would not be cited at a condition-
level deficiency for the entire Emergency Preparedness Medicare
condition (at Sec. 482.15). The manner and degree of the noncompliance
is considered to determine whether there is substantial compliance or
not. A standard-level deficiency means that the provider may be out of
compliance with one or more aspects of a regulatory condition or
requirement, but is considered less severe than a condition-level
deficiency. A condition-level deficiency, however, is considered more
serious in nature and could lead to a facility being terminated from
the Medicare and Medicaid programs for non-compliance. Immediate
jeopardy citations are condition-level deficiencies that pose immediate
jeopardy to patient health and safety.
On a validation survey, when the SA cites a condition-level
deficiency for which the AO has not cited a comparable deficiency, the
deficiency is considered by CMS to have been missed by the AO and is a
factor in determining the AO's ``disparity rate'' for each facility
type. The identification of one missed condition-level deficiency by
the AO results in the entire survey being counted toward the disparity
rate. The number of disparate surveys is divided by the total number of
validation surveys performed with respect to that AO by various States'
SAs, in order to determine the AO's disparity rate.
According to the most recent report, the FY 2020 Report to
Congress,\4\ disparity rates for all CMS approved AO programs for the
following facility types for the most recent year in the report (FY
2019) are: Hospitals (42 percent); Psychiatric hospitals (45 percent);
Critical Access Hospitals (46 percent); Home Health Agencies (8
percent); Hospices (19 percent) and Ambulatory Surgical Centers (34
percent). From FY 2018 to FY 2019, hospitals, HHAs and ASCs had the
only decreases in disparity rates, with a decrease of 5-percentage
points, 11-percentage points, and 7-percentage points, respectively.
The disparity rates for psychiatric hospitals increased by seven
percentage points from FY 2018 to FY 2019. The disparity rates for CAHs
and hospices increased by five percentage points and three percentage
points respectively from FY 2018 to FY 2019. The findings and other
information are consistent with previous reports, and no notable
changes were observed in the FY 2020 RTC covering the FY 2019 period of
activities.
---------------------------------------------------------------------------

\4\ https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/QSO-19-17-AO-CLIA.pdf.
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D. CMS Validation Survey Pilot

As part of our ongoing efforts to enhance transparency and our
oversight of the AOs, in 2018, CMS began a pilot for integrated
validation surveys for accredited hospitals, known as the Validation
Redesign Program (VRP) pilot. In a VRP pilot survey, the SA teams
accompany the AO survey teams on a reaccreditation survey for an
accredited facility for the purpose of evaluating the AO surveyors'
competency at performing surveys and overall effectiveness during the
survey process. The initial findings of the VRP pilot will be discussed
further later in this preamble at sections IV.J and IV.L.3. CMS plans
to continue to refine the

[[Page 12001]]

validation process over the next several years in an effort to enhance
AO oversight, and verify that providers/suppliers under deemed status
are in compliance with the Medicare conditions, and focus surveys on
key quality concerns while reducing provider burden.
A national AO seeking approval of its accreditation programs in
accordance with section 1865(a) of the Act must apply for and be
approved by CMS for a period not to exceed 6 years. (See Sec.
488.5(e)(2)(i)). An AO must submit a renewal application seeking re-
approval of its accreditation program(s) before the expiration date of
its current CMS approval. Review of the AO's renewal application in a
timely manner allows CMS to ensure that there would not be a lapse in
accreditation for the providers and suppliers accredited by the AO.
Requiring the AO to submit a renewal application periodically allows
CMS to ensure that the accreditation provided by the AO continues to
ensure that the providers or suppliers accredited by that AO meet or
exceed the Medicare conditions.

E. Overview of Transparency and Oversight of Accrediting Organizations

In September 2017, an article in the Wall Street Journal \5\ raised
concerns regarding the performance and transparency of AO surveys, and
noted potential conflicts of interest between an AO's accreditation
services and its consulting services. As a result of this article, CMS
initiated an investigation into these allegations.
---------------------------------------------------------------------------

\5\ The Wall Street Journal, ``Watchdog Awards Hospitals Seal of
Approval Even After Problems Emerge'' Stephanie Armour (September 8,
2017) https://www.wsj.com/articles/watchdog-awards-hospitals-seal-of-approval-even-after-problems-emerge-1504889146.
---------------------------------------------------------------------------

F. Prior Rulemaking--Accrediting Organizations Conflict of Interest
Request for Information (RFI)

CMS is aware, from the information submitted with their
applications, that some AOs with CMS-approved accreditation programs
are also providing fee-based consultative services to Medicare-
participating health care facilities. Our understanding is that typical
AO fee-based consultative services include, but are not limited to the
following:
Assistance for clinical and non-clinical leaders
(including administrators) in understanding the AO and Medicare
conditions for compliance;
Review of facility standards and promised early
intervention and action through simulation of a real survey, such as a
mock survey with comprehensive written reports of findings;
Review of a facility's processes, policies and functions;
Identification of and technical assistance for changing
and sustaining areas in need of improvement; and,
Educational consultative services.
CMS acknowledges that independent fee-based consulting is a
valuable resource that can help providers and suppliers improve the
quality and safety of the care they provide. This does not mean that
the providers or suppliers who elect not to receive fee-based
consulting from an AO that offers it, or that providers or suppliers
that are accredited by an AO that does not offer this service would not
provide safe, quality care.
There are many third-party consultants that offer fee-based
consulting across all provider and supplier types. The availability of
third-party fee-based consultants give providers and suppliers access
to this educational service, if their AO does not provide fee-based
consulting. If a provider's/supplier's AO already offers fee-based
consulting, third-party consultants can offer such providers and
suppliers, with an alternative, allowing providers and suppliers to
compare the effectiveness and quality of consultants to address their
needs within their cost limitations. The provider or supplier may also
be able to negotiate a price for educational services provided by a
third-party consultant, while this may not be an option with the AOs
that offer fee-based consulting. It is important to note there would be
no conflict of interest associated with the use of third-party fee-
based consultants because these consultants do not also make compliance
determinations about the provider or supplier.
Fee-based consulting services are not prohibited by law or
regulation. However, CMS is concerned that an AO's provision of such
fee-based consulting results in perceived or actual conflicts of
interests because of the contractual and financial relationship that
exists between the health care provider and the AO, which is a private
entity that profits from the performance of the inherently governmental
function of regulating health care providers through accreditation.
Because of this, on December 20, 2018, we published a Request for
Information (RFI) in the Federal Register entitled, ``Medicare Program:
Accrediting Organizations Conflict of Interest and Consulting Services;
Request for Information'' (83 FR 65331) hereinafter referred to as
``2018 AO Conflict of Interest RFI'', in response to increasing concern
about potential conflicts of interest created by the accreditation and
consultative activities of the AOs. Specifically, we solicited public
comments to determine whether offering consultative services to the
same entities an AO accredits may create actual or perceived conflicts
of interest between an AO's accreditation program and its consultative
program. We stated that this dual function may undermine, or appear to
undermine, the integrity of the accreditation programs and could erode
public trust in the safety of providers and suppliers that have been
accredited by CMS-approved AOs. We further acknowledged that certain
consulting services offered by some of the AOs, such as quality
improvement work and training of facility staff, may be beneficial to
some facilities and result in improvements in operations or the quality
of care furnished and may be provided with the best of intentions. We
stated that circumstances could arise where an AO has recommended a
facility for deemed status through their accreditation service, while
the consultancy service of the AO was generating revenue assisting the
same facility in passing the AO's own accreditation surveys. Some AOs
have indicated that they establish firewalls between the arms of their
businesses, but we stated that these firewalls may not be sufficient to
ensure that no conflicts of interest result from these activities.
We further stated that, similar to quality improvement organization
(QIO) and external quality review organization (EQRO) programs, any AO
with a Medicare-approved accreditation program has assumed a position
of public trust and is responsible for acting on behalf of the public,
because the AO is performing a function that assists in the federal
government's enforcement programs. We also expressed our view that AOs
voluntarily take on this position and responsibility when they seek
accreditation approval from CMS to accredit providers and suppliers for
participation in Medicare. Because of the responsibility to maintain
public trust and public health, we continually ensure that all entities
and programs, including AOs and their accreditation programs that
require CMS approval, be held to high standards of ethical conduct so
that everyone can have complete confidence in the integrity of federal
government certification. We stated that the AOs' decisions to accredit
facilities must be made without regard to any additional services that
a Medicare provider or supplier might

[[Page 12002]]

obtain through the AO or its subsidiaries. We stated that this policy
would ensure and maintain public trust in the Medicare certification
program.
In the 2018 AO Conflict of Interest RFI, we solicited public
comments to gather information for potential future rulemaking and to
obtain insight on mechanisms to address this potential conflict of
interest. We were specifically interested in ways to potentially modify
Sec. 488.5(a), which sets out the required information to be submitted
with an AO's application. For example, Sec. 488.5(a)(10) states that
the application information from the AO include the organization's
policies and procedures to avoid conflicts of interest, including the
appearance of conflicts of interest, involving individuals who conduct
surveys or participate in accreditation decisions.
We stated that potentially expanding Sec. 488.5(a)(10) by adding
provisions that would require the AOs to disclose information about any
consultative services they offer to facilities could further enhance
our oversight of AOs.
In addition, we solicited comments on the following issues:
With respect to fee-based consultative services provided
by AOs to the facilities they accredit--
++ How are these services provided and communicated to the
facilities?
++ Are potential conflicts of interest disclosed?
Are there other entities that could provide this training
besides the AOs?
Whether commenters perceive a conflict of interest in AOs
providing fee-based consultative services to the facilities they
accredit.
Whether the ability of an AO to collect fees for
consultation services from entities they accredit could degrade the
public trust inherent in an AO's CMS approved accreditation programs.
What the appropriate consequences or impacts should be, if
a conflict does exist.
What firewalls may exist within an AO between
accreditation and consultation services, or what firewalls would be
prudent, to avoid potential and actual conflicts of interest.
Examples of positive and negative effects which may be as
a result of a conflict of interest.
What the potential impact, financially and overall would
be if CMS were to finalize rulemaking which would restrict certain
activities that might give rise to a real or perceived conflict of
interest.
When and/or under what circumstances it would be
appropriate for AOs to provide fee-based consultative services to the
facilities which they accredit.
Whether, and if so, under what specific circumstances CMS
should review a potential conflict of interest, and what factors CMS
should look at to determine if a conflict of interest exists.
A list describing under what circumstances the AOs or
stakeholders would believe there to be a conflict; and under which
circumstances conflict does not exist.
The type of information which would be considered
necessary, useful and/or appropriate in proving or refuting our
hypothesis of a connection between the use of consultative services and
preferential treatment of accredited providers and suppliers. (See 83
FR 65336.)
We received approximately 128 public comments in response to the
2018 AO Conflict of Interest RFI. Approximately half of the commenters,
(consisting primarily of AOs and health care facilities that use
consulting services) supported the use of AO consulting services and
stated that there is no conflict of interest associated with fee-based
consulting. The other half of commenters (consisting of individuals,
provider associations, medical advocacy groups and one AO) stated that
the provision of fee-based consulting by the AOs creates a conflict of
interest.
Several commenters stated that the benefits derived from AO fee-
based consulting far outweighs any potential or actual conflict of
interest that may result. Many commenters believe that AO consulting
services allow the facility to seek information and guidance that helps
them understand, interpret and comply with the Medicare conditions and
regulatory requirements. These commenters stated that use of the AO's
fee-based consulting services helped to improve the safety and quality
of the care provided by the health care facility.
Many commenters stated that there are already-implemented checks
and balances between CMS and the AOs that are sufficient to ensure that
no conflicts of interest occur between the AOs and their accredited
facilities. These commenters stated that the AOs have robust firewall
policies and procedures in place to prevent conflicts of interest
related to fee-based consulting. Many commenters also stated that CMS
has a specific AO fee-based consulting firewall policy in place and
that this policy is adequate to prevent any conflicts of interest.
However, CMS does not currently have such a policy.\6\
---------------------------------------------------------------------------

\6\ In section IV.B.6 of this rule, we propose to require any AO
that provides fee-based consulting services or its associated fee-
based consulting division or company to have written fee-based
consulting ``firewall'' policies and procedures.
---------------------------------------------------------------------------

Several commenters stated that AOs are commissioned to ensure
compliance with the Medicare conditions. These commenters stated that a
big part of compliance is not only being punitive but informational/
educational. One commenter suggested that AOs are in a unique position
to provide this education and technical assistance because they
understand the complexity of the Medicare conditions. One commenter
stated that if AO fee-based consulting services were not provided,
facilities could see additional deficiencies cited due to
misinterpretation of requirements and multiple rounds of surveys,
generating still more cost to the facility.
Several commenters stated that the financial benefit derived by the
AOs from providing fee-based education is not significant. Some of
these commenters also stated that the AOs gained no benefit from the
success or results of accreditation whether they had assisted the
provider to deliver better services or not.
One commenter stated that they were are not aware of other
organizations who would be capable of educating and advising health
care providers in a similar fashion as the AOs' consulting services.
Several other commenters expressed concern about having fee-based
consulting services provided by an independent third-party. These
commenters stated that, while there are other entities beside the AOs,
such as QIOs that could provide training, the focus would solely be on
quality rather than the outcome of an accreditation.
Many commenters stated that the integrity of the accreditation
process is of utmost concern for regulators, providers and patients
alike and that AOs should position themselves to be above reproach in
regard to overseeing patient care and quality of services that health
care facilities provide, so as to retain the trust of patients and the
public. Several commenters suggested that anything that may undermine
the integrity of accreditation programs or the public trust in CMS
accredited providers and suppliers be considered and addressed. One
commenter stated that the ability of AOs to provide both survey
services and consulting services is a conflict of interest, which
results in a decreased level of trust among providers, Medicare, and
the public.
Many commenters expressed concern about the financial and
contractual relationship that exists between AOs and the health care
facilities they accredit. These commenters expressed

[[Page 12003]]

concern that the existence of a financial relationship between AOs and
health care providers casts a veil of doubt over the entire CMS
hospital accreditation process, eroding the public trust in CMS to
maintain the standard of care at our nation's hospitals and to ensure
that Medicare patients are receiving safe, therapeutic care. One
commenter stated the belief that the business connection between the
provider and the AO creates a relationship that the AO could have an
incentive to manipulate.
In addition, several commenters expressed concern about the
significant financial interest the AOs have in the provision of fee-
based consulting. One commenter stated that since AOs are being paid by
the health care facilities for both accreditation services as well as
consulting services, it is obviously in their financial interest to
keep the health care facilities accredited and not to create too much
dissatisfaction to incite the organization to seek another AO. Several
commenters expressed concern that this financial relationship might
provide the incentive for the AOs to ignore or downplay deficiencies
during the survey of a consultative client in order to increase the
apparent efficacy of its consulting services. Or, perhaps more
undetectably, an AO could exaggerate the deficiencies on surveys in
order to increase the apparent value of the consulting services to
providers. Because of the above-stated concerns, several commenters
suggested that CMS prohibit the AOs from providing fee-based consulting
to the health care providers and suppliers they accredit.

G. Conflict of Interest--The AO Owner's, Surveyor's and Other
Employee's Interest in or Relationship With a Health Care Facility That
the AO Accredits

It is typical for an individual health care professional, such as a
physician or nurse, to have concurrent employment relationships with
more than one health care provider. Many health care professionals,
such as physicians, physician assistants, and nurse practitioners have
multi-setting practices or are employed at more than one health care
facility. For example, a registered nurse (RN) may work on staff at a
hospital but also work at other hospitals through a medical staffing
agency. In addition, as employees of a health care facility, these
health care professionals could possibly gain a financial interest in
the health care facility through means such as being a contributor to
the construction costs of a new wing of the facility or buying stock in
the facility or its parent corporation. Management employees could be
awarded stock or stock options for the facility or its parent
corporation as part of their compensation and benefits package.
AOs frequently hire surveyors that are also employed at one or more
outside health care settings because the professional associations,
expertise, knowledge and skills held by these health care practitioners
make them an asset as a surveyor. This might include, for example, a RN
who is employed by a hospital and also works as a surveyor for an AO.
This employment scenario does not generally violate CMS policy or
regulations. Furthermore, an AO surveyor having other employment does
not, in and of itself, necessarily create a conflict of interest.
However, if the AO provides accreditation services to the health care
facility that employs the AO surveyor, this would cause a conflict of
interest if that surveyor is permitted to have any involvement in the
survey process for that health care facility.
CMS has recently encountered two situations in which an AO's
surveyor was also employed by the health care facility that was being
accredited by the AO. In one of these situations, an AO surveyor was
also employed in an administrative position at a rehabilitation
facility that was being surveyed by the AO. This situation was not
disclosed to CMS by the AO. Currently CMS has no specific regulations
that would prohibit a conflict of interest related to an AO surveyor's
relationship with a health care facility that the AO accredits, except
for home health agencies and hospice programs.
Section 488.5(a)(10) of our regulations requires that an AO
provide, with its application seeking CMS approval of its accreditation
program, ``the organization's policies and procedures to avoid
conflicts of interest, including the appearance of conflicts of
interest, involving individuals who conduct surveys or participate in
accreditation decisions.'' However, Sec. 488.5(a)(10) does not provide
requirements for specific types of information or requirements that
should be contained in the AO's conflict of interest policy and
procedures. This regulation does not specifically prohibit or define
conflicts of interest and, based on the comments to the 2018 AO
Conflict of Interest RFI, CMS proposes to revise this regulation to
more specifically address situations that should be included in the
AO's conflict of interest policy.
As noted above, the SAs and AOs perform similar work. Section 4008
of the SOM describes examples of scenarios that would be conflicts of
interest for SA surveyors who have an outside relationship with a
facility that is surveyed by the SA.\7\ Currently, section 4008 of the
SOM applies only to the SA surveyors and not AO surveyors.
---------------------------------------------------------------------------

\7\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/som107c04pdf.pdf.
---------------------------------------------------------------------------

Scenarios in which an AO surveyor has a relationship with a health
care facility that their AO accredits could represent a conflict of
interest. As CMS has no specific regulations that would proactively
address such conflicts of interest for AOs that accredit healthcare
providers other than home health agencies and hospice programs, we
propose to establish several requirements to help mitigate such
conflicts of interest in section IV.B.7 of this proposed rule.

III. Request for Public Comment on Whether It Is a Conflict of Interest
for AO Board Members or Advisors To Have an Interest in or Relationship
With a Health Care Facility That the AO Accredits

As previously stated, it could be a conflict of interest when an AO
surveyor is involved with the survey of a facility with which that
surveyor has an employment, financial, business or other interest or
relationship. We note that in most cases, the AO board members do have
interests in or relationships with the health care facilities the AO
accredits. In many cases, the board members of the AOs frequently hold
upper management positions of a health care facility the AO accredits,
such as chief executive officer (CEO), director, or President. In an
article published in the Wall Street Journal on September 8, 2017,\8\
it was stated that ``[t]wenty of the Joint Commission's 32 board
members are executives at health systems it accredits or else work at
parent organizations of such health systems. Some other board members
are named by healthcare lobbying groups, such as the American Hospital
Association and the American Medical Association. This article compared
this situation to ``Big Pharma setting up its own accrediting
organization'' and stated that ``if you look beneath the surface, there
are conflicts and problems.''
---------------------------------------------------------------------------

\8\ S. Armour, Hospital Watchdog Gives Seal of Approval, Even
After Problems Emerge, Wall Street Journal, September 8, 2017.
---------------------------------------------------------------------------

We seek public comment as to whether it would be a conflict of
interest for an AO board member, AO advisor, or CEO or other executive
team members to also have a relationship with a health care
organization accredited by such AO. An AO advisor

[[Page 12004]]

would be an advisory committee member, advisor to the CEO, or an
advisor to the board of directors. We refer readers to proposals
related to an AO owner's, surveyor's, or other employee's interest in
or relationship with a health care facility the AO accredits in section
IV.B.7 of this proposed rule.

IV. Provisions of the Proposed Rule

We establish health and safety standards, known as the Conditions
of Participation, Conditions for Coverage, or Requirements for
Participation for different types of health care providers and
suppliers, and these standards are based on specific statutory
authorities for the different provider and supplier types. Pursuant to
such authorities, each specific type of Medicare-certified provider and
supplier must meet our health and safety standards. As part of the CMS
certification process, compliance with these standards is evaluated by
SAs under agreement at section 1864 of the Act, through the survey and
certification process. However, CMS makes the final Medicare
certification determination. In the alternative, we can deem these
providers and suppliers to have met those standards if they are
accredited by the CMS-approved AOs that are the subject of this
proposed rule.
CMS is using the authority established by Congress under section
1865 of the Act to establish certain requirements for AOs in this
proposed rule. Section 1865(a)(2) of the Act establishes a process for
the Secretary to make a finding with respect to approval of an
accrediting organization. In making this finding, the Secretary must
consider, among other factors, the AO's requirements for accreditation,
its survey procedures, its ability to provide adequate resources for
conducting required surveys and supplying information for use in
enforcement activities, its monitoring procedures for provider entities
found out of compliance with the conditions or requirements, and its
ability to provide the Secretary with necessary data for validation.
In addition, ``Non-certified'' suppliers are a statutory category
for which CMS does not set health and safety standards, even though
they must obtain accreditation in accordance with statute. Because we
have not set health and safety standards for these facility types, we
are not applying these provisions to non-certified supplier types at
this time. These suppliers include (1) Advanced Diagnostic Imaging
(ADI) suppliers; (2) home infusion therapy (HIT) suppliers; (3)
diabetes self-management training (DSMT) suppliers; and (4) durable
medical equipment prosthetics, orthotics supplies (DMEPOS). We are also
not proposing to extend any of the provisions set forth in this
proposed rule to AOs that accredit non-certified suppliers.
Non-certified suppliers are those suppliers that are required to be
accredited by a CMS-approved AO for Medicare payment, do not enter into
a Medicare agreement but are enrolled in the Medicare program, and do
not receive a CMS certification number (CCN). These non-certified
suppliers are a smaller, discrete group that are not under the
jurisdiction of the SAs and do not undergo validation surveys. For
example, there are no health and safety regulations for advanced
diagnostic imaging (ADI) suppliers and only minimal such standards for
DMST suppliers. Also, many ADI suppliers are physician's practices that
provide an ADI service, such as computerized tomography (CT) scans in
their office. CMS has not yet developed a survey process and health and
safety requirements for these supplier types, however we reserve the
right to do so in the future. CMS does a review of the applications for
AOs that accredit non-certified programs. The provisions proposed in
this rule would not align to these programs at this time.
As stated in section I ``Executive Summary'' and section II
``Background'' of this proposed rule, since issuing the 2015 AO final
rule, there are several provisions related to oversight of AOs that
require strengthening. Throughout the last several years, we have
worked closely with the AOs, provided guidance and instituted an AO
Liaison program in which CMS meets with each AO at least on a quarterly
basis. These meetings and discussions have provided an avenue for CMS
to also receive feedback on existing Medicare conditions, our
interpretive guidelines and allowed for an opportunity for CMS to
clarify expectations for the AOs. This experience has helped us to
identify areas of our regulations in need of revision to more clearly
articulate the requirements for all AOs with a CMS-approved
accreditation program. Furthermore, as we have taken actions to
exercise more oversight of existing CMS-approved AO programs, we have
become aware of the need to clarify, reorganize, and amend our
regulations to support a more efficient and effective oversight
process.
The below proposal outlines the background behind each proposal and
what led to CMS' development of this proposed rule.

A. Proposal To Add Definition of ``Unannounced Survey'' to Sec. 488.1

We propose to add a new definition of ``unannounced survey'' to
Sec. 488.1. The definition of ``unannounced survey'' would be
consistent with the definition of ``unannounced'' contained in the
Merriam-Webster dictionary, which is ``without previous notice or
arrangement and therefore unexpected.'' Adding this definition of
``unannounced survey'' would support the existing requirements set out
at Sec. 488.5(a)(4)(i) and in our sub-regulatory guidance. This
proposal clarifies and codifies existing requirements under Sec.
488.5(a)(4)(i), which requires that surveys must be unannounced, which
means that the facility must be unaware of the survey until the time
that the survey team arrives, and that the provider or supplier would
not receive notice of the survey until the survey team arrives at the
facility. Our long standing policy behind the term ``unannounced
survey'' has been within section 2700A, chapter 2 of the SOM, outlining
the expectation that all surveys of providers and suppliers (other than
clinical laboratories) must be unannounced to the provider or supplier
being surveyed. This means that the provider or supplier to be surveyed
would not receive notice of the survey until the survey team arrived at
the facility for the survey, as is also currently the AO's process for
complaint surveys. The proposed definition for ``unannounced survey''
would also state that unannounced surveys must be scheduled by the AO
in a manner so that their timing and occurance will not be predictable
to the healthcare facility being surveyed.
One of the primary reasons surveys conducted by either the SA or
the AO are required to be unannounced is to prevent the provider or
supplier from making unusual preparations for the survey that would not
represent the ongoing typical condition of the provider and true nature
and quality of care provided. Examples of these activities would
include unusual cleaning activities, painting, clearing obstructions
from halls and entrances, denying leave to staff during that time or
calling staff back to inflate staffing availability, and re-reviewing
medical records outside of what is normally done. If a provider or
supplier knows the exact time a surveyor will be onsite, it may
temporarily adjust its typical practices such as staffing, which would
provide an unrepresentative picture to surveyors of the quality of care
typically provided to patients or residents. A notice to facility
leadership via

[[Page 12005]]

organizational websites, emails, or phone calls prior to surveyors
arriving onsite is considered a violation with CMS regulations.
In 2009, CMS clarified this expectation in the Survey &
Certification Policy Memorandum 09-41,\9\ to advise that announcing of
surveys was in conflict with CMS regulations. In the effort to align AO
survey processes with CMS survey processes (which are followed by the
SA surveyors), as outlined in section IV.C of this proposed rule,
additional clarity regarding this prohibition is needed. Defining the
term ``unannounced survey'' within the regulation as opposed to our SOM
(subregulatory guidance) would provide clarity regarding our
expectations, and would mirror the processes used by our SAs, who do
not announce their surveys (except for clinical laboratories); as
noted, any AO practice of announcing surveys could undermine the
integrity of the survey process. While we recognize AOs may have
provided up to a 60-minute advance notice of the survey team arriving
onsite for initial and reaccreditation survey activities, this is
inconsistent with the processes followed by our SAs, and is
inconsistent with the AOs' own survey processes for complaint surveys
(which are always unannounced).
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Therefore, in accordance with Sec. 488.5(a)(4)(i), which requires
unannounced surveys, as well as our long-standing policy in section
2700A, chapter 2 of the SOM, we propose that all surveys of providers
and suppliers (other than clinical laboratories) must be unannounced
and any advance notice to facilities would be prohibited. This proposed
requirement would apply to AOs as well as SAs and further support our
initiative to bring consistency to survey practices as outlined in
section IV.C of this proposed rule.
Furthermore, the definition of ``unannounced survey'' must ensure
that the recertification surveys are unpredictable. AOs generally
complete comprehensive re-accreditation surveys of their client
providers and suppliers every 32 to 36 months. However, some providers
or suppliers have informed us that they know when an AO is scheduled to
survey the facility--the AO may schedule the facility for survey within
the same week or month every survey cycle, or has narrowed its schedule
via the use of blackout days, or informed the facility close to the
time of the survey via administrative contact from the AO, such as
payment collection, confirmation or change of address notification or
other facility-AO specific information. All of these practices
undermine the integrity of the unannounced survey process.

B. Conflict of Interest

1. Proposal for Information To Be Submitted With the AOs' Conflict of
Interest Policies and Procedures (Proposed Revisions to Sec.
488.5(a)(10))
Section 488.5(a)(10) currently requires that the AO submit ``the
organization's policies and procedures to avoid conflicts of interest,
including the appearance of conflicts of interest, involving
individuals who conduct surveys or participate in decisions.'' This
requirement does not require the AO to address any specific areas or
issues in their conflict of interest policies and procedures. In
addition, the AOs only need to submit this information to CMS with
their initial and renewal applications, which is currently every 6
years or less, as established by CMS.
We propose to revise Sec. 488.5(a)(10) by adding a requirement
that AOs must provide CMS with more specific conflict of interest
policies and procedures. We propose at Sec. 488.5(a)(10)(i) to require
the AOs to provide CMS with their policies and procedures for
separation of their fee-based consulting services from their
accreditation services (that is, fee-based consulting ``firewall''
policies and procedures). We propose at Sec. 488.5(a)(10)(ii) to
require the AOs to provide their policies and procedures for protecting
the integrity of the AOs' accreditation program, including the
requirements of proposed Sec. 488.8(i) and (j) noted below. Section
488.8(i) pertains to restrictions on certain fee-based consulting
services provided by AOs, and Sec. 488.8(k) pertains to conflicts of
interest which arise due to AO owners, surveyors, and other employees
having a business, employment, financial or other type of relationship
with a health care facility accredited by the AO.
At Sec. 488.5(a)(10)(iii), we propose to require the AOs to
provide policies and procedures for the prevention and handling
potential or actual conflicts of interest that could arise from
situations in which an AO owner, surveyor, or other employee has a
business, employment or financial interest in or relationship with
another survey agency or health care facility to which the AO provides
accreditation services.
Proposed Sec. 488.5(a)(10)(iii) would further state that such
interests or relationships would include but not be limited to: (1)
being employed as a SA surveyor; (2) being employed in a health care
facility that is accredited by the AO; (3) having an ownership,
financial or investment interest in a health care facility that is
accredited by the AO; (4) serving as a director of or trustee for a
health care facility that is accredited by the AO; (5) serving on a
utilization review committee of a health care facility that is
accredited by the AO; (6) accepting fees or payments from a health
facility or group of health facilities that is/are accredited by the
AO; (7) accepting fees for personal services, contract services,
referral services, or for furnishing supplies to a health care facility
that is accredited by the AO; (8) providing consulting services to a
health care facility that the AO accredits; (9) having members of their
immediate family engaged in any of the stated activities, other than
being a non-managerial employee of a health facility that is accredited
by the AO; and (10) engaging in any activities during the course of the
survey of the facility that would be or cause a conflict of interest.
In proposed Sec. 488.5(a)(10)(iii)(I), we have defined the term
``immediate family member'' as a husband or wife, birth or adoptive
parent, child, or sibling; stepparent, stepchild, stepbrother, or
stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law; grandparent or grandchild; and spouse
of a grandparent or grandchild. This is also consistent with the
definition of ``immediate family member'' used for the hospice program
conflict of interest regulations at Sec. 488.1115.
We further propose at Sec. 488.5(a)(10)(iv) to require AOs to
provide policies and procedures for providing notification to CMS when
such a conflict of interest is discovered.
We propose at Sec. 488.5(a)(10)(v) to define ``conflict of
interest'' as a situation in which an AO, its owner(s), surveyors, or
other employees, or the AO's successors, transferees, or assigns, or
the immediate family members of the AO owners(s), surveyors and other
employees have an employment, business, financial or other type of
interest in or relationship with a health care facility the AO
accredits. We would deem a conflict of interest to have occurred if one
of the above-stated parties either knowingly or unknowingly exploited
their interest in or relationship with that provider or supplier. We
remind readers that in the CY 2022 Home Health Prospective Payment
System Rate Update (86 FR 62368) that we finalized similar conflict of
interest regulations for hospice

[[Page 12006]]

programs at Sec. 488.1115(b). The proposed requirements of this rule
for accrediting organizations are consistent with, and build upon, the
current conflict of interest regulation for hospice programs at Sec.
488.1115(b). For additional discussion on the Hospice final rule see 86
FR 62368.
We are proposing changes to Sec. 488.5(a)(10) to require the AO to
have policies and procedures for the prevention, handling of and
notification of CMS when conflicts of interest arise, because on
several occasions, AOs have failed to notify CMS of such conflicts of
interest. These changes would broaden our oversight of the AOs'
handling and reporting of conflicts of interests. Additionally, by
requiring the AOs to provide CMS with more specific information about
their conflict-of-interest policies and procedures, CMS would be
afforded a more comprehensive look at how the AOs plan to handle
specific scenarios that CMS would deem to be conflicts of interest.
These proposed requirements would require those AOs that did not have
policies and procedures to prevent, address and handle conflicts of
interests to develop and use them.
The proposed requirements at Sec. 488.5(a)(10)(iii), for the
conflict of interest and information that must be submitted with the
AOs' conflict of interest policies and procedures, are more detailed
than the requirements currently set forth in section 4008 of the SOM,
which provide examples of possible scenarios that could be conflicts of
interest for the SA surveyors. Section 4008 of the SOM leaves it to the
discretion of the SA management to decide how to identify and address
these conflicts of interest.
A more detailed conflict of interest requirement is not necessary
for the SA surveyors because SA surveyors, who are state employees, are
generally required to report incidences of conflicts of interest to the
SA management, who is tasked with taking the appropriate action.
Unlike the SAs, the AOs are more likely to encounter scenarios with
conflicts of interest. For example, AO owners, board members, surveyors
and other employees might also be employed by health care facilities
that are surveyed and accredited by that AO. Therefore, the proposed
requirements for AOs must be more detailed and prescriptive than SAs
because of the likelihood of them encountering conflicts of interest.
2. Proposal To Require AOs To Obtain and Submit Surveyor Declarations
of Any Interest in and Relationships With Health Care Providers the AO
Accredits to CMS on an Annual Basis (Proposed Sec. 488.5(a)(22))
A conflict of interest may exist when an AO surveyor has
interest(s) in or relationship(s) with a health care facility the AO
accredits. Requiring AOs to obtain and submit declarations detailing
such interests and relationships would ensure that CMS is notified of
potential or actual conflicts of interest AO surveyors might have with
the providers and suppliers the AO accredits. Such notice would allow
CMS to be aware of the existence of these potential or actual conflicts
of interest, some of which would preclude a surveyor from participating
in survey activities (see Sec. 488.8(j) discussion at section IV.B.6
of this proposed rule) and some of which would not.
We propose to add a new provision at Sec. 488.5(a)(22) that would
require the AO to obtain declarations from all surveyors employed or
contracted to the AO regarding any employment, business, financial or
other interests in or relationships they have with the health care
facilities the AO accredits. We propose that AOs would initially be
required to submit the surveyor declarations with their initial
application for CMS approval of their accreditation programs. We
further propose to require the AOs to update the surveyor declarations
on an annual basis, and that the information from the annual updated
surveyor declarations be submitted to CMS no later than December 31st
each year. Annual updates would be necessary because a surveyor's
interests in and relationships with health care facilities the AO
accredits could change over time. This requirement would ensure that
the information contained in the surveyor declarations remains up-to-
date and accurate. This provision at paragraph (a)(22) would be
implemented 1 year after the effective date of the final rule (which
would be 60 days after publication of the final rule). We further
propose to require the AOs to begin submitting their surveyor
declaration information on or before the December 31st that occurs
after the implementation date of this requirement.
3. Proposal To Place Restrictions on Fee-Based Consulting Services
Provided by AOs to the Medicare-Certified Providers and Suppliers They
Accredit (Proposed Sec. 488.8(i))
CMS recognizes the value of fee-based consulting by independent,
third-party consultants who provide insight or expertise to assist
facilities in achieving or maintaining compliance with AO and/or
Medicare's health and safety standards. These interventions are
beneficial and often tailored to meet a facility's specific compliance
needs. Consulting services also may assist a provider or supplier in
identifying quality concerns, whether based on a Medicare requirement
or standards of practice, and therefore these services may improve the
safety of patient care. AO fee-based consulting activities are not
prohibited by federal law and there are no current CMS regulations
prohibiting AOs from providing fee-based consulting services.
However, AOs assume a public trust role when voluntarily applying
to CMS for deeming authority. This authority, once granted, conveys
Medicare certification for those entities accredited by the AO and it
is essential that the integrity of their oversight process be above
question. A number of AOs with CMS-approved accreditation programs
currently provide AO fee-based consulting services to the Medicare-
participating health care facilities they accredit. When an AO provides
fee-based consulting services to a provider or supplier it accredits it
could create a conflict of interest for several reasons.
First, AOs provide deeming surveys to providers or suppliers on
behalf of CMS. AOs are required to use accreditation standards that are
comparable to or exceed the Medicare standards and survey processes in
the performance of deeming surveys. A potential or actual conflict of
interest arises from allowing a CMS-approved AO with deeming authority,
the ability to charge a provider or supplier to conduct a deeming
survey to identify non-compliance (for Medicare participation), and
also charge for providing AO fee-based consulting services to help the
provider meet Medicare requirements.
Second, providers and suppliers often choose AO fee-based
consulting specifically for the additional resources and assistance
provided. Some AOs publicly advertise the ability of their fee-based
consulting to simulate what to expect from the actual AO survey. It is
possible that Providers and suppliers found to be non-compliant by
their AO may assume that the most direct path to compliance is to hire
the AO's fee-based

[[Page 12007]]

consulting services. Such an assumption would provide AOs with fee-
based consulting services with an unfair advantage over other, third-
party consulting services.
Finally, by charging for accreditation services (for example,
deeming surveys) and also for the subsequent fee-based consulting
services, for the purpose of remediating deficiencies identified by the
same AO, there may be an expectation from providers and suppliers that
the AO demonstrate the effectiveness their consulting services on
subsequent compliance surveys. In other words, the provider or supplier
may expect to receive a favorable survey report because they have paid
the AO not only for accreditation but also for fee-based consulting
services which are promoted by the AOs to help the provider or supplier
do well on their survey. In addition, this expectation may push AOs to
ignore significant deficiencies found during survey of its fee-based
consulting clients in order to demonstrate the efficacy of its fee-
based consulting and promote these services.
In short, an AO's business model is geared toward retention of its
accredited providers and suppliers. AOs that provide both regulatory
oversight through Medicare deeming surveys and also fee-based
consulting services, which are geared towards assisting clients comply
with the requirements required to pass the surveys, invites concerns
about the integrity of their final compliance determinations.
CMS issued an AO Conflict of Interest RFI (83 FR 65331) in 2018 to
gather feedback related to AO conflict of interest practices. We
received 128 public comments in response to the RFI. Many commenters
stated that fee-based consulting provided by an AO or its associated
consulting division or company to the health care facilities it
accredits is a conflict of interest. These commenters stated that this
conflict of interest arises from granting the inherently governmental
function of monitoring patient safety, by regulating health care
providers through accreditation, to a private entity, especially when
that private entity profits from those who are regulated.
Several commenters alleged that AOs that provide fee-based
consulting may have the incentive to ignore deficiencies detected
during the accreditation survey, in order to provide a ``good'' survey
report to demonstrate the apparent efficacy of their AO fee-based
consulting services and also to keep the paying customer(s) happy. Many
commenters also suggested that if an AO provides poor survey results to
a health care facility that has paid a significant fee for
accreditation, it is unlikely that the facility would continue to
retain that AO as a service provider.
After careful review and analysis of the public comments received
in response to the RFI, we agree that a conflict of interest arises
from the contractual and financial relationship between the health care
provider and the AO, which is a private entity that profits from the
performance of regulating health care providers through accreditation.
AOs that provide fee-based consulting services generate additional
revenue beyond the fees realized for accreditation services by
providing fee-based consulting services to the same facilities they
accredit.
We propose at Sec. 488.8(i) several restrictions on fee-based
consulting provided by these AOs, their consulting divisions, or
separate business entities. By ``fee-based consulting division,'' we
mean a separate division within the AO that provides fee-based
consulting services. This division of the AO would have a separate
manager and staff. By ``separate business entity,'' we mean a business
entity, such as a company or corporation, that is separate and apart
from the AO and that has been established by the AO, either under a
similar or different name, for the purpose of the providing fee-based
consulting services.
The proposed regulation at Sec. 488.5(i) would still allow AOs to
provide fee-based consulting services to the providers and suppliers
they accredit with restrictions that address the conflict of interest
issues associated with this service.
We propose at Sec. 488.8(i)(1) that, unless excepted under
proposed Sec. 488.8(i)(4), AOs and their associated consulting
divisions or companies would be prohibited from providing fee-based
consulting services to any health care provider or supplier to which
the AO provides accreditation services prior to an initial
accreditation survey. However, the health care provider or supplier may
seek fee-based consulting services from an entity entirely uninvolved
in that provider or supplier's accreditation process. This option
allows these providers and suppliers support they may believe necessary
to meet Medicare standards and requirements prior to serving patients
while eliminating any conflict of interest for their AO.
For purposes of proposed Sec. 488.8(i)(1), the term ``initial
survey'' would mean the first accreditation survey of a health care
provider or supplier performed by an AO. The term ``prior to the
initial accreditation survey'' would mean the time period beginning on
the day the provider or supplier enters into a contract with the AO to
provide accreditation services and continuing until the date that the
initial accreditation survey is completed. The survey completion date
would include the completion of any required plans of correction by the
provider or supplier. In addition, if a health care provider or
supplier was terminated or withdrew from the AO's accreditation and
later retained the services of that AO, the first survey of the
returning health care provider or supplier performed by the AO would be
considered an initial accreditation survey.
The requirement of proposed Sec. 488.8(i)(1), which would prohibit
an AO from providing fee-based consulting or coaching to a health care
provider or supplier prior to the initial accreditation survey, would
provide a more accurate assessment of the provider's or supplier's
baseline operating conditions and deficiencies on the initial survey.
Such a raw assessment would not be possible if the provider or supplier
receives AO fee-based consulting prior to the initial accreditation
survey.
In addition, such a baseline assessment of deficiencies would be
useful to the AO in assessing areas needing improvement, developing a
plan of correction and areas of focus for the fee-based consulting.
This proposed restriction would also remove the financial incentive on
the part of the AO to ignore deficiencies during the initial survey of
providers and suppliers that paid for fee-based consulting prior to an
initial survey.
We note that this proposal only restricts an AO with deeming
authority and a fee-based consulting practice from providing fee-based
consulting services to its accredited providers and suppliers prior to
the initial accreditation survey. It does not prohibit providers and
suppliers from hiring third-party fee-based consulting services prior
to their initial AO survey, in other words, this proposal does not
prohibit other consulting services from being used during this period.
We do not anticipate that this proposal would cause a negative
impact on the patient care provided by the provider or supplier for
several reasons. First, providers or suppliers would be able to obtain
AO fee-based consulting during the first 24 months of the 36-month
reaccreditation cycle which occurs after the initial survey. This
education could be tailored to address the deficiencies found during
the initial survey. If the AO were to provide fee-based consulting
prior to the initial survey, the AO would not know what

[[Page 12008]]

deficiencies exist and would only be able to provide generalized fee-
based education to the provider or supplier. Second, the provider and
supplier could always seek fee-based education prior to the initial
survey from a third -party consultant. The purpose of our proposal to
prohibit AO fee-based consulting prior to the initial survey and during
the 12-month period prior to each reaccreditation survey is to reduce
or remove any potential or actual conflict of interest. However, if a
provider or supplier were to seek fee-based consulting from a third-
party consultant, that has no relationship to the AO that accredits
that provider or supplier, no conflict of interest would exist.
We also propose at Sec. 488.8(i)(2) to prohibit AOs from providing
fee-based consulting services to a health care provider or supplier it
accredits within 12 months prior to the next scheduled re-accreditation
survey of that provider or supplier. For purposes of proposed Sec.
488.8(i)(2), the term ``re-accreditation survey'' would mean any
subsequent accreditation surveys performed by the AO after the initial
survey.
The accreditation cycle for most Medicare-certified providers and
suppliers is 36 months (3 years), which means that the AOs perform an
accreditation survey of these providers and suppliers no less than
every 36 months. The proposed language at Sec. 488.8(i)(2) would allow
AOs to provide fee-based consulting during the first 24 months (2
years) of the accreditation cycle, but not during the 12-month (1-year)
period preceding the re-accreditation survey. For example, with this
proposal, if the initial survey was completed on June 1, 2025, the
provider's or supplier's reaccreditation survey would be due by June 2,
2028. The AO could provide fee-based consulting to the provider or
supplier from June 2, 2025, to June 2, 2027. The AO would be prohibited
from providing AO fee-based consulting to the provider or supplier from
June 2, 2027, to June 2, 2028. An accredited provider or supplier would
retain the ability to use consultants not affiliated with their AO at
any time, including any timeframe prior to or after an accreditation
survey for Medicare compliance.
The proposed requirement would provide the accredited provider or
supplier ample time to obtain the education they need in order to
understand the CMS requirement, the AO's accreditation standards and
survey process, and 1-year period, prior to their next accreditation
survey, in which to implement the AO's accreditation standards and CMS
standards (CoPs) in their facility and rectify any deficiencies found
during the initial survey.
The proposed requirement at Sec. 488.8(i)(2) would address the
actual or potential conflicts of interest associated with AO fee-based
consulting because it creates a 1-year time period prior to the re-
accreditation survey in which the AO is prohibited from providing any
type of additional teaching or ``coaching'' that would help the
provider or supplier ``pass'' or obtain better scores on the upcoming
accreditation survey.
We further propose at Sec. 488.8(i)(3) that the AOs or their
associated consulting divisions or companies be prohibited from
providing fee-based consulting services to a health care provider or
supplier in response to a complaint received by the AO regarding that
provider or supplier. Our rationale for this requirement is that AOs
are required by CMS regulation to investigate and resolve complaints
received regarding their accredited providers and suppliers (that is,
42 CFR 488.5(a)(4)(ix); 42 CFR 488.5(a)(12)). This regulatory
requirement includes investigating the complaint and working with the
accredited provider or supplier to help them resolve any deficient
practices identified in the complaint. AOs charge a significant fee for
their fee-based consulting. AOs should not profit by providing fee-
based consulting to a provider and supplier in response to a complaint
that they are regulatorily required to investigate and resolve. This
proposed regulation would prevent this from occurring.
We propose at Sec. 488.8(i)(4)(i) to (iv) that the restrictions
upon AO fee-based consulting would not apply to the following
situations: (1) AO fee-based consulting services provided during the
24-month period after the date the initial or re-accreditation survey
is performed (proposed Sec. 488.8(i)(4)(i)); (2) AO fee-based
consulting services provided to address complaints received and
investigated by the SA regarding an AO's accredited provider or
supplier in which one or more condition-level or immediate jeopardy
deficiencies are identified, provided however that, the fee-based
consulting must occur after the complaint investigation and survey has
been completed and must only address those issues identified by the
complaint survey (proposed Sec. 488.8(i)(4)(ii)); (3) AO fee-based
consulting services provided to health care providers or suppliers to
which the AO has never provided accreditation services (proposed Sec.
488.8(i)(4)(iii)); and (4) no-cost consulting or general education
provided by the AO about their accreditation program (proposed Sec.
488.8(i)(4)(iv)).
Proposed Sec. 488.8(i)(4)(ii) would allow AOs to provide AO fee-
based consulting services in response to complaints received by the SA
regarding an AO's accredited provider or supplier. However, this fee-
based consulting must be provided by the AO after completion of the SA
investigation and complaint survey. We would permit AO fee-based
consulting services after a complaint is received by the SA, because
the SA, not the AO, would perform an investigational survey. Therefore,
the affected provider or supplier should be permitted to seek fee-based
consulting from its AO, in accordance with the restrictions stated
above, to address the issues identified in the SA complaint and
complaint survey, if appropriate.
It is important to note that AO fee-based consulting should only be
provided when serious deficiencies have been identified in the SAs
complaint investigation report. By serious deficiencies, we mean
deficiencies that would be considered condition level by the SA and the
AO. However, the AO should first work directly with the provider or
supplier, as part of their accreditation services package, to resolve
the issues identified in the SAs complaint investigation report and
only provide AO fee-based consulting if these issues cannot be resolved
successfully, through other methods. It has always been the duty of the
AOs to address and resolve complaints received regarding its accredited
providers and suppliers, whether said complaint is received by the AO
or the SA. An AO receives a significant fee for the accreditation
services provided. We believe that the investigation and resolution of
complaints falls squarely under these paid accreditation services. We
do not believe it appropriate for AOs to offer fee-based consulting/
educational services in response to each and every complaint received
regarding one of its accredited providers or suppliers. In other words,
the AOs should not realize additional profit from its paying customers,
when it has already been paid to perform the task at hand.
More specifically, we would expect that an AO not offer fee-based
consulting to an accredited provider or supplier in response to a
complaint, unless the deficiency(ies) identified in the complaint are
substantiated by the investigation, and found to be systemic,
widespread, and ingrained in the culture of the organization. We would
also expect to find that the AO first attempted to work with the
provider or supplier, as part of the accreditation services provided,
to resolve the deficiencies identified in the complaint,

[[Page 12009]]

before resorting to fee-based consulting. Finally, we would expect to
find that if an AO offers fee-based consulting/educational services to
the provider or supplier, they do so after trying all non-cost options
available, and that the fee-based consulting/education was reasonably
expected to resolve the deficiencies identified in the compliant.
Proposed Sec. 488.8(i)(4)(ii) requires that the AO fee-based
consulting cannot be provided until after completion of the SA's
investigation and complaint survey. By ``completion of the SA's
investigation'', we mean the date upon which the SA has completed all
work required to investigate the complaint and has issued its findings.
This restriction is necessary because if the affected provider or
supplier were to receive fee-based consulting from the AO prior to the
completion of the SA's investigation and complaint survey, the affected
provider or supplier potentially could alter processes, operations or
documentation, all of which could compromise the SAs investigation of
the complaint. In such a scenario, the investigation and complaint
survey report would not be an accurate reflection of the issues
identified in the complaint. While it may seem counter-productive for
the affected provider or supplier to obtain AO-fee-based consulting
after completion of the SA's investigation and complaint survey, we
believe that it would actually be helpful to the affected provider or
supplier. After completion of the SA's complaint survey and
investigation, the affected provider or supplier will receive a
complaint investigation report, which will allow the AO to tailor the
fee-based consulting services or other educational activities to
address any deficiencies identified in said report. Also, through AO
fee-based consulting services, the AO could work with the affected
provider or supplier, at their own pace, to implement long-lasting and
sustainable changes that address the deficiencies identified, as
opposed to the implementation of quick temporary solutions or
corrective action prior to completion of the complaint investigation. A
quick temporary solution would be one that the provider or supplier
implements on a short-term basis, typically only during the time that
the surveyors are present. By contrast, a long-lasting and sustainable
solution would be one in which the provider or supplier implements the
solution, orients the staff to its requirements, regularly monitors for
compliance with the requirements and corrects non-compliance on a
continual basis.
Proposed Sec. 488.8(i)(4)(iii) would further allow AOs to provide
fee-based consulting services to health care providers or suppliers the
AO does not accredit at the time the consulting services are furnished.
If the AO has not provided accreditation services to a provider or
supplier at the time fee-based consulting services are provided, the AO
would not have a preexisting financial relationship with that provider
or supplier. Thus, no conflict of interest would exist.
Proposed Sec. 488.8(i)(5) would require AOs to report information
about the fee-based consulting provided to the providers and suppliers
they accredit to CMS. See section IV.B.4 for information about this
proposed rule.
Proposed Sec. 488.8(i)(6) provides for penalties for AOs that
provide fee-based consulting in violation of the restrictions set forth
on proposed Sec. 488.8(i)(1) to Sec. 488.8(i)(3). See section IV.B.5
of this proposed rule for a discussion of this proposed section.
We propose at Sec. 488.8(i)(7) that the requirements at Sec.
488.8(i) would become applicable 1 year from the effective date of the
final rule to allow for an appropriate time of transition. We believe
that this would provide ample time for the AOs to prepare for and
implement the proposed requirements at Sec. 488.8(i).
The conflict inherent in AO fee-based consulting on accreditation
standards while an AO is also performing surveys to determine
compliance with those same standards is what the proposed restrictions
on AO fee-based consulting seek to address. An entity that collects
fees to remedy findings or prepare for a survey performed by another
arm of the same entity creates a perceived conflict of interest that
undermines the integrity of the health and safety oversight process.
These proposals seek to allow continuance of independent consulting
activities while addressing concerns related to fee-based consulting
performed by the AOs, themselves.
We note that this proposed restriction on AO fee-based consulting
services at Sec. Sec. 488.8(i)(1), 488.8(i)(2), and Sec. 488.8(i)(3)
would not prohibit the AOs from providing no-cost education, such as
general education about the AO's accreditation and survey process and
mock surveys. The restrictions on AO fee-based consulting would also
not prohibit AOs from providing education about the Medicare
conditions, AO standards, or survey process, to its accredited health
care providers and suppliers, as long as this education is provided
completely free of charge. This means that the AO would not be allowed
to raise the price of their accreditation services because of the
provision of this education, or do anything else that would cause the
provider or supplier to incur any additional costs for the education
provided by the AO, its consulting division or separate consulting
company to the providers or suppliers it has contracted with to provide
accreditation services. We believe that it is important that health
care providers and suppliers receive education that would assist them
in compliance, so long as it is not provided on a fee basis, which
would introduce another financial relationship between the AO and the
provider or supplier that could cause a conflict of interest.
We also note that other CMS programs have established similar
conflict of interest and independence provisions for organizations that
have a public trust role in assessing the quality of services provided.
For example, in the Medicaid program, CMS has established regulatory
standards with respect to the independent judgment of any External
Quality Review Organization that reviews the quality of the Medicaid
managed care organization for the state (42 CFR 438.354). These
regulations establish, among other requirements, that an External
Quality Review Organization may not review any managed care entity for
which that organization has also conducted a private accreditation
review within the previous 3 years.
Our proposal to place restrictions on the provision of fee-based
consulting by AOs to their current accredited providers and suppliers
is authorized by section 1865(a)(2) of the Act, which gives CMS the
broad power of oversight over the activities of AOs. The provision of
AO fee-based consulting is one of the factors in section 1865(a)(2) of
the Act that should be considered in determining whether a national
accreditation body demonstrates that all of the applicable conditions
or requirements of this title are met or exceeded.
4. Proposal To Require AOs To Provide CMS With Information About the
Fee-Based Consulting They Provide (Proposed Sec. 488.8(i)(5))
We proposed at Sec. 488.8(i)(1), Sec. 488.8(i)(2), and Sec.
488.8(i)(3) to place restrictions on the fee-based consulting services
provided by AOs. In order to enforce our proposals, we propose at Sec.
488.8(i)(5) to require the AOs that provide fee-based consulting
services to submit information to CMS, on a calendar year bi-annual
basis, about the fee-based consulting services they provide.
We propose to add a requirement at Sec. 488.8(i)(5) that would
require the AOs

[[Page 12010]]

that accredit Medicare-certified providers and suppliers to provide CMS
with information regarding the fee-based consulting services no later
than 15 days after the end of each calendar year bi-annual (6-month)
period.
More specifically, this proposal would require these AOs to submit
a document which contains the following information to CMS:
Whether the AO or an associated consulting division or
company established by the AO provides fee-based consulting services.
The names and CMS Certification Number (CCN) numbers of
all health care providers and suppliers to which the AO or its
associated consulting division or company has provided fee-based
consulting services during the previous calendar year quarter.
The dates the AO fee-based consulting services were
provided to each provider and supplier listed.
Whether the accrediting organization has, at any time in
the past provided, or is currently providing accreditation services to
each health care provider or supplier listed in said document, and if
so, the date the accreditation services were provided.
The date of the most recent accreditation survey
performed, and the date the next re-accreditation survey is due to be
performed for each health care provider and supplier listed in said
document.
A description of the AO fee-based consulting services
provided to each health care provider or supplier listed in said
document.
We are further proposing that the two bi-annual reporting periods
would consist of January 1st to June 30th and July 1st to December 31st
each year. The submission deadline for the first period would be July
15th each year. The submission deadline for the second period would be
January 15th each year. This would ensure that AOs are not providing
fee-based consulting services to providers and suppliers prior to an
initial survey, within 12 months prior to a re-accreditation survey, or
in response to a complaint received regarding an accredited provider or
supplier. In addition, this information would also allow CMS to see the
number of providers and suppliers to which the AOs are providing fee-
based consulting services.
We propose that these provisions would become applicable 1 year
from the effective date of final rule to allow for an appropriate time
of transition. We believe that this would provide the AOs with ample
time to prepare for and implement this requirement.
5. Proposal for Penalties for AOs Found To Be Providing AO Fee-Based
Consulting Services to the Health Care Providers or Suppliers They
Accredit in Violation of the Restrictions in 42 CFR 488.5(i)(1) Through
Sec. 488.5(i)(3) (Proposed Sec. 488.8(i)(6))
In section IV.B.3 of this proposed rule, we propose to implement
regulations that place restrictions on the fee-based consulting
services AOs provide to the health care providers and suppliers that
they accredit. In order to enforce these regulations, we propose at
Sec. 488.8(i)(6) to implement penalties for the violation of the
restrictions on AO fee-based consulting.
We propose at Sec. 488.8(i)(6)(i) that if an AO is found to be in
violation of the restrictions set forth in paragraphs Sec.
488.8(i)(1), (2) and (3), CMS may initiate penalties against the AO.
These penalties are set forth in proposed Sec. 488.8(i)(6)(i) and
Sec. 488.8(i)(6)(ii) and include placing the AO on a program review,
and involuntary termination of the CMS-approved AO's accreditation
program(s).
Whether or not we impose the penalties provided in Sec.
488.8(i)(6)(i) and (ii) would depend on the severity of the violation
and the facts and circumstances surrounding the violation. Such facts
might include the number of providers and suppliers that contracted for
prohibited AO fee-based consulting services, the number of times the AO
violated the restrictions of Sec. 488.8(i).
The purpose of these proposed provisions is to discourage AOs from
violating the proposed restrictions on the provision of fee-based
consulting to the providers and suppliers they accredit.
We propose that these provisions would become applicable 1 year
from the effective date of the final rule. We believe that this would
provide ample time for the AOs to prepare for the implementation of the
requirements of this rule.
6. Proposal To Require Accrediting Organizations To Have Written Fee-
Based Consulting Firewall Policies and Procedures (Sec. 488.8(j))
We propose at Sec. 488.8(j) to require any AO that provides fee-
based consulting services or its associated fee-based consulting
division or company to have written fee-based consulting ``firewall''
policies and procedures. We have defined the terms ``consulting
division'' and ``associated company'' in section IX.B.3 of this
proposed rule. We define the term ``firewall'' as the complete and
total separation between the AO's accreditation activities and its fee-
based consulting services.
We propose that these firewall policies and procedures must, at a
minimum, include the following provisions: at paragraph (j)(1)(i) the
AO's fee-based consulting services must be provided by a separate
division of the AO or separate business entity (that is company or
corporation) from the AO; at paragraph (j)(1)(ii) the AO's fee-based
consulting division or separate company must maintain separate staff
from that of the AO's accreditation division(s) to ensure that the fee-
based consulting division staff do not perform AO's accreditation
division functions and that the AO's accreditation division staff do
not perform fee-based consulting division functions; and at paragraph
(j)(1)(iii), the AO's accreditation staff and surveyors would be
prohibited from marketing the AO's fee-based consulting services to the
AO's accreditation clients.
The purpose of the provisions of proposed Sec. 488.8(j) is to
ensure that the AO maintains a complete division between their fee-
based consulting program and their accreditation program. In other
words, we seek to require the AOs to prevent any co-mingling of fee-
based consulting activities and staff with their accreditation
activities and staff. These requirements are necessary because several
commenters to our 2018 AO Conflict of Interest RFI, noted concern that
while some AOs that provide fee-based consulting have such firewall
policies in place, they have been breached. For example, one commenter
stated that one AO's accreditation staff aggressively marketed that
AO's fee-based consulting services to his health care facility. In
addition, during a CMS validation pilot joint survey with an AO, a SA
surveyor witnessed the AO's surveyors providing detailed education
about the survey process to the healthcare facility staff prior to the
start of the survey. This is inappropriate because surveys are to be
unannounced to prevent the facility from preparing for the survey. At
the beginning of a survey, a brief entrance conference is held for the
purpose of introducing the survey team, providing the survey agenda to
the facility staff, and telling the facility what records the surveyors
will be reviewing during the survey. However, providing detailed
information about the survey process and what areas the AO is going to
focus on during the survey gives the facility an advantage and time to
prepare for the survey. This negates the purpose of requiring surveys
to be unannounced and could allow the facility staff time to clean up
and

[[Page 12011]]

remove deficiencies that would normally be present. In addition,
providing such education to a health care facility prior to a survey
could assist that facility in getting a better survey report.
We do not currently have any regulations that provide oversight of
the fee-based consulting services provided by AOs or their separate
divisions or companies. Likewise, we do not currently have any
regulations that specifically require AOs that provide fee-based
consulting services to have written firewall policies or regulations
that provide requirements for such policies. Regulations are needed so
that CMS may ensure that an AO's fee-based consulting remains separate
from an AO's accreditation activities. This division is necessary to
reduce the conflict on interest associated with the provision of AO
fee-based consulting services.
7. Proposal To Prohibit AO Owners, Surveyors, and Other Employees From
Involvement With the Survey and Accreditation Process for Health Care
Facilities With Which They Have an Interest or Relationship (Proposed
Sec. 488.8(k))
Surveyors must rely on their professional judgment, in addition to
federal rules and guidelines, to determine compliance. An AO surveyor,
owner, or other employees' interest in or relationship with a health
care facility that the AO accredits could present a conflict of
interest that could affect the results of a survey in several ways. For
example, an AO owner, surveyor, or other AO employee involved in the
survey of a healthcare facility with which the individual has an
interest or relationship could have compromised judgment, consciously
or unconsciously, regarding that facility. For example, a surveyor with
an interest in or relationship with the health care facility being
surveyed could be inclined to minimize or ignore deficiencies, possibly
because he or she believes these deficiencies are not representative of
the facility. A surveyor who has an interest in or relationship with
the facility being surveyed could possibly influence the findings made
by other members of the survey team by asking them to give the facility
credit for things not observed, since he or she can ``vouch'' for the
facility.
Even if the AO employee with the interest in or relationship with
the facility being surveyed is not part of the survey team for the
facility, he or she could still potentially influence the members of
the survey team prior to or after the survey. For example, attempting
to influence the survey decision making process, or the AO's survey
follow-up activities by attempting to discuss the facility with the
survey team, such as explaining the facility's policies and procedures
to the survey team, or even actively advocating on the facility's
behalf, potentially influencing their analysis of observed survey
results.
An AO surveyor, owner, or other employee that has an interest in or
relationship with a health care facility the AO accredits might have
additional motivation to improperly give that health care facility
notice about the survey ahead of the scheduled survey date. Surveys are
required to be unannounced to prevent the facility from preparing for
the survey by activities such as unusual cleaning activities, painting,
clearing obstructions from halls and entrances, covering up and hiding
deficiencies, coaching staff, and otherwise preparing in advance for
the survey. If the survey is unannounced, the health care facility is
not able to make advance preparations so that the survey team is able
to assess the facility in its usual condition and observe the typical
standard of care provided.
We propose to add a new requirement at Sec. 488.8(k)(1) to
prohibit AOs from allowing AO owners, surveyors, or other employees
from participating in the survey and accreditation process for health
care facilities with which they have had an interest or relationship
within the previous 2 years. At proposed Sec. 488.8(k)(1) we would
require that if an AO owner, surveyor or other employee has an interest
in or relationship with a health care facility accredited by the AO,
they would be prohibited from: (1) participating in the survey of that
health care facility (proposed Sec. 488.8(k)(1)(i)); (2) having input
into the results of the survey and accreditation for that health care
facility (proposed Sec. 488.8(k)(1)(ii)); (3) having involvement with
the pre- or post-survey activities for that health care facility
(proposed Sec. 488.8(k)(1)(iii)); or (4) having contact with or access
to the records for the survey and accreditation of that health care
facility (proposed Sec. 488.8(k)(iv)). Proposed Sec.
488.5(a)(10)(iii) lists proposed prohibited interests in or
relationships with a health care facility accredited by the AO, which
would include, but not be limited to, the following situations: (1)
being employed as a SA surveyor; (2) being employed in a health care
facility that is accredited by the AO; (3) having an ownership interest
in a health care facility that is accredited by the AO; (4) serving as
a director of or trustee for a health care facility that is accredited
by the AO; (5) serving on a utilization review committee of a health
care facility that is accredited by the AO; (6) accepting any fees or
payments from a health care facility or group of health care facilities
that is/are accredited by the AO; (7) accepting fees for personal
services, contract services, referral services, or for furnishing
supplies to a health care facility that is accredited by the AO; (8)
providing consulting services to a health care facility that the AO
accredits; (9) having members of an immediate family engaged in any of
the above activities; or (10) engaging in any activities during the
course of the survey of the facility that would be or cause a conflict
of interest.
We propose at Sec. 488.8(k)(2) to define the term ``immediate
family member'' as any person that has a lineal familial or marital
relationship with the AO owner, surveyor or other employee. Immediate
family members would include a husband or wife, birth or adoptive
parent, child, or sibling; stepparent, stepchild, stepbrother, or
stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law; grandparent or grandchild; and spouse
of a grandparent or grandchild. This definition is consistent with the
definition used for the home health and hospice conflict of interest
requirements. This definition is required for the purposes of Sec.
488.8(k)(1), which states that a conflict of interest can also exist
when an AO owner, surveyor or other employee has an interest in or
relationship with a health care facility the AO accredits.
Allowing an AO owner, surveyor or other employee that has an
interest in or relationship with a health care facility the AO
accredits would not only be inappropriate but could result in
inaccurate survey results and/or preferential treatment of the
facility.

C. Proposal To Require the AOs That Accredit Medicare-Certified
Providers and Suppliers To Use Medicare Conditions; and Strengthened
Survey Process Comparability (Proposed Sec. 488.4(a)(1) and (2))

Section 1865(a)(1) of the Act requires that if the Secretary finds
that the requirements for accreditation from an accreditation
organization demonstrates that a provider entity meets or exceeds all
applicable conditions, the Secretary must deem such requirements to be
met by the provider entity. However, the statutory language of ``meets
or exceeds'' currently allows AOs to develop standards that are more
stringent than those of Medicare. When an AO applies for ``deeming
authority'',

[[Page 12012]]

we determine whether those standards meet or exceed ours. In accordance
with Sec. 488.5(e), CMS publishes a proposed rule when CMS receives a
complete application from a national accrediting organization seeking
CMS's approval of an accreditation program. The proposed notice
identifies the organization and the type of providers or suppliers to
be covered by the accreditation program and provides 30 calendar days
for the public to submit comments to CMS. CMS subsequently publishes a
final notice, rendering its decision to either approve or disapprove a
national accrediting organization's application, within 210 calendar
days from the date CMS determines the AO's application was complete.
The final notice outlines a summary of the findings of CMS's review and
any corrective action which was required to be taken by the AO in order
to be considered to meet or exceed our standards, or comparable survey
processes. When CMS approves or reapproves an accrediting organization
for deemed status, the approval may not exceed 6 years.
We are concerned that the current application review processes
under Sec. 488.5 does not go far enough. Some of our concerns with the
efficacy of the AO application review process are based on the results
of the initial and renewal applications and the SA findings, as noted
below:
AO Application Reviews: Between 2017 to September 2021, we
received a total of 22 AO applications for review. After review of
these applications, we returned all 22 applications to the AOs because
we found that the AOs' standards were not comparable to ours. AO most
common standards requiring revisions to meet or exceed Medicare
conditions included: governing body, physical environment, emergency
preparedness patient rights, medical/clinical records and care
planning. Additionally, AO standards regarding coordination of
services; skilled professional services; infection control; staff
responsibilities and quality improvement assessment programs (QAPI) all
required revisions by the AOs.
SA Findings: In FY 2019, CMS conducted 119 hospital
surveys (including psychiatric hospitals) and 196 non-hospital surveys
totaling 315 validation surveys. In FY 2019, the SAs found serious
``condition-level'' instances of non-compliance 60 times in accredited
hospitals (including psychiatric hospitals), and 51 instances in which
the AO missed the deficiencies. In these instances, even though the AOs
did not find comparable levels of non-compliance, this non-compliance
was sufficient to start enforcement proceedings against the subject
hospitals. These results demonstrated that the AOs may have failed to
ensure their facilities were meeting Medicare's minimum standards. In
total, between FY 2017 and FY 2019, CMS conducted 363 hospital
(including psychiatric hospitals) validation surveys, with SAs
identifying condition-level non-compliance a total of 185 times and 158
instances in which the AOs missed comparable deficiencies. Between FY
2017 and FY 2019, CMS also conducted a total of 369 validation surveys
for HHAs and Hospices, with SAs identifying condition-level non-
compliance a total of 57 times and 50 instances in which the AOs missed
comparable deficiencies.\10\ This data has amplified CMS' concerns
related to the comparability of survey processes as well as the need
for increased AO oversight.
---------------------------------------------------------------------------

\10\ FY 2020 Report to Congress (RTC): Review of Medicare's
Program Oversight of Accrediting Organizations (AOs) and the
Clinical Laboratory Improvement Amendments of 1988 (CLIA) Validation
Program https://www.cms.gov/files/document/qso-22-06-ao-clia.pdf.
---------------------------------------------------------------------------

Therefore, under the statutory authority granted to us under
section 1865(a)(1) of the Act, we propose revisions at Sec.
488.4(a)(1) to require that the AOs that accredit Medicare-certified
providers and suppliers use the applicable Medicare conditions as their
minimum accreditation standards. This means that the AOs must
incorporate the Medicare conditions identical to our regulations within
their accreditation standards for their deeming programs. However, AOs
would be allowed to use additional accreditation standards that exceed
the Medicare conditions, as permitted under section 1865(a)(1) of the
Act. We would, however, require the AOs' to clearly delineate their
additional accreditation standards that exceed the Medicare conditions
when seeking CMS approval for deeming authority.
The requirement that the AOs identify the Medicare conditions as
their accreditation standards would also allow providers and suppliers
to know what the minimum Medicare deeming standards are and where the
AO standards exceed these standards through its accreditation program,
as permitted under section 1865(a)(1) of the Act. Facilities are
expected to comply with regulatory requirements of CMS and the
accreditation standards of the AO, however we have found that in
certain circumstances, the facilities were more familiar with AO
standards and did not fully understand the AO standards are more
stringent than the Medicare conditions. There were several instances in
which our comparability review of AO standards under Sec. 488.5
resulted in the need for AOs to correct deficiencies in their survey
standards and processes, because we determined that the minimum
Medicare conditions would have not been adhered to. Despite these
frequent reviews, the regulations only require AO standards to be
comparable, not exact to the Medicare conditions, therefore increasing
the likelihood of gaps in interpretation.
This proposed requirement would increase the likelihood that AO
standards and processes would meet or exceed our regulatory
requirements and transparency for providers to understand when the AO
has more stringent standards, further explained in sections IV.D of
this proposed rule.
We also propose to strengthen our process for comparability review
of the AOs survey processes at proposed Sec. 488.4(a)(2), further
explained in sections IV.E and IV.F of this proposed rule. More
specifically, we propose to re-designate existing paragraph (a)(1) as
(a)(3) and re-designate existing paragraph (a)(2) as (a)(4) with
revisions, and add a new requirement at Sec. 488.4(a)(1). This
provision would require the AOs that accredit Medicare-certified
providers and suppliers to use the exact text of the applicable
Medicare conditions set forth in the applicable CMS regulations for
each provider and supplier type as their minimum accreditation
requirements. However, the AOs would be free to establish additional
accreditation requirements that exceed Medicare conditions as permitted
by section 1865(a)(1) of the Act. We propose to add language at Sec.
488.4(a)(2) that AOs use a survey process comparable to the processes
set out for SAs in the SOM and approved by CMS, as outlined throughout
Sec. 488.5(a)(4). We also propose that these requirements and changes
at paragraphs (a)(1) and (2) would be applicable beginning 1 year from
the effective date of the final rule.
These proposed changes to Sec. 488.4(a)(1) and Sec. 488.4 (a)(2)
would align national health and safety standards across all AOs and
strengthen the survey processes used by the AOs. We further believe
that our proposal would ensure uniformity and transparency of the
surveys performed by the AOs for deeming purposes and improve CMS'
ability to accurately evaluate an AO's performance.
We propose to re-designate the current Sec. 488.4(a)(1) and (a)(2)
to Sec. 488.4(a)(3) and (a)(4). We also propose

[[Page 12013]]

to add requirements at paragraphs (a)(1) and (a)(2) that AOs
incorporate the Medicare conditions and use survey processes comparable
to those of the SA. We also refer readers to additional proposed
changes made to Sec. 488.4(a)(4) in section VI.O of this proposed
rule.
The proposal to require AOs to incorporate the Medicare conditions
(as defined in Sec. 488.1) as their minimum accreditation standards
would become applicable 1 year after the effective date of the final
rule.

D. Proposal To Revise the Crosswalk Requirements at Sec. 488.5(a)(3)

As a result of our proposal at Sec. 488.4(a)(1) to require the AOs
to incorporate the Medicare conditions (as defined in Sec. 488.1) into
their accreditation standards for their deeming programs, we would also
modify the regulations at Sec. 488.5 that would be affected by this
requirement. Section 488.5(a)(3) requires the AOs to submit with their
initial and renewal application, ``[a] detailed crosswalk (in table
format) that identifies, for each of the applicable Medicare conditions
or requirements, the exact language of the organization's comparable
accreditation requirements and standards.'' Because section 1865(a) of
the Act allows AOs to have accreditation standards for their deeming
programs that meet or exceed the Medicare conditions, the content,
format, and wording of AOs' accreditation standards frequently differ
significantly from that of the Medicare conditions. Therefore, we
require the AOs to provide a crosswalk which identifies the applicable
Medicare conditions that corresponds to each of the AO's accreditation
standards. The purpose of this crosswalk is to help us determine to
which Medicare condition each AO accreditation standard corresponds.
Since we proposed at Sec. 488.4(a)(1) to require the AOs to
incorporate the Medicare conditions into their accreditation standards,
it would no longer be necessary to require the AOs to submit a
crosswalk that provides ``comparable'' standards. Instead, we propose
that AOs would need to provide a crosswalk which demonstrates that the
AO has incorporated the language of the Medicare conditions, as well as
provide the AO standards which exceed the Medicare conditions (see
Table 2 in section VI.B.I of this proposed rule for an example).
Similar to the existing process for submission of the AO's crosswalk
during an application, we propose to revise Sec. 488.5(a)(3) to
require a crosswalk that demonstrates the AO's use of CMS's
requirements and standards. AOs would provide additional or exceeding
standards under their use of the required exact language and annotate
the exceeding standards. This would further allow providers and
suppliers to know what the minimum Medicare deeming standards are and
where the AO standards exceed these standards through its accreditation
program.
We propose to revise Sec. 488.5(a)(3) to first remove the
requirement that the AO provide a ``comparable'' standard for each of
the applicable Medicare conditions or requirements and replace it with
the '' incorporation of the CMS requirements in the AO accreditation
standards for any deeming program.'' Second, in the application that is
submitted to CMS for review, the AO would have to submit a detailed
crosswalk. We would not expect the AOs to use the same survey tags (a
letter/number identifier, for example, A-0001) as used by SA surveyors.
For example, CMS' regulatory requirement at Sec. 482.11(c) requires
hospitals to ``assure that personnel are licensed or meet other
applicable standards that are required by State or local laws.'' In
this example and aligned with our proposed provisions, the AO would be
required to have an accreditation standard for its hospital deeming
program which would state ``The hospital must assure that personnel are
licensed or meet other applicable standards that are required by State
or local laws,'' with the AOs applicable standard number. Using Table 2
in section VI.B.1 of this proposed rule for this example, the crosswalk
would appear as follows:
[GRAPHIC] [TIFF OMITTED] TP15FE24.000

As seen in this example, the AO standard number identification may
vary from CMS' CFR regulatory citation. Additionally, as previously
described, CMS is not restricting AOs from exceeding the Medicare
conditions. Therefore, if an AO believes that additional accreditation
standards would need to apply to their deemed facilities, an AO would
submit the exceeding requirements under the particular standard. Using
the same example, the AO would submit a crosswalk similar to the
example below. As seen, AO Standard Number XX.001 would be exceeding
the Medicare conditions.

[[Page 12014]]

[GRAPHIC] [TIFF OMITTED] TP15FE24.001

Establishing a consistent standard across all AOs would bring
transparency to the accreditation process. This would allow providers
and suppliers to know what the minimum Medicare deeming conditions are
and where the AO standards exceed these Medicare conditions through its
accreditation program. It would also provide greater uniformity between
an AO certification survey at a facility and a state survey that may be
subsequently performed at that same facility, which could include a
complaint survey or a validation survey.
Additionally, from CMS' oversight perspective of the AO
applications for deeming authority and review of the crosswalks over
the last several years, we have also identified that AOs have
inadvertently omitted certain standards in their crosswalk submissions.
Therefore, while the impression that requiring a crosswalk for AOs may
seem unnecessary as we would be requiring AOs to incorporate the
Medicare conditions into their accreditation standards, it is
imperative that CMS be able to ensure the AO has standards for each
Medicare condition. The review of the exceeding standards is also
critical for CMS to ensure that any additional requirements established
under accreditation for deemed providers or suppliers do not conflict
with the Medicare conditions.
We propose that the proposed provision would be applicable 1 year
after the effective date of the final rule.

E. Proposal To Strengthen the Comparability of the Survey Process
Between the AOs and the States

An AO must demonstrate to CMS that it has the ability to
effectively evaluate a health care facility's compliance with the
Medicare conditions using survey processes that are comparable to those
survey methods, procedures, and forms required by CMS and as
implemented by the SAs. A general description of SAs' survey processes
are set out at Sec. 488.26 and specified in the SOM.
As part of the application process as set out at Sec. 488.5, CMS
is required to complete a survey processes review as part of the AO
application review process. The purpose of the survey processes review
is to determine whether the AO's survey processes are comparable to the
CMS survey processes. The survey process comparability review is done
by reviewing information in the application, such as, the AO's survey
activity guides, organizational procedures for surveyors, surveyor
training materials and AO survey requirements. CMS also conducts an in-
person observation of an AO survey (carried out by a CMS survey
observation team) as part of CMS' review of an AO's application. The
purpose of the survey observation is to ensure that the AO surveyors
follow the processes set out in the application and to ensure that the
AO surveyors evaluate all Medicare requirements.
Sections 1865(a)(1) and 1865(a)(2) of the Act require us, when
making this finding, to consider a national AO's ``survey procedures''
and ``. . . its ability to provide adequate resources for conducting
required surveys and supplying information for use in enforcement
activities, its monitoring procedures for provider entities found out
of compliance with the conditions or requirements. . . .'' Our
longstanding requirements at Sec. 488.4(a)(3) implemented this
statutory provision by requiring AOs to provide us with detailed
information on their survey processes, and our regulations at Sec.
488.5 and Sec. 488.8 set out the procedures for comparability review.
We further discussed AO survey procedures' comparability to our SA
survey processes and the SOM in the May 22, 2015 final rule published
in the Federal Register, entitled ``Medicare and Medicaid Programs:
Revisions to Deeming Authority Survey, Certification, and Enforcement
Procedures'' (80 FR 29795) (hereinafter referred to as the ``2015 AO
final rule''). We assess comparability by reviewing the information in
the AO's application in light of the SOM survey process requirements
for SAs, which implements the survey process requirements found in
parts 488 and 489 of our regulations. The role of the SOM is to provide
explicit guidance on the process to assess providers' and suppliers'
compliance with our regulatory requirements. We do however note, that
the AOs are already required to submit the documentation and that most
AOs provide this within their applications, therefore we do not believe
this imposes any additional burden on the AOs, as this has been a long-
standing expectation as described in the preamble of this proposed rule
and the 2015 AO final rule (80 FR 29795) which stated that while the
explicit reference to the SOM was removed, ``this will not change our
practice of assessing comparability in light of the SOM survey process
requirements for SAs, which implement survey process requirements found
in parts 488 and 489 of our regulations governing certification and
provider agreements.

[[Page 12015]]

As previously noted, CMS received 22 AO applications between
January 2017 and August 2021. Of those 22 applications, 14 were
returned to the AO for revisions to the AO's survey processes and
policies, distinct from the finding that all 22 AO's standards were not
initially comparable with the Medicare conditions. These required
survey process revisions included ensuring all surveys were unannounced
in accordance with Sec. 488.5(a)(1)(i), which we discuss in section
IV.A of this proposed rule. Other applications were returned for
inconsistencies with our patient or representative complaint processing
guidance set out in chapter 5 of the SOM. Additionally, among these 22
applications, we identified concerns within the AO survey processes
during the on-site survey observations, as authorized under Sec.
488.8(h). The following concerns were noted during the survey
observations for these 22 applications:
The survey citations and rationales for citing or not
citing ``Governing Body'' Medicare condition violations (for example,
42 CFR 482.12) were inconsistent with CMS' SA survey methodologies;
The AO's failure to enforce the deadlines by which
facilities must come into compliance after receiving adverse survey
results;
Conflicting timeframe(s), such as the required number of
days required to conduct follow-up activities, including follow-up
surveys, for facilities that have previously demonstrated non-
compliance at the condition-level; and
Incorrect number of medical records reviews during a
survey. (CMS requires that AO surveyors review a specific number of
medical records, based on the facilities' patient volume, to ensure the
surveyor have an accurate picture of patient care services provided
within the facility).
CMS' concerns about the failures of AOs to conduct in-depth
investigations; the lack of consistency and comparability exhibited by
our having to return all received AO applications for corrections in
survey standards and processes; the excessive frequency of disparate
findings between AOs and SAs, as further explained in section IV.I of
this proposed rule; and the failure to review medical records, as
required by SA procedures, all strengthen our resolve to ensure
consistency in AO performance. Our initial and renewal application
reviews are the foundation for our oversight of AOs to determine the
AO's ability to ensure facilities adhere to minimum Medicare
conditions.
Because of these disparities, we propose to strengthen our
requirements under Sec. 488.5. We refer readers to our discussion of
these proposals found in section IV.F of this proposed rule, that would
require AOs that accredit Medicare-certified providers and suppliers to
use a survey process that is comparable to the survey processes and
procedures used by CMS and the SA. We note that this has been the
expectation under the existing requirements, as a condition of
obtaining and retaining deeming authority. We propose to increase the
specificity of our application and reapplication requirements for
national AOs to improve documentation that would demonstrate this
comparability.

F. Proposal To Revise the AO Application Documentation Requirements
Related to the Survey Processes (Sec. 488.5(a)(4); Sec.
488.5(a)(4)(iii); Sec. 488.5(a)(4)(v); Sec. 488.5(a)(4)(vii); Sec.
488.5(a)(4)(xi); Sec. 488.5(a)(5); Sec. 488.5(a)(6); Sec.
488.5(a)(12); Sec. 488.5(a)(13))

To achieve our goal to require the AOs to use a survey process that
is comparable to that used by CMS and the SAs (and in alignment with
our proposal at Sec. 488.4(a)(2) regarding comparable survey
processes), we propose the following revisions and additions to the
existing AO application regulation requirements.
1. Proposed Revisions to Sec. 488.5(a)(4)(Description of Survey
Process)
At Sec. 488.5(a)(4), we propose to add language which includes
what we believe to be the core fundamental activities of the survey
process, such as pre survey preparation; offsite preparation; entrance
interview and activities; information gathering and investigation,
analysis of information; exit conference; post-survey activities; and
statement of deficiencies-related activities. These are processes used
by the SA which are needed to ensure that a Medicare-participating
provider or supplier receives an unbiased, independent survey.
We have observed, both in our on-site observation of AOs during the
existing process set out at Sec. 488.8(h), as well as during the VRP
pilot conducted 2018 through 2019, that AOs often provided daily
briefings to and had frequent discussions with the management of the
surveyed facility whose purpose was not clearly described in the AO's
applications. We noted that these ``meetings'' with facility management
impeded or did not allow for sufficient time for the survey team to
complete survey activities, such as direct observations or interviews.
Therefore, the proposal to add the core activities, as well as the
revisions outlined below, would further strengthen comparability
between SAs and AOs, while continuing to allow for flexibilities in the
survey processes used by AOs. These requirements, as revised, shall
become applicable beginning [date 1 year after the effective date of
the final rule].
2. Proposed Revisions to Sec. 488.5(a)(4)(iii) (Documentation of
Surveyor Forms and Guidance)
Section 488.5(a)(4)(iii) currently requires that AOs applying for
deeming authority provide, among other documentation, copies of the
organizations survey forms, guidelines and instructions to surveyors.
We propose to be more specific about the level of detail we require
from the survey instructions and guidance the AO provides to us when
seeking our approval. Specifically, we propose to require detailed
information regarding how the AO surveys for facility compliance with
the following core activities or standards within the Medicare
Conditions, such as: Governing Body; Patient Rights; Emergency
Preparedness; Quality Assessment and Performance Improvement; Medical
Staff; Nursing Services; Medical Records Services; and Infection
Control. These core activities and standards are part of every state
survey and based on Medicare Conditions. With respect to each of these
survey subject areas, we would require the applying AO to provide
documentation on the instructions it provides for surveying these
Medicare conditions, including survey probes, interview questions, and
methods for their own review of facility documentation pertaining to
these Medicare conditions.
It has become evident through our validation and comparability
reviews of AOs that the documentation we currently request from them no
longer suffices to adequately determine whether the AO surveyors are
investigating these Medicare conditions sufficiently to ensure the
health and safety of Medicare beneficiaries and other patients. AOs
have failed to survey adequately for facility compliance with their
respective documentation requirements, including specific standards or
survey processes. We also propose that AOs submit their patient and
staff interview questions. By having access to these questionnaires, we
would be able to determine whether there are gaps in the survey
processes

[[Page 12016]]

which are leading to the disparity findings, as we have seen in our
validation surveys.
3. Proposed Revisions to Sec. 488.5(a)(4)(v) (Survey Review Process)
At Sec. 488.5(a)(4)(v), we propose to add additional areas
clarifying and strengthening the requirement that AOs provide a
description of their document review processes in their approval
applications. We propose to add that AOs must describe processes and
surveyor procedures related to the review of medical records, medical
staff credentialing procedures; personnel files (including staff
competency); and the number of patient observations, patient interviews
and staff and facility interviews.
We have noticed that many AOs fail to review adequate numbers of
records for the provider/supplier type involved. In the review of the
22 AO applications received between 2017 and September 2021, a total of
nine AOs were identified to have not reviewed the adequate number or
records. Additionally, we have observed that some AO survey practices,
such as interviewing patients in non-confidential settings, and
deficient complaint investigations, undermine the integrity and
accuracy of AO surveys. We are concerned that staff or patients may not
be honest and candid if another facility staff member or supervisor is
present during interviews. The expectations are that interviews are
conducted privately with staff. For example, in Appendix A of the SOM,
we explicitly require surveyors to ``Explain that all interviews will
be conducted privately with patients, staff, and visitors, unless
requested otherwise by the interviewee.'' Privacy in interviews with
staff is important and encourages the likelihood of honest feedback
about an organization. Additionally, we also identified a few (three of
22 applications) during our survey observations of AOs onsite,
instances in which the AO did not observe actual performance of
medication administration, wound care or other services provided by the
accredited facility, and most observations within the hospital setting
were surgical time-outs (part of the Universal Protocol and performed
in the operating room, immediately before the planned procedure is
initiated). In one instance, the AO failed to ask the facility for any
patient/representative complaint information, which indicates that the
AO failed to conduct any investigation as to how the facility manages
complaints and grievances. These specific examples raise concern in
that the AO survey process does not sufficiently ensure safe practices
for patients.
Furthermore, as noted in our discussion of proposed Sec.
488.5(a)(4)(iii), we have also identified multiple instances in which
the AOs have conducted limited review of facilities' staff
credentialing and competency testing activities. For instance, in one
survey observation, we observed that the AO reviewed the personnel
files of only one licensed practical nurse (LPN) and one phlebotomist,
and did not review any personnel files for RNs, pharmacists, or
dietitians, as outlined in Appendix A of the SOM, which we consider to
be critical staff for this provider setting. In another survey, the AO
determined that nursing staff were not documenting chains of custody of
narcotic medications, but failed to review the facility's
pharmaceutical policies and procedures, and conducted no interviews of
pharmacy staff. In such circumstances where a category of documentation
was missing from the facility's record, we would mandate that the AO or
SA conduct further investigations to determine the reason for the
lapse.
4. Proposed Revision to Sec. 488.5(a)(4)(vii) (Correction of
Identified Non-Compliance)
At Sec. 488.5(a)(4)(vii), we propose to add additional language to
the existing requirement that the AO must provide us with descriptions
of their procedures and timelines for monitoring the provider's or
supplier's correction of identified non-compliance with the
accreditation program's standards. We believe this requirement is not
specific enough for enforcement; we have regularly had to request
revisions of documents submitted by AOs during our review of
applications and re-applications over the years. We propose to clarify
this language by adding the requirement that AOs must also include
documentation related to dates established by the AO and how those
accreditation dates are determined by the AO when deficiencies may be
found during initial and reaccreditation surveys, as well as the AOs
process for accreditation decisions based on survey findings. We also
propose to require the AOs to provide as part of this standard, their
investigative and organizational process which the AO uses to make
determinations on accreditation or the removal of accreditation and
recommendation to the Survey Operations Group (based out of the various
CMS Survey and Enforcement Division Locations) to remove deemed status
of the non-compliant facility. We have also proposed additional changes
at Sec. 488.5(a)(4)(viii) and refer readers to section IV.G ``Proposal
to Require AOs to Provide CMS with Survey Findings'', of this proposed
rule.
5. Proposed Revisions to Sec. 488.5(a)(4)(xi) (AO Training and
Education Programs)
At Sec. 488.5(a)(4)(xi), we propose to add a new requirement to
require AOs to provide CMS with documentation summarizing their staff
training programs, whether web-based or via methods such as Power Point
presentations or hard-copy materials, which would provide an overview
of how they train surveyors to follow their survey processes, and,
where applicable, highlight differences from CMS survey processes.
Currently, CMS receives limited training materials the AO provides to
its surveyors; therefore, when conducting survey observations as under
our authority at Sec. 488.8(h), it is often challenging to understand
differences in survey processes. We may receive an AO's printed
materials for training and/or downloaded versions of electronic
surveyor training platforms; however, these materials vary. These
materials indicate that some AOs collect employees' oral evidence for a
survey, as opposed to a more document-focused review done by the SAs.
AOs' applications do not always provide us with the entire scope of
surveyor education the AO provides to its surveyors, therefore
challenging our review of comparability. The current regulation at
Sec. 488.5(a)(8) only requires the AO to give us ``[a] description of
the content and frequency of the organization's in-service training it
provides to survey personnel.'' CMS frequently asks AOs to submit
additional training and education materials during the application
review processes. Requesting the AOs' staff training programs and
documentation as outlined in the proposal will provide CMS with greater
enforcement capabilities and allow CMS to assess the AOs' consistency
in training against those of required by the SAs. Additionally, because
we review AO applications for comparability to CMS survey processes,
this additional information would be invaluable to CMS' better
understanding of the AOs' survey processes prior to conducting a survey
or during the validation or proposed direct observation process, as
discussed in sections II.D and IV.K.3 of this proposed rule.
6. Proposed Revisions to Sec. 488.5(a)(5) (Composition of Survey Team)
At Sec. 488.5(a)(5), we propose to add requirements which describe
the AOs'

[[Page 12017]]

minimum criteria for determining the size and composition of survey
teams for the facilities they accredit. We propose to require the AO to
provide us with documentation describing the criteria or process by
which the AOs determines the makeup of their survey teams, based on:
(1) the size of the facility to be surveyed, based on average daily
census; (2) the complexity of services offered, including outpatient
services; (3) the type of survey to be conducted; (4) Whether the
facility has special care units or off-site clinics or locations; (5)
Whether the facility has a historical pattern of serious deficiencies
or complaints; and, (6) Whether new surveyors are to accompany a team
as part of their training.
Our on-site survey observation of AO surveyors has found some
concerning practices. For example, we understand some AOs use time
limits on the length of their investigations, which can limit the depth
and accuracy of the investigation. One AO also only permitted a 2-day
period in which to conduct a survey of a critical access hospital
(CAH), whereas the policy of the SA is based on the scope of services
provided by the provider, type of survey to be conducted, complexity of
services offered and whether the facility has off-site locations. The
AO's policies did not allow for flexibility to have the survey exceed 2
days, which would likely not allow for all departments to be surveyed,
or in the event of an immediate jeopardy or condition-level non-
compliance finding, for an investigation to be conducted. While
fortunately no condition-level no-compliance was identified, the strict
AO policy on timeframe of survey conflicts with the intent to complete
the investigative process and did not allow for flexibility in survey
length. It appears based on this example that at least one AO may not
be giving considerations to the size and number of outpatient
departments or provider-based locations per facility and the need to
investigate immediate jeopardy or condition-level non-compliance when
deciding on time limits for surveys. Additionally, some AOs have not
always ensured surveys are conducted on all off-site locations that are
still certified under the main campus or facility CCN as is required
for SAs in accordance with Appendix A of the SOM--Survey Protocol,
Regulations and Interpretive Guidelines for Hospitals, Survey Protocol,
Task 3 (``Information Gathering/Investigation''). This proposed
provision would be effective one year following the publication of the
final rule.
Clarifying these minimum expectations would help AOs meet Medicare
conditions and create more consistency between the approaches used by
AOs and the SAs.
7. Proposed Revisions to Sec. 488.5(a)(6) (Adequate Number of
Surveyors for Size of Facility)
At Sec. 488.5(a)(6), we propose to add language to the existing
requirement that requires the AO to provide documentation demonstrating
the overall adequacy of the number of the organization's surveyors,
including how the organization will increase the size of the overall
survey staff to match growth in the number of accredited facilities
while maintaining regular re-accreditation intervals for existing
accredited facilities. We propose to add language demonstrating that
the AO has enough surveyors to ensure that a sufficient amount of time
can be allotted to its clients to complete all survey activities.
Through our direct observations as part of the application process,
we identified several instances in which the scope of document reviews
was limited and the content of medical records was not thoroughly
reviewed, because it seems the AO surveyors did not have enough time to
review records. This may be a systemic issue across AOs. This proposed
provision would be effective 1 year following the publication of the
final rule.
8. Proposed Revisions to Sec. 488.5(a)(12) (Complaint Survey
Documentation Requirements)
At Sec. 488.5(a)(12), we propose to add additional elements
critical to the AOs' effective investigation of complaints about their
client facilities. Specifically, we propose that the AO in its
application documents for CMS approval of its deeming authority would
also have to include: (1) a description of its process for triaging and
categorizing complaints about the surveyed facility; (2) timeframes for
responding to complaints and a method to track and trend complaints
(for example, frequency of similar complaints, complaint type, etc.)
received with respect to the AOs accredited facilities; (3) procedures
and persons responsible for the review of plans of corrections; and
procedures for follow up if the plans of corrections are not adequate;
(4) AO requirements for plans of corrections for standard level
deficiencies; (5) follow up survey procedures and monitoring of
condition-level findings; (6) procedures for addressing immediate
jeopardy deficiencies; and (7) sharing of previous deficiency findings
or complaints with survey teams. The existing regulatory requirement
for the AO to provide procedures for responding to, and investigating,
complaints against accredited facilities, including policies and
procedures regarding referrals is insufficient. Of our 19 AO initial
and renewal applications received in the past years, CMS has requested
additional AO documentation for this particular standard in order to
adequately assess the comparability of survey processes. Strengthening
the language will bring greater clarity as to the expectations for
documents to the AO submitting an initial or renewal application.
9. Proposed Revisions to Accreditation Decision-Making Policies and
Reporting Sec. 488.5(a)(13)
At Sec. 488.5(a)(13), we propose to re-designate existing
paragraph (ii) to (iii) and add two new paragraphs at (ii) and (iv).
The section currently requires an AO applying or re-applying for
deeming authority to provide CMS with a description of its processes
for accreditation status decision making. The proposed revision would
require the AO to document its specific policies and procedures for
reporting accreditation decisions to CMS, including timeframes for
notification. Additionally, we propose to require the AO to submit
specific documentation describing how it will inform us when one of the
facilities they accredit withdraws from accreditation. This
communication is necessary since it alerts us that such facility will
need to be surveyed by the SA next time. By requesting this additional
information related to accreditation decisions made by the AOs, as well
as reviewing documentation on how the AO notifies their facilities and
CMS and our SAs of a facility withdrawing from the AO, CMS will
strengthen the existing requirements and would create a more
consistent, uniform review of the AO survey process for comparability.
We also believe by requiring this information, we will be able to
review the AOs' processes for reporting. Additionally, we will also be
able to identify under what circumstances an AO maintains accreditation
of a facility versus the potential CMS decision to drop deeming
authority. We have found in several instances that even in light of
serious health and safety deficiencies and CMS's removal of deeming
authority, a facility can still remain accredited, which may provide an
untrustworthy perception to the public that the facility has no health
and safety concerns. When CMS provides deeming

[[Page 12018]]

authority to an AO, the expectation is that its standards meet or
exceed Medicare conditions and that surveys are comparable to those of
the SAs, which is not the case for accreditation versus deeming.
Facilities may voluntarily end their deeming and accreditation from an
AO or be involuntarily removed from deeming authority. When this occurs
under the deeming process, the facility is placed under the SA's
jurisdiction, meaning the SA will survey and monitor the facility for
compliance with federal requirements. However, in situations where the
facility's deemed status is removed involuntarily for non-compliance,
yet the AO continues to accredit the provider, CMS believes the public
perception is that these facilities are still meeting or exceeding the
requirements for Medicare, which may not be true.
Through the establishment of a more rigorous and comprehensive
survey process review during the required application and renewal
process, our concerns regarding insufficient compliance would be
addressed. The proposed additional and revised requirements would
ensure a more uniform assessment and improve our evaluation of AO
performance to ensure that surveys conducted by AOs are comprehensive
and fully examine all Medicare conditions. We also believe that
codifying these detailed documentation requirements in regulation would
establish a consistent standard across all AOs and would bring
uniformity and transparency to the accreditation process.
We propose that the provisions clarifying the existing requirements
to require AOs that accredit Medicare-certified providers and suppliers
to provide us with more detailed descriptions of their survey processes
and procedures would become applicable 1 year from the effective date
of final rule.

G. Proposal To Require AOs To Provide CMS With Survey Findings (Sec.
488.5(a)(4)(viii))

General AO survey findings are entered into a CMS database known as
the Accrediting Organization System for Storing User Recorded
Experiences (ASSURE). This database collects general information about
the accreditation survey, such as, date, survey findings and severity
of problems indicated by the findings. It generally does not include
actual survey reports. Currently AOs provide a limited set of data for
surveys within the ASSURE database. We use this information in
addressing administrative program elements, and in assessing AO
performance. While we have the authority to request this information
from the AO, we generally do so only when we determine that it is
necessary for follow-up. To date, we have not consistently required the
AOs to submit copies of their survey reports and related information.
We propose to modify Sec. 488.5(a)(4)(viii) to require that AOs
provide all survey reports to CMS, which would not be disclosed except
as permissible by statute, pursuant to subsection 1865(b) of the Act.
AOs would be required to submit a statement that organization agrees to
provide with a copy of all survey reports, including but not limited
to, initial, re-survey, and complaint survey reports, and/or any other
information related to survey activities as CMS may require (including
corrective action plans) as part of its initial and renewal
applications, or upon CMS request. The proposed revision to Sec.
488.5(a)(4)(viii) would expand the requirement from the current
requirement that AOs provide survey reports from applicants seeking
initial participation in Medicare (with other surveys only upon
request). Under our proposal, we would have access to any survey
reports, including initial, reaccreditation, complaint surveys, and
corrective action plans that CMS may require. These reports, like those
of survey agencies, would assist CMS in program analysis of tracking
citations issued to accredited facilities to determine whether there is
a concern with an AO's performance. Similarly, these reports would
assist in reviewing disparate findings in which the SA may have cited a
deficiency within an accredited facility that the AO failed to
recognize.
Current Sec. Sec. 488.5(a)(4)(viii) and 488.5(a)(11)(ii) allow CMS
to receive copies of the AOs' survey reports. However, CMS is
prohibited by section 1865(b) of the Act as well as Sec. 488.7(b) from
disclosing these surveys to the public, with the exception that CMS may
disclose such a survey and related information to the extent that they
are from home health agencies, or hospice programs, or pertain to an
enforcement action taken by CMS. Furthermore, the stem statement of
Sec. 488.7 requires that a Medicare participating provider or
supplier, in accordance with Sec. 488.4, must authorize its respective
AO to release to CMS a copy of its most current accreditation survey
including corrective action plans and any information related to the
survey that CMS may require.'' Section 488.7(b) further provides that
CMS may publicly disclose an accreditation survey and information
related to the survey, upon written request, but only to the extent
that the accreditation survey and survey information are related to an
enforcement action taken by CMS.
CMS has the authority under section 1875(b) of the Act as well as
regulations at Sec. 488.8(a)(1) to evaluate the performance of the AOs
through review of the organizations' survey activity. Through
consistent access to AO survey findings CMS would enhance our ability
to analyze survey findings and process, identify emerging quality of
care issues and patterns in AO survey findings, and, ultimately,
improve care for our beneficiaries.
As the proposal for revision to Sec. 488.5(a)(4)(viii) is being
made in connection with our proposal to require the AOs that accredit
Medicare-certified providers and suppliers to use the proposed revised
comparable survey processes and procedures, we propose that the
revisions to Sec. 488.5(a)(4)(viii) become applicable 1 year from the
effective date of the final rule.

H. Proposal To Require That AO Surveyors Must Take the CMS Online
Surveyor Basic Training

Prior to 2006, CMS offered basic surveyor training courses in a
traditional in-person classroom setting. Over time, we began providing
online basic surveyor training courses for each provider and supplier
type (ambulatory surgical centers (ASCs), hospitals, home health
agencies (HHAs), etc.), as well as training specific to writing skills
for surveyor documentation.
Basic training online courses are designed to provide surveyors
with the basic knowledge and skills needed to survey the respective
provider or supplier type for compliance with the Medicare conditions.
The online courses also help develop and refine surveying skills,
foster an understanding of the survey process, and enhance surveyors'
overall ability to conduct and document surveys. Courses are self-paced
web-based training. Users may access the online courses at any time and
have ongoing access to the course. This affords surveyors the
opportunity to refresh knowledge regarding Medicare conditions and
processes whenever necessary. The numbers of learners trained in online
courses have been steadily increasing since their inception.
Currently, the trainings are publicly available through the CMS
Quality, Safety & Education Portal (QSEP) website at https://qsep.cms.gov. These trainings are free of charge for AO surveyors and
the public at large.

[[Page 12019]]

SA surveyors are required to take CMS program-specific trainings
along with SA-led orientation, field survey observations, and mentoring
as part of a comprehensive training and education program to assure an
adequately trained, effective surveyor workforce.
SAs perform validation surveys on a sample of providers and
suppliers (such as hospitals, CAHs, ASCs, and HHAs) accredited by the
AOs. Validation surveys compare the survey findings of the AO to those
of the SA to see if there are any disparities. The disparities found
between an AO's surveys and an SA's surveys is used in a performance
measure called the ``disparity rate'' and is tracked by CMS as an
indication of the quality of the surveys performed by the AO as
described earlier in this proposed rule.
The disparity findings between AO surveyors and SA surveyors may,
in part, be attributed to differences in surveyor training and
education, which varies from AO to AO, and may be inconsistent with the
CMS-provided SA surveyor training discussed earlier in this proposed
rule.\11\ We further believe that uniform surveyor training would
increase the consistency between the results of the surveys performed
by SAs and AOs, and have a positive impact on the historically high
disparity rates. The Fiscal Year 2020 ``Report to Congress: Review of
Medicare's Program Oversight of Accrediting Organizations (AOs) and the
Clinical Laboratory Improvement Amendments of 1988 (CLIA) Validation
Program,'' \12\ showed variation in overall disparity rates, by
provider type, as well as by the AO. For example, the disparity rate
from FY 2018 to FY 2019, hospitals, HHAs and ASCs had the only
decreases in disparity rates of all the program types, with a 5-
percentage point, 11-percentage point and 7-percentage point decrease
respectively. The disparity rates for psychiatric hospitals increased
by 7-percentage points from FYs 2018 to 2019. The disparity rates for
CAHs and hospices increased by 5-percentage points and 3-percentage
points respectively from FY 2018 to FY 2019. On November 4, 2021, we
published a final rule in the Federal Register, entitled, ``Medicare
and Medicaid Programs; CY 2022 Home Health Prospective Payment System
Rate Update'' (86 FR 62240). In that final rule, we finalized
implementing regulations to require AO surveyors to have successfully
completed the relevant CMS-sponsored basic hospice surveyor training
prior to conducting any hospice program surveys in accordance with
Division CC, section 407 of the Consolidated Appropriations Act of 2021
(CAA 2021) .
---------------------------------------------------------------------------

\11\ https://qsep.cms.gov.
\12\ The most recent Report to Congress may be accessed at:
https://www.cms.gov/files/document/qso-22-06-ao-clia.pdf.
---------------------------------------------------------------------------

In addition to the recent hospice program surveyor training
requirements, we propose to amend the provision at Sec. 488.5(a)(8) by
adding new paragraphs (a)(8)(i) to (a)(8)(iv), which would impose a new
training requirement on those surveyors working for AOs that accredit
Medicare-certified provider and suppliers. We note that we had
previously made a similar proposal in the calendar year (CY) 2019 Home
Health Prospective Payment System Rate Update proposed rule (83 FR
32470, July 12, 2018). However, we did not finalize this proposal, due
to commenters' concerns with course enrollment access and the amount of
time we estimated it would require for an AO surveyor to complete the
course.
CMS believes the concerns raised by interested parties during the
previous proposed rule comment period have been addressed by narrowing
the scope of the required training and providing additional details
regarding implementation. Therefore, we are again making this proposal
to address the consistency of surveyor knowledge and interpretation,
since we propose to require the AOs to use Medicare conditions and
survey processes. We describe the courses required as well as the
estimated time for each in section VI of this proposed rule. We propose
at Sec. 488.5(a)(8) a description of the content and frequency of the
organization's in-service training it provides to survey personnel and
we would also require AOs to submit their training materials to CMS as
part of the application process. We additionally propose at Sec.
488.5(a)(8)(i) to require that all AO surveyors complete two CMS
mandatory courses which instruct surveyors, for all facility types, how
to document their findings in the standardized survey materials. We
would also require AO surveyors to complete all relevant CMS online
program-specific basic surveyor training, which we have already
established for state and federal surveyors. For example, AO hospital
surveyors would be required to take the following CMS online courses:
(1) Principles of Documentation for Non-Long-Term Care; (2) Basic
Writing Skills for Surveyor Staff; (3) and, Hospital Basic Training. A
hospice surveyor would take the Principles of Documentation for Non-
Long-Term Care; Basic Writing Skills for Surveyor Staff; and Hospice
Basic Training courses. If an AO surveyor participates in both hospital
and hospice surveys they would take the two documentation courses and
the two basic training courses. These courses would be the minimum
mandatory requirements for AO surveyors. In addition, we would also
require that all AO surveyors would be required to take any updates to
the CMS online surveyor courses when necessary. Any training above and
beyond the minimum CMS online surveyor courses would be at the AO's
discretion.
We propose at Sec. 488.5(a)(8)(ii), that AO surveyors hired after
the date of implementation of this provision would be required to
complete the required CMS online surveyor training courses prior to
serving on a survey team (except as a trainee). A time requirement is
necessary to ensure that the AO surveyors take the CMS online surveyor
training in a timely manner and is consistent with the existing hospice
program surveyor training requirements at 42 CFR 488.1115(a).
We propose at Sec. 488.5(a)(8)(iii) that AOs would also be
required to document that the CMS online surveyor training courses were
completed and the date of completion in the surveyor's staff personnel
records. The purpose of this requirement would be to allow the AO and
CMS to have records that document that the requirements had been met by
each surveyor. We would review these training records during our onsite
visit to the AO's office that is performed as part of the initial and
renewal application process. We further propose at Sec.
488.5(a)(8)(iii) to require that the AOs maintain this documentation of
course completion by each surveyor for no less than one accreditation
cycle, so we can verify that AO surveyors had completed the online
courses as part of the AO's next renewal application process. One
accreditation cycle would be defined as the period of time during which
the AOs' CMS approval is in effect, starting from the date of
application approval and continuing until the date of approval of the
next renewal application.
This proposed requirement aligns with and expands upon recent
regulations that require hospice program AO surveyors to successfully
complete the CMS online Basic Hospice Surveyor Training prior to
performing any hospice program surveys.
In addition, we propose at Sec. 488.5(a)(8)(iv) that the
provisions proposed at Sec. Sec. 488.5(a)(8)(i) through (a)(8)(iv)
would be applicable beginning 1 year after the effective date of the
final rule.

[[Page 12020]]

I. Proposal To Establish Criteria for ``National in Scope'' (Sec.
488.1)

On April 5, 2013, we published a proposed rule in the Federal
Register entitled, ``Medicare and Medicaid Programs; Survey,
Certification, and Enforcement Procedures'' (78 FR 20564), hereinafter
referred to as ``2013 AO oversight proposed rule'', which proposed
modifications to the CMS AO oversight regulations. In the 2013 AO
oversight proposed rule, we stated that the demonstration of ``national
in scope'' by an AO must be specific to each accrediting program for
which new or renewed CMS approval is sought. We also proposed to define
``national accreditation organization'' in Sec. 488.1 to specify that
CMS requires an AO program seeking initial approval to ``already be
fully implemented and operational nationally'' (78 FR 20566). However,
in the 2015 AO final rule (80 FR 29796), we finalized the policy that
we would not require an AO to reach facility minimums or meet specific
geographic distribution requirements to be deemed ``national in scope''
(80 FR 29802). We did this because we believed AOs should be able to
demonstrate the ability to scale over time.
Currently, we require that an AO's accreditation program be
national in scope in order to receive CMS approval. However, we have
never specified objective criteria for ``national in scope'' in
regulations. Therefore, as the number of AOs (and the number of
applications from AOs) grow, it is in the best interest of CMS and the
AOs to establish specific criteria to define ``national in scope.''
Establishing a specific definition and criteria for what CMS would
consider to constitute widely located geographically across the United
States (U.S.) would ensure that CMS is objective and consistent during
the AO application review process when making a determination as to
whether an AO's accreditation program is, in fact, national in scope.
This would further ensure that new AOs, submitting applications for
deeming authority, are represented across the nation and not clustered
within one area of the country. Furthermore, this also provides an
opportunity for facilities to choose any AO with a CMS-recognized
accreditation program for its provider/supplier type, versus only
having one AO to choose.
Therefore, we propose to add a definition for ``National in
scope,'' to the CMS regulations at Sec. 488.1 to establish criteria
for determining when an AO's accreditation program meets the
requirement. We propose that the definition, ``National in scope''
would mean that the providers and suppliers accredited by an AO under a
specific accreditation program, must be widely located geographically
across the U.S. The proposed requirement for ``national in scope''
would have two components. First, the AO would be required to have
accredited at least five providers or suppliers under the accreditation
program in question. Second, the five providers or suppliers accredited
by the AO under that accreditation program would have to be
geographically located in at least five out of the six geographic
regions.
The addition of the proposed definition of ``National in scope'',
requires that we also define the term ``geographic regions of the
U.S.'', because this is a component of the definition of ``National in
scope.'' Therefore, we propose to add a definition for ``Geographic
regions'' at Sec. 488.1.
The proposed six geographic regions consist of six groups of states
that cover the northeast, southeast, mid-west, central, south, and
western areas of the United States which provide six possible areas in
which an AO could accredit a provider or supplier to meet the second
part of the ``national in scope'' test. In contrast, the use of a
simple north, south, east and west geographical division of the U.S.
would only provide four possible regions in which an AO have accredited
providers and suppliers.
We believe that use of these six geographic regions as the
geographical test for ``national in scope'' would provide a standard by
which CMS could measure whether an AO has accredited the required
number of health care providers or suppliers in varying geographical
areas of the U.S. We further believe the requirement that an AO have
one provider or supplier in at least five of the six geographic regions
would demonstrate the AO's ability to scale up and develop a national
presence over time and align with CMS' current consortiums or
regions.\13\ AOs would need to be able to demonstrate this standard in
their initial applications for deeming authority, as well as continue
to meet this definition, which would be evaluated within their renewal
applications.
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\13\ CMS Organizational Chart, Page 17, Survey Operations Group
https://www.cms.gov/About-CMS/Agency-Information/CMSLeadership/Downloads/CMS_Organizational_Chart.pdf.
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We also believe that this proposed definition of ``Geographic
regions'' would ensure that we are impartial and consistent during the
application review process. We also believe that this proposed
definition would provide the AOs with objective criteria for the
definition of ``national in scope'' that they can strive to meet prior
to submitting an application, especially for possible new accrediting
programs.
We note that Sec. 488.1 currently defines ``national accrediting
organization'' as ``an organization that accredits provider entities
(as that term is defined in section 1865(a)(4) of the Act) under a
specific program and whose accredited providers and suppliers are
widely located geographically across the U.S.'' Because we proposed to
add a specific definition for ``National in scope'' to Sec. 488.1,
that requires a two-part test, it is also necessary to update the
definition of ``National accrediting organization'' to add the
requirement that the AO must be national in scope.
This would ensure that new AOs submitting applications for Medicare
approval of their accreditation programs, would be required to show
that they have the ability to provide accreditation services to
providers and suppliers across the nation and not just those clustered
within one area of the country. Making it a requirement that AOs be
capable of providing accreditation services throughout the U.S.
provides the opportunity to health care providers and suppliers in all
regions of the U.S. to obtain deeming accreditation from the AO of
their choice.
Therefore, we propose to revise the existing definition of
``National accrediting organization'' at Sec. 488.1. The proposed new
definition of ``National accrediting organization'' would read as
follows ``National accrediting organization means an accrediting
organization that is national in scope and accredits provider or
suppliers, under a specific accreditation program.''
We propose to add the new definition for ``National accrediting
organization'' so that we can include the phrase ``is national in
scope'' within the said definition. The purpose for revising the
definition of ``National accrediting organization'' is to enforce
national in scope requirement for AOs.

J. Proposal To Revise the Definition of ``Rate of Disparity'' and To
Use the Process and Outcome Disparity Rates and Performance Measures
(Sec. 488.1)

In section IV.L of this proposed rule, we propose to revise the
validation program by using two different types of validation surveys,
which are: (1) the 60-day ``look-back'' validation survey and, (2) and
a direct survey observation approach, to evaluate the performance of
the AOs. Validation surveys are full surveys performed for a
representative

[[Page 12021]]

sample of accredited facilities. Look-back validation surveys are
completed by the SA within 60 days of an AO's full accreditation survey
for the same facility. In some cases, representative sample ``mid-cycle
validation surveys'' may be conducted whether or not there has been a
preceding AO survey.
The analysis of the validation survey findings are reported as a
``disparity rate.'' As previously discussed in section II.C of this
proposed rule, this rate of disparity is currently defined at Sec.
488.1 as the percentage of all sample validation surveys for which a SA
finds noncompliance with one or more Medicare conditions and where no
comparable condition-level deficiency was cited by the AO and it is
reasonable to conclude that the deficiencies were present at the time
of the AO's most recent survey of that provider or supplier. The goal
of the validation process is to determine whether the findings of the
two surveys are comparable.
In calculating the current rate of disparity, the numerator is the
number of surveys in which the AO missed at least one condition-level
deficiency found by the SA and the denominator is the number of surveys
in the validation sample. The result is the percentage of validation
surveys where the AO missed finding a significant deficiency identified
by the SA. If the AO missed at least one serious deficiency in a third
of the validation surveys, the disparity rate would be 33 percent. A
lower disparity rate indicates better AO performance.
The existing definition of ``rate of disparity'' is not applicable
to the direct observation validation survey because it focuses on the
survey process as opposed to outcome of the survey. Therefore, we
propose to revise the current definition of ``rate of disparity''
located at Sec. 488.1 and replace this definition with two new
definitions, which are ``outcome disparity rate'' and ``process
disparity rate.''
The outcome disparity rate would be applicable to the look-back
validation survey, which is the current method of validation. We
propose that the new definition of ``outcome disparity rate'' would
generally remain as the existing definition of ``rate of disparity'' at
Sec. 488.1, but would be revised and retitled as ``outcome disparity
rate'' to distinguish it from the ``process disparity rate.''
When calculating the process disparity rate, the numerator for one
provider or supplier for which the direct observation validation survey
is done would be the number of observed survey process findings and the
denominator would be the number of expected survey process findings for
all direct observation validation surveys. The observed survey process
findings are the actual number of Medicare conditions that were
observed being surveyed for by the AO. The expected survey process
findings are the total number of Medicare conditions that the AO should
have surveyed for during the survey observation. The result would be
reported as a percentage. A high percentage indicates greater disparity
between the expected AO performance on direct observation validation
survey and the actual AO performance on the direct observation
validation survey. For example, a direct observation validation survey
with 75 observed process findings out of 100 expected process findings
would yield a process disparity rate of 25 percent [((100-75) / 100) *
100], indicating a 25 percent difference between what is observed and
what is expected (See Figure 1).
[GRAPHIC] [TIFF OMITTED] TP15FE24.002

The proposed process disparity rate would be applicable to the
direct observation validation survey and would be defined as the
difference between the observed survey process findings and the
expected survey process findings.
The overall process disparity rate for a particular AO would be
calculated by taking the average of the process disparity rate for each
direct observation validation survey performed for an accreditation
program of an AO. Preliminary results obtained from the VRP pilot
during the period of June 2018 to July 2019 are shown in Figure 2.
While we will analyze and explain the pilot data when more is
available, we share preliminary data here as a sample of how the
process disparity rate would be calculated if this proposed rule is
finalized as proposed.

[[Page 12022]]

[GRAPHIC] [TIFF OMITTED] TP15FE24.003

The outcome disparity rate measure would also be a component of
evaluating AO performance. We have been measuring the outcome disparity
rate as a performance measure for years and have historical data to
share. This measure would comprise any look-back validation survey
condition level findings made by the SA that had not been identified by
the AO during their reaccreditation survey, where it is reasonable to
conclude that these deficiencies were present when the AO performed the
survey (see Figure 3).
[GRAPHIC] [TIFF OMITTED] TP15FE24.004

In addition to reporting the overall disparity between the outcomes
found by both the AO and SA, the differences between the observed and
expected survey processes would also be reported as the process
disparity rate.
In FY 2019, we found that 42 percent of the state validation look-
back validation surveys performed for hospitals, the AO did not cite a
comparable deficiency to those cited by the SA. The proposed definition
of new process disparity rate would showcase the average percent
difference between the observed survey process findings and the
expected survey process findings, by provider type.
Figure 4 provides the FY 2020 outcome disparity rate for Medicare
provider types as reported in the January 2021 Report to Congress.
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[[Page 12023]]

[GRAPHIC] [TIFF OMITTED] TP15FE24.005

BILLING CODE 4120-01-C
We note that the average disparity rate across all Medicare
provider types is 32 percent, based on the most recent data, with the
largest disparity rate being

[[Page 12024]]

CAHs' accreditation surveys, at 46 percent. By continuing to monitor
outcome disparities, and further investment in our methodologies for
measuring process disparities would help to bring AOs up to the
standards of SAs.

K. Proposal To Require AOs To Submit a Publicly Reportable Plan of
Correction for Unacceptable Performance Measure Scores (Sec.
488.8(a)(2))

In section IV.J of this proposed rule, we proposed to revise the
definition of ``disparity rate'' to include a process and outcome
disparity rates. We noted that the proposed definition of outcome
disparity rate generally remains the same as the currently defined
definition of disparity rate. We further noted that we have been
measuring the outcome disparity rate as a performance measure for
years. We would note that we would use the new process disparity rate
as a performance measure.
To monitor an AO's ongoing performance as provided by section
1875(b) of the Act and Sec. 488.8, we propose in paragraph (a)(2) to
expand the types of validation activities included in the performance
review. We also propose in paragraph (a)(4) to require AOs to submit a
plan of correction that would be publicly reported, when the AO's
performance on survey activities identify disparity concerns either
through the outcome disparity rates or process disparity rates.
We propose to revise Sec. 488.8(a)(2) to broaden activities that
CMS would evaluate in our ongoing review of AOs. Specifically, we would
monitor the results of our outcome disparity rate, the look-back
validation surveys, complaint surveys and the process disparity rate as
determined by the direct observation survey.
We propose to revise Sec. 488.8(a)(4) to require that when an AO's
outcome disparity or process disparity performance measure scores, as
determined from look-back and direct observation validation surveys,
reveal that the AO's accreditation survey activities do not meet an
acceptable performance threshold established by CMS, the AO would be
required to submit an acceptable plan of correction to CMS which
identified corrective action the AO proposed to take to correct their
performance.
We propose at Sec. 488.8(a)(4)(i), to require that the plan of
correction be submitted to CMS for review within 10 business days the
AO being notified by CMS of not meeting the acceptable performance
threshold. We also propose that in order to be acceptable, the AO's
plan of correction would have to: (1) document specific actions being
taken by the AO to address improving performance (proposed Sec.
488.8(a)(4)(i)(A); (2) document the timeframe for implementation of the
plan (proposed Sec. 488.8(a)(4)(i)(B)); (3) plan for ongoing
monitoring of the plan of correction toward achieving an acceptable
level of performance (proposed Sec. 488.8(a)(4)(i)(C); and, (4)
identify the individual responsible for implementation and monitoring
of the acceptable plan of correction (Sec. 488.8(a)(4)(i)(D)).
CMS would subsequently communicate with the AO on the acceptability
of the plan of correction and would provide oversight of
implementation. We propose at Sec. 488.8(a)(4)(ii) that upon review
and approval of the submitted plan of correction, CMS would provide
ongoing evaluation of the progress of plan implementation.
Finally, we propose at Sec. 488.8(a)(4)(iii) that the AO's plan of
correction be made subject to public reporting by CMS. Once approved,
the plan of correction would be publicly available for review. This
means that the acceptable plan of correction would be displayed
publicly by CMS once approved. This plan of correction would be
utilized to increase an AO's accountability for maintaining performance
standards.
The purpose of this oversight is to improve AO survey activity
outcome and processes with the presumption that improvements toward
acceptable performance would improve the health and safety of patients
receiving services in Medicare-participating facilities. This is an
effort to strengthen AO oversight by requiring AOs to address issues
and take corrective action to improve to an acceptable level of
performance. Previously, this was handled verbally or through written
correspondence between the AO and CMS staff without a specific plan of
correction.
The proposed publicly reportable plan of correction would be based
on both an analysis of data to identify the outcome and process
disparity performance measure(s) for which the AO did not meet
acceptable performance as well as significant instances of disparity.
An analysis matrix would outline both outcome performance and process
performance areas of successful achievement and those areas for which
achievement was less than acceptable as demonstrated by the outcome and
process disparity rate data. An example of what a plan of correction
matrix might look like is indicated in Figure 5.
BILLING CODE 4120-01-P

[[Page 12025]]

[GRAPHIC] [TIFF OMITTED] TP15FE24.006

BILLING CODE 4120-01-C
The matrix in Figure 5 is representative of FY 2018 data collected
during the direct observation validation surveys, look-back validation
surveys, and complaint surveys (which investigates specific
allegations) conducted by the SA at AO facilities. If deficiencies were
cited first by the AO and validated by the SA during a look-back or
complaint survey this is considered an outcomes match. If the AO survey
process under direct observation by the SA did not raise concerns, this
indicates a positive outcome and positive process, which are
represented in the top left box. The top right and bottom left boxes
indicate where improvements need to be made in either the process or
outcome of the respective Medicare condition, also known as CoP, while
the bottom right box shows where improvements in both measures should
be made.
The AO would be able to use this matrix to identify if the less
than acceptable performance is either outcome-focused, process-focused,
or both. The proposed plan of correction would be required to be
submitted to CMS within 10-business days following CMS' notification to
the AO of less than acceptable performance, and would have to address
the areas of improvement and the specific actions to be taken by the AO
to improve those areas on a sustainable basis.

L. Proposal To Revise the AO Survey Validation Program (Sec. 488.9)

Prior to discussing our proposed changes below, the following
provides (1) background on validation surveys, (2) background on look-
back validation surveys, and (3) background on additional approaches to
conduct validation surveys, before (4) introducing CMS' proposed
changes.
1. Background on Validation Surveys
Section 1864(c) of the Act permits the SAs to perform validation
surveys of provider and supplier types deemed for Medicare
participation under section 1865(a) of the Act as a means of validating
the AOs' accreditation processes. The accreditation validation program
is one component of CMS' oversight of AOs with approved Medicare
accreditation programs, and consists of two types of validation
surveys:
Complaint surveys--focused surveys based on complaints,
which, if substantiated, could indicate serious non-compliance with one
or more Medicare conditions; and
Validation surveys--full surveys, which are routinely
performed for a representative sample of deemed facilities as part of
the annual CMS-AO representative sample validation survey program.
These surveys are completed by the SA within 60 days of an AO full
accreditation survey for the same facility.
Prior to 2007, section 1875 of the Act required CMS to report to
Congress annually only on the Joint Commission's (TJC's) hospital
accreditation program.\14\ In FY 2007, we expanded this oversight and
began conducting 60-day representative sample validation surveys for
selected non-hospital facility types (CAHs, HHAs and ASCs), in addition
to those already being performed for deemed status hospitals. In FY
2010, hospice look-back validation surveys were added, and in FY 2011,
psychiatric hospital 60-day validation surveys were added. In FY 2019,
we conducted a total of 315 representative sample look-back validation
surveys for six facility types across AOs.\15\ This total comprised of
119 hospital surveys (including 20 psychiatric hospitals) and 196 non-
hospital validation surveys. (See Graph 1.)
---------------------------------------------------------------------------

\14\ Section 125(b)(4) of Public Law 110-275 (2008), which was
subsequently revised to apply to all AOs.
\15\ Outpatient physical therapy and rural health clinics were
not part of the validation sample.

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[[Page 12026]]

[GRAPHIC] [TIFF OMITTED] TP15FE24.007

[GRAPHIC] [TIFF OMITTED] TP15FE24.008

Since 2007, CMS has worked to strengthen its oversight of AOs and
increase the number of validation surveys. The recent history of
validation survey samples is as follows:
2015: 118 hospital and 240 non-hospital surveys totaling 358
surveys.
2016: 119 hospital and 254 non-hospital surveys totaling 373
surveys.
2017: 116 hospital and 244 non-hospital surveys totaling 360
surveys.
2018: 128 hospital and 188 non-hospital surveys totaling 316
surveys.
2019: 119 hospital and 196 non-hospital surveys totaling 315
surveys.
These numbers represent a 250 percent increase in the overall
number of validation surveys conducted, from 90 in FY 2007 to 315 in FY
2019. During the same time period, the number of non-hospital
validation surveys conducted increased by 460 percent, from 35 surveys
in FY 2007 to 196 surveys in FY 2019. The number of hospital validation
surveys conducted increased by 116 percent, from 55 surveys in FY 2007
to 119 surveys in FY 2019.
2. Background on Look-Back Validation Surveys
The purpose of look-back validation surveys of deemed providers or
suppliers is to assess the AO's ability to ensure compliance with
Medicare conditions. These surveys are on-site full surveys completed
by SA surveyors no later than 60 days after the end date of an AO's
Medicare accreditation program full survey. The SA performs these
surveys without any knowledge of the findings of the AO's accreditation
survey. CMS determines the number of look-back validation surveys to
perform

[[Page 12027]]

for each AO based on its total number of facilities, as well as the
overall budgeted validation survey targets, by state and facility type.
The proportion of look-back surveys completed for deemed facilities
is calculated by dividing the number of look-back validation surveys
conducted by the total number of deemed facilities. The proportion of
deemed facilities that received a look-back validation survey in FY
2019 is as follows:
Hospitals: Three percent of deemed hospitals received a
validation survey in FY 2019 (99 validation surveys conducted out of
3,332 deemed facilities).
Psychiatric Hospitals: Four percent of deemed psychiatric
hospitals received a validation survey in FY 2019 (20 validation
surveys conducted out of 466 deemed facilities).
CAHs: Three percent of deemed CAHs received a validation
survey in FY 2019 (13 validation surveys conducted out of 449 deemed
facilities).
HHAs: Two percent of deemed HHAs received a validation
survey in FY 2019 (84 validation surveys conducted out of 4,034 deemed
facilities).
Hospices: One percent of deemed hospices received a
validation survey in FY 2019 (32 validation surveys conducted out of
2,458 deemed facilities).
ASCs: Four percent of deemed ASCs received a validation
survey in FY 2019 (67 validation surveys conducted out of 1,803 deemed
facilities).
3. Background on Additional Approaches To Conducting Validation Surveys
Over the years, we have looked for ways to improve the validation
survey process and the disparity rate methodology. As discussed earlier
in this proposed rule, the disparity rate for various provider types
ranged between 8 percent for HHAs and 46 percent for CAHs.
To address concerns about high disparity rates, CMS has been
testing a VRP pilot since 2018. In the VRP pilot, instead of the
separate look-back validation survey, a direct observation of the AOs
survey by is performed. During the direct observation validation
survey, the SA surveyors are present when the AO surveyors perform an
accreditation survey, so that they can directly observe and evaluate
the ability to the AO surveyors to assess compliance with the Medicare
conditions. The purpose of this direct observation is to evaluate, in
real time, the AO performance on the survey process. The real time
observation of the survey allows the SA surveyors to make suggested
improvements and address any concerns with AOs immediately.
From June 2018 through August 2019, CMS conducted a total of 30 VRP
pilot surveys in 17 states in the acute care hospital program (11), ASC
program (10), psychiatric hospital program (3), HHA program (5) and
hospice program (1). This proposed direct observation validation
process has yielded additional information about the extent to which
the AO's process meets or exceeds the survey process used by the SA
surveyors. Our preliminary findings from our VRP pilot surveys include
the following:
Certain AOs have rigid survey schedules that prove to be
burdensome to the SA observers while onsite.
AOs have strict timeframes for each section of the survey
to which they adhere, regardless of the findings or need to further
investigate an issue within a facility.
Not all AOs survey offsite locations consistently for all
portions of the survey.
Certain AO survey methodology favored a ``yes/no,''
``have/don't have'' format versus a more in-depth investigative
approach.
Verbal assertion was considered adequate evidence of
compliance without verification via observations and/or document
review.
4. Proposal To Revise the Existing AO Survey Validation Program
(Proposed Revisions to Sec. 488.9)
We propose to revise the validation program by using two different
types of validation surveys, which are: (1) the look-back validation
survey and, (2) and a direct observation validation survey approach, to
evaluate the performance of the AOs. We propose that direct observation
surveys can be performed by the SA or CMS surveyors.
We will also be looking at programmatic adjustments to the look-
back validation survey to address some of the concerns stakeholders
have raised, to focus on key quality concerns, and to reduce provider
burden. These programmatic changes do not require a regulatory change
and are under development.
Specifically, we propose at Sec. 488.9(b) to revise the types of
validations surveys. We will continue using the existing look-back
validation survey, through use of a sample of facilities in each
program type, which would take place within 60 days following the AO
surveys. These 60-day validation surveys are referred to as look-back-
validation surveys. As discussed above, we are planning to make
additional programmatic adjustments to the existing look-back
validation survey process to address the scope of the review and
provider burden. Those adjustments would not require a regulatory
change and are under development.
We propose at Sec. 488.9(b)(2) to require validation using the
direct observation validation survey, which focuses on real-time
observation and evaluation of the AOs survey process. At Sec. 488.9(c)
we propose the rules for look-back validation surveys. At Sec.
488.9(d) we propose the rules for selection for look-back validation
surveys. More specifically, proposed Sec. 488.9(d)(1) would provide
that ``a provider or supplier selected for a look-back validation
survey must cooperate with the SA that performs the look-back
validation survey.'' We propose at Sec. 488.9(d)(2) that ``if a
provider or supplier selected for a look-back validation survey fails
to cooperate with the SA, it will no longer be deemed to meet the
Medicare conditions or requirements, will be subject to a review in
accordance with paragraph (a) of this section, and may be subject to
termination of its provider agreement under Sec. 489.53 of this
chapter.''
At Sec. 488.9(e), we propose the rules for the direct observation
validation surveys. These rules would include the following: (1) All
direct observation validation surveys will be unannounced to the AO and
the facility being surveyed (proposed Sec. 488.9(e)(1)); (2) The SA or
CMS surveyors will generally be assigned to the AO surveyors on a 1:1
basis, matching the experience of the accreditation surveyor where
possible, and using the CMS approved standards and processes to
determine compliance with the Medicare conditions (proposed Sec.
488.9(e)(2)); (3) the SA surveyors will observe the AO survey in
accordance with CMS established policies and procedures and will report
the findings directly to CMS (proposed Sec. 488.9(e)(3)); and, (4)
where the SA or CMS surveyors disagree with the findings of the AO
surveyors, and these differences cannot be reconciled, CMS will render
a final decision (proposed Sec. 488.9(e)(4)). This finding would not
be appealable pursuant to 42 CFR 498.3(d)(1), which provides that
administrative actions that are not initial determination (and
therefore not subject to appeal under this part) are not appealable.
Specifically, the findings that a provider or supplier determined to be
in compliance with the conditions or requirements for participation or
for coverage has deficiencies is such a non-appealable administrative
action.

[[Page 12028]]

At proposed Sec. 488.9(f), we propose circumstances in which an
accredited provider or supplier would be deemed to have not met the
applicable Medicare conditions or requirements, such as if: (1) the
provider or supplier refuses to authorize its AO to release a copy of
their current accreditation survey to CMS (proposed Sec. 488.9(f)(1));
(2) the provider or supplier refuses to allow a validation survey (for
either look-back or direct observation validation surveys) (proposed
Sec. 488.9(f)(2)); or (3) CMS finds that the provider or supplier does
not meet the applicable Medicare condition (also known as CoP, CfC,
conditions of certification, or requirements) (proposed Sec.
488.9(f)(3)).
At Sec. 488.9(g), we propose the consequences for non-compliance.
At Sec. 488.9(g)(1), we propose that if a CMS validation look-back or
direct observation validation survey results in a finding that the
provider or supplier is out of compliance with one or more Medicare
conditions, deemed status may be removed by CMS and the provider or
supplier will be subject to ongoing review by the SA or CMS (in
accordance with Sec. 488.10(d)) until the provider or supplier
demonstrates compliance. At proposed Sec. 488.9(g)(2), we propose that
CMS may take actions for the deficiencies identified in the in
accordance with Sec. 488.24, or may first direct the SA or CMS
surveyors to conduct another survey of the provider's or supplier's
compliance with specified Medicare conditions or requirements before
taking the enforcement actions provided for at Sec. 488.24. At
proposed Sec. 488.9(g)(3), we propose that if CMS determines that a
provider or supplier is not in compliance with applicable Medicare
conditions or requirements, the provider may be subject to termination
of the provider agreement and any other applicable intermediate
sanctions and remedies.
At proposed Sec. 488.9(h), we propose the re-instatement of the
deemed status of a provider or supplier. An accredited provider or
supplier would be deemed to meet the applicable Medicare conditions or
requirements in accordance with this section if any of the requirements
are met, as applicable:
It withdraws any prior refusal to authorize its AO to
release a copy of the provider's or supplier's current accreditation
survey (proposed Sec. 488.9(h)(1)).
It withdraws any prior refusal to allow a look-back or
direct observation validation survey, if applicable (proposed Sec.
488.9(h)(2)).
CMS finds that the provider or supplier meets all
applicable Medicare CoP, CfC, conditions of certification, or
requirements (proposed Sec. 488.9(h)(3)).
At proposed Sec. 488.9(i), we propose that the existence of any
performance review, comparability review, deemed status review,
probationary period, or any other action by CMS, does not affect or
limit CMS in conducting any subsequent validation survey.
By providing a flexible approach to the validation process, this
could reduce provider burden by reducing the frequency with which CMS
would perform validation using the look-back validation survey method
in which CMS performs a look-back validation survey within 60 days of
the end date of the AOs accreditation survey. This would reduce the
number of times that health care providers would have to undergo two
full surveys within a 60-day period. We further believe this approach
broadens the validation program activities and would be welcomed by
both the AOs and the providers and suppliers.
We propose that our proposals to revise the validation process by
adding direct observation validation surveys and our proposed revisions
to Sec. 488.9 would be applicable 60 days after the effective date of
the final rule.
We also propose that the direct observation surveys may be
performed by not only the SA but also by CMS surveyors. This allows for
flexibility and expediency in the performance of these validation
surveys.
The proposal to revise the validation process by adding look-back
and direct observation validation surveys and our proposed revisions to
Sec. 488.9 would not apply to laboratories, as they are subject to the
provisions under part 493.

M. Proposal To Revise the Psychiatric Hospital Survey Process

Under section 1861(f) of the Act, psychiatric hospitals are a
defined provider type. This statutory provision requires psychiatric
hospitals to comply with most hospital Medicare conditions, known as
CoPs, but includes a few provisions applicable exclusively to them. In
1986, special Medicare conditions for psychiatric hospitals were
published and included, as part of the hospital Medicare conditions, as
provisions of 42 CFR part 482. At that time, psychiatric hospital
surveys were performed by either SA personnel or Health Care Financing
Administration \16\ (HCFA) mental health surveyors (board-certified
psychiatrists, masters prepared psychiatric nurses, masters prepared
psychiatric social workers, doctorally prepared clinical psychologists,
and doctorally prepared clinical psychopharmacologists) who were under
contract with HCFA. This extensive experience requirement was beyond
what is required for other types of hospital services. This requirement
limited the number of SAs with qualified surveyors. Therefore, a CMS
contractor with specially-trained and/or experienced psychiatric
surveyors assisted the SAs in performing such surveys. This has
resulted in a bifurcated survey process, as most psychiatric hospitals
were subjected to two survey teams for each accreditation survey: the
hospital survey team and the psychiatric component survey team.
---------------------------------------------------------------------------

\16\ Health Care Financing Administration was the former name
for CMS, which was changed on June 14, 2001.
---------------------------------------------------------------------------

However, in the FY 2014 QSOG Mission and Priority Document, the
restrictive requirement for extensive education and/or experience for
psychiatric surveyors was removed. CMS developed online psychiatric
surveyor training, provided on-site psychiatric surveyor training
through contractors and offered partnership training for surveyors who
did not have extensive psychiatric education or experience. This
training became the standard and expectation for qualification to
survey to the psychiatric Medicare conditions.
The special Medicare conditions applying to psychiatric hospitals
are set forth in Sec. 482.60 through Sec. 482.62. The special
provisions at Sec. 482.60 require the following: (a) that the hospital
be primarily engaged in providing, by or under the supervision of a
doctor of medicine or osteopathy, psychiatric services for the
diagnosis and treatment of mentally ill persons; (b) meet the
conditions of participation specified in Sec. Sec. 482.1 through
482.23 and Sec. Sec. 482.25 through 482.57; (c) maintain clinical
records on all patients, including records sufficient to permit CMS to
determine the degree and intensity of treatment furnished to Medicare
beneficiaries, as specified in Sec. 482.61; and (d) meet the staffing
requirements specified in Sec. 482.62. As noted earlier, participating
psychiatric hospitals must also meet the Medicare conditions for acute-
care hospitals.
In March 2020, we eliminated the contract for separate psychiatric
hospital surveyors and provided comprehensive online training for all
SAs. This training focused on the specific psychiatric hospital
Medicare conditions so that the SA surveyors would be fully trained to
conduct all aspects of a complete psychiatric hospital inspection. At
this time, we also combined the interpretive guidance at Appendix AA
for psychiatric hospital

[[Page 12029]]

surveys into the Appendix A for hospital surveys to provide a single
location for all of the Medicare conditions during a full psychiatric
survey.
At this time, TJC and DNV are the only AOs that have CMS-approved
psychiatric hospital accreditation programs. They conduct one complete
survey of the entire psychiatric hospital, to include inspection of the
regular hospital Medicare conditions and the psychiatric hospital
Medicare conditions. Any AO is eligible to submit an application for
consideration for accreditation to survey psychiatric hospitals.
We propose to integrate the acute care hospital and psychiatric
hospital survey processes for SAs to ensure that there is a systematic,
and integrated look at psychiatric hospital quality. Therefore, AOs
that currently survey only hospitals would need to expand their
hospital accreditation programs to include Medicare conditions to
survey for psychiatric hospitals as well.
We believe that consolidating psychiatric and acute-care hospital
Medicare condition oversight will improve the overall quality of the
care by ensuring that systemic issues are more easily identified. With
a single survey team conducting the survey for the entire facility,
inconsistencies, trends, and subtle discrepancies can be connected more
easily and provide a more comprehensive overview of underlying systemic
issues. We believe that this comprehensive approach to survey both the
psychiatric and acute-care hospital will enhance patient health and
safety by ensuring the system as a whole is evaluated to meet the
applicable Medicare requirements. Moreover, a single survey team
decreases the team's physical imprint on the facility which minimizes
any facility disruption resulting from the survey. When revisits are
required related to deficiencies in the psychiatric Medicare
conditions, only one survey team will return for re-inspection, which
will reduce coordination time and resources as well as impact on
individual facilities. Finally, we have determined that combining the
survey process for psychiatric hospital Medicare conditions into the
hospital program would improve the cost efficiency of CMS's survey and
certification activities and simplify the survey process for SAs and
AOs alike.
For SAs, we would consolidate the deficiency report from
psychiatric hospital survey activity into one Form CMS-2567, reporting
on compliance with both the hospital Medicare conditions as well as the
psychiatric services Medicare conditions. The survey process for
inpatient psychiatric units located in acute care hospitals would not
change, and this change would not require any revisions to our
regulations.
To ensure that surveys of psychiatric hospitals and units located
in hospitals are performed properly by the SA surveyors, they have been
provided online training on the psychiatric hospital Medicare
conditions. CMS developed this online training and released it in March
2020. It is now available to all SA and AO surveyors at https://qsep.cms.gov/.
We would expand the acute care hospital accreditation program for
AOs to include current psychiatric hospital accreditation standards. As
per Sec. 488.8(b), CMS assesses the equivalency of the AOs programs to
the CMS-approved program requirements, and, as such, this proposal to
combine acute care and psychiatric hospital surveys necessarily
required that we also propose to revise the hospital accreditation
program application process for AOs that have an approved hospital
program, so as to include psychiatric hospital accreditation in their
hospital programs. Those AOs who currently have an approved hospital
program would be required to resubmit their standards, survey process
and surveyor training (which may include as part of CMS' training) to
include review of the psychiatric Medicare conditions for psychiatric
hospitals for CMS approval. This means that an AO that is seeking
approval of a hospital accreditation program would be required to file
one application that includes how they will assess for the two special
Medicare conditions for psychiatric hospitals within their hospital
accreditation program, whether or not they are currently accrediting
psychiatric hospitals or have plans do to so in the future.
As part of this proposal, we would also require that the AOs that
already have an existing CMS-approved hospital program expand their
existing hospital programs to include survey activities of psychiatric
services in psychiatric hospitals. Those AOs who currently have an
approved hospital program would be required to resubmit their
standards, survey process and surveyor training for CMS approval in
accordance with Sec. 488.8(b) by no later than 30-calendar days from
CMS notice to the hospital AOs using the existing process described in
Sec. 488.5(a)(19)(i). That process also permits CMS to give due
consideration to a request for extension.
We hope that this would encourage additional AOs to participate in
deeming psychiatric hospitals. Overall, the intent of these proposals
is to ensure that psychiatric services are evaluated in the context of
the larger hospital program evaluation so that systemic quality issues
are not missed. A single, comprehensive and focused survey team will be
able to identify and connect individual issues and trends which may be
occurring under two separate programs. Combining the two programs
provides a more global view of the facility's potential deficiencies
and is more likely to ensure the overall safety and quality of care
delivered. For example, if there were significant issues with staff
supervision of patients, one team of surveyors would be investigating
areas which now cross the two sets of requirements and survey teams
including patient-specific care planning, staff training, patient
rights, and potentially governing body. Integrating the survey
activities for hospital and psychiatric standards would also provide an
avenue for additional AOs to participate in deeming psychiatric
hospitals, which would produce more competition and provide facilities
with more options for surveying authorities.

N. Limitation on Terminated Deemed Providers/Suppliers Seeking Re-Entry
Into Medicare/Medicaid (Sec. 489.57, Sec. 488.4(b) & Sec.
488.5(a)(21))

Involuntary termination of the Medicare provider agreement is the
ultimate sanction for non-compliance with Medicare's basic health and
safety requirements. On average, less than ten involuntary terminations
occur each year. From January 2015 through September 2023, a total of
fifty-eight accredited providers and suppliers, including ASCs, ESRD
facilities, HHAs, Hospices, Hospitals, RHCs, and OPTs, were
involuntarily terminated from the Medicare program for unresolved
health and safety concerns. These providers currently have the option
of seeking re-approval to participate in Medicare/Medicaid through an
AO with a CMS-approved program. We remain concerned that providers who
have been involuntarily terminated from the Medicare program may
continue to remain accredited by an AO, and hold their continued
accreditation out to the public as a marker of high-quality care. Most
consumers, due to branding and advertising by the accredited community,
associate quality of care with accreditation, rather than CMS
certification. Therefore, involuntarily terminated providers who retain
their AO accreditation status convey that they continue to meet high
quality of care standards, despite their termination

[[Page 12030]]

from Medicare. This situation could weaken public trust in
accreditation as a marker of patient quality and safety. Since AO
standards are required to meet or exceed those of Medicare, we are
proposing at Sec. 488.5(a)(21)) that termination by Medicare
represents a prima facie case that the facility similarly fails to meet
accreditation standards.
These concerns were highlighted in media reports that noted
psychiatric hospitals whose provider agreements under Medicare were
terminated for harm to patients. These psychiatric hospitals
nonetheless retained their accreditation despite serious health and
safety concerns.^{17 18} An article published in the Wall
Street Journal (WSJ) on September 8, 2017 \19\ discussed patient-safety
problems at a hospital accredited by one of the AOs that provides fee-
based consulting. These safety issues were so severe that Medicare
considered terminating the hospital's Medicare participation agreement.
The AO that accredited the hospital made no changes in the hospital's
accreditation status and allowed it to continue promoting itself as
fully accredited, despite being out of compliance with the Medicare
safety requirements.
---------------------------------------------------------------------------

\17\ S. Armour, Psychiatric Hospitals With Safety Violations
Still Get Accreditation, Wall Street Journal, December 26, 2018.
\18\ D. Gilbert Behind Joint Commission's `Gold Seal of
Approval,' a history of missed safety violations at psychiatric
hospitals, Seattle Times, October 9, 2019.
\19\ S. Armour, Hospital Watchdog Gives Seal of Approval, Even
After Problems Emerge, Wall Street Journal, September 8, 2017.
---------------------------------------------------------------------------

The WSJ article reinforced concerns CMS had previously identified
regarding the very small number of facilities which we terminated for
failing to meet our basic health and safety regulations, but which
nonetheless retained their AO accreditation. Continued accreditation of
these outlier facilities which receive the ultimate sanction CMS may
impose based on their ongoing failure to meet basic health and safety
requirements raises serious concerns about the survey integrity and
public trust attached to AO accreditation. Therefore, we would propose
to explicitly prohibit AOs from allowing terminated facilities to
retain their accreditation, in order to reduce confusion for patients
and families about the continued health and safety of terminated
entities.
To address the issue of terminated providers or suppliers remaining
accredited by an AO, we propose to add a new regulatory requirement at
Sec. 488.4(b) (currently reserved). More specifically, proposed Sec.
488.4(b)(1) would provide that if CMS terminates the participation
agreement of a Medicare-certified provider or supplier, under our
authority at section 1865(c) of the Act, we would no longer recognize
the accreditation provided by an AO as evidence that Medicare standards
had been met or exceeded for that terminated provider or supplier.
In support of the proposed requirements at Sec. 488.4(b), we also
propose to add a new requirement at Sec. 488.5(a)(21) that would
require AOs to provide, with their initial and subsequent renewal
applications, a statement certifying that, in response to a written
notice from CMS notifying the AO that one of its accredited providers
or suppliers has been terminated from the Medicare/Medicaid program,
the AO agrees to terminate or revoke its accreditation of the
terminated provider or supplier within 5-business days from receipt of
said written notice.
The Medicare-approved deeming accreditation provided to Medicare-
certified providers and suppliers by AOs permits Medicare participation
in lieu of certification by the SA. Therefore, if a Medicare-certified
provider or supplier chooses to obtain deeming accreditation from an
AO, and then their Medicare participation is involuntarily terminated
after failing to meet the Medicare conditions, we would no longer
recognize the validity of the AO's accreditation with respect to that
provider/supplier under our oversight authority at section 1865 of the
Act. We do not believe that it is appropriate for a terminated provider
or supplier's AO deeming accreditation to remain effective for CMS
purposes after we have terminated this provider or supplier for
significant deficiencies that the AO may not have cited, discovered, or
fully recognized. A terminated provider or supplier may attempt to use
the AO's accreditation as a quality marker, when in fact their
practices are severely deficient, unsafe and non-compliant with the CMS
conditions.
Under section 1865 of the Act, we may involuntarily terminate CMS
approval of an AO's overall deeming authority if they miss egregious
deficiencies in one of their accredited providers or suppliers'
practices. However, we would prefer to withdraw our recognition of the
individual provider's or supplier's deeming accreditation instead, and
separately work with the AO to determine why such deficiencies went
undiscovered.
Proposed Sec. 488.4(b)(2) would provide that if CMS terminates the
participation agreement of a Medicare certified provider or supplier,
that terminated provider or supplier would be required to meet the
requirements set forth at Sec. 489.57 before a new agreement for
Medicare participation will be approved. We also propose a new
paragraph at Sec. 489.20(z) that reinstatement of a terminated
provider or certified supplier agreement is subject to the proposed
revision to Sec. 489.57.
The introductory text to Sec. 489.57 states that when CMS has
terminated a provider agreement under Sec. 489.53, or by the OIG under
Sec. 489.54, a new agreement with that provider will not be accepted
unless CMS or the OIG, as appropriate, finds that said provider or
supplier meets the requirements set forth in sections Sec. 489.57(a)
and (b). We propose to redesignate Sec. 489.57(a) and (b) as Sec.
489.57(a)(1) and Sec. 489.57(a)(2) without any change to the text.
Redesignated Sec. 489.57(a)(1) requires a provider or supplier that
has been terminated from the Medicare program to demonstrate that the
reason for termination of the previous Medicare provider agreement has
been removed and provide reasonable assurance that it will not recur.
Redesignated Sec. 489.57(a)(2) requires the terminated provider or
supplier to fulfill, or make satisfactory arrangements to fulfill, all
of the statutory and regulatory responsibilities of its previous
agreement.
We also propose to add a new paragraph (b) at Sec. 489.57.
Proposed Sec. 489.57(b) would provide that before a new agreement for
Medicare participation of the terminated provider or supplier is
approved, such terminated provider or supplier would have to meet the
requirements of proposed Sec. 489.57(b)(1) through (b)(3).
Proposed Sec. 489.57(b)(1) would require that the terminated
provider or supplier be under the exclusive oversight of the SA for the
purposes of the initial certification survey, initial certification and
demonstration of compliance with the Medicare conditions. Proposed
Sec. 489.57(b)(2) would require that the terminated provider or
supplier remain under the exclusive oversight of the SA until the SA
had certified the provider's/supplier's full compliance with all
applicable Medicare conditions and their application for participation
in the Medicare/Medicaid program had been approved. Finally, proposed
Sec. 489.57(b)(3) would provide that CMS would not recognize
accreditation from a CMS-approved accrediting organization for deeming
purposes while the terminated provider or supplier was under the
oversight of the SA and its new agreement for Medicare participation
was pending.

[[Page 12031]]

Our intent for proposing the new requirements at Sec. 489.57(b) is
to ensure that the SA would have the initial survey and certification
oversight authority over terminated providers and suppliers seeking re-
entry into the program about which we had significant health and safety
concerns. The terminated provider or supplier would remain under the
oversight of the SA for a reasonable assurance (RA) period of a
duration to be determined by CMS. During the RA period, the terminated
provider or supplier would be required to provide reasonable assurance
to the SA and CMS that the deficiencies that caused the termination
have been rectified and that they are not likely to recur. This means
that a terminated provider or supplier would have to use the SA, as
opposed to an accrediting organization, to perform their initial
participation survey and assessment of compliance before a new
agreement for Medicare participation is approved. If, after completion
of the reasonable assurance period, the SA found that the provider or
supplier met all of the applicable Medicare conditions, it would
certify said provider or supplier's compliance and notify CMS of its
findings. CMS would consider the SA's survey findings (certification)
in deciding whether to approve or deny the provider's or supplier's new
initial certification request for participation in the Medicare
program. However, if the SA were to find deficiencies and determine
that the provider or supplier did not meet the CMS conditions, the SA
could take several courses of action, depending on the severity of the
deficiencies. The SA could require the provider or supplier to submit a
plan of correction and give the provider or supplier time to correct
the deficiencies. The SA would then perform a subsequent survey to see
if the deficiencies have been removed and compliance with all
requirements has been achieved. If the deficiencies found during the
initial SA survey were significant or egregious, the SA may not approve
a plan of correction, notify CMS of its findings and recommendation,
and CMS may deny the provider's or supplier's request for new
participation in the Medicare program.
The SA cannot recommend certification of a previously terminated
provider or supplier that has significant condition or immediate
jeopardy level deficiencies, unless these deficiencies are properly and
promptly addressed and removed by the provider or supplier. Therefore,
the proposed new requirements at Sec. 489.57(b) would help to provide
reasonable assurance to CMS that the significant health and safety
concerns that warranted termination of the provider or supplier's
Medicare agreement have been corrected and compliance with all
applicable requirements and conditions have been achieved before a new
agreement for participation in the Medicare program is approved. We
believe that SA oversight during a reasonable assurance period of a
length to be determined by CMS, and survey and certification that the
terminated provider or supplier now meets the Medicare conditions is a
safer alternative to accepting AO deeming of that terminated provider
or supplier. This is because in the majority of cases of terminated
providers and suppliers, the SA discovered the egregious deficiencies
that caused terminations during a validation or complaint survey that
took place within 60 days of an AO reaccreditation survey. The AOs that
accredited the terminated providers and suppliers had not detected or
cited these deficiencies during their surveys.
Section 1865(b) of the Act prohibits public disclosure of surveys
performed by AOs (with the exception of HHAs, hospice programs, and
surveys that relate to an enforcement action taken by the Secretary).
However, the proposed new requirements at Sec. 489.57(b) will allow
the findings from the compliance surveys performed by the SA to be made
publicly available under our authority at subpart B, 42 CFR 401.133(a)
and section 1864(a) of the Act states: ``within 90 days following the
completion of each survey of any health care facility, ambulatory
surgical center, rural health clinic, comprehensive outpatient
rehabilitation facility, laboratory, clinic, agency, or organization by
the appropriate State or local agency described in the first sentence
of this subsection, the Secretary shall make public in readily
available form and place, and require (in the case of skilled nursing
facilities) the posting in a place readily accessible to patients (and
patients' representatives), the pertinent findings of each such survey
relating to the compliance of each such health care facility,
ambulatory surgical center, rural health clinic, comprehensive
outpatient rehabilitation facility, laboratory, clinic, agency, or
organization with (1) the statutory conditions of participation imposed
under this title and (2) the major additional conditions which the
Secretary finds necessary in the interest of health and safety of
individuals who are furnished care or services by any such health care
facility, ambulatory surgical center, rural health clinic,
comprehensive outpatient rehabilitation facility, laboratory, clinic,
agency, or organization.''
Thus, the proposed new requirements at Sec. 489.57(b) would allow
for greater transparency regarding the current compliance of terminated
health care providers and suppliers seeking re-entry into the program.

O. Proposal for Technical Correction for End-Stage Renal Disease (ESRD)
Facilities and Kidney Transplant Programs (Sec. 488.4(a)(4))

Section 1865(a)(1) of the Act had historically excluded dialysis
facilities from participating in Medicare via a CMS-approved
accreditation program; however, section 50403 of the Bipartisan Budget
Act of 2018 amended section 1865(a) of the Act to include renal
dialysis facilities as provider entities allowed to participate in
Medicare through a CMS-approved accreditation program. In addition, the
Bipartisan Budget Act of 2018 also amended section 1865(a) of the Act
to remove a reference to section 1881(b) of the Act, which had
prevented kidney transplant programs from being accredited via CMS-
approved accreditation programs. CMS' existing regulations at Sec.
488.4(a)(4), requires that when a national AO has applied for and has
received CMS-approval of a provider or supplier accreditation program,
then when a provider or supplier demonstrates full compliance with all
of the accreditation program requirements of the accrediting
organization's CMS-approved accreditation program, the accrediting
organization may recommend that CMS grant deemed status to the provider
or supplier. Further, the regulation at Sec. 488.4(a)(4) states that
``CMS may deem the provider or supplier, excluding kidney transplant
centers within a hospital and ESRD facilities, to be in compliance with
the applicable Medicare conditions or requirements.'' The CMS
regulatory language of ``excluding kidney transplant'' programs is
therefore in direct conflict with the Bipartisan Budget Act of 2018
amendment. We therefore propose to remove the exclusion specifically in
our accreditation regulations under Sec. 488.4(a)(4) to align with the
statutory changes implemented the Bipartisan Budget Act of 2018.

V. Request for Information Regarding Timeframes and Expectation for the
Submission of AO Applications

We are requesting public comments on the timeframes and expectation
for the submission of applications submitted by AOs, because our
existing

[[Page 12032]]

AO oversight regulations do not restrict how many times an AO may
submit an initial application to CMS for review. Based on our initial
review of an application for completeness, which verifies the AO has
submitted all required elements under Sec. 488.5, we often find the
application to be incomplete and must return it to the AO for
additional clarifications, missing items or revisions. CMS also
receives applications, which require multiple pass backs due to the
applicant's failure to provide information about issues, such as their
financial viability, survey processes which appeared not to be
operationalized, or similar concerns. However, our existing regulations
do not limit the number of times an AO may submit an application for
review by CMS. Therefore, it is possible that incomplete application
could be submitted an unlimited number of times.
Therefore, we are soliciting public comments on the following
possible future limitations to the submission of applications by the
AOs that accredit Medicare-certified providers and suppliers:
An AO may only re-submit an application for CMS re-review
two additional times after CMS initially deems the application to be
``incomplete''.
If the AO's application is found by CMS to be incomplete
after the third submission, the AO must wait a minimum of 2 years
before resubmitting the entire application for CMS consideration.

VI. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995, we are required to
provide 60-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 are soliciting public comment on each of these issues stated in
sections III and IV of this proposed rule.
If you comment on these information collections, that is,
reporting, recordkeeping or third-party disclosure requirements, please
submit your comments electronically as specified in the ADDRESSES
section of this proposed rule.
Comments must be received on April 15, 2024.

Wage Data

To derive average costs, we used data from the U.S. Bureau of Labor
Statistics' May 2021 National Occupational Employment and Wage
Estimates for all salary estimates (http://www.bls.gov/oes/current/oes_nat.htm). In this regard, Table 1 presents the mean hourly wage,
the cost of fringe benefits and overhead (calculated at 100 percent of
salary), and the adjusted hourly wage.

[[Page 12033]]

[GRAPHIC] [TIFF OMITTED] TP15FE24.009

A. ICRs Related to Conflict of Interest Proposals

In this proposed rule, we made several proposals related to AO and
AO surveyor conflicts of interest. We will address the cost and time
burden associated with each of these proposals separately below.
1. ICR Related to Proposed Conflict of Interest Policies & Procedures
AOs Must Submit to CMS (Sec. 488.5(a)(10))
We proposed to modify Sec. 488.5(a)(10) to add a requirement that
the AOs must provide specific information with their conflict of
interest policies and procedures with the application they submit to
CMS. Specifically, the AO must submit the following policies and
procedures: (1) the AO's policies and procedures for separation of its
fee-based consulting services from its accreditation services; (2)
policies and procedures for protecting the integrity of the AO's
accreditation program, including the requirements of Sec. 488.8(k)(3)
policies and procedures for the prevention and handling potential or
actual conflicts of interest that could arise from situations in which
an AO owner, surveyor, or other employee has a direct interest in or
relationship with another survey agency or health care facility to
which the AO provides

[[Page 12034]]

accreditation services, including being employed as a SA surveyor or
having an ownership interest in a health care facility, etc., and (4)
policies and procedures for notification of CMS when a conflict of
interest is discovered.
The AO would need to modify their current conflict of interest
policy and procedures to include the above-stated information required
under the proposed revisions to Sec. 488.5(a)(10). We estimate that
this task would be performed by a team of at least two AO staff
members. The AO staff that would most likely perform this task would be
a person whose background is a RN or a health or medical services
manager. According to the U.S Bureau of Labor statistics, the mean
hourly wages for an RN is $39.78. This wage adjusted for the employer's
fringe benefits and overhead would be $79.56. According to the U.S
Bureau of Labor statistics, the mean hourly wages for a medical or
health services manager is $57.61. This wage adjusted for the
employer's fringe benefits and overhead would be $115.22.
We estimate that it would that at least two persons working in a
full-time basis for 3 days for the AO staff to revise their conflict of
interest policies and procedures to add the required information.
Therefore, we estimate that the total time required for the two team
members to perform this task would be 48 hours (8 hours x 3 days = 24
hours per each person) + (24 hours per person x 2 persons = 48 hours).
As of February 4, 2020, there are 11 AOs, that accredit Medicare-
certified providers and suppliers. We estimate that the total time
burden across these 11 AOs would be 528 hours (48 hours x 11 AOs).
We estimate that the cost burden related to the work performed by
the RNs on the team would be $1,909.44 (24 hours x $79.56). We estimate
that the cost burden related to the work performed by the medical or
health services manager on the team would be $2,765.28 (24 hours x
$115.22). Finally, we estimate that the total burden costs related to
the requirements for proposed Sec. 488.8(i)(1) would be $4,674.72 per
AO ($1,909.44 + $2,765.28). The total cost across the 11 AOs that
accredit Medicare-certified providers and suppliers is $51,421.92 (11
AOs x $4,674.72).
We believe that the stated burden would be incurred by the AO once
prior to the time that they submit their first application after this
requirement becomes effective. However, we believe that after the AOs
have made required modifications to their conflict of interest
policies, they will not have to revise them again, but will submit the
same revised conflict of interest policies every 6 years with their
renewal applications, so this burden would not be incurred again. We do
not count the burden related to the submission of the application
because the AO would be required to submit the application every 6
years to renew the CMS approval for their accreditation programs.
2. ICR Related to Requirement That the AOs Submit Surveyor Declarations
to CMS on an Annual Basis (Sec. 488.5(a)(22))
We propose to add a new paragraph (22) to Sec. 488.5(a), which
would require that the AO submit a declaration by each surveyor of any
outside interests or relationships with the health care facilities that
the AO accredits. This section would also require that the surveyor
declarations must be updated on an annual basis and submitted to CMS no
later than December 31st each year.
There would be a time and cost burden to the AO for having to
collect declarations from each of their surveyors annually. There would
also be a time and cost burden to the AO for the submission of the
surveyor declarations to CMS.
We estimate that it would take at least two persons working on a
full-time basis for 3 days (8 hours per day) to prepare the surveyor
declarations, get each AO surveyor to complete a declaration and submit
them to CMS. This would equate to 24 hours per person or 48 hours
across both staff performing this task.
We believe that the AO staff that would be performing these tasks
would be an RN and a management staff person, whose job duties meets
the description of the U.S. Bureau of Labor Statistics job of category
of health and medical services manager. As stated previously, the
adjusted mean hourly wage for an RN is $79.56. The adjusted mean hourly
wage for a medical and health services manager is $115.22.
We estimate that the time burden for this task per each AO would be
48 hours (24 hours x 2 staff persons). We further estimate that the
total time burden across all 11 AOs that accredit Medicare-certified
providers and supplier would be 528 hours (48 hours x 11 AOs).
We estimate that the cost burden related to the work performed by
the RN would be $1,909.44 (24 hours x $79.56). We estimate that the
cost burden related to the work performed by the medical or health
services manager would be $2,765.28 (24 hours x $115.22).
Finally, we estimate that the cost burden associated with the
requirements for proposed Sec. 488.5(a)(22) per each AO would be
$4,674.72 ($1,909.44 + $2,765.28. The total annual cost burden across
the 11 AOs that accredit Medicare-certified providers and supplier is
estimated to be $51,421.92 (11 AOs x $4,674.72).
3. ICRs Related to Proposal To Place Restrictions on AO Fee-Based
Consulting Services Provided by AOs to the Medicare-Certified Providers
and Suppliers They Accredit (Proposed Sec. 488.8(i)(1) through (3))
In section IV.B.3 of this proposed rule, we propose restrictions on
AO fee-based consulting provided by accrediting organizations or their
associated consulting divisions or companies. We believe the proposed
regulations at Sec. 488.5(i) would still allow AOs to provide fee-
based consulting services to the providers and suppliers they accredit
with restrictions that address the conflict of interest issues
associated with this service.
This proposal would require the AOs that provide fee-based
consulting to modify their fee-based consulting to revise their fee-
based consulting business documents, such as their business charter,
business documents, employee training information, informational
documents that are distributed to prospective clients, and their as
policies and procedures.
We believe that the AO staff that would be performing these tasks
would be an RN and a management staff person that has a job that meets
the U.S. Bureau of Labor Statistics job of category of health and
medical services manager. The adjusted mean hourly wage for an RN is
$79.56. The adjusted mean hourly wage for a medical and health services
manager is $115.22.
We estimate that this proposal would require the above-stated two
AO staff member to work on a full-time basis for 1 week (that is, 40
hours per person) to complete the required revisions to the AO's fee-
based consulting business documents. Therefore, we estimate that the
time burden per each AO for the two AO staff members to perform the
required tasks would be 80 hours (2 team members x 40 hours).
At this time, there are only four AOs that provide fee-based
consulting. Therefore, the total annual time burden would be 320 hours
(80 hours x 4 AOs).
The cost burden related to the work performed by the RN on this
task would be $3,182.40 (40 hours x $79.56). The cost burden related to
the work performed by the medical or health services manager on this
task would be $4,608.80 (40 hours x $115.22).
Finally, we estimate that the annual cost burden per each AO
related to the

[[Page 12035]]

requirements for proposed Sec. 488.8(i)(1) would be $7,791.20
($3,182.40 + $4,608.80). We estimate that the total annual cost burden
to the four AOs that provide fee-based consulting would be $31,164.80
($7,791.20 x 4 AOs).
4. ICR Related to Proposed Requirement for Submission of Information
About AO Fee-Based Consulting Services Provided (Sec. 488(i)(5))
We propose to add a requirement at Sec. 488.8(i)(5) that would
require the AOs to provide CMS with the following information about the
fee-based consulting services they provide to CMS on a bi-annual basis:
(1) whether the AO or its fee-based consulting division or separate
business entity (such as a company or corporation, that provides fee-
based consulting) provides fee-based consulting services; (2) the names
and CCN numbers of all health care providers and suppliers to which the
accrediting organization or its associated consulting division or
company has provided fee-based consulting services during the previous
6-month period; (3) the dates the AO fee-based consulting services were
provided to each provider and supplier; (4) whether the accrediting
organization has, at any time in the past provided, or is currently
providing accreditation services to each health care provider or
supplier listed in said document; (5) for each health care provider and
supplier listed in said document, the date of the most recent
accreditation survey performed, and the date the next re-accreditation
survey is due to be performed; and, (6) a description of the AO fee-
based consulting services provided to each health care provider or
supplier listed in said document.
This proposed regulation further requires that statement containing
the information require by Sec. 488.8(i)(5)(i) through (i)(5)(iv) must
be submitted to CMS every 6 months. We proposed that the document
containing this information must be submitted to CMS by no later than
15 days after the end of each calendar bi-annual period which consist
of January 1st to June 30th and July 1st (period #1) through December
31st (period #2) each year. This means that the submission deadline for
period #1 would be July 15th and the submission deadline for period #2
would be January 15th each year.
We estimate that the burden associated with this proposed
requirement would include the time and costs associated with the
gathering of the information necessary to prepare the required
document, the time required to prepare the document and the time
required to send the document to CMS. This burden would occur on a
continuing bi-annual basis.
We believe that the burden would be greater for the preparation of
the first report. Thereafter, the AOs would have already prepared and
formatted this report and would simply have to update the information
every 6 months.
We estimate that it would that at least two persons working on a
full-time basis for 3 days to prepare and submit the first required
statement to be submitted CMS. We further estimate that this team would
consist of one RN and one Medical or Health Service Manager. Therefore,
we estimate that the total hourly time burden for each team member
would be 24 hours (3 days x 8 hours per).
We estimate that the time burden per each AO per for the work
performed by the two AO staff members to prepare each report would be
48 hours (2 team members x 8 hours x 3 days). The total annual time
burden per each AO would be 96 hours (2 reports x 48 hours).
There are four AOs that provide fee-based consulting. However, we
propose that this provision would apply to all 11 AOs that accredit
Medicare-certified providers and suppliers because it would require
each AO to, at a minimum, respond to question #1 which asks whether the
AO or an associated consulting division or company established by the
AO provides fee-based consulting services. Those AOs that do not
provide fee-based consulting would simply respond in the negative to
this question and would not have to provide any further information.
The time and cost burden to the AOs that do not provide fee-based
consulting would be negligible because they would send this notice to
CMS via email. This task would take an AO staff member less than a
minute to complete every 6 months. Therefore, as this task is so
minimal, we have not assessed burden for this task for the AOs that do
not provide fee-based consulting.
The estimated total annual time burden across all AOs that do
provide fee-based consulting would be 384 hours (96 hours per 2 reports
annually x 4 AOs). The estimated total time burden across these 11 AOs
would be 384 hours (96 hours x 4 AOs).
The cost burden related to the work performed by RNs on the team
would be $1,909.44 (24 hours x $79.56 per hour). The cost burden for
the work performed by the medical or health services manager would be
$2,765.28 per each AO (24 hours x $115.22). The total estimated cost
burden per each AO would be $4,674.72. ($1,909.44 + $2,765.28) The
total estimated cost burden across the 4 AOs that provide fee-based
consulting services would be $18,698.88 ($4,674.72 x 4 AOs).
We believe that the above stated time and cost burdens would be
incurred by the AOs that provide fee-based consulting only the first
time that they prepare the required document and send it to CMS. We
believe that after the AO has prepared their first report, they would
have this report in an electronic format on their computers. Therefore,
for the second and all subsequent report, we estimate that the related
to the preparation and submission of this report would be reduced by at
least two-thirds. This means that it would take only one RN a period of
8 hours to prepare the required statement and submit it to CMS. We
estimate that the total time burden across the four AOs that provide
fee-based consulting, would be 32 hours (8 hours x 4 AOs).
We estimate that the cost burden per each AO related to the work
performed by an RN to prepare the second or subsequent report would be
$636.48 (8 hours x $79.56). The total cost burden across the four AOs
that provide fee-based consulting would be $2,545.92 ($636.48 x 4 AOs).
We are requesting comments from the public on our estimated burden
for this activity and whether the frequency of bi-annual (every six
months) is appropriate.
5. ICR Related to Proposed Requirement That Accrediting Organization
Establish Fee-Based Consulting Firewall Policies and Procedures
(Proposed Sec. 488.8(j))
We propose at Sec. 488.8(j) to require any AO that provides fee-
based consulting services or its associated fee-based consulting
division or company to have robust, written AO fee-based consulting
firewall policies and procedures. These firewall polices and procedure
must, at a minimum, include the following provisions: (1) the AO's fee-
based consulting services must be provided by a separate division or
company from the AO's accreditation division; (2) the AO's fee-based
consulting division or separate company must maintain separate staff
from that of the AO's accreditation divisions to ensure that the fee-
based consulting division staff do not perform AO's accreditation
division functions and that the AO's accreditation division staff do
not perform fee-based consulting division functions; and, (3) the AO's
accreditation staff and surveyors are prohibited from marketing the
AO's fee-based consulting services to the AO's accreditation clients.
This proposed requirement would only apply to the AOs that provide
fee-

[[Page 12036]]

based consulting and would require these AOs that establish new fee-
based consulting firewall policies or revise their policies and
procedures to meet the proposed requirements. It is our understanding,
from review of the comments received on the submitted by the AOs in
response to the AO Conflict of Interest RFI, that these AOs already
have such fee-based consulting firewall policies in place. If this is
the case, then the time and cost burden associated with revising these
policies and procedures would not be extensive.
In section VI.A.5 of this proposed rule, we estimated that it would
take each AOs that provide fee-based consulting services 80 hours to
revise their fee-based consulting business documents, such as their
business charter, business documents, employee training information,
informational documents that are distributed to prospective clients,
and their as policies and procedures.
We have included the burden associated with the revision of AO fee-
based consulting firewall policies and procedures. We believe that the
burden associated with the revision of the AO's fee-based consulting
policies and procedures would fall under the time and cost burden
estimated in section VI.A.5 of this proposed rule. As such, we will not
assess a separate burden here.
6. ICR Related to Proposed Regulation To Prevent Conflicts of Interest
Caused by AO Owners, Surveyors or Other Employees Interest In or
Relationship With a Health Care Facility Accredited by the AO (Proposed
Sec. 488.8(k))
We propose to avoid conflicts of interest related to employment
relationships between AO surveyors and health care facilities that are
accredited by the AO, the AO's shall do the following: (1) AOs shall
not allow its surveyors to participate in the survey of facilities with
which they have a relationship; (2) AOs shall not allow its surveyors
to have any input into or influence the outcome of any survey performed
for facilities with which they have a relationship; (3) AOs shall not
allow its surveyors to have any involvement with the pre or post survey
activities for the health care facilities with which they have a
relationship; and, (4) AOs shall not allow its surveyors to have any
contact with the records from the surveys for any health care
facilities with which they have a relationship.
We believe that this in exempt from the PRA in accordance with 5
CFR 1320.3(b)(2). We believe that this should already be a usual and
customary practice of the AOs.

B. ICRs Associated With the Requirement That AOs Incorporate the
Medicare Conditions

1. ICRs Associated With the Requirement That the AOs Provide Detailed
Crosswalks Identifying Incorporation of the CMS Standards
As proposed under Sec. 488.5(a)(3), we would require AOs to
incorporate the language of the CMS' Medicare conditions and provide
CMS with a detailed crosswalk. While AOs are required to provide a
similar crosswalk under the existing process, CMS previously only
required a ``comparable'' standard, therefore through this proposal,
AOs would need to recreate their AO standards to incorporate the
Medicare condition language into their accreditation standards for
their deemed programs. We also note that this proposal would require a
one-time overhaul of AO standards and burden would be imposed for the
first year following the effective date of this rule and not be a
reoccurring annual burden. Burden costs subsequent to changes would
remain as current practice with updates required to be reviewed and
approved as outlined in existing Sec. 488.5.
We would expect that the AOs use the existing CFR language they are
required to crosswalk currently and assign an AO standard number or
realign their existing AO standards in a manner which would allow for a
one-to-one comparison to ensure their accreditation standards
incorporate the CFR language. Aforementioned, CMS is not restricting
the AOs from exceeding the Medicare conditions, however if exceeded the
AO would need to provide additional language or clearly delineate the
exceeding language. For example, we would only anticipate that the
format used be similar to the one seen in Table 2.
[GRAPHIC] [TIFF OMITTED] TP15FE24.010

[[Page 12037]]

We anticipate that the AOs for each program type (that is, hospice,
home health, outpatient physical therapy, hospitals, ESRD facilities,
RHC, CAH, ASCs, psychiatric hospitals) for which the AO has deeming
authority would be required to review and revise their existing
crosswalk and standards into the required format. We further anticipate
that the review and updating of AO standards crosswalk would be done by
AO staff consisting of at least one RNs and a medical secretary.
We estimate that the RN would spend 2 hours performing this task.
We further estimate that a medical secretary would spend 198 hours
performing this task. Therefore, the total time burden per each AO for
this task would be 200 hours. (2 hours per 1 RN + 198 hours per 1
medical secretary).
This requirement applies only to those AOs that accredit Medicare-
certified providers and suppliers. There are 11 AOs that accredit
Medicare-certified providers and suppliers. Therefore, the total time
burden for this task would be 2,200 hours (200 hours x 11 AOs).
The adjusted mean hourly wage for an RN is $79.56. We estimate that
the cost for the work performed by the RN to perform the work on this
task would be $159.12 (2 hours x $79.56 per hour).
The adjusted mean hourly wage for a medical secretary is $38.22. We
estimate that the cost burden for the work performed by the medical
secretary on this task would be $7,567.56 (198 hours x $38.22 per
hour). The total estimated cost burden for all work performed on this
task would be $7,726.68 ($159.12 + $7,567.56).
There are currently 11 AOs that accredit Medicare-certified
providers and suppliers. Therefore the annual burden cost for all 11
AOs for one program only would be $84,993.48 ($7,726.68 x 11 AOs).
However, the majority of our AOs have multiple accreditation
programs, therefore this cost would increase based on the number of
programs. For example, one of the AOs has deeming authority for six
program types, therefore this AO would be subject to a burden cost of
$46,360.08 ($7,726.68 x 6 programs).
CMS has 24 approved accreditation programs across 11 AOs (as of
February 15, 2022) which are accredited, and so the total cost across
all AOs and their programs would be $185,440.32 ($7,726.68 x 24).
2. ICRs Related to AO Providing Their New Accreditation Standards to
Their Accredited Providers and Suppliers
In addition to changing the survey standards as proposed under
Sec. 488.5(a)(3), the AOs would be required to provide the newly
revised AO standards to the facilities they accredit. There are
approximately 14,904 accredited facilities across the program types. We
anticipate that a Medical Secretary (see Table 1 in section VI of this
proposed rule for wage estimates) would provide all accredited
facilities a copy of the revised standards for accreditation. We
believe that the majority of AOs have a website portal which standards
are available to their facilities, therefore we anticipate the
estimated time to upload and notify facilities of the revisions to take
2 hours per program type. Between the 11 AOs we have 24 programs which
are accredited.
As noted above, we estimate that this task would take approximately
2 hours to complete per each program. We also estimate that the total
burden hours for this task would be 48 hours (2 hours x 24 programs).
We estimate that the cost burden per each program would be $76.22
($38.22 x 2 hours). We further estimate that the total cost associated
with uploading the AOs revised standards across the 24 accreditation
programs would be $1,829.28 ($76.22 x 24 AO programs).
In addition, we believe the AOs would also notify their individual
facilities impacted. We believe this would be done by an AO staff
person with a job that falls under the U.S. Bureau of Labor Statistics
job category of medical secretary. The adjusted mean hourly wage for a
medical secretary is $38.22.
We estimate this task would take 15 minutes per each facility
notified. There are 14,904 facilities that must be notified. Therefore,
the total time required to notify all of these facilities would be
3,726 hours (.25 hours x 14,904 facilities).
We estimate that the annual cost burden per each AO for notifying
the facility would be $9.55 per each facility (60 minutes divided by 15
minutes = 4) and ($38.22 divided by 4 = $9.55). We estimate that the
total annual cost across all of these facilities would be $142,333.20
($9.55 x 14,904 facilities).
3. ICRs Related to Education to Providers and Suppliers Regarding New
Standards
We believe the AOs would be required to provide education to their
deemed facilities related to the new standards (standards incorporating
the CMS Medicare condition language). As part of this education, the
AOs would provide an overview of the changes in the AOs accreditation
standards to the healthcare facilities accredited by the AO. We further
believe that the regulations to persons from the health care facility
that would take this training would be staff such as a regulatory
compliance specialist (general manager) at the health care facilities
the AO accredits. We further believe the AO would generally send an
education specialist or RN to provide this overview of the revised
standards, or have an online platform of training for the facilities to
use.
The adjusted mean hourly wage for a general and operations manager
is $60.45. This wage adjusted for the employer's fringe benefits and
overhead would be $120.90 (see Table 1). According to the U.S Bureau of
Labor Statistics, the mean hourly wage for a RN is $39.78. This wage
adjusted for the employer's fringe benefits and overhead would be
$79.56 (see Table 1).
We anticipate that the training to be provided by the AOs about the
new regulations would take approximately 1 hour to complete. We believe
that each facility would send at least two persons to this training. We
believe that the persons that would be likely to attend this training
would be a general or services operation manager at the facility and an
RN, who is a regulatory compliance manager.
There are approximately 14,904 deemed facilities. Therefore, we
estimate that the total time burden to each health care facility for
the completion of the AO training would be 2 hours. The total estimated
time burden for the accredited facilities would be 29,808 hours (2
hours x 14,904 facilities).
We estimate that the cost burden for the time spent for the RN to
attend the training would be $79.56. RN (1 hour x $79.56 per hour). We
further estimate that the cost burden for the general or services
manager from the facility to attend the training would be $120.90 (1
hour x $120.90 per hour). We estimate that the total cost burden per
each accredited facility for the completion of this training by the two
facility staff persons would be $200.46 ($79.56 per RN + $120.90 per
general or services manager). We further estimate that the total annual
cost burden across all 14,904 accredited facilities would be
$2,987,655.84 ($200.46 x 14,904 facilities).
The burden associated with these requirements will be submitted to
OMB

[[Page 12038]]

under OMB control number (0938-NEW).

C. ICRs Associated With the Requirement That AOs Use Survey Processes
That are Comparable to That Used by CMS and the SAs

Our proposal to Sec. 488.5(a)(4) through (13), would require the
AOs to submit revised initial and renewal application information
supporting comparability in the survey processes and guidance
established by CMS and used by the SA. However, we note that while
additional regulatory language changes are being made under Sec.
488.5(a)(4) through (13), AOs are already required to submit this type
of documentation. Our intent is to clarify in regulation the minimum
standards and required documentation that AOs show comparability to CMS
survey process, forms, guidelines and instructions to surveyors.
1. ICR Related to Revised Documentation Submission Requirements Imposed
by Requirements That AOs Use Comparable Survey Process at Sec.
488.5(a)(4), Sec. 488.5(a)(4)(iii), Sec. 488.5(a)(4)(v), and Sec.
488.5(a)(4)(vii)
The requirements under(Sec. 488.5(a)(4), Sec. 488.5(a)(4)(iii),
Sec. 488.5(a)(4)(v), and Sec. 488.5(a)(4)(vii)) would require AOs to
ensure that with the submission for an initial or renewal application
for deeming authority, in addition to what is required in the existing
regulations, that the AO includes: (1) core principals of the survey
process; (2) comparable survey guidance and instructions, including
specific processes for certain survey activities; and, (3) description
of the organizations survey review process, including the accreditation
decisions and investigative and organizational processes used to make
determinations of non-compliance. We do however note, that the AOs are
already required to submit the documentation and that most AOs provide
this within their applications, therefore we do not believe this
imposes any additional burden on the AOs, as this has been a long-
standing expectation as described in the preamble of this proposed rule
and the 2015 AO Final Rule, (80 FR 29795, May 22, 2015), which stated
that while the explicit reference to the SOM was removed, ``this will
not change our practice of assessing comparability in light of the SOM
survey process requirements for Sas, which implement survey process
requirements found in parts 488 and 489 of our regulations governing
certification and provider agreements. Therefore, we believe no
additional burden is imposed through these proposed provisions.
2. ICR Related to Revised Documentation Submission Requirements Imposed
by Requirements That AOs Use Comparable Survey Process at Sec.
488.5(a)(5), Sec. 488.5(a)(6), and Sec. 488.5(a)(12)).
As described above related to the clarified and strengthened
proposed requirements under Sec. 488.5(a)(4), Sec. 488.5(a)(4)(iii),
Sec. 488.5(a)(4)(v), and Sec. 488.5(a)(4)(vii), we further propose to
require additional information under Sec. 488.5(a)(5), Sec.
488.5(a)(6), and Sec. 488.5(a)(12). As also mentioned above, we
believe that the AOs currently submit this information with their
initial and renewal applications, however by codifying the requirements
within regulation, we are clarifying the requirements which are
instrumental to maintaining the integrity of the survey process,
whether conducted by the SA or the AO. Therefore, we do not believe
these clarifications to what our expectations are within regard to the
survey process documentation would impose any additional burden on the
AOs.
3. ICR Related to Revised Documentation Submission Requirements Imposed
by Requirements That AOs Use Comparable Survey Process at Sec.
488.5(a)(13)
The proposed requirements under Sec. 488.5(a)(13) would require
AOs to submit specific information on the AOs' notification procedures,
including timeframes for notification, to CMS in regards to a facility
which the AO accredits if the facility fails to meet accreditation
standards or its accreditation status is affected, as part of the
documentation currently required under Sec. 488.5(a)(13). Furthermore,
the existing requirements currently require the AOs to have: (1)
procedures for responding and investigating complaints; and (2) a
process for decision-making as it relates to accrediting status. In
addition to the above added proposed requirement, we also propose to
add that AOs must submit documentation regarding the AO's process for
facilities that withdraw from accreditation, including notification
procedures.
We believe this review and revision would be conducted by a one RN,
one general health care support member, one medical secretary and the
CEO to develop these procedures, review and approve all changes. The
adjusted mean hourly wage for an RN is $79.56. The adjusted mean hourly
wage for a health care support staff person is $32.04. The adjusted
mean hourly wage for a medical secretary is $38.22. The adjusted mean
hourly wage for a CEO is $204.82.
We anticipate it would take approximately 5 hours for the AO staff
to review the new requirements set forth in the final rule and to
determine what changes need to be made to their standards, policies and
procedures. We also estimate that it would take an additional 5 hours
for the AO staff to make the revisions required to align their
accreditation standards and policies and procedures with our proposed
revisions. Therefore, the total estimated time burden per each AO would
be 10 hours.
This requirement applies to the 11 AOs (as of February 15, 2022)
that accredit Medicare-certified providers and suppliers. Therefore,
the total time burden across these 11 AOs would be 110 hours (10 hours
x 11 AOs).
As stated above, we believe that the AO staff that would perform
this task would consist of an RN, a health care support staff person, a
medical secretary and the AO's CEO to review and approve all changes.
We estimated that the cost burden for the work performed by the RN
would be $198.90 (2.5 hours x $79.56 per hour). We estimate that the
cost burden for the work performed by the health care support staff
person would be $80.10 (2.5 hours x $32.04). We estimate that the cost
burden for the work performed by the medical secretary would be $95.55
(2.5 hours x $38.22). We estimate that the cost burden for the work
performed by the CEO would be $512.05 (2.5 hours x $204.82).
We estimate that the total cost burden per each AO for this task
would be $886.60 ($198.90 + $80.10 + $95.55 + $512.05). The burden
across the 11 AOs that accredit Medicare-certified providers and
suppliers would be $9,752.60 ($886.60 x 11 AOs).
4. ICR Associated With the Requirement That the AOs Prepare a Training
for CMS About Its Revised Survey Process (Proposed Sec.
488.5(a)(4)(xi))
The proposed requirement at Sec. 488.5(a)(4)(xi) would require the
AOs to submit a presentation or web-based training materials to CMS, in
a format to be chosen at the discretion of the AO, which would provide
CMS with an overview of the AOs survey process and demonstrate how the
AO's survey process is comparable to that of CMS. We would require the
AOs to provide this presentation to CMS prior to the performance of any
direct observation surveys as provided for at Sec. 488.8(h).
As the AOs currently have existing training for its surveyors on
the survey process, we believe that the preparation

[[Page 12039]]

of this presentation would only require the AOs to extrapolate what
they believed are the core differences within CMS survey process and
that of their organization.
We believe it would take approximately 5 hours for the review of
the current AO processes and approximately 25 hours to develop an
abbreviated course of their survey processes for their accredited
programs. We believe that the persons at the AO who would perform these
tasks would be two RNs and a medical secretary. We estimate that each
RN would spend approximately 25 hours performing the required work. We
further estimate that the medical secretary would spend 5 hours
performing work on this task. The adjusted mean hourly wage for an RN
is $79.56. The adjusted mean hourly wage for a medical secretary is
$38.22.
We estimate that the total time burden per each AO would be 55
hours. This provision would apply to all 11 AOs that accredit Medicare-
certified providers and suppliers. Therefore, the estimated total
annual time burden for these tasks would be 605 hours (55 hours x 11
AOs).
We estimate that the cost burden to each AO for the work performed
by the RNs would be $3,978 ($79.56 x 50 hours). We further estimate
that the cost burden to each AO for the work performed by the medical
secretary would be $191.10 ($38.22 x 5 hours). The total estimated cost
burden per each AO for this task would be $4,169.10 ($3,978 + $191.10).
This requirement would apply to all 11 AOs that accredit Medicare-
certified providers and suppliers. Therefore, we estimate that the
total cost would be $45,860.10 ($4,169.10 x 11).
Across these 11 AOs there are 24 different types of accreditation
programs. We estimate that the burden associated with this task would
be $100,058.40 ($4,169.10 x 24 accreditation programs).
5. ICR Related to Requirement for AO To Submit Survey Findings/Reports
As mentioned in section IV.C of this proposed rule, we also propose
to require the AOs as part of their application under Sec.
488.5(a)(4)(viii) to acknowledge that it will submit any requested
survey findings and reports, to include complaint survey reports to CMS
for internal use.
This requirement would not cause the AOs to incur any new
additional burden as the submission of this information is already
required by this regulation and is therefore a usual and customary
component of initial and renewal applications. AOs are also already
required to submit the deficiencies and facility non-compliance in a
roll up format. Therefore, this proposed requirement for a full survey
report could potentially be seen as a burden reduction as CMS would not
require a specific new entry or format and reduce time spent by the AO
summarizing the survey activity.
6. ICR Related to Documentation Requirements for Submission to CMS for
Approval of the AOs' Revised Accreditation Standards and Survey Process
as Required by Sec. 488.8(b)
The AOs would be required to resubmit their new survey processes
and standards for a comparability review as required by Sec.
488.8(b)(1).
We believe that the AO staff that would work on this task would be
a medical secretary. We believe that the medical secretary would gather
all required documents, complete the compilation of documents and
verification. The adjusted mean hourly wage for a medical secretary is
$38.22.
We anticipate the total burden hours for each AOs to compile each
accrediting program and the revisions as proposed within Sec.
488.4(a)(1) and Sec. 488.4(a)(2) for a resubmission to CMS for review
and approval would be 80 hours.
This requirement would apply to the 11 AOs that accredit Medicare-
certified providers and suppliers. Therefore, we estimate that the
total annual would be 880 hours (80 hours x 11 AOs).
The total estimated cost burden for each AO is $3,057.60 (80 hours
x $38.22). The total annual cost burden s is $33,633.60 ($3,057.60 x 11
AOs).
There are 24 accreditation programs across the 11 AOs that accredit
Medicare-certified providers and suppliers. We estimate that the total
annual cost burden across all 24 accreditation programs would be
$73,382.40 ($3,057.60 x 24 accredited programs).
As mentioned in section IV.C of this proposed rule, the proposed
changes would not implement a reoccuring annual burden, but rather have
a one-time burden on the AOs until the survey processes and activities
are aligned with our proposed changes. CMS would resume the current
process for approval and re-approval of AOs and their accrediting
programs as outlined within the revised proposed Sec. 488.5.
We note, there is no direct burden associated with these changes to
the deemed provider or supplier, and there is no cost burden or
reporting burden associated with the proposed addition of the
definition of unannounced under Sec. 488.1.

D. ICR Related to Requirement That the AO Surveyors Take the CMS Online
Surveyor Training

We proposed at Sec. 488.5(a)(8), to add a new requirement that
would require AOs to state in their application for CMS approval, that
all AO surveyors have completed or will complete two CMS mandatory
documentation courses and the relevant program specific CMS online
trainings established for SA surveyors, initially, and thereafter.
There are a total of 163 online training programs that are
available to SA surveyors on the CMS QSEP website. These courses are
self-paced and the person taking the course can take the courses over a
period of time. The amount of time required to complete each of these
training course varies depending on the pace at which the surveyor
completes the training. The basic surveyor training courses for
specific programs range in time from 16-82 hours for completion. We
estimate the average time it takes for completion of one of the basic
surveyor courses is 27 hours. This could be more or less depending upon
the specific program that AO surveyors need to take.
We propose that each AO surveyor take the two mandatory
documentation courses (that is ``Principles of Documentation for Non-
Long-Term Care'' and ``Basic Writing Skills for Surveyor Staff'') and
the basic surveyor course for the care setting for which they perform
surveys. We further estimate that it would take approximately 4 hours
to complete each of the documentation courses, however, these courses
are self-paced and could take less or longer. Therefore, an AO surveyor
would incur a time burden of approximately 35 hours for the completion
of these CMS surveyor training courses (27 hours for the basic surveyor
course + 4 hours for ``Principles of Documentation for Non-Long-Term
Care'' course + 4 hours for ``Basic Writing Skills for Surveyor Staff''
course).
Each AO had different numbers of surveyors, depending on its size
and the number of accreditation programs it has. Therefore, for the
purposes of this burden estimate, we will estimate that each AO has an
average of 75 surveyors. This would equate to an estimated time burden
to each AO associated with this requirement would be 2,625 hours. (35
hours x 75 surveyors).
As of February 15, 2022, there are 11 AOs that accredit Medicare-
certified providers and suppliers. We estimate that the time burden
across all of these AOs associated with the requirement that their
surveyors take the CMS online

[[Page 12040]]

surveyor training would be 28,875 hours (2,625 hours x 11 AOs).
The adjusted mean hourly wage for an RN is $79.56. We estimate that
each AO would incur wages in the amount of $2,784.60 per each surveyor
that completes the CMS online surveyor training (35 hours x $79.56).
Each AO would incur a total cost burden in the amount of $208.845 for
all 75 surveyors that take the CMS online surveyor training (75
surveyors x $2,784.60).
The estimated cost burden across all AOs (that accredits Medicare-
certified providers and supplies) associated with this requirement
would be $2,297,295. ($208.845 x 11 AOs). The burden associated with
this requirement will be submitted to OMB under OMB control number
0938-NEW.

E. ICR Associated With the Establishment of a Definition for ``National
in Scope''

As proposed at Sec. 488.1, we would require the AO to provide
documentation for meeting the definition of ``national in scope''
within their initial and reapplication process. As currently required
by Sec. 488.1, the AO must provide documentation that demonstrates the
organization meets the definition of a ``national accrediting
organization'' as it relates to the accreditation program. Therefore,
we estimate the burden on AOs to be minimal as they are already
required to provide documentation to this effect. Therefore, we
estimate the following:
1. ICR Related to Documentation Requirements for ``National in Scope''
We anticipate that a CEO of an AO would compile and verify that the
AO meets the proposed definition of ``national in scope''.
Since CMS is not requiring a specific format for this
documentation, but suggests the AO provide a list which identifies the
accredited facilities meeting the definition, we anticipate the
compiling of this information would take approximately 40 minutes (0.66
hour) per each AO. For existing CMS approved AOs, the general re-
application cycle is not to exceed 6 years. Therefore, we anticipate
this burden to be applicable every 4 to 6 years. Therefore, we estimate
that the total time burden across all 11 AOs would be 7.33 hours (or 7
hours & 20 minutes) every 4 to 6 years.
The average hourly wage of the AOs CEO is $204.82. Therefore, we
estimate that the total cost burden for this task per each AO would be
is $136.52 ($204.82 divided by 60 minutes = $3.413 per min.) and
($3.413 x 40 min. = $136.52 per 40 min.)). We further estimate that the
total cost burden across the 11 AOs that accredit Medicare-certified
providers and suppliers would be $1,501.72 ($136.52 x 11 AOs).
2. ICR Related to Incorporation of the ``National in Scope''
Requirements Into the AO's Application
We anticipate that a medical secretary would finalize and package/
send the application for CMS approval.
We believe this additional document of meeting ``national in
scope'' would take approximately 5 minutes (0.083 hours) per each AO to
be included in the package which is already required under Sec. 488.5.
This requirement would apply only to the 11 AOs that accredit Medicare-
certified providers and suppliers. We estimate that the total time
burden associated with this task across these 11 AOs would be 55
minutes (0.91 hour) (5 minutes per each AO x 11 AOs).
The adjusted mean hourly wage for a medical secretary is $38.22.
Therefore, we estimate that the cost burden per each AO for this task
would be $3.18 (5 minutes (0.083 hour) x $38.22). We further estimate
that the total cost burden would be $35.03 ($38.22/60 min. per hour =
$0.637 per min.) and ($0.637 per min. x 55 min. = $35.03 per 55 min.)
or ($3.185 x 11 AOs = $35.03).
We would anticipate that this burden would be imposed to ensure AOs
submit verification of meeting the new definition. However, this burden
would only be incurred by the AOs during the submission of their
initial or renewal applications which would only take place every 4 to
6 years. The burden associated with these requirements will be
submitted to OMB under OMB control number 0938-NEW.
We do note, there is no direct burden associated with these changes
to the deemed provider or supplier.

F. ICR Associated With the Proposed Revision of the AO Performance
Measures and To Require a Publically Reportable Plan of Correction

SAs perform validation surveys on a sample of providers and
suppliers (such as hospitals, CAHs, ASCs, and HHAs) accredited by the
AOs. Validation surveys compare the survey findings of the AO to those
of the SA to see if there are any disparities. The disparities found
between an AO's surveys and an SA's surveys is used in a performance
measure called the ``disparity rate'' and is tracked by CMS as an
indication of the quality of the surveys performed by the AO as
described earlier in this proposed rule.
We proposed to revise the validation process for Medicare-certified
providers and suppliers by adding a new type of validation survey know
as direct observation validation survey. As a result of the revisions
made to the validation process, we have necessarily been required to
propose a new two-part definition for ``disparity rate'' to revise the
definition of disparity rate.
At Sec. 488.8(a)(4), we propose that the AO submit a publicly
reportable plan of correction for performance that is less than an
acceptable threshold for established performance measures.
This is a new requirement and therefore would be a new burden for
AOs to complete. The plan of correction will be completed and submitted
to CMS within 10-business days following the notification of the AO of
their less than acceptable performance. It will address the areas of
improvement and the specific actions to be taken to improve those areas
on a sustainable basis, the process for ongoing monitoring of progress
of the toward acceptable performance, as well as the individuals
responsible for overseeing the plan of correction and the anticipated
implementation dates of the proposed actions.
We believe that this task would be performed by the AO's CEO. We
also anticipate that each AO would prepare approximately 123 plans of
correction per year. We further estimate that it would take 80 hours of
time by the AO's CEO to prepare each plan of correction. This is using
the overall average disparity rate of 33 percent. There are
approximately 374 annual validation surveys performed across all
provider types (374 x 0.33 total plans of correction). We further
estimate that the total annual time burden per each AO for the
completion of POCs would be 9,840 hours (80 hours x 123). We further
estimate that the total annual time burden for the completion of all
POCs across all 11 AOs that accredit Medicare-certified providers and
suppliers would be 108,240 hours (9,840 hours x 11 AOs).
We estimate that the cost burden to each AO for the completion of
each POC would be $16,385.60 (80 hours x $204.82). We further estimate
that the annual cost burden per each AO for the completion of the
estimated 123 POCs per year would be $2,015,428.80 (9,840 hours x
$204.82). We further estimate that the total annual cost burden across
all 11 AOs that accredit Medicare-certified providers and suppliers for
the completion of all POCs annually would be $22,169,716.80
($2,015,428.80 x 11 AOs).

[[Page 12041]]

G. ICR Associated With the Revision of the Definition of ``Disparity
Rate''

In the proposal for the definition of disparity rate as dicussed in
section IV.I of this proposed rule, there is no associated burden as
look-back validation surveys are a usual and customary part of the
existing validations program. Direct observation validation surveys are
already being performed under current regulatory authority Sec.
488.8(a)(2) and are a usual and customary part of the VRP. AO will
continue to perform survey activities as required, the revised and
expanded definition of disparity would impact data collection by CMS,
but no additional burden to the AO or provider.

H. Burden Reduction Associated With the Revision of the AO Validation
Program

At Sec. 488.9, we propose to revise the AO validation program to
include the additional component of a direct observation of the AO's
survey process by SA or CMS surveyors. This would be called a direct
observation validation survey. There is no associated burden to the AO
or SA. Currently, CMS funds validation surveys. We do not anticipate
additional costs.
However, there are associated burden reductions to the provider
community since half of the traditional validation survey will be
replaced by direct observation validation surveys. To determine the
amount of burden reduction on the provider community, it would be
assumed that providers undergoing a traditoinal validation survey
assign facility liaison staff to accompany and assist SA surveyors
during their on-site validation survey. We believe that this task would
be performed by RNs and other medical administrative staff. We estimate
that the time burden for this task would be 8 hours per day for an
average of 3 days. Therefore, we estimate that the time burden per each
direct observation surveys would be 24 hours.
We anticipate a burden reduction based on our proposed changes
because the implementation of the direct observation validation surveys
would decrease the number of look-back validation validation surveys to
be performed by at least 50 percent.
The anticipated annual burden reduction calcualtions are based on
our FY 2019 look-back validation survey data collection. In FY 2019, we
conducted approximately 315 surveys.
We estimate that at least a 50 percent reduction in the look-back
validation surveys would reduce the provider and supplier burden by 144
hours per survey (3 days x 8 hours x 6 liaison staff) for a total of
25,920 hours (144 hours x 180 look-back validation surveys) across all
programs that receive validation surveys. This figure assumes on
average a look-back validation on-site survey of 3 days with three SA
surveyors and a total of six provider facility staff as provider
liaisons. Total annual burden reduction to providers and supplier
nationwide would be -$2,062,195.20 (25,920 hours x $79.56).

I. ICR Associated With the Revision of the Psychiatric Hospital
Accreditation Process

As discussed in section IV.L of this proposed rule, we propose to
require AOs which have a CMS-approved hospital accreditation program to
expand their programs to include the three special conditions for
psychiatric hospitals and provide CMS with a detailed crosswalk which
identifies the inclusion of the psychiatric standards that meet or
exceed CMS psychiatric Medicare conditions. While these AOs already
have approved hospital programs, we note that this proposal would
require a one-time overhaul of the AO's hospital program standards to
be expanded to include the psychiatric standards and burden would be
imposed for the first year following the effective date of this rule
and not be a reoccurring annual burden. Burden costs subsequent to
changes would remain as current practice with updates required to be
reviewed and approved as outlined in existing Sec. 488.5. As proposed
in multiple sections of this proposed rule, we propose to require the
AOs to use Medicare conditions, more comparable survey processes
through clarifications of what CMS considers ``core survey processes''
with the ability to delineate where they exceed and take the CMS online
surveyor training courses. Therefore, we believe burden would be
minimal and most of the burden would be in areas in which the AO would
``exceed'' Medicare requirements.
As of December 7, 2022, there are four CMS-approved AOs which have
established hospital accreditation programs. Two of these four AOs
already have an established CMS approved psychiatric accreditation
program.
We anticipate that this requirement would be of moderate burden for
AOs, however we anticipate the burden to be a one-time burden for two
of four hospital AOs, because two of these AOs already have a CMS-
approved psychiatric accreditation program and, therefore, would not be
required to submit a new application to CMS. This requirement would be
part of the initial and renewal application process as defined in Sec.
488.5, therefore would not impose annual reoccurring burden to any AOs
initially applying or reapplying. We would expect that the AOs use the
existing CFR language they are required to crosswalk currently in the
regular hospital program and expand it to assign an AO standard number
to the psychiatric standards with language which meets or exceeds the
Medicare conditions.
1. ICR Associated With the Requirement That AOs Develop a Psychiatric
Hospital Accreditation Program
We anticipate that the AOs would be required to review and revise
their existing hospital program crosswalk and standards to include the
psychiatric standards. We believe this review and revision would be
conducted by a cadre of AO professionals consisting of two RNs, one
physician, one medical secretary and the CEO to review and approve all
changes.
We believe the two RNs would develop the initial psychiatric
standards incorporated under the AOs hospital program. We estimate that
this task would take approximately 150 hours to complete. The adjusted
mean hourly wage for an RN is $79.56.
We believe the AO's CEO would review and approve the revised
standards and that this task would take approximately 45 hours. The
adjusted mean hourly wage for a CEO is $204.82.
We believe the medical secretary would process the AO's revised
application and send it to CMS. We estimate that this task would take 5
hours. The adjusted mean hourly wage for a medical secretary is $38.22.
We estimate that the time burden for each AO would be 200 hours
(150 hours for the two RNs + 45 hours by the CEO and 5 hours by the
medical secretary).
There are currently three AOs that would need to revise their
hospital programs to incorporate the three psychiatric special
standards. We estimate that the total time burden across these three
AOs would be 600 hours (200 hours x 3 AOs).
We estimate that the cost burden for the work performed by the RNs
would be $11,934 ($79.56 x 150 hours), the CEO would be $9,216.90
($204.82 x 45 hours), the medical secretary would be $191.10 ($38.22 x
5 hours). Therefore, the total estimated cost burden per AO for these
tasks would be $21,342 ($11,934 + $9,216.90 + $191.10).
We further estimate that the total cost burden across the three AOs
which

[[Page 12042]]

would need to revise their hospital programs to incorporate the three
psychiatric special standards into their hospital accreditation
programs would be $64,026 ($21,342 x 3 AOs).
2. ICR Associated With Accrediting Facilities Under the Revised
Psychiatric Hospital Accreditation Program
As aforementioned, there are four existing AOs which have a CMS
approved hospital accreditation program; however, two of four AOs would
need to resubmit their applications for CMS-approval based on the
proposed provisions for the psychiatric standards as well as meeting
the definition and criteria of national in scope. The scope of the CMS
approved hospital programs would not change with this proposed
expansion of the program to include the psychiatric special conditions.
Once the hospital program is approved as national in scope, the
addition of the three special conditions does not change the overall
scope of the entire program. Therefore, there would be no additional
burden associated with this requirement.

J. Burden Associated With Limitations to Terminated Providers Seeking
Re-Enrollment and Certification in Medicare/Medicaid Programs

We propose to add a new policy at Sec. 488.4(b) which would
withdraw CMS recognition of the ``deeming authority'' accreditation of
any Medicare certified provider or supplier that is involuntarily
terminated from the Medicare/Medicaid program, if such provider/
supplier subsequently applies to re-enter the Medicare program. We also
propose adding a new requirement at Sec. 488.4(b)(2) that would
require a terminated provider or supplier to have to meet all of the
requirements of Sec. 489.57 before a new agreement with that provider
or supplier into the Medicare program will be approved.
In support of proposed Sec. 488.4(b), we also propose to add a new
requirement at Sec. 488.5(a)(21) that would require AOs to provide,
with their initial and subsequent renewal applications, a statement
certifying that, in response to a written notice from CMS notifying the
AO that one of its accredited providers or suppliers has been
terminated from the Medicare/Medicaid program, the AO agrees to
terminate or revoke its accreditation of the terminated provider or
supplier within 5-business days from receipt of said written notice.
We have also made revisions and added proposed new requirements at
Sec. 489.57(b) that would require a terminated provider or supplier to
meet the requirements set forth at Sec. Sec. 489.57(b)(1) to (b)(3)
before their new agreement for Medicare participation will be approved.
Proposed new Sec. 489.57(b)(1) would require that a terminated
provider or supplier must be under the exclusive oversight of the SA
for the purpose of the initial survey, certification and demonstration
of compliance with the Medicare conditions before their new agreement
for Medicare participation can be approved. Proposed new Sec.
489.57(b)(2) would require that the previously terminated provider or
supplier must remain under the exclusive oversight of the SA until the
SA or the applicable CMS Location (formerly called CMS Regional Office)
has performed a reasonable assurance survey, determined that the
terminated provider or supplier has corrected the deficiencies that
caused the termination and that they are unlikely to recur and has
certified its full compliance with all applicable Medicare conditions.
The previously terminated provider's or supplier's new agreement for
participation in the Medicare/Medicaid program may not be approved
until such certification has been provided by the SA or CMS Location.
Finally, our proposal at new Sec. 489.57(b)(3) would require that
during the time period in which the terminated provider or supplier is
under the exclusive oversight of the SA and while the new agreement for
Medicare participation is pending, CMS will not accept or recognize
accreditation from a CMS-approved accrediting organization.
We believe that there would be no additional cost or time burden
associated these proposed requirements for several reasons. First, the
terminated providers and suppliers would have to undergo periodic,
unannounced surveys performed by the SA or CMS. We believe that this is
exempt from the PRA in accordance with 5 CFR 1320.3(b)(2) because these
surveys are a usual and customary practice of accreditation. Therefore,
the terminated provider or supplier would incur no additional time or
cost burden related to the SA survey process.
Also, considering that as a result of the above-stated proposals,
CMS would not recognize deeming accreditation from an AO while a
provider or supplier is terminated from the Medicare program, the AOs
would be required to terminate or revoke accreditation for terminated
providers and suppliers; and that during the time that a new agreement
for Medicare participation is pending, would be under the exclusive
oversight of the SA, they would not incur any fees for SA's services.
If they remained accredited by the AO, they would pay fees for this
accreditation.
In addition, all prospective providers and suppliers, including
those that were terminated and seeking re-entry into the Medicare/
Medicaid program are already required to submit an initial Form CMS-855
provider enrollment application to CMS. The provider or supplier would
therefore not incur any new time or cost burden related to the
submission of this application.
The burden associated with all requirements stated above will be
submitted to OMB for approval under OMB control number (0938-NEW).

K. Summary of Estimated Burden

The Table 3 provides a summary of the estimated burden related to
the proposals being made in this proposed rule.
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VII. Response to Comments

Because of the large number of public comments, we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.

VIII. Regulatory Impact Analysis

A. Statement of Need

We seek to strengthen the public trust in CMS-approved AOs'
findings and to protect the health and safety of patients that seek
services from Medicare and Medicaid-participating providers that are
accredited by CMS-approved AOs. We believe that AOs that voluntarily
seek approval for ``deeming purposes'' are taking on a critical quality
assurance role for the American people. Patients need to be able to
rely on the strength of that accreditation to be assured that their
health care services will be safe and of high quality. Where there are
gaps in that accreditation process, or where quality issues are not
fully identified or investigated by the AO, it means that current and
future patients may experience unnecessary harm or quality issues.
Therefore, we are seeking to strengthen our oversight of AOs by
revising existing regulations or implementing new regulations that
would address the following issues: (1) place limitations on the fee-
based consulting services AOs offer to the providers and suppliers they
accredit; (2) implement penalties for violation of the prohibition
against AO fee-based consulting; (3) require AOs to report information
to CMS on a bi-annual basis about the fee-based consulting services
they provide; (4) require AOs to report specific conflict of interest
information to CMS with their initial and renewal applications; (5)
require AOs to submit surveyor conflict of interest declarations to CMS
on an annual basis; (6) prohibit AO owners, surveyors and other
employees, that currently or within the previous 2 years have had an
interest in or relationship with a health care facility the AO
accredits from doing the following: (a) participating in the survey of
that health care facility; (b) having input into the results of the
survey and accreditation for that health care facility; (c) having
involvement with the pre- or post-survey activities for that health
care facility, or (d) having contact with or access to the records for
the survey and accreditation of that health care facility; (7) require
AOs to incorporate the CMS conditions into their accreditation
standards for its deeming programs; (8) use a comparable survey
processes; (9) revise the validation process, implement new performance
measures and the use of plans of correction for unacceptable
performance measure scores; (10) revise

[[Page 12047]]

the hospital application process for AOs that have an approved hospital
accreditation program to incorporate surveys of psychiatric hospitals
into their hospital programs; (11) add new definitions for the terms
``unannounced survey'', ``national in scope'', ``geographic regions'',
``process disparity rate'', and ``outcome disparity rate''; and (12)
place limitations on terminated providers or suppliers seeking re-entry
into the Medicare program. In addition, we are soliciting comments from
the public on whether CMS should limit the number of times an AO can
submit an incomplete initial application for a new accreditation
program and soliciting comments regarding other opportunities to
improve the public transparency of quality of care findings at
facilities surveyed by AOs; recognizing that under section 1865(b) of
the Act, surveys performed by AOs may not be disclosed except for
hospices, home health agencies, and surveys related to enforcement
activity.
We continue to review and revise our health and safety requirements
and survey processes to ensure they are effective in driving quality of
care for our accredited providers and suppliers.

B. 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), Executive Order 14094 entitled ``Modernizing
Regulatory Review'' (April 6, 2023), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the
Social Security Act, section 202 of the Unfunded Mandates Reform Act of
1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on
Federalism (August 4, 1999).
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). The
Executive Order 14094 entitled ``Modernizing Regulatory Review''
(hereinafter, the Modernizing E.O) amends section 3(f)(1) of Executive
Order 12866 (Regulatory Planning and Review). The amended section 3(f)
of Executive Order 12866 defines a ``significant regulatory action'' as
an action that is likely to result in a rule: (1) having an annual
effect on the economy of $200 million or more in any 1 year (adjusted
every 3 years by the Administrator of OIRA for changes in gross
domestic product), or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, territorial, or
tribal governments or communities; (2) creating a serious inconsistency
or otherwise interfering with an action taken or planned by another
agency; (3) materially altering the budgetary impacts of entitlement
grants, user fees, or loan programs or the rights and obligations of
recipients thereof; or (4) raise legal or policy issues for which
centralized review would meaningfully further the President's
priorities or the principles set forth in this Executive Order as
specifically authorized in a timely manner by the Administrator of OIRA
in each case.
A regulatory impact analysis (RIA) must be prepared for major rules
with significant regulatory action/s and/or with significant effects as
per section 3(f)(1) of Executive Order 12866 ($200 million or more in
any 1 year). Based on our estimates, OMB's Office of Information and
Regulatory Affairs has determined that this rulemaking is
``significant''.

C. Detailed Economic Analysis

1. Benefits
In developing this proposed regulation, we carefully considered its
potential effects including both costs and benefits. The overall
benefit of this rule would be to improve CMS' oversight of the AOs and
to improve the overall quality and safety of healthcare. More
specifically, the benefits of this rule include the prevention and
removal of potential and actual conflicts of interest, the improvement
of the validation process and anticipated reductions in the validation
disparity rate, the additional performance measure and the
implementation of plans of correction that would help AOs that have low
performance measure scores to prepare a plan for how to improve their
performance. We note that the generation of benefits is contingent upon
behavior change, which entails costs; provisions that are discussed,
below, as having negligible costs would therefore be anticipated to
have minimal benefits.
2. Provision-Specific Costs, Benefits and Transfers
We have identified the direct costs associated with this proposed
rule as the costs associated with reporting, recordkeeping, and other
costs. These costs are discussed below.
a. Impact Related to Conflict of Interest Proposals
In this proposed rule, we have made several proposals related to AO
and AO surveyor conflicts of interest. In the 2018 AO Conflict of
Interest RFI, many commenters stated that AOs tend to ignore
deficiencies during surveys in order to promote the efficacy of their
consulting services. These commenters also stated the belief that the
AOs may ignore deficiencies to avoid giving poor survey results to
their clients, who have paid substantial fees for both accreditation
and AO fee-based consulting services. These commenters further stated
the belief that the financial relationship between the AO and the
health care facilities they accredit causes a conflict of interest. We
believe that the proposed restrictions on AO fee-based consulting would
reduce this conflict of interest and hopefully remove the incentive for
AOs to ignore deficiencies during surveys. We further believe that the
conflict of interest proposals we have made would prevent potential and
new conflicts of interests from occurring. We will address the
financial impacts associated with each of these proposals separately
below.
(1) Impact Related to Proposed Conflict of Interest Policies &
Procedures AOs Must Submit to CMS (Proposed Revisions to Sec.
488.5(a)(10))
We proposed to modify Sec. 488.5(a)(10) to add a requirement that
the AOs must provide specific information with their conflict of
interest policies and procedures with the application they submit to
CMS. Specifically, the AO must submit the following policies and
procedures: (1) for separation of its fee-based consulting services
from its accreditation services; (2) policies and procedures for
protecting the integrity of the AO's accreditation program, including
the requirements of Sec. 488.8(j); and, (3) for the prevention and
handling potential or actual conflicts of interest that could arise
from situations in which an AO owner, surveyor, or other employee has a
direct interest in or relationship with another survey agency or health
care facility to which the AO provides accreditation services,
including a surveyor's outside interest, abuse of influence or
disclosures of privileged information, etc.
The AO would need to modify their current conflict of interest
policy and procedures to include the above-stated information required
under the proposed revisions to Sec. 488.5(a)(10). We estimate that
this task would be performed by a team of at least two AO staff members
which would be a RN and

[[Page 12048]]

a health services manager. We estimate that the total burden costs
related to the requirements for proposed Sec. 488.8(i)(1) would be
$4,674.72. We estimate that the cost across all AOs would be
$51,421.92.
We believe that the above stated burden impact would be incurred by
the AO once prior to the time that they submit their first application
after this requirement becomes effective. However, we believe that
after the AOs have made required modifications to their conflict of
interest policies, they will not have to revise them again, but will
submit the same revised conflict of interest policies every 6 years
with their renewal applications, so this burden would not be incurred
again. We do not count the burden related to the submission of the
application because the AO would be required to submit the application
every 6 years to renew the CMS approval for their accreditation
programs.
(2) Impact Related to Requirement That the AOs Submit Surveyor Conflict
of Interest Declarations to CMS on an Annual Basis (Proposed Sec.
488.5(a)(22))
We proposed to add a new paragraph (a)(22) to Sec. 488.5, which
would require that the AO must submit a declaration by each surveyor of
any outside interests or relationships with the health care facilities
that the AO accredits. This section would also require that the
surveyor declarations must be updated on an annual basis and submitted
to CMS by no later than December 31st each year.
We believe that the AOs would incur time and cost burdens for
having to collect declarations from each of their surveyors annually.
There would also be a time and cost burden to the AO for the submission
of the surveyor declarations to CMS.
We estimate that the total burden costs related to the requirements
for proposed Sec. 488.8(i)(1) would be $4,674.72. We further estimate
that the total cost across the 11 AOs that accredit Medicare-certified
providers and supplier, would be $51,421.92.
(3) Impacts Related to Proposed Restrictions on Fee-Based Consulting
Provided by AOs to the Health Care Providers and Suppliers They
Accredit (Sec. 488.8(i)(1), Sec. 488.8(i)(2), and Sec. 488.8(i)(4)
In this proposed rule, we propose to modify the AO oversight
regulations Sec. 488.8(i) by adding a new provision which would add
restrictions on the fee-based consulting services provided by the AOs
to the same health care providers and suppliers they accredit for
Medicare deeming purposes.
At proposed Sec. 488.8(i)(1), an AO or its associated fee-based
consulting division or company would not be permitted to provide fee-
based consulting services to any health care provider or supplier prior
to an initial accreditation survey. For purposes of this requirement,
the term ``initial survey'' means the first accreditation survey
performed of a health care provider or supplier by an accrediting
organization. If a health care provider or supplier is terminated or
withdraws from the services of an accrediting organization and then, a
later time, again retains the services of that accrediting
organization, the first survey performed by the accrediting
organization of the returning health care provider or supplier would be
considered an initial accreditation survey.
At proposed Sec. 488.8(i)(2), an AO or its associated fee-based
consulting division or company may not provide fee-based consulting
services to a health care provider or supplier the accrediting
organization accredits within 12 months prior to the next scheduled re-
accreditation survey of that provider or supplier. For purposes of this
paragraph, the term ``re-accreditation survey'' means the any
subsequent accreditation surveys performed by the accrediting
organization following the initial survey.
At proposed Sec. 488.8(i)(4), an AO or its associated fee-based
consulting division or company may not provide fee-based consulting
services to a health care provider or supplier, to which the
accrediting organization provides accreditation services, in response
to a complaint received by the AO regarding that provider or supplier.
At proposed Sec. 488.8(i)(4)(i) through Sec. 488.8(i)(4)(iv) the
restriction upon AO fee-based consulting shall not apply to the
following situations: AO fee-based consulting services provided during
the 24-month period after an initial or re-accreditation survey is
performed; AO fee-based consulting services provided to address
complaints received and investigated by the SA regarding an accrediting
organization's accredited provider or supplier in which one or more
condition-level or immediate jeopardy deficiencies are identified,
provided however that, the AO fee-based consulting must occur after the
complaint investigation and survey has been completed and must only
address those issues identified by the complaint survey; AO fee-based
consulting services provided to health care providers or suppliers to
which the accrediting organization has never provided accreditation
services; no-cost consulting or general education provided by the
accrediting. Also, as we stated in the preamble, the proposed
restriction on AO fee-based consulting services at Sec. 488.8(i)(1)
through (3) would not prohibit the AOs from providing fee-based
consulting services to health care providers and suppliers the AO is
accrediting such as mock surveys, education about the Medicare
conditions or the survey process. This proposal would also not prohibit
the general education provided by the AO about their accreditation
program. This proposal would apply only to the four AOs that provide
fee-based accreditation,
We believe that there would be two types of impact related to the
proposals for Sec. 488.8(i). First, the AOs would incur time and cost
burden to the AOs related to having to make changes to their fee-based
consulting program standards and policies. Second, we recognize that
there would be a financial impact to the AOs due to the loss of revenue
that would have been realized from the fee-based consulting services
they currently provide that would now be prohibited. We will address
these two burdens separately below.
As a result of our proposals at Sec. 488.8(i)(1) through (3), the
AOs will no longer be allowed to provide fee-based consulting services
to a health care provider or supplier prior to an initial survey,
within 12-months prior to a provider's or supplier's re-accreditation
survey or in response to a complaint received in response to an
accredited provider or supplier. We believe that this limitation on the
AOs' fee-based consulting model will require the AOs to revise their
fee-based consulting business documents, such as their business
charter, business documents, employee training information,
informational documents that are distributed to prospective clients,
and their policies and procedures as well as potentially restructure
their staffing.
We estimate that these changes would cause each AO to incur a total
time burden of 80 hours and a total cost burden of $7,791.20. We
further estimate that the total impact across the four AOs that provide
fee-based-consulting would be a time burden of 320 hours and a cost
burden of $31,164.80. (See section VI.A.3 of this proposed rule for the
details of how these time and cost burdens were calculated.)
We also believe that there will be a financial impact to the four
AOs that provide fee-based consulting from the proposed restrictions on
of fee-based consulting. Although the 2018 AO

[[Page 12049]]

Conflict of Interest RFI gathered information about the nature of these
relationships, they did not provide enough information for us to
accurately calculate the financial impact that the requirements of
proposed Sec. 488.8(i)(1) would have on the AO. We do estimate that
the AOs would have a decrease in approximately 25 percent of the fee-
based consulting business due to the restriction on providing fee-based
consulting prior to initial surveys. We say this because AOs perform
accreditation on a 3-year cycle, following the initial survey. We
estimate that 25 percent of the fee-based consulting performed by an AO
on an annual basis would be for new clients prior to their initial
survey. We further estimate that the remaining 75 percent of the AOs
fee-based consulting business would be provided to providers and
suppliers prior to a reaccreditation survey.
According to IRS financial disclosure statements filed by the AO
that provides the most fee-based consulting through an associated fee-
based consulting, this AO realized gross revenue from fee-based
consulting services in the amount of $44,960,143 in 2020 and
$55,970,543 in 2021.\20\ This equates to an average annual revenue of
$50,465,298 from fee-based consulting.
---------------------------------------------------------------------------

\20\ https://www.jcrinc.com/-/media/jcr/jcr-documents/about-jcr/financial-statements/2021-jcr-form-990-redacted-pdc.pdf.
---------------------------------------------------------------------------

We estimate that new accreditation clients make up approximately 33
percent of an AOs client base and that the remaining 66 percent consist
of existing clients that require reaccreditation surveys. We further
estimate that, currently, only 25 percent (out of the 33 percent) of an
AO's new clients elect to have fee-based consulting prior to the
initial survey. Therefore, if the AOs are restricted from performing
fee-based consulting prior to the initial survey of new clients, they
would lose 25 percent of the revenue they receive from their fee-based
consulting business. We estimate that the proposed restrictions on fee-
based consulting would cause the AO that provides the most fee-based
consulting services to incur lost revenue in the amount of $12,616,324
per year ($50,465,298 divided by 4).
While we do not have any independent information about the amount
of profits the other AOs realize from their fee-based consulting
services, we presume that these three AOs do not realize as much
revenue from the provision of fee-based consulting as this large AO. We
say this for several reasons. First, the other AOs are smaller
businesses and have a smaller client base than does this large AO. It
is our understanding that these AOs provide fee-based consulting on a
smaller scale because they have less clients and some that are smaller
businesses that may not have the funds to pay for fee-based consulting
services. Therefore, we are not able to provide an accurate estimate of
how much loss in revenue will result from the restrictions in AO fee-
based consulting.
We estimate that the AOs charge between $100,000 and $500,000 for
the fee-based consulting they provide to each healthcare provider or
supplier. We do not know how many providers or suppliers currently use
the fee-based consulting services of their AO prior to their initial
survey. Therefore, we are not able to provide an accurate estimate of
the total amount of consulting services shifting to new consultants and
away from AOs no longer permitted to provide such services to the
providers and suppliers for whom they conduct initial surveys.
(4) Impact Related to Proposed Requirement for Submission of
Information About AO Fee-Based Consulting Services Provided (Proposed
Sec. 488(i)(5))
We propose to add a requirement at Sec. 488.8(i)(5) that would
require the AOs to provide CMS with the following information about the
fee-based consulting services they provide to CMS on a bi-annual basis:
(1) whether the AO or an associated consulting division or company
established by the AO provides fee-based consulting services; (2) a
list which contains the names and CCN numbers of all health care
providers and suppliers to which the AO or its associated consulting
division or company has provided fee-based consulting services during
the previous 6 months; (3) whether the AO has provided accreditation
services to each health care provider or supplier on said list, and if
so, the date the accreditation services were provided; and (4) a
general description of the AO fee-based consulting services provided to
each health care provider or supplier on said list. This proposed
regulation further requires that statement containing the above-stated
information must be submitted to CMS no later than 15 days after the
end of each 6-month period.
We estimate that the impact associated with this proposed
requirement would include the time and costs associated with the
gathering of the information necessary to prepare the required
statement, the time required to prepare the statement and the time
required to send the statement to CMS. This impact would occur on a bi-
annual basis, although, we believe that the burden would be greater for
the preparation of the first report. Thereafter, the AOs would have
already prepared and formatted this report and would simply have to
update the information on a quarterly basis.
We estimate that the total hourly time burden per each AO for these
tasks would be 96 hours and the total estimated cost burden would be
$4,674.72. The impact across the four AOs that provide fee-based
consulting would be 96 hours and $18,698.88.
We believe that the above stated burden would be incurred only the
first time that the AO would be required to prepare the required
statement and send it to CMS. We believe that after the AO has prepared
their first report, they would have this report in an electronic format
on their computers. Therefore, for the second and all subsequent
reports, we estimate that the cost related to the preparation and
submission of this report would be reduced by at least 25 percent.
We estimate that the financial impact to each AO for preparation of
the second or subsequent report would be $636.48 and to all AOs that
provide fee-based consulting would be $2,545.92.
(5) Impact Related to Proposed Requirement That Accrediting
Organization Establish Fee-Based Consulting Firewall Policies and
Procedures (Proposed Sec. 488.8(j))
At Sec. 488.8(j) we proposed to require any AO that provides fee-
based consulting services or its associated fee-based consulting
division or company to have robust, written fee-based consulting
firewall policies and procedures. We would require that these firewall
polices and procedure at a minimum, include the following provisions:
(1) the AO's fee-based consulting services must be provided by a
separate division or company from the AO's accreditation division; (2)
the AO's fee-based consulting division or separate company must
maintain separate staff from that of the AO's accreditation divisions
to ensure that the fee-based consulting division staff do not perform
AO's accreditation division functions and that the AO's accreditation
division staff do not perform fee-based consulting division functions;
and, (3) the AO's accreditation staff and surveyors are prohibited from
marketing the AO's fee-based consulting services to the AO's
accreditation clients.
This proposed requirement would only apply to the AOs that provide
fee-based consulting and would require

[[Page 12050]]

these AOs that establish new fee-based consulting firewall policies or
revise their policies and procedures to meet the proposed requirements.
We believe that the burden associated with the revision of the AO's
fee-based consulting policies and procedures would fall under the time
and cost burden estimated in section VI.A.5 of this proposed rule. As
such, we will not assess a separate burden here.
(6) Impact Related to Proposed Regulation To Prevent AO Owners,
Surveyors or Other Employees That Have an Interest In or Relationship
With a Health Care Facility Accredited by the AO From Participating in
Survey Activities for That Facility (Proposed Sec. 488.8(k))
We propose to avoid conflicts of interest related to employment
relationships between AO surveyors and health care facilities that are
accredited by the AO. At proposed Sec. 488.8(k) we would require the
AO's to prohibit their owners, surveyors and other employees from doing
the following: (1) participating in the survey of facilities with which
they have a relationship; (2) having input into or influence the
outcome of any survey performed for facilities with which they have a
relationship; (3) having any involvement with the pre or post survey
activities for the health care facilities with which they have a
relationship; or, (4) having any contact with the records from the
surveys for any health care facilities with which they have a
relationship. We believe that this should already be a usual and
customary practice of the AOs and therefore there should be no
additional burden to the AOs to comply with the requirements of this
section.
b. Impacts Associated With the Requirement That AOs Incorporate the
Medicare Conditions (Sec. 488.4(a)(1))
(1) Impacts Associated With the Requirement That the AOs Provide
Detailed Crosswalks Identifying the Incorporation of CMS Standards
We propose at Sec. 488.4(a)(1) to require AOs to incorporate the
CMS' health and safety standards. Currently, the AOs are required to
provide a similar crosswalk under the existing process, CMS previously
only required a ``comparable'' standard. Therefore, we propose to
revise Sec. 488.5(a)(3) to require the AOs to submit ``A detailed
crosswalk (in table format, as specified by CMS) that identifies each
of the applicable Medicare conditions (as defined in Sec. 488.1)
incorporating the language of CMS requirements and standards.''
As a result of this proposal, AOs would need to recreate their AO
standards to match CMS'. We also note that this proposal would require
a one-time overhaul of AO standards and burden would be imposed for the
first year following the effective date of this rule and not be a
reoccurring annual burden. Incremental costs subsequent to changes
would be minimal, as our proposal reflect current practice) with
updates required to be reviewed and approved as outlined in existing
Sec. 488.5).
We anticipate the impact to AOs for the revision of their existing
crosswalk and standards into the required format would be $159.12 per
AO. We estimate that the total cost impact across the 11 AOs that
accredit Medicare-certified providers and suppliers would be $84,993.48
for one accreditation program each.
However, the majority of our AOs have multiple accreditation
programs, therefore this cost impact would increase based on the number
of programs. CMS has 24 approved accreditation programs across the 11
AOs that accredit Medicare-certified providers and suppliers. We
estimate that the total financial impact across all of these
accreditation programs would be $185,440.32.
(2) Impacts Related to AO Providing Notice of the Revised Accreditation
Standards to Their Accredited Providers and Suppliers Via Their Website
In addition to changing the survey standards as proposed under
Sec. 488.4(a)(1), the AOs would be required to provide the newly
revised AO standards to the facilities they accredit. There are
approximately 14,904 accredited facilities across all program types. We
believe that the majority of AOs have a website portal on which they
make their standards available to their accredited providers and
suppliers.
We estimated that the total impact across the 11 AOs that accredit
Medicare-certified providers and suppliers for providing notice of
their revised accreditation standards on their website would be
$1,829.28.
(3) Impact Related to Providing Notice of the Revised Accreditation
Standards to the Accredited Providers and Suppliers via Email
We also believe the AOs would provide notice of their revised
accreditation standards to their accredited providers and suppliers
directly via email. We believe this would be a group email that would
be sent out via group text to all of the AOs accredited providers and
suppliers. We estimate that it would take only 15 minutes to prepare
this email and there are approximately 14,904 accredited providers and
suppliers across all 11 AOs that accredit Medicare-certified providers
and suppliers. Therefore, the total estimated financial impact across
all these 11 AOs for providing notice of the AOs revised accreditation
standards via email would $142,333.20.
(4) Impacts Related to Education of Providers and Suppliers Regarding
New Standards
We believe that the AOs that accredit Medicare-certified providers
and suppliers would be required to provide education to their
accredited providers and suppliers about their new Medicare
accreditation standards, which must be revised to be the same as the
CMS standards, or more stringent. We believe that this training would
most likely be provided by webinar.
There are approximately 14,904 deemed facilities. We estimate that
the cost impact to each facility would be $200.46 ($79.56 per RN +
$120.90 per general or services manager). We further estimate that the
total annual cost burden across all 14,904 accredited facilities would
be $2,987,655.84.
c. Impacts Associated With the Requirement That AOs Use a Survey
Process That Is Comparable to That Used by CMS and the SAs
We propose to require the AOs to use the strengthened and revised
requirements for initial and renewal applications for deeming
authority, which includes revisions specifically to the documentation
submitted related to the AO survey processes and guidance and its
comparability to those survey processes used by the SA. We also propose
to require the AOs to state in their survey reports, to identify the
specific Medicare condition that corresponds with each finding of non-
compliance.
(1) Impact Related to Documentation Associated With Requirements That
AOs Use Comparable Survey Processes (Sec. 488.5(a)(4), Sec.
488.5(a)(4)(iii), Sec. 488.5(a)(4)(v), and Sec. 488.5(a)(4)(vii))
We believe that impact of the changes to the require specific
information related AOs' survey processes; surveyor guidance and
instructions; survey forms and survey review process would vary
depending on the AO because there are three out of the eleven AOs that
accredit Medicare-certified providers and suppliers that already use
survey

[[Page 12051]]

processes and guidance that are very similar to that used by the SA.
Therefore, the impact to these three AOs would be much less than the
impact to the remaining AOs, which use a different survey process which
are causing more concern related to the comparability of survey
activities and the ability to maintain the integrity of the survey
process. For the purposes of this impact analysis we have provided our
estimates based on an AO that would require the most changes to their
existing documentation provided to show AO comparability to CMS survey
processes, guidance and documentation.
The requirements under Sec. 488.5(a)(4), Sec. 488.5(a)(4)(iii),
Sec. 488.5(a)(4)(v), and Sec. 488.5(a)(4)(vii)) would require AOs to
ensure documentation submitted supported the already existing
expectations under the regulatory requirements and only added
additional clarity within these proposed provisions. Therefore, we
estimate that there is no impact on each AO for providing these
requirements, as further explained in section VI.C.1 of this proposed
rule, that AOs Use Comparable Survey Process (Sec. 488.5(a)(4), Sec.
488.5(a)(4)(iii), Sec. 488.5(a)(4)(v), and Sec. 488.5(a)(4)(vii)).
(2) Impact Related to Documentation Requirements Imposed by Requirement
That AOs Submit a Training for CMS About Its Revised Survey Process
(Sec. 488.5(a)(4)(xi))
The proposed requirements under Sec. 488.5(a)(4)(xi) would require
the development of a presentation, such as an abbreviated web-based
training or related training materials, for CMS about the AOs revised
survey processes, specifically highlighting areas which vary from the
survey processes and activities used by the SA. We believe while this
would require development of new material, the content of such material
is already available and would be extrapolated from the AOs training to
new surveyors.
We believe that development of the training would be $4,169.10 per
AO and $45,860.10 across all 11 AOs. However, we further determined
that we would consider the total across all 24 accredited programs to
be $100,058.40 as survey processes used by the AO may vary based on the
provider or supplier.
(3) Impact Related to Documentation Related to Requirements That AOs
Use Comparable Survey Process (Sec. 488.5(a)(5), Sec. 488.5(a)(6),
and Sec. 488.5(a)(12))
Aforementioned in the Impact Related to Documentation Imposed by
Requirements that AOs Use Comparable Survey Process (Sec. 488.5(a)(4),
Sec. 488.5(a)(4)(iii), Sec. 488.5(a)(4)(v), and Sec.
488.5(a)(4)(vii)), the proposed requirements under Sec. 488.5(a)(5),
Sec. 488.5(a)(6), and Sec. 488.5(a)(12) also clarify existing and
longstanding standard practices on the survey processes and do not
impose additional burden to the AOs. Therefore, we estimate these
proposed requirements would have no financial impact on the AOs.
(4) Impact Related to Documentation Requirements Imposed by Requirement
That AOs Use Comparable Survey Process (Sec. 488.5(a)(13))
The requirements at Sec. 488.5(a)(13) currently require the AOs to
have: (1) procedures for responding and investigating complaints and,
(2) a process for decision-making as it relates to accrediting status.
We propose to add two new requirements which would require the AO to
provide CMS with its organizational policies and procedures related to
the AOs notification procedures, including timeframes for notification,
to CMS in regards to a facility which the AO accredits when the
facility fails to meet accreditation standards or its accreditation
status is affected, as well as its processes and timelines for
notification to CMS when one of its accredited facilities withdraws
from accreditation. We estimate the total burden to be $886.60 per AO
or $9,752.60 across all 11 AOs.
We estimate that the total financial impact for these tasks would
be $109,650.20 across all 11 AOs and the 24 programs currently
recognized under AO deeming authority.
(5) Impact Related to the Requirement for AO To Submit Survey Findings/
Reports
As mentioned in the preamble, we also propose to require the AOs as
part of their application under Sec. 488.5(a)(4)(viii) to acknowledge
that it will submit any requested survey findings and reports, to
include complaint survey reports to CMS for internal use.
This requirement would not cause the AOs to incur any new
additional burden as the submission of this information is already
required by this regulation and is therefore is a usual and customary
part requirement for initial and renewal applications. AOs are also
already required to submit the deficiencies and facility non-compliance
in a roll up format. Therefore, this proposed requirement for a full
survey report would not cause any additional burden as CMS would not
require a specific new entry or format and reduce time spent by the AO
summarizing the survey activity.
(6) Impact Related to the Requirement That the AOs Submit Their Revised
Accreditation Standards and Survey Processes to CMS for Review and
Approval
Finally, in addition to the burden estimates above, the AOs would
be required to resubmit their new survey processes and standards for
CMS review as required under Sec. 488.8(b)(2). We anticipate the total
financial impact associated with the requirement at Sec. 488.8(b)(2)
that an AO submit any proposed changes in its accreditation
requirements or survey process to CMS for review and approval would be
$3,057.60 per AO per accrediting program type. We estimate that the
financial impact across the 11 AOs would be $33,633.60. Finally, we
estimate that the total financial impact across the 24 accredited
programs is estimated at $73,382.40.
As mentioned within the preamble, the proposed changes would not
implement a reoccuring annual burden, but rather have a one-time burden
on the AOs until the survey processes and activities are aligned with
our proposed changes. CMS would resume the current process for approval
and re-approval of AOs and their accrediting programs as outlined
within the new proposed Sec. 488.5.
We do note, there is no direct burden associated with these changes
to the deemed provider or supplier.
d. Impact Related to the Requirement That the AO Surveyors Take the CMS
Online Surveyor Training
We proposed at Sec. 488.5(a)(8), to add a new requirement that
would require AO to state in their application for CMS approval, that
AOs that who accredit Medicare-certified providers and suppliers must
include a statement acknowledging that all AO surveyors have completed
or will complete two CMS mandatory documentation courses and the
relevant program specific CMS online trainings established for SA
surveyors, initially, and thereafter.
CMS provides a number of online surveyor training modules that are
available to the SA surveyors. We proposed to require the AO surveyors
to take this training in an attempt to decrease the historically high
disparity rate between the AOs survey results and those of the
validation surveys performed by the SA surveyors.
There are a total of 163 online training programs that are
available the SA surveyors on the CMS Quality, Safety and Education
Portal (QSEP) website.

[[Page 12052]]

This website provides courses that are general in nature such as
``Principles of Documentation for Non-Long Term Care'' and ``Basic
Writing Skills for Surveyor Staff'', infection control, patient safety,
Emergency Preparedness. The CMS QSEP website also offers courses
related to specific health care settings such as hospitals, CAHs, ASCs,
Laboratories, Community Mental Health Centers, EMTALA, Federally
Qualified Health Centers (FQHCs), Home Health Agencies and OASIS,
Hospices, Nursing Homes and the MDS, Outpatient Physical Therapy/
Outpatient Speech Therapy. These courses are self-paced and the person
taking the course can take the courses over a period of time. The
amount of time required to complete each of these training course
varies depending on the pace at which the trainee completes the
training. The basic surveyor training courses for specific programs
range in time from 16-82 hours for completion. We estimate the average
time it takes to take one of the basic surveyor courses is 27 hours.
This could be more or less depending upon the specific program that AO
surveyors need to take.
We would require that each AO surveyor takes the 2 mandatory
documentation courses (that is ``Principles of Documentation for Non-
Long-Term Care'' and ``Basic Writing Skills for Surveyor Staff'') and
the basic surveyor course for the care setting for which they perform
surveys. We further estimate that it would take approximately 4 hours
to complete each of these courses, however, these courses are self-
paced and could take less or longer. Therefore, an AO surveyor would
incur a time burden of approximately 35 hours for the completion of all
of the required CMS surveyor training courses.
Based upon this information we estimate that the financial impact
to the AOs that accredit Medicare-certified providers and suppliers
would $2,784.60 per each surveyor that completes the CMS online
surveyor training.
We are not able to accurately estimate to total time and cost
burden to each AO for the wages incurred for the time spent by all
surveyors from each AO to take the CMS online surveyor training
courses, because we do not know exactly how many surveyors each AO has.
However, if we estimate that each AO has 75 surveyors, the estimated
financial impact to each AO associated with this requirement would be
$208.845.
As of February 4, 2020, there are currently 11 AOs that accredit
Medicare-certified providers and suppliers. We estimate that the total
estimated financial impact across these 11 AOs would be $2,297,295.
e. Impact Associated With the Establishment of a Definition for
``National in Scope''
As proposed under Sec. 488.1, we would require the AO to provide
documentation for meeting the definition of ``national in scope''
within their initial and reapplication process. As currently required
under Sec. 488.5(a)(1), the AO must provide documentation that
demonstrates the organization meets the definition of a ``national
accrediting organization'' under Sec. 488.1 as it relates to the
accreditation program. Therefore, we estimate the burden on AOs to be
minimal as they are already required to provide documentation to this
effect. Therefore, we estimate the following:
(1) Impact Related to the Documentation Requirements for ``National in
Scope''
We anticipate that a CEO of an AO would compile and verify that the
AO meets the proposed definition of ``national in scope''. According to
the U.S. Bureau of Labor Statistics, the mean hourly wage for a CEO is
$102.41. This wage adjusted for the employer's fringe benefits and
overhead would be $204.82. (See Table 1 in section IV ``Collection of
Information Requirements'' of this proposed rule.)
CMS is not requiring to use a specific format for the documentation
they submit to show that their accreditation program is national in
scope. However, we suggest that the AO provides a list, which lists the
accredited facilities and which would show the geographic locations for
these accredited facilities. For existing CMS-approved AOs, the general
re-application cycle is not to exceed 6 years. Therefore, we anticipate
this below burden to apply every 4 to 6 years.
We anticipate the compiling of this information would take
approximately 40 minutes (0.66 hours). Currently, there are 11 approved
AOs and we anticipate no more than two new AOs per year to apply for
deeming authority. We estimate that the total financial impact to each
AO for completion of this task would be $136.55 every 6 years ($204.82
per hour x 0.66 hours). We further estimate that the financial impact
across the 11 AOs that accredit Medicare-certified providers and
suppliers would be $1,501.72.
(2) Impact Related to Incorporation of the ``National in Scope''
Requirements Into the AO's Application
When preparing an initial application of CMS approval of its
accreditation programs, an AO must include documentation that their
accreditation programs meet the definition of ``national in scope.'' We
anticipate that would be performed by a Medical Secretary with an
hourly wage of $38.22 and would take 5 minutes (0.083 hour) to
complete. We estimate that the financial impact for this requirement
would be a $3.18.
There are 11 AOs. We estimate that the total financial impact for
this work across all AOs would be $35.03.
We do note, there is no direct burden associated with these changes
to the deemed provider or supplier.
f. Impact Associated With the Proposed Revision of the AO Performance
Measures
As proposed in this rule, we are requiring that AO submit a
publicly reportable plan of correction for performance measure scores
that are under an acceptable threshold for established performance.
This is a new requirement and therefore would be a new burden for
AOs to complete. The plan of correction must be completed and submitted
to CMS within 10-business days follow the notification of the AO of
their less than acceptable performance. The plan of correction must
address the areas of improvement and the specific actions to be taken
to improve those areas on a sustainable basis, the process for ongoing
monitoring of progress of the toward acceptable performance, as well as
the individuals responsible for overseeing the plan of correction and
the anticipated implementation dates of the proposed actions.
We estimate that it would take 80 hours for the AO staff to prepare
each plan of correction. We believe that the financial impact to the AO
for this task would be $15,395, based on the preparation of 123 plans
of correction per year. We estimate the the total annual impact per
each AO for the complation of 123 POCs per year would be $2,015,428.80
per each AO for completion of 123 POCs per year. The total financial
impact across all 11 AOs that accredit Medicare providers and suppliers
would be $22,169,716.80.
g. Impact Associated With the Revision of the Definition of ``Disparity
Rate''
In the proposed definition of disparity rate there is no associated
burden as look-behind validation surveys are a

[[Page 12053]]

usual and customary part of the existing validations program. Direct
observation validation surveys are already being performed under
current regulatory authority Sec. 488.8(a)(2) and have become a usual
and customary part of the validation program. AO will continue to
perform survey activities as required, the revised and expanded
definition of disparity will impact data collection by CMS, but no
additional burden to the AO or provider.
h. Impact for the Revision of the AO Validation Program
In the proposed revision and expansion of Sec. 488.9, we propose
to revise the validation program to include the additional component of
a direct observation of the AO's survey process by the SA or CMS
surveyors. There would be no associated impact to the AO or SA as a
result of the additional validation method. Currently, CMS funds
validation surveys. We do not anticipate additional costs. However,
there are associated burden reductions to the provider community since
half of the traditional validation survey will be replaced by direct
observation validation surveys.
We anticipate a burden reduction based on our proposed changes. The
anticipated annual burden reduction to providers and suppliers is based
on our FY 2019 look-behind validation survey data collection. In FY
2019, we conducted approximately 315 surveys. The anticipated burden
reduction with our new proposed changes are based on the look-behind
validation surveys, which allows a reduction by at least 50 percent
(180 look-back surveys) through replacing them with the direct
observation validation survey. This burden reduction occurs because
during direct observation surveys, the SA surveyors observe the AO
surveyors during the performance of a reaccreditation survey instead of
performing a separate validation survey within 60 days of the AO's
reaccreditation survey. As only one survey is performed, the burden to
providers and suppliers undergoing validation using the direct
observation validation method is reduced by at least 50 percent. We
determined that the use of the direct observation validation surveys
would reduce the burden related to the look-back validation surveys to
providers and supplier by at least 50 percent because with direct
observation validation surveys, the SA surveyors observe the AO
surveyors during the performance of their survey. This requires only
one survey to be performed. Whereas, with 60-day look-back validation
surveys, the SA surveyors perform a validation survey within 60 days of
the AO's reaccreditation survey. This requires the provider or supplier
selected for validation to undergo two surveys within a 60-day period.
Half of the validation surveys to be performed with the revised
validation program will use the direct observation method. Therefore,
we estimate that provider/supplier burden would be reduced by 50 at
least percent. We believe this, in turn, would reduce the financial
impact of the validation program to provider and supplier burden or in
other words result in a cost savings of $2,062,195.20.
i. Impact Associated With the Revision of the Psychiatric Hospital
Accreditation Process
As discussed in this proposed rule, we propose to require AOs which
have a CMS-approved hospital accreditation program to expand their
programs to include the three special conditions for psychiatric
hospitals and provide CMS with a detailed crosswalk which identifies
the inclusion of the psychiatric standards which meet or exceed CMS
psychiatric Medicare conditions. While these AOs already have approved
hospital programs, we note that this proposal would require a one-time
overhaul of the hospital program standards to expand the program to
include the psychiatric standards and burden would be imposed for the
first year following the effective date of this rule and not be a
reoccurring annual burden. Burden costs subsequent to changes would
remain as current practice with updates required to be reviewed and
approved as outlined in existing Sec. 488.5. As proposed in multiple
sections of this proposed rule, we propose to require the AOs to use
Medicare conditions, more comparable survey processes with the ability
to delineate where they exceed and take the CMS online surveyor
training courses. Therefore, we believe burden would be minimal and
most of the burden would be in areas in which the AO would ``exceed''
Medicare requirements.
Currently, there are four CMS-approved AOs which have established
hospital accreditation programs. One of these four AOs which already
has an established CMS-approved psychiatric accreditation program.
We anticipate that this requirement be of moderate burden for AOs,
however we anticipate the burden to be a one-time burden for 3 of 4
hospital AOs. Once effective by the date of the final rule, or as
specified by CMS, this would be part of the initial and renewal
application process as defined in Sec. 488.5, therefore would not
imposed annual reoccurring burden to any AOs initially applying or
reapplying. We would expect that the AOs use the existing CFR language
they are required to crosswalk currently in the regular hospital
program and expand it to assign an AO standard number to the
psychiatric standards with language which meets or exceeds the Medicare
standards.
(1) Impact Associated With the Requirement That the AOs Develop a
Psychiatric Hospital Accreditation Program
We anticipate the burden for AOs to review and revise their
existing hospital program crosswalk and standards to include the
psychiatric standards would cause a financial impact to each affected
AO in the amount of $21,342.
There are currently three AOs which would need to revise their
hospital programs to incorporate these standards. We estimate that the
total financial impact across these 3 AOs would be $64,026.
(2) Impact Associated With Accrediting Facilities Under the Revised
Psychiatric Hospital Accreditation Program
As aforementioned, there are four existing AOs which have a CMS-
approved hospital accreditation program, however three of four AOs
would need to resubmit their applications for CMS-approval based on the
proposed provisions for the psychiatric standards as well as meeting
the definition and criteria of national in scope. The scope of the CMS-
approved hospital programs would not change with this proposed
expansion of the program to include the psychiatric special conditions.
Once the hospital program is approved as national in scope, the
addition of the three special conditions does not change the overall
scope of the entire program. Therefore, we believe this burden would be
incorporated into the burden required with the new proposed changes of
this rule. Therefore, please see the impact section for comparability
to the CMS survey processes as required by Sec. 488.4(a)(2).
j. Impact Associated With Limitations to Terminated Deemed Providers
and Suppliers Seeking Re-Approval Into Medicare/Medicaid
We proposed to add a new policy at Sec. 488.4(b) which would
withdraw CMS recognition of the ``deeming authority'' accreditation of
any Medicare certified provider or supplier that is terminated from the
Medicare/Medicaid program, if such terminated provider/supplier

[[Page 12054]]

subsequently applies to re-enter Medicare and seek initial
certification. We also proposed to add new requirement at Sec.
488.4(b)(2) that would require that before a terminated provider or
supplier would be eligible for participation in the Medicare program,
they would have to meet all of the requirements of Sec. 489.57.
In support of our proposal at Sec. 488.4(b), we also propose to
add a new requirement at Sec. 488.5(a)(21) that would require AOs to
provide, with their initial and renewal applications, a statement
certifying that, in response to a written notice from CMS notifying the
AO that one of its accredited providers or suppliers has been
terminated from the Medicare/Medicaid program, the AO agrees to
terminate or revoke its accreditation of the terminated provider or
supplier within 5-business days from receipt of that written notice.
Section 1865(c) of the Act states that if the Secretary finds that
a provider or supplier has significant deficiencies, then it is no
longer deemed to meet the requirements the entity has been treated as
meeting pursuant to subsection (a)(1) for such period as may be
prescribed in regulations. As further explained below, our proposed
revised regulations at Sec. 489.57 governs the process that terminated
providers and suppliers must follow to be allowed to submit a new
request for Medicare participation. Specifically, Sec. 489.57, as
revised, would require that when a provider agreement has been
terminated by CMS or OIG, a new agreement with that provider would not
be accepted unless CMS or the OIG finds the following: (1) that the
reason for termination of the previous agreement has been removed and
there was reasonable assurance that it would not recur; and (2) that
the provider has fulfilled, or has made satisfactory arrangements to
fulfill, all of the statutory and regulatory responsibilities of its
previous agreement. Also, the terminated provider or supplier would
have to meet the following requirements before a new agreement with
that provider or supplier could be approved: (1) the terminated
provider or supplier would have to submit to, and remain under, the
exclusive oversight of the state survey agency for a reasonable
assurance period of a length of time to be determined by CMS, for the
purposes of the initial survey, certification and demonstration of
compliance with the Medicare conditions; (2) the terminated provider or
supplier would have to remain under the exclusive oversight of the SA
until the SA or CMS certified that the provider or supplier was in
compliance with all applicable Medicare conditions, and CMS approved
the new agreement for participation in the Medicare/Medicaid program;
and (3) during the time period in which a terminated provider or
supplier was not certified to participate in the Medicare program,
while the prospective provider or supplier was under the oversight of
the SA, and while the new agreement for Medicare participation was
pending, CMS could not deem the provider to have met CMS standards via
accreditation until the SA determined that the applicable Medicare
requirements have been met or exceeded, as described in Sec. 488.4.
The intended purpose of these proposed new and revised regulations
is to further clarify the existing process for terminated providers and
suppliers and also prevent providers and suppliers that have been
terminated from the Medicare/Medicaid program from mischaracterizing
their continued AO accreditation as proof that they meet the Medicare
standards and provide safe and effective care, when in fact they were
terminated from the Medicare program for egregious deficiencies that
had, in many instances, not been detected by the AO. Currently CMS does
not have explicit regulatory authority to withdraw recognition of an
AO's deeming accreditation when a provider or supplier has been
terminated from the Medicare/Medicaid program. Nor does CMS currently
have a regulation requiring AOs to withdraw or revoke their
accreditation of providers or suppliers that have been terminated from
the Medicare/Medicaid programs. These proposed new and revised
regulations will provide this regulatory authority for CMS. We are also
proposing additional requirements at Sec. 489.57(b) that would require
that if a terminated provider or supplier filed a new application for
participation in the Medicare/Medicaid program, said terminated
provider or supplier would have to meet the requirements set forth at
Sec. 489.57(b)(1) to (b)(3) before their new agreement for Medicare
participation could be approved.
Proposed new Sec. 489.57(b)(1) would require that a terminated
provider or supplier be under the exclusive oversight of the SA for the
purpose of the initial survey, certification and demonstration of
compliance with the Medicare conditions. Proposed new Sec.
489.57(b)(2) would require that the terminated provider or supplier
seeking re-entry must remain under the exclusive oversight of the SA
until the SA has certified its full compliance with all applicable
Medicare conditions and the agreement for participation in the
Medicare/Medicaid program has been approved. Finally, proposed new
Sec. 489.57(b)(3) would require that during the time period in which
the terminated provider or supplier was under the oversight of the SA
and while the new agreement for Medicare participation was pending, CMS
would not accept or recognize accreditation from a CMS-approved
accrediting organization.
We believe that there would be no additional cost or time burden
associated with these proposed requirements because the terminated
providers and suppliers would have to undergo periodic, unannounced
surveys performed by the SA. If these providers and suppliers had not
been terminated, they would have had to undergo surveys by the AO.
Therefore, the provider or supplier would incur no additional time or
cost burden related to the SA survey process. Also, there would be no
increase in the time required for survey of these terminated providers
or suppliers to become newly certified or participate in the Medicare
program.
Also, considering that as a result of the above-stated proposals,
CMS would not recognize accreditation from an AO while a provider or
supplier is terminated from the Medicare program, the AOs would be
required to terminate or revoke accreditation for terminated providers
and suppliers; and that during the time that a new agreement for
Medicare participation is pending, the prospective Medicare provider or
supplier would be under the exclusive oversight of the SA, they would
not incur any fees for SA's services.
In addition, terminated providers seeking re-entry into the
Medicare/Medicaid program would be required to submit an initial
enrollment application to CMS. The provider or supplier would not incur
any new time or cost burden related to the preparation and submission
of the application because the preparation and submission of this
application is a usual and customary requirement for any entity seeking
initial certification as a provider or supplier in the Medicare/
Medicaid program.

Summary of Financial Impact Caused by the Proposals in This Proposed
Rule

Table 4 summarizes the financial impact of the proposals that we
are making in this proposed rule.
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3. Regulatory Review Cost Estimation
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this proposed rule, we
should estimate the cost associated with regulatory review. Due to the
uncertainty involved with accurately quantifying the number of entities
that will review the rule, we assume that the total number of unique
commenters to the 2018 AO Conflict of Interest Request for Information
(December 20, 2018, 83 FR 65331) will be the number of reviewers of
this proposed rule. We acknowledge that this assumption may understate
or overstate the costs of reviewing this rule. It is possible that not
all commenters reviewed the 2018 AO Conflict of Interest Request for
Information in detail, and it is also possible that some reviewers
chose not to comment on the published rule. For these reasons we
thought that the number of past commenters would be a fair estimate of
the number of reviewers of this rule. We welcome any comments on the
approach in estimating the number of entities which will review this
proposed rule.
We believe that persons reviewing this rule would consist of AO
management staff, healthcare association management staff, and health
care facility management staff. We believe all of these persons would
have positions that fall under the U.S. Bureau of Labor Statistics job
category of medical and health services manager. Assuming an average
reading speed, we estimate that it would take approximately 2 hours for
the staff to review this proposed rule. Using the wage information from
the BLS for Medical and Health Service Managers (Code 11-9111), we
estimate that the cost of reviewing this rule is $230.44 ($115.22 per
hour x 2 hours).\21\
---------------------------------------------------------------------------

\21\ https://www.bls.gov/oes/current/oes119111.htm.
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D. Alternatives Considered

1. Proposed Changes to AO Fee-Based Consulting
We considered proposing a complete ban on AO fee-based consulting
because of the conflict of interest associated with the provisions of
this service by the AOs to the health care providers and suppliers they
accredit. However, we presume the financial impact to the AOs
associated with a complete ban on fee-based consulting would be larger.
For example, the AO that provides the most fee-based consulting
realized over $50 million dollars annually from providing these
services. A complete or almost complete ban on the provision of AO fee-
based consulting services would eliminate or severely limit this
revenue source.
Therefore, we decided to propose more limited restrictions on AO
fee-based consulting services that would address the conflicts of
interest.
2. Proposed Changes to the Validation Program
We considered several alternatives for changes to the validation
program. First, we considered making no changes to the validations
program, which would mean that we would continue performing only look-
back surveys. We also considered performing only direct observation
surveys. After considering the alternative, we decided to propose
performing a combination of both look-back and direct observation
surveys because this would result in a cost savings to providers and
suppliers. If we were to continue the validation program as is, there
would be no change in

[[Page 12058]]

provider burden. If we modify the validation program by performing only
direct observation validation surveys, burden to providers and
suppliers would be reduced significantly, however, the workload on the
SAs would be increased significantly. The SAs have indicated during the
pilot program that they would not be able to handle such an increased
workload. Therefore by using the direct observation method for at least
50 percent of the validation surveys performed annually this would
provide a significant decrease in provider and supplier burden while
placing a manageable and acceptable workload on the SAs.

E. Regulatory Flexibility Act (RFA)

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 proposed rule would not have a
significant economic impact on a substantial number of small entities.
(See the Table 2 in section VI.B.1 of this proposed rule.)
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds. We are not preparing an
analysis for section 1102(b) of the Act because we have determined, and
the Secretary certifies, that this proposed rule would not have a
significant impact on the operations of a substantial number of small
rural hospitals.

F. Unfunded Mandates Reform Act (UMRA)

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 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 2023, that
threshold is approximately $177 million. This proposed rule would not
impose a mandate that will result in the expenditure by State, local,
and Tribal Governments, in the aggregate, or by the private sector, of
more than $177 million in any 1 year.

G. Federalism

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 May 23, 2023.

List of Subjects

42 CFR Part 488

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

42 CFR Part 489

Health facilities, Medicare, and Reporting and recordkeeping
requirements.

For the reasons set forth in the preamble, the Centers for Medicare
and Medicaid Services proposes to amend 42 CFR chapter IV, as set forth
below:

PART 488 SURVEY, CERTIFICATION, AND ENFORCEMENT PROCEDURES

0
1. The authority citation for part 488 continues to read as follows:

Authority: 42 U.S.C. 1302; and 1395hh.

0
2. Section 488.1 is amended by--
0
a. Adding the definition of ``Geographic regions'';
0
b. Revising the definition of ``National accrediting organization'';
0
c. Adding the definitions of ``National in scope'', ``Outcome disparity
rate'' and ``Process disparity rate'';
0
d. Removing the definition of ``Rate of disparity''; and
0
e. Adding the definition of ``Unannounced survey''.
The additions and revisions read as follows:

Sec. 488.1 Definitions.

* * * * *
Geographic regions--CMS uses specified geographic regions of the
Unites States to measure whether an accrediting organization's
accreditation program meets the definition of ``national in scope.''
For this purpose, the United States is divided into the following five
geographic regions:
(1) Northeast: Delaware, District of Columbia, Maryland,
Pennsylvania, Virginia, West Virginia, New York, New Jersey, Puerto
Rico, Virgin Islands, Connecticut, Maine, Massachusetts, New Hampshire,
Rhode Island, and Vermont;
(2) Southeast: Alabama, Florida, Georgia, Kentucky, Mississippi,
North Carolina, South Carolina, and Tennessee;
(3) Midwest: Illinois, Indiana, Michigan, Minnesota, Ohio,
Wisconsin;
(4) Central: Iowa, Kansas, Missouri, and Nebraska; Colorado,
Montana, North Dakota, South Dakota, Utah, Wyoming;
(5) South: Arkansas, Louisiana, New Mexico, Oklahoma, and Texas;
(6) Western: American Samoa, Arizona, California, Hawaii,
Commonwealth of the Northern Mariana Islands, Guam, Alaska, Idaho,
Nevada, Oregon, Washington
* * * * *
National accrediting organization means an accrediting organization
that is national in scope and accredits provider or suppliers, under a
specific accreditation program.
National in scope means that the providers and suppliers accredited
by an accrediting organization under a specific accreditation program,
are widely located geographically across the United States. The
requirement for ``national in scope'' has two components. First, the
accrediting organization must have accredited at least five providers
or suppliers under the accreditation program in question. Second, the
five providers or suppliers accredited by the accrediting organization
under that accreditation program must be geographically located in at
least five out of the six geographic regions.
Outcome disparity rate means the percentage of all look-back
validation surveys for an accrediting organization's program for which
the state survey agency finds noncompliance with one or more Medicare
conditions and no comparable condition level deficiency was cited by
the accrediting organization, where it is reasonable to conclude that
the deficiencies were present at the time of the accrediting
organization's most recent survey of that provider or supplier.
Process disparity rate means, for a direct observation validation
survey, the

[[Page 12059]]

difference between the observed survey process findings and the
expected survey process findings expressed as a percentage.
* * * * *
Unannounced survey means a survey that is conducted without any
prior notice of any type, through any means of communication or forums,
to the facility to be surveyed, and therefore, is unexpected to the
facility until the arrival onsite by surveyors. This also means that
the accrediting organizations must schedule their surveys so that the
facility is unable to predict when they will be performed.
* * * * *
0
3. Revise Sec. 488.4 to read as follows:

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

(a) The following requirements apply when a national accrediting
organization has applied for CMS approval of a provider or supplier
accreditation program and CMS has found that the program provides
reasonable assurance to providers or suppliers accredited under the
program:
(1) The accrediting organizations that accredit Medicare-certified
providers and suppliers shall incorporate the applicable Medicare
conditions language as their minimum accreditation standards, which are
applicable beginning [date 1 year after the effective date of the final
rule].
(2) The accrediting organizations that accredit Medicare-certified
providers and suppliers shall use a survey process comparable to the
processes set out in the State Operations Manual, or as issued via
policy memorandums, and approved by CMS, as defined in Sec. 488.5,
applicable beginning [date 1 year from the effective date of the final
rule].
(3) When a provider or supplier demonstrates full compliance with
all of the accreditation program requirements of the accrediting
organization's CMS-approved accreditation program, the accrediting
organization may recommend that CMS grant deemed status to the provider
or supplier.
(4) CMS may deem the provider or supplier to be in compliance with
the applicable Medicare conditions or requirements. The deemed status
provider or supplier is subject to validation surveys as provided at
Sec. 488.9.
(b) The following requirements apply for termination of a
provider's or supplier's Medicare participation agreement on CMS
recognition of its accreditation provider by an Accrediting
Organization:
(1) If CMS terminates the participation agreement of a provider or
supplier, CMS will no longer recognize or accept the accreditation
provided by an accreditation organization to that provider or supplier
as demonstrating that the Medicare requirements have been met by such
provider or supplier; and,
(2) If CMS terminates the participation agreement of a provider or
supplier, the terminated provider or supplier must meet all
requirements set forth at 42 CFR 489.57 before a new agreement with
that provider or supplier for Medicare participation will be approved.
0
4. Section 488.5 is amended by--
0
a. Revising paragraphs (a)(3), (4), (5), (6), (8), (10), (12) and (13);
and
0
b. Adding paragraphs (a)(21) and (22)
The revisions and additions read as follows:

Sec. 488.5 Application and re-application procedures for national
accrediting organizations. (a) * * *

(3) A detailed crosswalk (in table format, as specified by CMS)
that identifies each of the applicable Medicare conditions (as defined
in Sec. 488.1) incorporating the language of the CMS requirements and
standards, and those accreditation standards that exceed the CMS
conditions. This requirement, as revised, shall become applicable
beginning [DATE 1 YEAR AFTER THE EFFECTIVE DATE OF THE FINAL RULE].
(4) A detailed description of the organization's survey process
including, but not limited to, the core activities of the survey
process such as, but not limited to, documentation supporting Pre
Survey Preparation/Offsite Preparation, Entrance Interview/Activities,
Information Gathering/Investigation, Analysis of Information, Exit
Conference, Post Survey Activities/Statement of Deficiencies
activities, to confirm that a provider or supplier meets or exceeds the
Medicare program requirements, and maintains the integrity of the
survey process, which is intended to be a non-biased evaluation of a
facility's ability to provide safe care and protect the health and
safety of patients. This description must include all of the following
information:
(i) Frequency of surveys performed and an agreement by the
organization to re-survey every accredited provider or supplier,
through unannounced surveys, no later than 36 months after the prior
accreditation effective date, including an explanation of how the
accrediting organization will maintain the schedule it proposes. If
there is a statutorily mandated survey interval of less than 36 months,
the organization must indicate how it will adhere to the statutory
schedule.
(ii) Documentation demonstrating the comparability of the
organization's survey process and surveyor guidance to those required
for state survey agencies conducting federal Medicare surveys for the
same provider or supplier type, in accordance with the applicable
requirements or conditions of participation or conditions for coverage
or certification.
(iii) Copies of the organization's survey forms, guidelines, and
instructions to surveyors, including but not limited to specific
processes of how surveyors' survey facilities for the core survey
activities: Governing Body, Patient Rights, Emergency Preparedness,
Quality Assessment and Performance Improvement, Medical Staff, Nursing
Services, Medical Records Services, and Infection Control. This would
also include interpretive guidelines and survey probes, including
patient and staff interview questions, and processes used by surveyors
when interviewing facilities for compliance based on each of the
specific survey standards, comparable to those instructions required
for state survey agencies.
(iv) Documentation demonstrating that the organization's survey
reports identify, for each finding of non-compliance with accreditation
standards, the comparable Medicare CoP, CfC, conditions for
certification, or requirements.
(v) Description of the organization's accreditation survey review
process, to include but not limited to processes for review of medical
records, medical staff credentialing procedures based on services
provided; staff record review to review for competency and personnel
files; adequate number of patient observations; and confidential
patient interviews and staff interviews.
(vi) Description of the organization's procedures and timelines for
notifying surveyed facilities of non-compliance with the accreditation
program's standards.
(vii) Description of the organization's procedures and timelines
for monitoring the provider's or supplier's correction of identified
non-compliance with the accreditation program's standards, including
the deadlines for initial and reaccreditation surveys, accreditation
decisions, as well as the investigative and organizational process
which the accrediting organization uses to make these determinations.
(viii) A statement acknowledging that, as a condition for CMS
approval of a national accrediting organization's accreditation
program, the organization

[[Page 12060]]

agrees to provide CMS with the following information as part of its
initial and renewal applications and, upon request from CMS, and as
part of the data submissions required under paragraph (a)(11)(ii) of
this section:
(A) a copy of all survey reports, including but not limited to,
initial, re-survey, and complaint survey reports, and
(B) any other information related to survey activities as CMS may
require (including corrective action plans).
(ix) A statement acknowledging that the accrediting organization
will provide timely notification to CMS when an accreditation survey or
complaint investigation identifies an immediate jeopardy as that term
is defined at Sec. 498.3 of this chapter. Using the format specified
by CMS, the accrediting organization must notify CMS within 2-business
days from the date the accrediting organization identifies the
immediate jeopardy.
(x) For accrediting organizations applying for approval or re-
approval of CMS-approved hospice programs, a statement acknowledging
that the accrediting organization (AO) will include a statement of
deficiencies (that is, the Form CMS-2567 or a successor form) to
document findings of the hospice Medicare conditions of participation
in accordance with section 1822(a)(2)(A)(ii) of the Act and will submit
such in a manner specified by CMS.
(xi) Documentation summarizing the AOs staff training programs,
whether web-based electronic or hard-copy materials, on how the AO
provides training or education to surveyors on the AOs survey
processes, and, where applicable, highlight differences from CMS survey
processes.
(xii) The requirements of paragraph (a)(4), shall become applicable
beginning [DATE 1 YEAR AFTER THE EFFECTIVE DATE OF THE FINAL RULE].
(5) Beginning [DATE 1 YEAR AFTER THE EFFECTIVE DATE OF THE FINAL
RULE], the criteria the accrediting organization uses in determining
the size and composition of the organization's survey teams for the
type of provider or supplier to be accredited, these criteria at a
minimum should address survey team size and composition based on:
(i) The size of the facility to be surveyed, based on average daily
census;
(ii) The complexity of services offered, including outpatient
services;
(iii) The type of survey to be conducted;
(iv) Whether the facility has special care units or off-site
clinics or locations;
(v) Whether the facility has a historical pattern of serious
deficiencies or complaints; and
(vi) Whether new surveyors are to accompany a team as part of their
training.
(6) Beginning [DATE 1 YEAR AFTER THE EFFECTIVE DATE OF THE FINAL
RULE], the overall adequacy of the number of the organization's
surveyors to ensure sufficient amount of time is allotted to complete
all survey activities, including how the organization will increase the
size of the survey staff to match growth in the number of accredited
facilities while maintaining re-accreditation intervals for existing
accredited facilities.
* * * * *
(8) A description of the content and frequency of the
organization's in-service training it provides to survey personnel,
including the training materials provided, and, with respect to CMS
training, a statement acknowledging that:
(i) The accrediting organization will ensure all of its surveyors
complete two mandatory CMS online documentation courses and the
relevant program-specific CMS online basic surveyor training course
(established for state survey agency surveyors), initially, and
thereafter when updates are necessary;
(ii) The required CMS online surveyor training will be completed by
each existing surveyor before serving on a survey team (except as a
trainee); and
(iii) The accrediting organization must document in the staff
personnel records for each surveyor, that the CMS online surveyor
documentation and basic training courses were completed and the date of
completion. The statement must acknowledge that the accrediting
organization will maintain this documentation for no less than one
accreditation cycle.
(iv) These requirements shall become applicable beginning [DATE 1
YEAR AFTER THE EFFECTIVE DATE OF THE FINAL RULE].
* * * * *
(10) The organization's policies and procedures to avoid conflicts
of interest, (as defined in paragraph (a)(10)(v) of this section)
including the appearance of conflicts of interest, involving
individuals who conduct surveys or participate in accreditation
decisions. These policies and procedures will include the following:
(i) The accrediting organization's policies and procedures for
separation of its fee-based consulting services from its accreditation
services;
(ii) The accrediting organization's policies and procedures for
protecting the integrity of the accrediting organization's
accreditation program, including the requirements of Sec. 488.8(i) and
(k),
(iii) The accrediting organization's policies and procedures for
the prevention and handling potential or actual conflicts of interest
that could arise from situations in which an accrediting organization
owner, surveyor, or other employee has an interest in or relationship
with another state survey agency or health care facility to which the
accrediting organization provides accreditation services. Such
interests or relationships include but are not limited to:
(A) Being employed as a state survey agency surveyor;
(B) Being employed in a health care facility that is accredited by
the accrediting organization;
(C) Having an ownership, financial or investment interest in a
health care facility that is accredited by the accrediting
organization;
(D) Serving as a director of or trustee for a health care facility
that is accredited by the accrediting organization;
(E) Serving on a utilization review committee of a health care
facility that is accredited by the accrediting organization;
(F) Accepting fees or payments from a health facility or group of
health facilities that is/are accredited by the accrediting
organization;
(G) Accepting fees for personal services, contract services,
referral services, or for furnishing supplies to a health care facility
that is accredited by the accrediting organization;
(H) Providing consulting services to a health care facility that
the accrediting organization accredits;
(I) Having members of their immediate family engaged in any of the
above stated activities. The term ``immediate family member'' is
defined as any person with which the accrediting organization owner(s),
surveyors or other employees have a lineal or immediate familial or
marital relationship, including a husband or wife, birth or adoptive
parent, child, or sibling; stepparent, stepchild, stepbrother, or
stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law; grandparent or grandchild; and spouse
of a grandparent or grandchild.
(J) Engaging in any activities during the course of the survey of
the facility that would be or cause a conflict of interest.

[[Page 12061]]

(iv) The accrediting organization's policies and procedures for
notification of CMS when a conflict of interest is discovered.
(v) For the purposes of this section, a conflict of interest exists
when an accrediting organization, the accrediting organization's
successors, transferees, or assigns, the accrediting organization
owner(s), surveyors, or other employees, or the immediate family
members of the accrediting organization owners(s), surveyors and other
employees have an employment, business, financial or other type of
interest in or relationship with a health care facility the accrediting
organization accredits.
* * * * *
(12) Beginning [DATE 1 YEAR AFTER THE EFFECTIVE DATE OF THE FINAL
RULE], the organization's procedures for responding to, and
investigating, complaints against accredited facilities, including
policies and procedures regarding referrals to appropriate licensing
bodies and ombudsman programs, when applicable. This would also
include:
(i) Accrediting organization's process for triaging and
categorizing complaints about the surveyed facility;
(ii) Timeframes for responding to complaints and a method to track
and trend complaints received with respect to the accrediting
organization's accredited facilities;
(iii) Procedures and persons responsible for the review of plans of
corrections and procedures for follow up if the plans of corrections
are not adequate;
(iv) Accrediting organization requirements for plans of corrections
for standard level deficiencies;
(v) Follow up survey procedures and monitoring of condition-level
findings;
(vi) Procedures for addressing immediate jeopardy deficiencies and,
(vii) Sharing of previous deficiency findings or complaints with
survey teams.
(13) The organization's accreditation status decision-making
process, including its policies and procedures for granting,
withholding, or removing accreditation status for facilities that fail
to meet the accrediting organization's standards or requirements,
assignment of less than full accreditation status or other actions
taken by the organization in response to non-compliance with its
standards and requirements. The organization must furnish the
following:
(i) A description of all types and categories of accreditation
decisions associated with the program for which approval is sought,
including the duration of each.
(ii) The accrediting organization's general notification procedures
to notify CMS, including the timeframes for notification of any
decision to revoke, withdraw, or revise the accreditation status of a
specific deemed status provider or supplier. Such notification must be
made within three business days from the date the organization takes an
action.
(iii) A statement acknowledging that the organization agrees to
notify CMS (in a manner CMS specifies) of any decision to revoke,
withdraw, or revise the accreditation status of a specific deemed
status provider or supplier, within three business days from the date
the organization takes an action.
(iv) The organizations process for facilities that withdraw from
accreditation, to include timeframes for notification to CMS and
include the process for surveying facilities which may require an
upcoming survey.
(v) These requirements of this paragraph (a)(13) become applicable
beginning [DATE 1 YEAR AFTER THE EFFECTIVE DATE OF THE FINAL RULE].
* * * * *
(21) A statement certifying that, in response to a written notice
from CMS notifying the organization that one of its accredited
providers or suppliers has been terminated from the Medicare/Medicaid
program, the accrediting organization agrees to terminate or revoke its
accreditation of the terminated provider or supplier within 5-business
days from receipt of said written notice, and not re-accredit the
provider until CMS has approved the provider or supplier for
participation in Medicare.
(22) A declaration by each surveyor of any employment, business,
financial or other interests in or relationships with a State Survey
Agency or a health care facility the accrediting organization accredits
as described in paragraph (a)(10)(iii) of this section, which must be
updated on an annual basis and submitted to CMS no later than December
31st each year. This provision will become applicable beginning [DATE 1
YEAR AFTER THE EFFECTIVE DATE OF THE FINAL RULE].
* * * * *
0
5. Section 488.8 is amended by--
0
a. Revising paragraph (a)(2); and
0
b. Adding new paragraphs (a)(4), (i), (j) and (k).
The revision and additions read as follows:

Sec. 488.8 Ongoing review of accrediting organizations.

(a) * * *
(2) Analysis of the results of the validation surveys under Sec.
488.8(a)(4), including the outcome disparity rate as determined from
look-back validation surveys, surveys from substantial allegations of
noncompliance, and the process disparity rate as determined from direct
observation validation surveys.
* * * * *
(4) When an accrediting organization's performance measure scores
as determined from look-back and direct observation validation surveys,
reveal that the accrediting organization's accreditation survey
activities do not meet an acceptable performance threshold established
by CMS, the accrediting organization will be required to submit an
acceptable plan of correction that meets the requirements set forth
below:
(i) The accrediting organization's acceptable plan of correction
must be submitted to CMS for review within 10 business days of CMS
notification of not meeting acceptable performance. An acceptable plan
of correction must:
(A) Document specific actions being taken by the accrediting
organization to address improving performance.
(B) Document the timeframe for implementation of this plan.
(C) Plan for ongoing monitoring of the plan of correction toward
achieving an acceptable level of performance.
(D) Identify the individual responsible for implementation and
monitoring of the acceptable plan of correction.
(ii) Upon review and approval of the plan of correction, CMS will
provide ongoing evaluation of the progress of plan implementation.
(iii) The accrediting organization's plan of correction is subject
to public reporting by CMS.
* * * * *
(i) Restrictions on fee-based consulting provided by accrediting
organizations or their fee-based consulting divisions or separate fee-
based business entities. (1) Except as provided in paragraph (i)(4) of
this section, an accrediting organization or its fee-based consulting
division or separate business entity (such as a company or corporation,
that provides fee-based consulting), may not provide fee-based
consulting services to any new health care provider or supplier before
the initial accreditation survey has been completed. For purposes of
this paragraph, the term ``initial survey'' means the first
accreditation survey performed of a health care provider or supplier by
an accrediting organization that has not previously received
accreditation services from that

[[Page 12062]]

accrediting organization. If a health care provider or supplier is
terminated or withdraws from the services of an accrediting
organization and later retains the services of the same or a new
accrediting organization, the first survey performed by the same or new
accrediting organization of that health care provider or supplier would
be considered an initial accreditation survey;
(2) Except as provided in paragraph (i)(4) of this section, an
accrediting organization, its fee-based consulting division or separate
business entity, such as a company or corporation, that provides fee-
based consulting, may not provide fee-based consulting services to a
health care provider or supplier the accrediting organization accredits
within 12 months prior to the next scheduled re-accreditation survey of
that provider or supplier. For purposes of this paragraph, the term
``re-accreditation survey'' means the any subsequent accreditation
surveys performed by the accrediting organization following the initial
survey;
(3) Except as provided in paragraph (i)(4), an accrediting
organization, its fee-based consulting division, or separate business
entity, such as company or corporation that provides fee-based
consulting, may not provide fee-based consulting services to a health
care provider or supplier, to which the accrediting organization
provides accreditation services, in response to a complaint received by
the accrediting organization regarding that provider or supplier.
(4) An accrediting organization, its fee-based consulting division,
or separate business entity, such as a company or corporation that
provides fee-based consulting, may provide fee-based consulting to the
health care providers and suppliers it accredits only under the
following circumstances:
(i) During the 24-month period after an initial or re-accreditation
survey is performed.
(ii) To address complaints received and investigated by the State
Survey Agency regarding an accrediting organization's accredited
provider or supplier in which one or more condition level or immediate
jeopardy deficiencies are identified. Such fee-based consulting by an
accrediting organization may occur only after the State Survey Agency
complaint investigation and survey has been completed and must only
address those issues identified by the complaint survey.
(iii) Fee-based consulting services provided to health care
providers or suppliers the accrediting organization does not accredit
at the time the consulting services are furnished.
(iv) Non fee-based consulting or general education provided by the
accrediting organization about their accreditation program.
(5) The accrediting organization must provide to CMS, on a biannual
basis, a document which contains the following information:
(i) Whether the accrediting organization or an associated
consulting division or company established by the accrediting
organization provides fee-based consulting services;
(ii) The names and CCN numbers of all health care providers and
suppliers to which the accrediting organization or its associated
consulting division or company has provided fee-based consulting
services during the previous 6-month period;
(iii) The dates the fee-based consulting services were provided to
each provider and supplier;
(iv) Whether the accrediting organization has, at any time in the
past provided, or is currently providing accreditation services to each
health care provider or supplier listed in said document; and
(v) For each health care provider and supplier listed in said
document, the date of the most recent accreditation survey performed,
and the date the next re-accreditation survey is due to be performed;
and
(vi) A description of the fee-based consulting services provided to
each health care provider or supplier listed in said document.
(6) If an accrediting organization provides fee-based consulting
services to a health care provider or supplier it accredits, in
violation of the restrictions set forth in paragraphs (i)(1), (2) and
(3) of this section, CMS may take the following actions:
(i) CMS may place the accrediting organization on a CMS approved
accreditation program review in accordance with paragraph (c) of this
section; or
(ii) CMS may involuntarily terminate the CMS approval for the
accreditation programs in accordance with paragraph (g) of this
section.
(7) The provisions at paragraph (i) of this section will become
applicable beginning [DATE 1 YEAR FROM THE EFFECTIVE DATE OF THE
FINAL].
(j) Accrediting organization fee-based consulting firewall policies
and procedures. (1) An accrediting organization, its fee-based
consulting division, or separate business entity, such as a company or
corporation that provides fee-based consulting services to the health
care providers and suppliers the accrediting organization accredits,
must have written fee-based consulting firewall policies and
procedures, which, at a minimum, include the following provisions:
(i) The accrediting organization's fee-based consulting services
must be provided by a separate division of the accrediting organization
or separate business entity, such as a company or corporation, that is
separate from the accrediting organization's accreditation division;
(ii) An accrediting organization's fee-based consulting division or
separate business entity must maintain separate staff from that of the
accrediting organization's accreditation divisions to ensure that the
fee-based consulting division staff do not perform accrediting
organization's accreditation division functions and that the
accrediting organization's accreditation division staff do not perform
fee-based consulting division functions; and
(iii) An accrediting organization's accreditation staff and
surveyors are prohibited from marketing the accrediting organization's
fee-based consulting services to the accrediting organizations
accreditation clients.
(2) An accrediting organization that provides fee-based consulting
must submit its written fee-based consulting firewall policies and
procedures to CMS by a date specified by CMS and with each application
submitted seeking renewal of the CMS approval for their accreditation
programs.
(k) Conflict of interest due to accrediting organization owner,
surveyor or other accrediting organization employee relationship with a
health care facility accredited by the accrediting organization. (1) If
an accrediting organization owner, surveyor or other employee,
currently or within the previous 2 years, has an interest in or
relationship (as defined in Sec. 488.5(a)(10)(iii)(B) to
488.5(a)(10)(iii)(J)) with a health care facility, accredited by the
accrediting organization, the accrediting organization owner, surveyor
or other employee shall not be permitted to:
(i) Participate in the survey of that health care facility,
(ii) Have input into the results of the survey and accreditation
for that health care facility,
(iii) Have involvement with the pre-or post-survey activities for
that health care facility, or
(iv) Have contact with or access to the records for the survey and
accreditation of that health care facility.
(2) For the purposes of this section, ``immediate family member''
is defined

[[Page 12063]]

as any person that has a lineal familial or marital relationship with
the accrediting organization owner, surveyor or other employee.
Immediate family members would include a husband or wife, birth or
adoptive parent, child, or sibling; stepparent, stepchild, stepbrother,
or stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-
law, brother-in-law, or sister-in-law; grandparent or grandchild; and
spouse of a grandparent or grandchild.
0
6. Revise Sec. 488.9 to read as follows:

Sec. 488.9 Validation surveys.

(a) Basis for survey. CMS may require a survey of an accredited
provider or supplier to validate the accrediting organization's CMS-
approved accreditation process. These surveys are conducted on a
representative sample basis, or in response to substantial allegations
of non-compliance.
(1) For a representative sample, the survey may be comprehensive
and address all Medicare conditions or requirements, or it may be
focused on a specific condition(s) as determined by CMS.
(2) For a substantial allegation of noncompliance, the SA surveys
for any condition(s) or requirement(s) that CMS determines is related
to the allegations.
(b) Types of validation surveys. (1) Look-back Validation Surveys
are performed by the state survey agency on a sample of health care
facilities accredited by CMS approved accrediting organization that are
scheduled for survey by the accrediting organization, and are performed
within 60 days after the accrediting organization has performed its
survey.
(2) Direct observation validation surveys are performed on a sample
of the accrediting organization's surveys and are performed
concurrently by the accrediting organization and the state survey
agency or CMS. The state survey agency or CMS surveyors are present to
observe the accrediting organization's survey process.
(c) Rules for state look-back validation surveys. (1) All look-back
validation surveys will be unannounced to the accrediting organization
and the facility being surveyed.
(2) The look-back validation survey may address compliance with all
Medicare conditions or requirements, or it may be focused on a specific
condition(s) or requirement(s) as determined by CMS.
(3) For a look-back validation survey that addresses a substantial
allegation of non-compliance, the state survey agency surveys for any
condition(s) or requirement(s) that CMS determines is related to the
allegations.
(d) Selection for look-back validation survey. (1) A provider or
supplier selected for a look-back validation survey must cooperate with
the state survey agency that performs the look-back validation survey.
(2) If a provider or supplier selected for a look-back validation
survey fails to cooperate with the state survey agency, it will no
longer be deemed to meet the Medicare conditions or requirements, will
be subject to a review in accordance with paragraph (a) of this
section, and may be subject to termination of its provider agreement
under Sec. 489.53 of this chapter.
(e) Rules for direct observation validation surveys. (1) All direct
observation validation surveys will be unannounced to the accrediting
organization and the facility being surveyed.
(2) The state survey agency or CMS surveyors will generally be
assigned to the accrediting organization surveyors on a 1:1 basis,
matching the experience of the accreditation surveyor where possible,
and using the CMS approved standards and processes to determine
compliance with the Medicare conditions.
(3) The state survey agency or CMS surveyors will observe the
accrediting organization survey in accordance with CMS established
policies and procedures and will report the findings directly to CMS.
(4) Where the state survey agency or CMS surveyors disagree with
the findings of the accrediting organization surveyors, and these
differences cannot be reconciled, CMS will render a final decision.
Such decision would not be appealable under part 498 of this chapter.
(f) Provider or supplier not in compliance. A provider or supplier
will be deemed non-compliant with the validation process, in accordance
with this section, if any of the following conditions are present:
(1) The provider or supplier refuses to authorize its accrediting
organization to release a copy of their current accreditation survey to
CMS;
(2) The provider or supplier refuses to allow a validation survey
(for either look-back or direct observation validation surveys); or,
(3) CMS finds that the provider or supplier does not meet the
applicable Medicare Conditions of Participation, Conditions for
Coverage, conditions of certification, or requirements.
(g) Consequences for a finding of non-compliance. (1) If a CMS
validation look-back or direct observation validation survey results in
a finding that the provider or supplier is out of compliance with one
or more Medicare conditions or requirements, deemed status may be
removed by CMS and the provider or supplier will be subject to ongoing
review by the state survey agency (in accordance with Sec. 488.10(d))
until the provider or supplier demonstrates compliance.
(2) CMS may take actions for the deficiencies identified in the
look-back validation survey or direct observation survey in accordance
with Sec. 488.24, or may first direct the state survey agency to, or
CMS may, conduct another survey of the provider's or supplier's
compliance with specified Medicare conditions or requirements before
taking the enforcement actions provided for at Sec. 488.24.
(3) If CMS determines that a provider or supplier is not in
compliance with applicable Medicare conditions or requirements, they
may be subject to termination of their provider agreement with CMS
under Sec. 489.53 of this chapter and any other applicable
intermediate sanctions and remedies.
(h) Re-instating deemed status. An accredited provider or supplier
will be deemed to meet the applicable Medicare conditions or
requirements in accordance with this section, if the following
requirements are met, as applicable:
(1) It withdraws any prior refusal to authorize its accrediting
organization to release a copy of the provider's or supplier's current
accreditation survey.
(2) It withdraws any prior refusal to allow a look-back or direct
observation validation survey, if applicable.
(3) CMS finds that the provider or supplier meets all applicable
Medicare Conditions of Participation, Conditions for Coverage,
conditions of certification, or other requirements.
(i) Impact of adverse actions. The existence of any performance
review, comparability review, deemed status review, probationary
period, or any other action by CMS, does not affect or limit conducting
any validation survey.

PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL

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

Authority: 42 U.S.C. 1302, 1395i-3, 1395x, 1395aa(m), 1395cc,
1395ff, and 1395(hh).

0
8. Section 489.20 is amended by adding paragraph (z) to read as
follows:

Sec. 489.20 Basic commitments.

* * * * *
(z) In the case of a provider that has been involuntarily
terminated by CMS

[[Page 12064]]

under Sec. 489.53, or by the OIG under Sec. 489.54, reinstatement of
the provider agreement is subject to Sec. 489.57(b).
0
9. Revise Sec. 489.57 to read as follows:

Sec. 489.57 Reinstatement after termination.

When a provider agreement has been terminated by CMS under Sec.
489.53, or by the OIG under Sec. 489.54, a new agreement with that
provider will not be accepted unless:
(a) CMS or the OIG, as appropriate, finds--
(1) That the reason for termination of the previous agreement has
been removed and
there is reasonable assurance that it will not recur; and
(2) That the provider has fulfilled, or has made satisfactory
arrangements to fulfill, all of the statutory and regulatory
responsibilities of its previous agreement.
(b) The terminated provider or supplier that had deemed status
meets the following requirements before a new agreement with that
provider or supplier may be approved:
(1) The terminated provider or supplier must become and remain
under the exclusive oversight of the state survey agency for a
reasonable assurance period of a length of time to be determined by
CMS, for the purposes of the initial survey, certification and
demonstration of compliance with the Medicare conditions.
(2) The terminated provider or supplier must remain under the
exclusive oversight of the state survey agency until the state survey
agency or CMS has certified that the provider or supplier is in
compliance with all applicable Medicare conditions and the agreement
for participation in the Medicare/Medicaid program has been approved.
(3) During the time period in which a terminated provider or
supplier is not certified to participate in the Medicare program, while
the prospective provider or supplier is under the oversight of the
state survey agency, and while the new agreement for Medicare
participation is pending, CMS will not accept or recognize deeming
accreditation from a CMS-approved accrediting organization until the
applicable Medicare requirements have been met or exceeded, as
described in Sec. 488.4 of this chapter.

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-02137 Filed 2-8-24; 4:15 pm]
BILLING CODE 4120-01-P