[Federal Register Volume 77, Number 95 (Wednesday, May 16, 2012)]
[Rules and Regulations]
[Pages 29001-29031]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-11543]



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Vol. 77

Wednesday,

No. 95

May 16, 2012

Part III





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Chapter IV





 Medicare and Medicaid Program; Regulatory Provisions to Promote 
Program Efficiency, Transparency, and Burden Reduction; Final Rule

Federal Register / Vol. 77 , No. 95 / Wednesday, May 16, 2012 / Rules 
and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Chapter IV

[CMS-9070-F]
RIN 0938-AQ96


Medicare and Medicaid Program; Regulatory Provisions to Promote 
Program Efficiency, Transparency, and Burden Reduction

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

ACTION: Final rule.

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SUMMARY: This final rule identifies reforms in Medicare and Medicaid 
regulations that CMS has identified as unnecessary, obsolete, or 
excessively burdensome on health care providers and beneficiaries. This 
rule increases the ability of health care professionals to devote 
resources to improving patient care, by eliminating or reducing 
requirements that impede quality patient care or that divert providing 
high quality patient care. This is one of several rules that we are 
finalizing to achieve regulatory reforms under Executive Order 13563 on 
Improving Regulation and Regulatory Review and the Department's Plan 
for Retrospective Review of Existing Rules.

DATES: These regulations are effective on July 16, 2012.

FOR FURTHER INFORMATION CONTACT: Ronisha Davis, (410) 786-6882. We have 
also included a subject matter expert and contact information under the 
``Provisions of the Proposed Regulations and Analysis of and Responses 
to Public Comments'' section for each provision set out in this rule.

SUPPLEMENTARY INFORMATION:

I. Executive Summary for This Final Rule

A. Purpose

    In Executive Order 13563, ``Improving Regulations and Regulatory 
Review'', the President recognized the importance of a streamlined, 
effective, and efficient regulatory framework designed to promote 
economic growth, innovation, job-creation, and competitiveness. To 
achieve a more robust and effective regulatory framework, the President 
has directed each executive agency to establish a plan for ongoing 
retrospective review of existing significant regulations to identify 
those rules that can be eliminated as obsolete, unnecessary, 
burdensome, or counterproductive or that can be modified to be more 
effective, efficient, flexible, and streamlined. This final rule 
responds directly to the President's instructions in Executive Order 
13563 by reducing outmoded or unnecessarily burdensome rules, and 
thereby increasing the ability of health care entities to devote 
resources to providing high quality patient care.

B. Summary of the Major Provisions

    Removes Unnecessary Burdensome Requirements: We have reduced burden 
to providers and suppliers by modifying, removing, or streamlining 
current regulations that we have identified as excessively burdensome.
     End Stage Renal Disease Facilities Life Safety Code: We 
have limited mandatory compliance with the Life Safety Code to those 
ESRD facilities located adjacent to high hazardous occupancies. We 
clarified that the requirement for sprinklers in facilities housed in 
high rise buildings is intended to be applicable to those buildings 
constructed after January 1, 2008.
     Ambulatory Surgical Centers (ASC) Emergency Equipment: We 
have removed the detailed list of emergency equipment that must be 
available in an ASC's operating room. The current list includes 
outdated terminology as well as equipment that are not suitable for 
ASCs that furnish minor procedures that do not require anesthesia.
     Re-enrollment Bar for Providers and Suppliers: We have 
eliminated the unnecessarily punitive enrollment bar for providers and 
suppliers when it is based on the failure of a provider or supplier to 
not respond timely to revalidation or other requests for information.
     Intermediate Care Facilities for Individuals who are 
Intellectually Disabled (ICR/IID): We have eliminated the requirement 
for time-limited agreements for ICFs/IID and replaced the requirement 
with an open ended agreement which, consistent with nursing facilities, 
would remain in effect until the Secretary or a State determines that 
the ICF/IID no longer meets the ICF/IID conditions of participation. We 
have also added a requirement that a certified ICF/IID must be 
surveyed, on average, every 12 months with a maximum 15-month survey 
interval. This action provides States with more flexibility related to 
the current process.
    Removes Obsolete or Duplicative Regulations or Provides Clarifying 
Information: We have removed requirements in the Code of Federal 
Regulations (CFR) that have become obsolete and are no longer needed or 
enforced.
     OMB Control Numbers for Approved Collections of 
Information: We have removed the obsolete list of OMB control numbers, 
approval numbers, and information collections in the CFR because the 
list is now displayed on the OMB public Web site. In our quarterly 
notice of all CMS issuances, we will remind the public that the 
complete listing is available on the OMB Web site.
     Appeals of Part A and Part B Claims Determinations: We 
have removed obsolete pre-BIPA regulations that apply to initial 
determinations, re-openings, and appeals of claims under original 
Medicare. This will eliminate confusion by Medicare beneficiaries, 
providers, and suppliers regarding which appeals rights and procedures 
apply.
     Ambulatory Surgical Centers (ASC) Infection Control 
Program: We have removed the obsolete requirement that an ASC must 
establish a program for identifying and preventing infections, 
maintaining a sanitary environment, and reporting the results to the 
appropriate authorities. This requirement should have been removed when 
a new condition for coverage dedicated to infection control was 
adopted.
     E-prescribing: We have retired older versions of e-
prescribing transactions for Medicare Part D and adopted the newer 
versions to be in compliance with the current e-prescribing standards.
     Physical and Occupational Therapist Qualifications: We 
have removed the outdated personnel qualifications in the current 
Medicaid regulations and refer to the updated Medicare regulations.
     Organ Procurement Organizations (OPOs) Definitions: We 
have updated definitions related to organ procurement as the meaning of 
these definitions has changed over time.
     Organ Procurement Organizations (OPOs) Administration and 
Governing Body: We have removed duplicate regulations. This change does 
not alter or change the existing regulations related to the 
requirements that the OPO governing body must meet, such as, having 
full legal authority for the management of all OPO services.
    Responds to Stakeholder Concerns: We have identified nomenclature 
and definition changes that will improve clarity and update our 
regulations to terms widely used by the public.
     Removal of the Term ``Recipient'' for Medicaid: We have 
removed the term ``recipient'' from current CMS regulations and made a 
nomenclature

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change to replace ``recipient'' with ``beneficiary'' throughout the 
CFR. In response to comments from the public to discontinue our use of 
the unflattering term ``recipient'' under Medicaid, we have been using 
the term ``beneficiary'' to mean all individuals who are eligible for 
Medicare or Medicaid services.
     Replace the Term ``Mental Retardation'' with 
``Intellectual Disability'': We have replaced all references in CMS 
regulations to the unflattering term ``mentally retarded'' with 
``individuals who are intellectually disabled'' that has gained wide 
acceptance in more recent disability laws.

C. Summary of Costs and Benefits

1. Overall Impact
    There are cost savings in many areas. Two areas of one-time savings 
are particularly substantial. First, we estimate that one-time savings 
to ESRD facilities are likely to range from about $47.5 to $217 
million, but we are using $108.7 million as our estimate. Second, we 
also estimate a one-time savings of $18.5 million to ASCs through 
reduced emergency equipment requirements. Both of these estimates are 
conservative and total savings could be significantly higher. The many 
types of recurring savings that these provisions will create include 
avoidance of business and payment losses for physicians and other 
providers that are difficult to estimate but likely to be in the tens 
of millions of dollars annually through the reforms we propose for re-
enrollment and billing processes. We have identified other kinds of 
savings that providers and patients will realize throughout the 
preamble. Taking all of the reforms together, we estimate that the 
overall cost savings that this rule will create will exceed $200 
million in the first year. This includes the one-time savings related 
to ESRD and ASC reforms, as well as the savings to providers in 
reductions in lost billings, paperwork costs, confusion, and other 
burden reductions discussed throughout this preamble. All of these 
potential savings are summarized in the table that follows.
2. Section-by-Section Economic Impact Estimates for 2012
    The following chart summarizes the provisions for which we are able 
to provide specific estimates for savings or burden reductions:

 
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                                                                                               Likely five year
                                                                           Likely savings or  saving or benefits
                Provisions                            Frequency                benefits           (rounded to
                                                                              (millions)          nearest ten
                                                                                                   million)
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End-Stage Renal Disease (ESRD) Facilities   One-Time....................              $108.7                $110
 (Sec.   494.60).
ASC Emergency Equipment (Sec.   416.44)...  One-Time....................                18.5                  20
Revocation of Enrollment/Billing            Recurring...................               100.0                 500
 Privileges (Sec.   424.535).
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II. Background

    In January 2011, the President issued Executive Order 13563, 
``Improving Regulations and Regulatory Review.'' Section 6 of that 
order requires agencies to identify rules that may be ``outmoded, 
ineffective, insufficient, or excessively burdensome, and to modify, 
streamline, expand, or repeal them in accordance with what has been 
learned.'' In accordance with the Executive Order, the Secretary of the 
Department of Health & Human Services (HHS) published on May 18, 2011, 
a Preliminary Plan for Retrospective Review of Existing Rules (http://www.whitehouse.gov/21stcenturygov/actions/21st-century-regulatory-system). As shown in the plan, the Centers for Medicare & Medicaid 
Services (CMS) has identified many obsolete and burdensome rules that 
could be eliminated or reformed to improve effectiveness or reduce 
unnecessary red tape and other costs, with a particular focus on 
freeing up resources that health care providers, health plans, and 
States could use to improve or enhance patient health and safety. CMS 
has also examined policies and practices not codified in rules that 
could be changed or streamlined to achieve better outcomes for patients 
while reducing burden on providers of care. CMS has also identified 
non-regulatory changes to increase transparency and to become a better 
business partner.
    As explained in the plan, HHS is committed to the President's 
vision of creating an environment where agencies incorporate and 
integrate the ongoing retrospective review of regulations into 
Department operations to achieve a more streamlined and effective 
regulatory framework. The objective is to improve the quality of 
existing regulations consistent with statutory requirements; streamline 
procedural solutions for businesses to enter and operate in the 
marketplace; maximize net benefits (including benefits that are 
difficult to quantify); and reduce costs and other burdens on 
businesses to comply with regulations. Consistent with the commitment 
to periodic review and to public participation, HHS will continue to 
assess its existing significant regulations in accordance with the 
requirements of Executive Order 13563. HHS welcomes public suggestions 
about appropriate reforms. If, at any time, members of the public 
identify possible reforms to streamline requirements and to reduce 
existing burdens, HHS will give those suggestions careful 
consideration.
    We received several comments from the public that identified areas 
for possible future reform. We received comments from different 
industries including but not limited to national organizations (for 
example, the American Academy of Family Physicians and the American 
Academy of Ophthalmology), associations, and hospitals. Suggestions for 
areas of reform ranged across provider and supplier types and included 
a variety of ideas on how to streamline requirements, reduce excessive 
burdens, and increase transparency. We are reviewing these 
recommendations to determine if and where possible improvements can be 
made through future rulemaking or other vehicles. We note that some of 
the recommendations in the comments were closely related to areas being 
reformed in this rule. Therefore, we have provided responses to those 
comments in the related sections below.

III. Provisions of the Proposed Rule and Analysis of and Response to 
Public Comments

    The following is a description of each of the proposals set forth 
in the October 24, 2011 proposed rule (76 FR 65909). We grouped the 
proposals into three

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categories--(1) Removes unnecessarily burdensome requirements; (2) 
removes obsolete regulations; and (3) responds to stakeholder concerns. 
There were 14 specific reforms included in the proposed rule. As noted 
above, we requested comments on additional areas for future reforms in 
these three areas or others. We seek to address these goals while 
maintaining high standards for the quality of care delivered to 
Medicare and Medicaid beneficiaries.

A. Removes Unnecessarily Burdensome Requirements

    The following provisions provide some form of burden relief to 
providers and suppliers by modifying, removing, or streamlining current 
regulations that we have identified as excessively burdensome.
1. End-Stage Renal Disease (ESRD) Facilities (Sec.  494.60)
    Current regulations at 42 CFR part 494 provide Conditions for 
Coverage (CfCs) for Medicare-participating end-stage renal disease 
(ESRD) facilities. Effective February 9, 2009, these regulations were 
updated to include Life Safety Code (LSC) provisions that we applied to 
ESRD facilities to standardize CMS regulations across provider types. 
When the new regulation was first promulgated, we believed that 
standardized application of the LSC was desirable and that the costs 
for ESRD facilities would not be excessive. However, we have since 
determined that standardization may not be appropriate given the non-
residential and unique characteristics of ESRD facilities and the 
increased burden created by these requirements without the commensurate 
benefit. Chapters 20 and 21 of the National Fire Protection Agency's 
(NFPA) 101 LSC, 2000 Edition, were incorporated by reference in the 
ESRD regulations at Sec.  494.60(e).
    When implemented, these LSC regulations were found to duplicate 
many provisions of existing State and local fire safety codes covering 
ESRD facilities. Although the State and local codes protected patients 
from fire hazards, our rule incorporating the NFPA 101 LSC by reference 
retroactively imposed some additional structural requirements. We 
believe that some of these additional requirements, such as smoke 
compartments (per section 20.3.7/21.3.7 of NFPA 101) are unnecessary 
for most ESRD facilities. Smoke compartments, for example, are required 
in hospital and ambulatory surgical centers where patients are 
anesthetized, unconscious, or sleeping overnight. Smoke compartments 
are unnecessary in ESRD facilities as these compartments support a 
``defend in place'' fire strategy which assumes the occupants of a 
location cannot immediately evacuate in case of fire. However, in 
dialysis facilities, this is not the case because the evacuation 
process from fire entails rapid disconnection from the dialysis machine 
and a quick exit.
    In retrospect, the additional structural requirements of NFPA 101 
potentially could improve patient safety from fire in specific dialysis 
facilities that pose a higher risk for life safety from fire by their 
proximity to a potential fire source or their barriers to prompt 
evacuation from fire. These higher risk locations are those dialysis 
facilities that are adjacent to ``high hazardous'' occupancies and 
those facilities that do not have a readily available exit to the 
outside for swift, unencumbered evacuation.
    However, data demonstrate that there is an extremely low risk of 
fire in outpatient dialysis facilities, and there are no recorded 
patient injuries or death due to fire in the 40 years of the Medicare 
ESRD program. The Federal Emergency Management Agency's (FEMA) Topical 
Fire Report Series (TFRS) documented the low fire risk of ESRD 
facilities, which ranked lowest (0.1 percent) in fire incidence among 
all health care facilities. (Medical Facility Fires, TFRS Volume 9, 
Issue 4). We believe that the reason the fire risk is so low in 
dialysis facilities is due to the following combination of factors:
     ESRD facilities do not have fire ignition sources commonly 
found in other medical facilities, for example, cooking, anesthesia, 
paint shops, or piped-in gases, and are generally configured with open 
patient treatment areas providing exits directly to the outside;
     Dialysis patients are not anesthetized and are required at 
Sec.  494.60(d)(2) of the ESRD regulation to be trained in emergency 
disconnect from their dialysis treatment and evacuation from the 
building;
     Section 494.60(c)(4) of the ESRD regulation requires that 
staff be present in the patient treatment area at all times during 
treatment and therefore immediately available to assist in emergency 
evacuation.
    While the risks of fire are very low in a dialysis facility, the 
costs of complying with the LSC requirements in dialysis facilities are 
high. Through research discussed in the following paragraph, CMS 
learned that the actual costs for renovation and construction necessary 
for compliance with the additional requirements of NFPA 101 for 
dialysis facilities were considerable and profoundly exceed the 
original government estimate of $1,960 per facility, as published in 
the proposed rule for the 2008 ESRD CfC (70 FR 6242).
    To estimate the true costs for renovation and construction 
necessary to comply with the requirements for NFPA 101, in June 2011, 
CMS asked ESRD providers to provide estimates of the financial impact 
of implementing four potentially-costly additional requirements of NFPA 
101. They included smoke compartment barriers, occupancy separations, 
hazardous area separations, and upgraded fire alarms. Owners of 3,756 
of 5,600 existing certified dialysis facilities responded to the CMS 
request for cost projections. The responders represented approximately 
70 percent of existing dialysis facilities, including hospital-owned 
facilities and those owned by small, medium, and large dialysis 
organizations.
    The data collected showed that approximately 50 percent (an 
estimated 2,800) of the existing ESRD facilities would require 
renovations or upgrading of at least one of the four elements to comply 
with the requirements of NFPA 101. There are several reasons why, in 
June 2011, approximately 50 percent of existing dialysis facilities had 
not been renovated to comply with the February 2009 implementation 
date. The primary reason was the pervasive inconsistency in knowledge, 
interpretation, and application of NFPA 101 to ESRD facilities that we 
have become aware of since the 2009 implementation date. There was a 
high variability in the cost estimates submitted, ranging from a low of 
$23,500 to a high of $222,000 for an existing facility which needed to 
renovate, construct and upgrade all four components. The average per-
facility cost estimates submitted for the additional structural 
requirements of NFPA 101 are as follows:
     Smoke compartments--$32,544
     Occupancy separation--$28,139
     Hazardous areas separation--$16,976
    The total average cost for a facility to meet all three 
requirements would be $77,659. We suspect that the variability of the 
estimates may be due to differing State and local requirements already 
in existence, differences in contractor costs, varying building 
characteristics (for example, age, size, construction type), and the 
inconsistent interpretations and applications of NFPA 101 that are 
prevalent across the nation. The wide range of estimates makes it 
difficult to determine an average cost related to implementation of 
NFPA 101. However, using the average costs for the individual

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structural requirements listed above, if 50 percent or 2,800 facilities 
required only renovation for hazardous area separation, the savings 
would be $47.5 million. If 2,800 facilities required renovation for all 
three structural requirements, the total savings from the burden 
reduction at the average estimate for all three would be $217 million.
    These amounts represent a significant financial burden on 
facilities, and we believe that there will be little or no improvement 
in patient safety from fire for a majority of them. Expenditures of 
this magnitude would likely divert resources away from areas which do 
affect dialysis patient safety, such as infection control and 
prevention.
    The cost estimates do not account for the added burden that 
renovation to comply with NFPA 101 would impose on dialysis patients 
who must be relocated to other ESRD facilities for their treatments 
during construction. Significant additional costs would also be 
incurred by Federal government agencies and State Survey Agencies for 
oversight activities of LSC surveys which often duplicate State LSC 
surveys.
    Based on information gained since publication of the updated ESRD 
CfC, we have concluded that the enforcement of the LSC requirements of 
NFPA 101 add costs out of proportion to any added protection that they 
may afford in dialysis facilities which are not at higher risk of fire 
penetration from adjacent industrial ``high hazard'' occupancies and 
where swift, unencumbered evacuation to the outside is available. 
Therefore, we proposed revising Sec.  494.60(e)(1) to restrict 
mandatory compliance with the NFPA 101 LSC to those ESRD facilities 
located adjacent to ``high hazardous'' occupancies and those facilities 
whose patient treatment areas are not located at grade level with 
direct access to the outside. This revision will retain the NFPA 101 
LSC protections for those facilities in higher-risk locations while 
relieving burden on those for whom the subdivision of building space 
and other additional LSC requirements of NFPA 101 are unnecessary.
    We intend to use the NFPA definition of ``high hazard occupancy'' 
found at A.3.3.134.8.2, Annex A, NFPA 101, Life Safety Code 2000, which 
applies to ``occupancies where gasoline and other flammable liquids are 
handled, used or stored under such conditions that involve possible 
release of flammable vapors; where grain dust, wood flour or plastic 
dusts, aluminum or magnesium dust, or other explosive dusts are 
produced; where hazardous chemicals or explosives are manufactured, 
stored, or handled; where cotton or other combustible fibers are 
processed or handled under conditions that might produce flammable 
flyings; and where other situations of similar hazard exist.''
    We noted that all ESRD facilities would still be required to comply 
with State and local fire codes and safety standards under Sec.  
494.20. We also proposed revising Sec.  494.60(e)(2) to clarify which 
ESRD facilities must use sprinkler-equipped buildings: Those housed in 
multi-story buildings of lesser fire protected construction types 
(Types II(000), III(200), or V(000), as defined in NFPA 101), which 
were constructed after January 1, 2008; and those housed in high rise 
buildings over 75 feet in height. We noted that this revision would not 
change the meaning or intent of Sec.  494.60(e)(2), but instead would 
clarify it. That provision states that dialysis facilities 
participating in Medicare as of October 14, 2008, may continue to use 
non-sprinklered buildings if such buildings were constructed before 
January 1, 2008, and if permitted by State law.
    The ESRD CfCs also address other topics related to fire and 
building safety that will remain in place under our revision. These 
existing CfC requirements include specific rules on how to handle 
chemicals related to the dialysis process, as well as general 
requirements for appropriate training in emergency preparedness for the 
staff and patients, including provisions for instructions on 
disconnecting from the dialysis machine during an emergency and 
instructions on emergency evacuation. We sought comments from the 
public on whether the other ESRD CfCs can be improved in a way that 
minimizes provider burden while protecting patient safety or, 
alternately, the extent to which remaining requirements are necessary 
and appropriate for the care and safety of dialysis patients. 
Similarly, we note that other CMS regulations include CfCs, and we 
sought comments on whether we should revisit these or other regulatory 
provisions or whether existing requirements are necessary and 
appropriate.
    We received 15 public comments on our proposed changes to the LSC 
requirements for ESRD facilities. Commenters represented the entire 
dialysis community, including small, independent dialysis providers, 
large corporate dialysis organizations, dialysis provider coalitions, a 
nephrology nursing organization, a dialysis product manufacturer, and 
individual dialysis community members. Two comments were submitted by 
building and fire safety organizations.
    All of the comments, with one exception, expressed strong support 
for the proposed rule and its intent to limit the application of the 
LSC requirements to ESRD facilities whose physical locations present a 
higher risk to life safety from fire. One commenter generally disagreed 
with the proposed changes.
    Comment: All but one of the commenters supported our rationale for 
the proposed rule: that there is a historically low fire incidence in 
outpatient ESRD facilities; that most ESRD facilities provide available 
direct exits from the patient treatment area level to the outside at 
grade level; and that dialysis patients are routinely trained in 
emergency disconnect and evacuation procedures, as required in the ESRD 
CfCs, facilitating quick evacuation. The commenters concurred that 
these combined elements make the building and structural ``defend in 
place'' requirements of the LSC (as incorporated by reference into our 
regulations), which may differ from those of some State and local fire 
codes, a significant added burden with little or no gain in patient 
safety. Commenters also agreed that the requirements of current State 
and local fire safety codes sufficiently protect dialysis patients, and 
that many provisions in the LSC provisions are duplicative of those 
existing codes.
    One comment from a building safety association agreed that, due to 
the overlapping, duplicative, and sometimes conflicting requirements 
between the LSC and State and local fire and building codes, limited 
application of the Federal LSC in ESRD would realize cost savings in 
not duplicating survey activities, but also for the dialysis facilities 
that may be required to comply with the overlapping and conflicting 
codes. The commenter also suggested that the cost savings published 
with the proposed rule were under-estimated.
    Some of the commenters agreed that the expenditures for compliance 
with the LSC would be significantly higher than was predicted in the 
proposed rule for the 2008 ESRD CfC. One commenter from a large 
dialysis organization stated that the projection of costs for their 
facilities alone was just short of $120 million. Several commenters 
specifically agreed with the preamble language that expenditures for 
renovations and construction to comply with LSC requirements would 
divert resources away from issues which have been demonstrated to 
negatively impact dialysis patients, such as infections.

[[Page 29006]]

    Many commenters expressed appreciation that we reconsidered the 
strict application of the LSC to all ESRD facilities and for our 
responsiveness to the dialysis community's concerns and desire to 
expend their resources where the greatest patient safety will be 
realized.
    Response: We thank the commenters for their comments. We share the 
common goals of optimizing the health and safety of dialysis patients 
and allocating resources where they will benefit patients most. We 
appreciate your support for these proposed changes.
    Comment: Two commenters suggested that more facilities should be 
included in the proposed exemption from the LSC requirements. One 
commenter suggested that ESRD facilities that do not have exits at 
grade level should also be exempted from the LSC requirements. The 
rationale for this suggestion was that these facilities do not generate 
a risk equivalent to those facilities located adjacent to ``high 
hazardous'' occupancies. Another commenter suggested that dialysis 
facilities providing only home dialysis training and support services 
be exempted from the LSC, citing the limited provision of on-site 
dialysis and generally higher staff-to-patient ratios.
    Response: While there may be a higher risk of fire when an ESRD 
facility is located adjacent to a ``high hazardous'' occupancy, we 
consider the provision of swift, unencumbered evacuation integral to 
dialysis patients' life safety from fire. Once a dialysis patient has 
performed emergency disconnection from their treatment, the additional 
time it may take to traverse stairwells and/or passageways from a non-
grade level treatment area to reach an outside exit justifies the 
additional structural requirements of the LSC provisions for ``defend 
in place''. Home dialysis patients who may be intermittently receiving 
their dialysis treatments at the dialysis home training and support 
facility have the same life safety and fire risks as do in-center 
dialysis patients. To ensure patient safety, we are not making changes 
to the proposed regulations in response to these comments.
    Comment: Three commenters requested further clarification regarding 
the provision of exits from the patient treatment level to grade level. 
The commenters inquired whether ESRD facilities which were slightly 
above grade level and supplied interior Americans with Disabilities Act 
(ADA)-compliant accessibility ramps from patient treatment areas to 
grade level (for example, down 5-10 feet) would be considered as 
providing exits at grade level, and therefore exempt from the LSC 
requirements.
    Response: The terminology for the provision of exit ``to the 
outside at grade level from the patient treatment area level'' is 
intended to apply to ESRD facilities that are on the ground/grade level 
of a building where patients do not have to traverse up or down 
stairways or passageways within the building to evacuate to the 
outside. ADA-compliant accessibility ramps in the exit area that 
provide ease of access between the patient treatment level and the 
outside street level would not be considered stairways or passageways. 
An ESRD facility which provides one or more exits to the outside at 
grade level from the patient treatment level, and a patients' exit path 
which includes an ADA-compliant accessibility ramp to the outside would 
be exempt from the LSC requirement, as long as it was not located 
adjacent to a high hazardous occupancy.
    Comment: Three commenters requested further clarification of how 
``adjacent to'' would be defined. All three commenters suggested that 
the definition of ``adjacent to'' should be equivalent to sharing a 
wall with the other occupancy. One added that sharing a ceiling or 
floor with the other occupancy should be included in the definition.
    Response: We recognize that there are different definitions of the 
term ``adjacent'', and use it in reference to ESRD facilities that 
share a common wall, floor, or ceiling with a high hazardous occupancy. 
Because of the higher risk of fire occurrence in high hazardous 
occupancies, sharing a common wall, floor, or ceiling increases the 
risk of fire penetration to the ESRD facility. This increased risk 
makes the additional structural requirements of the LSC appropriate for 
patient protection.
    Comment: Two commenters requested further clarification regarding 
the definition of a ``high hazardous occupancy'', and suggested the 
definition from the preamble language be retained.
    Response: As stated in the preamble to the proposed rule, we use 
the definition of ``high hazardous occupancy'' from the National Fire 
Protection Association (NFPA) 101, 2000 Edition at section 
A.3.3.134.8.2: ``occupancies where gasoline and other flammable liquids 
are handled, used or stored under such conditions that involve possible 
release of flammable vapors; where grain dust, wood or plastic dusts, 
aluminum or magnesium dust, or other explosive dusts are produced; 
where hazardous chemicals or explosives are manufactured, stored, or 
handled; where cotton or other combustible fibers are processed or 
handled under conditions that might produce flammable flyings; and 
where other situations of similar hazard exist.''
    Comment: Two commenters requested clarification regarding the 
proposed language change for ESRD facilities that require sprinkler 
systems. The first issue raised was how to determine when a building 
was constructed. The second issue raised was whether the language in 
the proposed rule indicating that ESRD facilities located in high rise 
buildings are required to have sprinkler systems would be binding 
regardless of the building construction date.
    Response: We appreciate the comments pointing out ambiguities in 
the proposed rule language, which was intended to clarify, but not 
change, the sprinkler requirement finalized in the April 15, 2008 ESRD 
CfC final rule (73 FR20370), and set out at Sec.  494.60(e)(2). For the 
purposes of the sprinkler requirement, the date of building 
``construction'' is the date the structural permit approvals and plan 
reviews were completed by the authority having jurisdiction.
    Regarding sprinklers in high-rise buildings, the commenters are 
correct that the requirement for sprinklers in facilities housed in 
high rise buildings was intended to be applicable to those buildings 
constructed after January 1, 2008. We have revised the language in the 
final rule accordingly.
    Comment: Two commenters believe that the effective date for 
compliance with the LSC requirement of February 9, 2009, the date 
published in the ESRD CfC Final Rule published in 2008, is no longer 
meaningful. The commenters stated the uncertainties about the 
applicability and scope of the LSC requirements that have existed since 
the ESRD CfC Final Rule have prevented facilities from undergoing the 
necessary construction for compliance, and that a phase-in period would 
be needed for applicable facilities. One commenter suggested that a new 
effective date for compliance be established at 12 months from the date 
of publication of this rule.
    Response: We recognize that the delay in enforcement of the LSC 
requirements for ESRD facilities may appear to make the February 9, 
2009 date less meaningful, but that date will still be used to 
determine whether the building housing an ESRD facility which must 
comply with the LSC requirement is considered ``new'' or ``existing''. 
We did not make any changes based on this comment.
    Comment: One commenter agreed that most ESRD facilities are covered 
by

[[Page 29007]]

State and local fire and building safety codes. For example, the 
commenter stated that 43 of 50 States have adopted the International 
Fire Code in coordination with the International Building Code. The 
commenter suggested that there would be no reason in such jurisdictions 
that enforce a current building code and life safety and maintenance 
code to require enforcement of a LSC requirement. The commenter 
suggested that a LSC requirement would be appropriate for enforcement 
in jurisdictions where there is no State or local code. Although the 
commenter stated that ``most states, and most large population 
jurisdictions'' do have and enforce such current codes, they suggested 
that this rule apply only to those ESRD facilities located in 
jurisdictions that do not adopt a current national model building and 
fire code.
    Response: We do not currently maintain an accounting of the fire 
and building safety codes adopted in individual States and local 
jurisdictions. Also, we do not adopt CfCs that vary by jurisdiction, 
although CMS defers to state law where such laws impose stricter 
standards than CMS requirements. We believe that limiting required 
adherence to the NFPA LSC requirements based on ESRD location is 
appropriate and did not make any changes in response to this comment.
    Comment: Several commenters expressed concerns about the ESRD 
survey process in conjunction with the LSC. The issues they raised 
included how the designation of ESRD facilities as exempt from LSC 
requirements would be made; who would conduct the LSC compliance 
surveys; what education those survey personnel would receive to prevent 
inconsistent and inaccurate application; and how the enforcement of the 
LSC for the applicable facilities would be implemented. Some commenters 
provided suggestions relevant to these topics.
    Response: We appreciate the many suggestions for assuring a smooth, 
efficient, and consistent method for implementing a standardized ESRD 
LSC compliance survey and enforcement process for applicable 
facilities. We will take them into consideration in the development of 
such a process.
    Comment: The sole opposing commenter agreed that there is low risk 
and few fire incidents in outpatient ESRD facilities, and suggested 
that this is because ``a majority of'' ESRD facilities already meet the 
requirements of NFPA 101.
    Response: We agree that application of a fire and building safety 
code may reduce injuries from fire. However, the ESRD CfCs did not 
include a Medicare LSC requirement until 2008, and, as stated in the 
preamble to the proposed rule, there have been no reported patient 
injuries or deaths due to fire in dialysis facilities in the 35 years 
of the Medicare ESRD program. We believe this comment supports the 
conclusion that existing State and local fire and building safety codes 
were adequately protecting patients and staff prior to the ESRD CfC 
requirement finalized in 2008. In the preamble to the proposed rule, we 
noted that all ESRD facilities must continue to comply with State and 
local fire codes and safety standards under Sec.  494.20.
    Comment: The opposing commenter also expressed concern that the 
procedure for emergency disconnect from hemodialysis treatment is 
``potentially life threatening if carried out by a dialysis patient.'' 
The commenter cited a CMS publication from 2002, which listed 
instructions for an emergency disconnection procedure.
    Response: We appreciate the commenter's concern; however cited the 
publication is 10 years old and no longer reflects current standards. 
In the 2008 ESRD Conditions for Coverage at Sec.  494.60(d)(2), we 
require that all dialysis patients be instructed in how to disconnect 
themselves from treatment and evacuate in case of emergency. We contend 
that it is the unencumbered evacuation process that is primary to 
outpatient ESRD life safety from fire. We did not make any changes in 
response to this comment.
    We received three public comments that suggested areas of ESRD 
policy for possible future reform.
    Comment: Two commenters expressed concerns about the mandatory 
reporting of infection data to the Centers for Disease Control and 
Prevention (CDC) system, the National Healthcare Safety Network (NHSN) 
that is included in the ESRD Quality Incentive Program (QIP). The 
commenters support the requirement for infection data reporting as an 
incentive to improve care, but detailed multiple reasons why NHSN was 
burdensome, cumbersome, and, because it is a manual data entry system, 
subject to error and inaccurate data. One commenter outlined predicted 
labor costs for enrollment and manual data submission to NHSN, and 
estimated that it would cost in excess of $1,000,000 total for existing 
ESRD facilities. Both commenters suggested that we arrange an 
alternative method for mandatory infection data submission to NHSN, 
such as direct electronic data transfer and/or batch data submission.
    Response: We are aware of the many concerns regarding the mandatory 
infection data submission to NHSN that is included in the ESRD QIP, and 
are currently working with the CDC to explore methods for facilitating 
the use of NHSN as a reliable national system for this important ESRD 
infection data.
    Comment: One commenter addressed burdens of obtaining and 
documenting data regarding ESRD patients' co-morbid conditions for the 
purpose of claiming the case-mix adjustments in the ESRD Prospective 
Payment System (PPS). The commenter provided reasons why the required 
documentation of this patient information was difficult and costly to 
obtain, resulting in loss of revenue, due to under-reporting and the 
costs of collecting, reviewing, and auditing medical records.
    Response: The requirement for documentation of certain co-
morbidities, for the purpose of receiving additional payment for those 
conditions, is a condition of payment. That is, ESRD facilities have 
the option of providing appropriate, designated criteria in the medical 
record to support the co-morbidity in order to receive a payment 
adjustment for those co-morbidities. For example, there must be 
documentation that a patient had a positive chest x-ray or positive 
sputum in order to receive the payment adjustment for certain bacterial 
pneumonias. ESRD facilities can choose not to provide appropriate 
documentation, but they will not receive the payment adjustment. 
Because these payments are elective and not mandatory, we consider the 
associated paperwork requirements to be appropriate.
    Comment: One commenter recommended revisions to the ESRD CfC 
addressing Patients' Rights (42 CFR 494.70(a)(7)) that would clarify 
expectations for educating ESRD patients on their options for dialysis 
modalities and settings.
    Response: We appreciate the commenter's suggestions, and will take 
them into consideration for possible future reform.
    Comment: One commenter suggested an annual CMS review and update of 
the ESRD CfCs, to reflect the dynamic clinical and technological 
aspects of the dialysis industry.
    Response: We recognize the dynamic nature of dialysis care and 
treatment, but when new standards of care are developed, it may take 
years to determine the appropriateness of precise requirements. With 
this understanding, we strive to develop regulations that allow room 
for providers and suppliers to appropriately

[[Page 29008]]

adopt new standards of care without having to wait for new regulations.
    The above summarizes the ESRD LSC provision made in our proposed 
rule and the comments we received. We are finalizing the policies above 
as proposed and clarifying in the regulatory text that the requirement 
for sprinklers in facilities housed in high rise buildings was intended 
to be applicable to those buildings constructed after January 1, 2008.
    Contact: Lauren Oviatt, 410-786-4683.
2. ASC Emergency Equipment
    Section 1832(a)(2)(F)(i) of the Act specifies that Ambulatory 
Surgical Centers (ASCs) must meet health, safety, and other 
requirements specified by the Secretary in regulation in order to 
participate in Medicare. The Secretary is responsible for ensuring that 
the Conditions for Coverage (CfCs) and their enforcement are adequate 
to protect the health and safety of all individuals treated by ASCs, 
whether they are Medicare beneficiaries or other patients.
    To implement the CfCs, we determine compliance through State survey 
agencies that conduct onsite inspections using these requirements. ASCs 
also may be deemed to meet Medicare standards if they are certified by 
one of the national accrediting organizations whose standards meet or 
exceed the CfCs. The ASC regulations were first published on August 5, 
1982 (47 FR 34082). Most of the revisions since then have been payment-
related, with the exception of a final rule published on November 18, 
2008 (73 FR 68502) that revised four existing health and safety CfCs 
and created three new health and safety CfCs (42 CFR 416.41 through 
416.43 and 416.49 through 416.52).
    Sections 416.44(c)(1) through (c)(9) provide a detailed list of 
specific emergency equipment that must be available to the ASC's 
operating room, for example, emergency call system; oxygen; mechanical 
ventilator assistance equipment including airways, manual breathing 
bag, and ventilator; cardiac defibrillator; cardiac monitoring 
equipment; tracheotomy set; laryngoscopes and endotracheal tubes; 
suction equipment; and emergency medical equipment and supplies 
specified by the medical staff. In recent years, we have learned from 
the ASC community that some of these equipment requirements are 
outdated, while other equipment requirements would not be applicable to 
the emergency needs of all ASCs. The emergency equipment CfC has not 
been revised since its inception in 1982. To ensure that no ASC is 
burdened with maintaining unnecessary equipment, we proposed to revise 
the requirements for this CfC.
    In the October 24, 2011 proposed rule (76 FR 65909 through 65911), 
we proposed to remove the list of emergency equipment at Sec.  
416.44(c)(1) through (c)(9) and proposed at Sec.  416.44(c) to require 
that ASCs, in conjunction with their governing body and the medical 
staff, develop policies and procedures which specify the types of 
emergency equipment that would be appropriate for the facility's 
patient population, and make the items immediately available at the ASC 
to handle intra- or post-operative emergencies. We also proposed that 
the emergency equipment identified by an ASC meet the current 
acceptable standards of practice in the ASC industry. We stated that we 
believe these proposed changes would enable ASCs to better meet current 
demands, while also ensuring ASCs have the flexibility necessary to 
respond to emergency needs and incorporate the use of modern equipment 
most suitable for the procedures performed in the facility.
    We received ten public comments on our proposed changes to the ASC 
emergency equipment requirements. Commenters included organizations and 
associations that represent surgeons, anesthesiologists, nurse 
anesthetists, gastroenterologists, hospitals, state health commissions, 
ophthalmologists, health policy and ambulatory surgical centers.
    Seven out of the ten comments that we received expressed support 
for the proposed rule and its intent to remove the prescribed list of 
outdated and unnecessary emergency equipment from the current ASC 
regulations. Two commenters opposed the removal of the list and 
recommended the current regulation requirements stay in place. One 
commenter opposed the removal of the list, but offered an alternative 
list of emergency equipment for ASCs.
    Comment: Several commenters supported our rationale for the 
proposed rule. The commenters concurred that the proposed changes would 
allow ASCs to have more flexibility to respond to emergency needs and 
also incorporate the use of modern and specific emergency equipment 
most suitable for the procedures performed in each facility.
    Response: We thank the commenters for their support. We share the 
common goals of optimizing the health and safety of ASC patients and 
allowing ASCs to allocate their resources to the most current and 
specific emergency equipment that is tailored to the needs of patients 
who receive treatment in their facilities.
    Comment: One commenter opposed the elimination of the current 
emergency equipment list and instead offered an alternative list of 
emergency equipment that ASCs must have available in an emergency 
situation.
    Response: As we stated in the proposed rule preamble, the purpose 
of removing the outdated list of emergency equipment is to remove the 
burden of requiring ASCs to maintain unnecessary equipment, incorporate 
the use of modern emergency equipment, and give the ASC the flexibility 
to meet the needs of patients for the procedures performed in ASC 
facilities. We would like to reiterate that the removal of the 
prescribed list of emergency equipment in no way relieves the ASCs of 
maintaining a comprehensive supply of emergency equipment and supplies 
that are necessary to respond to a patient emergency in an ASC 
facility. Under this final rule, an ASC's governing body and medical 
staff are required to work in conjunction to develop policies and 
procedures which specify the types of emergency equipment appropriate 
for the facility and to make all of these items immediately available 
at the ASC to handle intra- or post-operative emergencies. Every ASC 
will be required to have emergency equipment in its facility that meets 
current acceptable standards of practice for the types of surgeries 
performed in the ASC. Moreover, we believe replacing the current list 
of emergency equipment with a revised standard list of emergency 
equipment would create the same problems that we are trying to 
eliminate in terms of mandating acquisition of the same equipment by 
every ASC, even when some of that equipment is not needed for the types 
of surgeries performed in a particular ASC. In addition, removing a 
prescriptive list of emergency equipment will eliminate the need to 
continually update the ASC regulations with a revised list whenever 
there is a new piece of equipment whose use becomes standard for 
handling various types of surgical emergencies.
    Comment: We received two comments that suggested the emergency 
equipment list remain in place since it is the same list of equipment 
required for hospital surgery that is located in the current hospital 
Conditions of Participation.
    Response: We note that the list of equipment required for hospitals 
at 42 CFR 482.51(d)(3), while similar to that in the current ASC rule 
at 42 CFR 416.44(c), is not worded identically and is in some cases 
less specific, providing more flexibility to hospitals. Further, as

[[Page 29009]]

we stated in the previous response, we are still requiring ASCs to 
identify and maintain a comprehensive, current and appropriate set of 
emergency equipment, supplies and medications that meet current 
standards of practice, and which will enable the ASC to appropriately 
respond to anticipated emergencies that are specific to the types of 
surgery performed in the ASC as well as being appropriate to the ASC's 
patient population. In addition, because hospital operating room suites 
typically handle a wider range of surgeries, including more complex 
surgeries than those performed in an ASC, it is reasonable that there 
would be differences in the standards for hospitals as compared to 
ASCs. We believe the requirement we have proposed for ASCs is 
appropriate to assure the safety of ASC patients without creating undue 
burdens on ASCs.
    Comment: One commenter that supported our proposed changes to the 
emergency equipment requirement noted the Malignant Hyperthermia 
Association of the United States recommendation that all facilities 
that administer malignant hyperthermia-triggering anesthetics should 
stock a minimum of 36 vials of dantrolene sodium for injection.
    Response: We thank the commenter for their support of the proposed 
rule. Currently, the ASC requirements do not mandate that ASCs stock a 
prescribed supply of any specific medication needed to handle specific 
intra- operative or post-surgical emergencies, such as malignant 
hyperthermia. However, we would expect that ASCs that perform 
procedures using anesthetics that involve a risk of malignant 
hyperthermia would address this risk in the emergency procedures they 
develop, and would stock appropriate supplies, including medications, 
to handle such emergencies. The proposed changes to the standard 
governing emergency equipment and supplies requires that ASCs meet the 
current acceptable standards of practice, and that all Medicare-
certified ASC facilities incorporate the identified emergency 
equipment, supplies and medications that are most suitable for the 
potential emergencies associated with the procedures performed in the 
ASC, and the population the ASC serves.
    Therefore, for the reasons set forth above, we are finalizing our 
proposal, without modification, to remove the list of emergency 
equipment at Sec.  416.44(c)(1) through (c)(9). Further, we are 
finalizing our proposal to modify Sec.  416.44(c) to require that ASCs, 
in conjunction with their governing body and the medical staff, develop 
policies and procedures specifying the types of emergency equipment 
that are appropriate for the facility's patient population, and make 
the items immediately available at the ASC to handle inter- or post-
operative emergencies. We are also finalizing our proposal that the 
emergency equipment identified by the ASC meet the current acceptable 
standards of practice in the ASC industry. CMS will monitor the 
implementation of this change in emergency equipment requirements and 
will revisit the issue if it is determined to have an adverse impact on 
patients.
    Contact: Jacqueline Morgan, 410-786-4282.
3. Revocation of Enrollment and Billing Privileges in the Medicare 
Program (Sec.  424.535)
    On June 27, 2008, we published a final rule in the Federal Register 
(73 FR 36448) entitled ``Medicare Program; Appeals of CMS or CMS 
Contractor Determinations When a Provider or Supplier Fails to Meet the 
Requirements for Medicare Billing Privileges.'' In that rule, we added 
a new provision at Sec.  424.535(c) to provide that: ``After a 
provider, supplier, delegated official, or authorizing official has had 
their billing privileges revoked, they are barred from participating in 
the Medicare program from the effective date of the revocation until 
the end of the re-enrollment bar. The re-enrollment bar is a minimum of 
1 year, but not greater than 3 years, depending on the severity of the 
basis for revocation.'' The purpose of this provision was to prevent 
providers and suppliers from being able to immediately re-enroll in 
Medicare after their Medicare billing privileges were revoked.
    In our October 24, 2011 proposed rule, we proposed to revise Sec.  
424.535(c) to eliminate the re-enrollment bar in instances where 
providers and suppliers have had their billing privileges revoked under 
Sec.  424.535(a) solely for failing to respond timely to a CMS 
revalidation request or other request for information. As we explained 
in the proposed rule, we believe that this change is appropriate 
because the re-enrollment bar in such circumstances often results in 
unnecessarily harsh consequences for the provider or supplier and 
causes beneficiary access issues in some cases. We have learned of 
numerous instances where the provider's failure to respond to a 
revalidation request was unintentional; that is, the provider was not 
aware of the request due to, for instance, misrouted mail or a clerical 
mistake. This is different from other revocation reasons, which may be 
more serious--for example, when providers have been excluded from 
Medicare, Medicaid or other Federal health care programs or have been 
convicted of a felony as described in Sec.  424.535(a)(2) and (a)(3), 
respectively. Moreover, there is another, less restrictive regulatory 
remedy available for addressing a failure to respond timely to a 
revalidation request. This remedy was identified in proposed Sec.  
424.540(a)(3).
    We received 9 public comments on our proposed change to Sec.  
424.535(c). The comments, which we have summarized, and our responses, 
are as follows:
    Comment: Many commenters expressed support for our proposed 
revision to Sec.  424.535(c). They agreed with our view that the 
imposition of a re-enrollment bar is unduly harsh in cases where a 
revocation is based solely upon the provider or supplier's failure to 
respond timely to a revalidation request or other request for 
information. Several commenters added that a re-enrollment bar in such 
instances could also cause beneficiary access issues. Another commenter 
stated that a re-enrollment bar is more appropriate for providers and 
suppliers that intentionally break laws and violate the trust of their 
patients.
    Response: We appreciate the commenters' support for our proposal. 
We are finalizing our proposed change to Sec.  424.535(c), which we 
believe will help reduce the administrative burden on providers and 
suppliers whose revocations are based solely on a failure to respond 
timely to a revalidation or other request for information. As 
commenters pointed out and as we explained above, some legitimate 
providers and suppliers were barred from being able to treat and bill 
for Medicare patients because of the wide scope of this reenrollment 
bar.
    Comment: Several commenters, while expressing support for our 
proposed change to Sec.  424.535(c), sought clarification as to: (1) 
When this change would become effective, and (2) whether it would apply 
to providers and suppliers that were mailed a revalidation notice in 
September 2011 but unintentionally missed the 60-day deadline for 
revalidating their enrollment.
    Response: The revision to Sec.  424.535(c) will become effective 
upon the effective date of this final rule. It will not be applied 
retroactively.
    Comment: Several commenters opposed our proposed change to Sec.  
424.535(c). One commenter stated that under Sec.  424.535(a), CMS may--
but is not required to--revoke and establish a

[[Page 29010]]

re-enrollment bar if a provider or supplier has not responded timely to 
a revalidation or other informational request. Hence, CMS should not 
remove its discretionary authority to impose a re-enrollment bar in 
these instances. The commenter also recommended that CMS provide data 
regarding the number of times that Medicare contractors have revoked 
Medicare billing privileges and established a re-enrollment bar in such 
cases. Another commenter asked how our proposed revision to Sec.  
424.535(c) would reduce fraud, waste and abuse and how CMS would deal 
with providers and suppliers that repeatedly fail to respond to 
revalidation or other informational requests; the commenter asked, for 
instance, whether a site visit would be performed and whether the 
provider's ownership would be verified.
    Response: While CMS has the discretion to revoke a provider or 
supplier's Medicare billing privileges under Sec.  424.535(a) for a 
provider or supplier's failure to respond to a revalidation or other 
informational request, the imposition of a re-enrollment bar under 
Sec.  424.535(c) is not discretionary. If the provider or supplier is 
revoked, a re-enrollment bar must follow. As explained above, we 
believe that an automatic re-enrollment bar for a revocation based on a 
failure to respond to a revalidation or other informational request is 
overly punitive. The most appropriate remedy, therefore, is to remove 
the re-enrollment bar in such situations.
    With respect to the commenter's request that CMS furnish data 
regarding the number of revocations and associated re-enrollment bars 
that have been imposed, we do not believe that such information is 
necessary for our analysis. We proposed this change in an effort to 
reduce the administrative burden on any provider or supplier subject to 
the bar, regardless of how often CMS or its contractors have imposed 
re-enrollment bars.
    We do not believe that the finalization of our proposed revision to 
Sec.  424.535(c) will impact our ability to prevent or combat 
fraudulent activity in our programs. Providers and suppliers that fail 
to respond once or repeatedly to a revalidation or other informational 
request will still be subject to adverse consequences, including--as 
explained below--the deactivation of their Medicare billing privileges. 
CMS does--and will continue to--closely scrutinize every provider and 
supplier that seeks to reactivate its billing privileges or re-enroll 
in Medicare after a revocation. In fact, in the latter case, the 
provider or supplier would be subject to the ``high'' level of 
categorical screening under Sec.  424.518(c)(3), which would include 
additional screening tools. In sum, the aforementioned safeguards 
should alleviate any program integrity concerns regarding our proposed 
change--which, as already noted, focuses on reducing the unfair burden 
to providers and suppliers that inadvertently fail to respond to 
revalidation or other informational requests.
    The above summarizes this provision in our proposed rule and the 
comments received. We are finalizing our changes to Sec.  424.535(c) as 
proposed.
    Contact: Morgan Burns, 202-690-5145.
4. Deactivation of Medicare Billing Privileges (Sec.  424.540)
    On April 21, 2006, we published a final rule in the Federal 
Register (71 FR 20753) titled ``Medicare Program; Requirements for 
Providers and Suppliers to Establish and Maintain Medicare 
Enrollment.'' As part of that rule, we established provisions for the 
deactivation of Medicare billing privileges at Sec.  424.540.
a. Section 424.540(a)(1)
    Section 424.540(a)(1) specifies that Medicare billing privileges 
may be deactivated if Medicare claims are not submitted for 12 
consecutive months. The purpose of this provision was to prevent 
situations in which unused, idle Medicare billing numbers could be 
accessed by individuals and entities to submit false claims. Currently, 
Medicare billing privileges are deactivated (made ineligible for 
Medicare billing purposes) for providers or suppliers that have not 
submitted a Medicare claim for 12 consecutive months. If the 
deactivated provider attempts to submit a claim after the date of 
deactivation, the claim would be denied. To reactivate its Medicare 
billing privileges, a provider or supplier is required to recertify--
generally via the submission of a complete CMS-855 enrollment 
application--that the provider or supplier's enrollment information 
currently on file with Medicare is accurate. Physicians and non-
physician practitioners are deactivated most often due to billing 
inactivity.
    In our October 24, 2011 proposed rule, we proposed to revise Sec.  
424.540(a)(1) to apply only to those providers and suppliers that do 
not submit a Form CMS-855I (the enrollment form for individual 
physicians and non-physician practitioners) to enroll in the Medicare 
program. As we explained in the proposed rule, we were mostly concerned 
with organizations that fail to submit a claim within a 12-month 
period, since business organizations would generally submit a claim on 
a more frequent basis. We felt, on the other hand, that there are 
instances in which individual practitioners had valid reasons for not 
filing claims within a 12-month period. These included, but were not 
limited to, cases where the practitioner: (1) Was enrolled in Medicare, 
but generally only treated non-Medicare patients, or (2) had multiple, 
separately-enumerated practice locations, yet typically only performed 
services at one of them. We also believed that the 12-month 
deactivation and reactivation processes increased the workload and 
administrative costs of Medicare contractors. For these reasons, we 
proposed the above-mentioned revision to Sec.  424.540(a)(1)
    We received 27 separately submitted public comments on our proposed 
change to Sec.  424.540(a)(1). The comments, which we have summarized, 
and our responses, are as follows:
    Comment: A significant number of commenters either opposed or 
expressed concerns about our proposed revision to Sec.  424.540(a)(1). 
One commenter, for instance, stated that by allowing unused Medicare 
billing numbers to remain active, CMS is fundamentally increasing the 
risk of fraud, waste and abuse (for example, identity theft) in 
Medicare. Other commenters cited a number of Health and Human Services 
Office of Inspector General (OIG) reports, including OEI-03-01-00270 
and OEI-04-08-4470, in support of OIG's contention that CMS should 
retain its existing discretionary authority to deactivate physicians 
and non-physician practitioners for 12 months of non-billing. 
Commenters also stated that these reports identified, among other 
things, the risks involved in allowing unused billing numbers to remain 
active.
    Response: We understand the commenters' concerns and have elected 
not to finalize our proposed change to Sec.  424.540(a)(1) at this 
time. The commenters are correct that our current deactivation 
authority for non-billing is discretionary. Upon further analysis, and 
based on the input we received from several commenters voicing 
reservations about our proposal, we do not believe it is necessary to 
revise this authority at this time. As commenters pointed out, a 
provider or supplier's failure to bill Medicare for an extended period 
of time raises numerous questions, such as whether the provider is 
still operational and meets the standards for his or her provider type. 
We believe that deactivation can protect the agency from risks 
associated with

[[Page 29011]]

misused provider numbers by (1) allowing CMS to confirm whether the 
provider or supplier continues to meet all Medicare requirements based 
on the provider or supplier's submission of a complete CMS-855 
application; and (2) preventing others from misusing the provider or 
supplier's billing number, which was a concern that several commenters 
expressed.
    CMS intends to study this issue further, as we believe that an 
appropriate balance between protecting the Medicare Trust Fund and 
reducing the burden on provider and suppliers is achievable. For 
example, CMS implemented in December 2011 a system for Automated 
Provider Screening that both simplifies enrollment into Medicare for 
providers and suppliers while increasing the ability of CMS to identify 
potentially ineligible or fraudulent providers and suppliers.
    Our decisions not to finalize the proposed change to Sec.  
424.540(a)(1) and finalize our proposed change to Sec.  424.535(c) are 
both grounded in efforts to weigh the potential benefits and costs to 
our program and providers. In the former case, we concluded that the 
program integrity risks associated with removing our discretionary 
deactivation authority in Sec.  424.540(a)(1) outweighed the potential 
benefits of a reduced burden on providers and suppliers. However, as 
explained, we believe our proposed changes to Sec.  424.535(c) will 
result in a decrease in provider and supplier burden without adversely 
impacting our ability to prevent and combat fraudulent activity in our 
programs. In the latter case, we do not see any increased program 
integrity risks that could potentially outweigh the benefits of reduced 
provider burden.
    Comment: One commenter stated that almost all State Medicaid 
agencies deactivate physician and non-physician practitioner billing 
numbers based on a lack of claim submissions over a given time. The 
commenter asked CMS to explain--(1) Whether the Federal Employee Health 
Benefit Program (FEHBP) also deactivates billing privileges based on 
claim non-submissions, and; (2) why CMS will forgo deactivation in its 
proposed revision to Sec.  424.540(a)(1) while most State Medicaid 
agencies will continue deactivations.
    Response: Approximately 200 private plans participate in the FEHBP. 
In the FEHBP, providers bill plans, not the Federal government. Hence, 
there is no federal deactivation authority as such in the FEHBP. Other 
management approaches, most notably private plan decisions on 
participating providers and program-wide debarment, are used to deal 
with provider billing problems related to program integrity. 
Regardless, as explained above, we have decided not to finalize our 
proposed revision to Sec.  424.540(a)(1).
    Comment: Several commenters requested that CMS explain why it will 
continue its deactivation process for Medicare-enrolled provider and 
supplier organizations, yet did not fully implement the deactivation 
process for Medicaid and Children's Health Insurance Program providers 
that was proposed in the February 2, 2011 final rule titled ``Medicare, 
Medicaid, and Children's Health Insurance Programs; Additional 
Screening Requirements, Application Fees, Temporary Enrollment 
Moratoria, Payment Suspensions and Compliance Plans for Providers and 
Suppliers.'' The commenter believes that this represents an 
inconsistency in CMS's approach to deactivation.
    Response: As we stated in the February 2, 2011 final rule, we 
decided not to finalize the 12-month deactivation provision in proposed 
Sec.  455.418 based on the comments received and certain operational 
considerations. However, we also stated in that rule that while States 
should have the discretion ``to police their own provider enrollment,'' 
we recommended that States ``deactivate provider numbers that have not 
been used for an extended period of time.'' This recommendation, in our 
view, is consistent with our decision not to finalize our proposed 
change to Sec.  424.540(a)(1).
    Comment: One commenter agreed with CMS' policy to continue to 
deactivate billing privileges associated with physicians and non-
physician practitioners who complete and submit the ``Medicare 
Enrollment Application--For Eligible Ordering and Referring Physicians 
and Non-Physician Practitioners (CMS-855O).''
    Response: While we appreciate the commenter's support, we note that 
physicians and non-physician practitioners who complete the Form CMS-
855O are not granted Medicare billing privileges. They do not and 
cannot send claims to Medicare for services they provide. They submit 
the form for the sole purpose of ordering or referring Medicare-covered 
items and services.
    Comment: One commenter recommended that CMS continue to deactivate 
Medicare billing numbers for physicians and non-physician practitioners 
who submit the CMS-855O and the CMS-855R and who do not bill the 
Medicare program for 12 consecutive months. The commenter added that 
since CMS did not consider the impact of deactivation on physicians and 
other practitioners in the proposed rule's preamble or regulation text, 
the inclusion of our proposed change in final rulemaking without 
adequate public notice would violate the Administrative Procedures Act.
    Response: As stated above, physicians and non-physician 
practitioners who complete the CMS-855O do not receive Medicare billing 
privileges and are thus not subject to deactivation under Sec.  
424.540(a)(1). In addition, we did not predicate our proposed change 
based on whether the physician or non-physician practitioner completed 
the CMS-855R. Deactivation for non-billing, in our view, should not be 
based solely on whether the physician or non-physician practitioner 
reassigns his or her benefits. Finally, we disagree with the 
commenter's assertion regarding CMS's consideration of the impact of 
deactivation on physicians and non-physician practitioners. We 
expressly outlined in the preamble to the proposed rule the burden 
imposed on such individuals because of the deactivation process. 
Indeed, it was this burden that encouraged us to propose our change to 
Sec.  424.540(a)(1).
    Comment: One commenter noted our statement in the proposed rule: 
``We have issued guidance that requires our contractors to conduct 
certain verification activities to guard against physician and non-
physician practitioner identity theft.'' The commenter asked CMS to 
furnish additional information about the techniques being used to 
prevent physician and non-physician practitioner identity theft.
    Response: Since January 2010, Medicare contractors have been 
required to perform additional verification activities to confirm the 
identity of a physician or non-physician practitioner who is reporting, 
for instance, a change in his or her practice location address, special 
payment address, or correspondence address. Specifically, the 
contractor is required to compare the signature on the submitted Form 
CMS-855 change request with the signature on file. If they do not 
match, the provider must submit proper identification, such as a copy 
of a driver's license or passport. These and other verification 
procedures are outlined in Chapter 15 of CMS's Program Integrity 
Manual.
    Comment: A commenter cited our statement in the proposed rule: 
``Currently Medicare provider and supplier enrollment billing 
privileges are deactivated (made ineligible for

[[Page 29012]]

Medicare billing purposes) for providers and suppliers that have not 
submitted a Medicare claim for 12 consecutive months.'' The commenter 
believed that this statement was incorrect, arguing that CMS 
discontinued the automatic deactivation process in late 2010 or early 
2011. The commenter requested that CMS explain why it: (1) Discontinued 
the automatic deactivation process for physicians, non-physician 
practitioners, medical groups and other suppliers, and (2) has not 
implemented an automatic deactivation process for Part A providers.
    Response: To clarify, the statement the commenter quotes was meant 
to describe CMS' existing deactivation authority at Sec.  
424.540(a)(1). Insofar as the automatic deactivation process, we 
believed that a case-by-case approach was more appropriate, in part for 
reasons which we have discussed in this final rule. Indeed, the burdens 
posed by automatic deactivations--both on our contractors and on those 
providers and suppliers that have legitimate reasons for not billing 
Medicare for 12 months--did not at that time justify the continuation 
of such a ``one-size-fits-all'' process. It is primarily for this 
reason, moreover, that an automatic deactivation mechanism has not been 
initiated for Part A providers.
    Comment: One commenter recommended that CMS explain the linkage, if 
any, between the current deactivation policy and the maximum period for 
claim submissions. The commenter also asked CMS to explain why a 
physician or non-physician practitioner should remain enrolled in 
Medicare if he/she cannot bill for services within 12 months from the 
date of service.
    Response: We do not see a significant linkage between deactivation 
and the timeframe in which a provider must submit a claim for payment. 
Rather, the deactivation policy, as already explained, was based 
largely on the need to prevent others from accessing unused billing 
numbers and to ensure--via the deactivated provider's submission of a 
complete Form CMS-855--that the provider and supplier continues to meet 
Medicare enrollment requirements. With respect to the commenter's 
second statement, we do not believe that a failure to submit claims 
justified the revocation of a provider or supplier's billing privileges 
so long as the provider or supplier is still in compliance with all 
Medicare requirements.
    Comment: Several commenters stated that CMS did not fully explain 
its rationale for its proposed change to Sec.  424.540(a)(1). They 
requested that CMS do so or otherwise withdraw the proposal. They also 
recommended that CMS explain how this change will affect CMS's efforts 
to reduce fraud, waste and abuse. One commenter requested that CMS 
outline the benefits that have accrued from the annual deactivation 
process. Another commenter urged CMS to explain how it will ensure that 
physician billing numbers are not misused by clearinghouses, billing 
agents, or former employees.
    Response: We believe that we provided sufficient rationale for the 
proposed change to Sec.  424.540(a)(1) in the proposed rule. However, 
based on the concerns that commenters have expressed, we will not be 
finalizing our proposed change.
    Comment: A commenter stated that CMS should have explained the 
impact that our proposed change would have on fraud, waste and abuse by 
physicians and practitioners who only order and refer services to 
Medicare beneficiaries.
    Response: We assume that the commenter is referring to physicians 
and non-physician practitioners who complete the Form CMS-855O. As 
stated above, such individuals do not have Medicare billing privileges. 
They are therefore unaffected by the deactivation provisions in Sec.  
424.540(a)(1).
    Comment: A commenter requested that CMS explain: (1) Why it did not 
include information regarding the supplier notification aspect of the 
deactivation process in the proposed rule, and (2) whether the post-
deactivation process allowed physicians and non-physician practitioners 
to update their re-enrollment in the Medicare program.
    Response: We did not include information about the supplier 
notification process in the proposed rule because we believed it was 
immaterial to the larger question of the burden that the deactivation 
process poses as a whole. As for the commenter's reference to a ``post-
deactivation process,'' we are unclear as to what the commenter means. 
If the commenter is asking whether a reactivation application can 
always be simultaneously used as a revalidation application, CMS does 
not generally hold that position; reactivation and revalidation 
applications are for separate purposes and are governed by separate 
rules.
    Comment: One commenter cited a Government Accountability Office 
(GAO) report (GAO-04-707) stating that out-of-date information 
increases the risk that Medicaid will pay individuals who are not 
eligible to bill Medicaid. The commenter asked CMS to explain why it 
disagrees with this statement and why its proposed change will decrease 
the risk to the Medicare program.
    Response: We agree that out-of-date enrollment information poses a 
risk to all of our programs. Our ongoing effort, in fact, to revalidate 
all providers and suppliers reflects the importance we place on the 
need for Medicare to have accurate and up-to-date information on all 
enrolled individuals and entities. As explained above, we are not 
finalizing our proposed change due to the program integrity concerns 
raised by comments such as this one.
    Comment: One commenter cited a December 1995 OIG report (OEI-01-94-
00231) that: (1) Generally stated that CMS should require carriers to 
deactivate unused provider numbers, (2) recommended that a 1-year non-
billing period be used, and (3) pointed out certain risks involved with 
unused numbers. The commenter asked why CMS did not discuss the history 
and background of the deactivation process in the proposed rule. The 
commenter also asked why CMS, through its proposal to eliminate non-
billing deactivations for physicians and non-physician practitioners, 
is disregarding the OIG's above-referenced recommendation.
    Response: We did not and do not believe that a detailed history of 
the deactivation process is necessary, as many providers and suppliers 
are already familiar with the concept of deactivation. We add that, as 
explained earlier, we are not finalizing our proposed change to Sec.  
424.540(a)(1).
    Comment: Several commenters supported our proposed revision to 
Sec.  424.540(a)(1). They generally stated that it would reduce the 
burden on providers, suppliers and Medicare contractors, and would 
ensure better access to care for beneficiaries. They added that there 
are indeed valid reasons for a physician or non-physician practitioner 
not to submit a Medicare claim for 12 consecutive months; for instance, 
he or she may: (1) Simply not have many Medicare patients, (2) have 
been ill, or (3) have been working outside the country. Another 
commenter stated that the reimbursement delays associated with 
deactivations can be devastating to some providers.
    Response: We appreciate these supportive comments. However, for 
reasons already discussed, we will not be finalizing our proposed 
change.
    Comment: One commenter urged CMS to expand our proposed change to 
Sec.  424.540(a)(1) to include physician group practices.
    Response: As already stated, we are not finalizing our proposed 
change.

[[Page 29013]]

Based on the comments received and for the reasons expressed above, we 
have decided not to finalize our proposed change to Sec.  
424.540(a)(1). We may, however, seek other approaches--including future 
rulemaking--to address the concerns of providers and suppliers 
regarding the deactivation of providers and suppliers for 12 
consecutive months of non-billing.
b. Section 424.540(a)(2)
    Section 424.540(a)(2) specifies that a provider or supplier's 
Medicare billing privileges may be deactivated if the provider or 
supplier fails to report a change to its enrollment information within 
90 calendar days or, for changes in ownership or control, within 30 
calendar days. We did not propose to alter this provision. We believe 
it is necessary for providers and suppliers to understand the 
importance of furnishing updated enrollment information to the Medicare 
program, for incorrect or aged data can lead to improper payments.
    We did not receive any comments with respect to Sec.  
424.540(a)(2).
c. Section 424.540(a)(3)
    We proposed to add a new Sec.  424.540(a)(3) that would allow us to 
deactivate, rather than revoke, the Medicare billing privileges of a 
provider or supplier that fails to furnish complete and accurate 
information and all supporting documentation within 90 calendar days of 
receiving notification to submit an enrollment application and 
supporting documentation, or resubmit and certify to the accuracy of 
its enrollment information. While the deactivated provider or supplier 
would still need to submit a complete enrollment application to 
reactivate its billing privileges, it would not be subject to other, 
ancillary consequences that a revocation entails; for instance, a prior 
revocation must be reported in section 3 of the Form CMS-855I 
application, whereas a prior deactivation need not. Indeed, it is for 
this reason that we believed our proposal would reduce the burden on 
the provider and supplier communities.
    We received 5 public comments on proposed Sec.  424.540(a)(3), all 
of which supported our proposed addition of Sec.  424.540(a)(3). The 
comments stated that revocation is often too harsh a penalty and that 
deactivation is a more suitable remedy. They added that our proposal 
would reduce the burden on providers and suppliers that inadvertently 
miss the 90-day deadline. We appreciate the support of these commenters 
and are finalizing the policy as proposed.
    We note that we received several comments in response to our 
request for feedback regarding additional ways to reduce the burden on 
providers and suppliers. The comments below pertain to the provider 
enrollment process:
    Comment: A commenter suggested that CMS allow providers and 
suppliers 120 days--rather than the 90 days referred to in Sec.  
424.540(a)(2)--to report a change of information. The commenter 
believed that such an extension would be beneficial in light of CMS's 
ongoing revalidation effort and would reduce the burden on Medicare 
providers and suppliers.
    Response: While we appreciate this suggestion, we believe that 90 
days constitutes more than sufficient time for a provider or supplier 
to submit a change of information. We have repeatedly stressed to the 
provider community how important it is for CMS to have accurate 
information on individuals and entities that bill Medicare. Erroneous 
data can lead to improper payments, thereby endangering the Medicare 
Trust Fund.
    Comment: A commenter recommended that CMS extend the timeframe for 
reporting a change in ownership or control from 30 days to 90 days. The 
commenter felt that 30 days is too short a timeframe for compliance. A 
90-day period would: (1) Make this reporting requirement consistent 
with that applied to other types of informational changes that must be 
reported, and (2) ease the burden on the provider community.
    Response: We recognize that 30 days is a significantly shorter 
period than that given for reporting most types of changes of 
information. Given, however, the relative importance of information 
regarding the provider's ownership, we believe that a 30-day period is 
appropriate.
    Comment: A commenter urged CMS to implement safeguards designed to 
avoid contractor application processing errors, which can lead to 
delays in payment to providers and, in turn, interruptions in patient 
access to care. The commenter also recommended that CMS implement a 
clearer and more direct process for streamlining Medicare enrollment; 
this includes identifying and resolving application processing errors 
and issues related to the customer service hotlines.
    Response: We appreciate these recommendations. We can assure the 
commenter that CMS is currently undertaking a number of initiatives 
designed to streamline and improve the provider enrollment process, 
such as the ongoing enhancement of the Provider Enrollment, Chain and 
Ownership System (PECOS) Internet-based enrollment mechanism.
    Comment: One commenter recommended that CMS reduce the risk 
categorization--as described in CMS final rule, published in the 
Federal Register on February 2, 2011, titled ``Medicare, Medicaid, and 
Children's Health Insurance Programs; Additional Screening 
Requirements, Application Fees, Temporary Enrollment Moratoria, Payment 
Suspensions and Compliance Plans for Providers and Suppliers''--for 
certain types of DMEPOS suppliers. Specifically, the commenter 
suggested that the risk category for ``non-commercial'' DMEPOS 
suppliers--that is, physicians and non-physician practitioners who 
furnish DMEPOS items to their own patients--be changed from ``high'' to 
``limited.'' The commenter argued that such suppliers would have to 
undergo fingerprinting and a criminal background check each time they 
enrolled in Medicare or opened a new location. This could spur many 
physicians to opt-out of Medicare, rather than be subjected to these 
burdens.
    Response: We understand the commenter's concerns. As we stated in 
the February 2, 2011 final rule, however, we predicated our screening 
level assignments on the collective experience of provider and supplier 
categories. Based on the continued problem of fraud and abuse in the 
DMEPOS arena, we believe that all newly enrolling DMEPOS suppliers--
irrespective of subcategory--should be in the ``high'' level of 
categorical screening. We will, nonetheless, continue to monitor this 
issue and may make adjustments to the risk categories when appropriate.
    Comment: One commenter suggested that hospital-based physician 
groups be permitted to submit enrollment applications more than 30 days 
before the effective date listed on the application. This would allow 
such groups to begin billing Medicare sooner.
    Response: We appreciate this suggestion. We will study the issue 
further and, if needed, furnish clarifying guidance to the public.
    Comment: A commenter urged CMS to reduce the period in which 
contractors must process enrollment applications to no later than 60 
days for paper applications and 45 days for Web-based applications. The 
commenter asked CMS to modify the proposed deadlines in the re-
designated Sec.  405.818 in accordance therewith.
    Response: Medicare contractors must process enrollment applications 
in accordance with the timeframes outlined in CMS Publication 100-08,

[[Page 29014]]

chapter 15, and as specified in their respective Statements of Work. We 
note that the vast majority of initial enrollment applications today 
must be processed within 60 days (paper) and 45 days (Web-based).
    Comment: Several commenters requested that CMS reduce all 
unnecessary paperwork from the enrollment process.
    Response: We appreciate this comment and are working towards making 
the enrollment process as paperless as possible, in part through 
enhancements to the Internet-based PECOS enrollment mechanism.
    Comment: A commenter requested that CMS: (1) Exempt federally 
qualified health centers (FQHCs) from the provider enrollment 
application fee described in Sec.  424.514; (2) have each Medicare 
Administrative Contractor assign an FQHC subject matter expert and 
customer service representative who can help better facilitate the 
processing of FQHC applications; and (3) no longer require each 
individual FQHC site to separately enroll, but to allow the parent to 
enroll with the individual sites listed as practice locations. The 
commenter believed that these changes would greatly reduce the burden 
on FQHCs.
    Response: Section 1866(j) of the Act requires the Secretary to 
impose a fee on each ``institutional provider of medical or other items 
or services or supplier.'' The term ``institutional provider'' is 
defined in Sec.  424.502 as ``any provider or supplier that submits a 
paper Medicare enrollment application using the CMS-855A, CMS-855B (not 
including physician and non-physician practitioner organizations), CMS-
855S or associated Internet-based PECOS enrollment application.'' Since 
FQHCs complete the Form CMS-855A to enroll in Medicare, they are 
subject to the application fee.
    We appreciate the commenter's suggestion regarding the assignment 
of designated contacts at Medicare contractor sites to handle FQHC 
enrollment applications. While we are not adopting the commenter's 
recommendation at this time, we will take it under advisement.
    Although we understand the commenter's concern about the FQHC 
``site-by-site'' process, we intend to retain the policy at 42 CFR 
491.5(a)(3)(iii) which states: ``If clinic or center services are 
furnished at permanent units in more than one location, each unit is 
independently considered for approval as * * * an FQHC.'' We believe it 
is important that each individual FQHC site be able--on its own 
merits--to meet all CMS requirements. Since we did not propose to 
change this requirement, it is considered outside the scope of the 
regulation, though we may take this comment into consideration for 
future rulemaking.
    Comment: A commenter recommended that CMS eliminate PECOS--which 
the commenter believes is a redundant system--and instead standardize 
the Medicare enrollment process with other public and private payers 
via the adoption of the Council for Affordable Quality Healthcare 
Universal Provider Datasource.
    Response: We do not believe that PECOS should be eliminated. It has 
proven to be an extremely valuable tool in capturing provider 
enrollment information that is unique to the Medicare program.
    Comment: A commenter requested that CMS standardize its fraud and 
abuse regulations, arguing that such changes would reduce physicians' 
burden of complying with multiple inconsistent regulatory schemes.
    Response: As the commenter has not specifically identified any 
inconsistencies within CMS's program integrity regulations, we 
unfortunately are not in a position to address this comment further.
    We also received several comments not clearly related to regulatory 
matters:
    Comment: One commenter recommended that CMS consider civil monetary 
penalties for physicians and other providers and suppliers who fail to 
report changes in a timely manner.
    Response: We believe that this comment is out-of-scope, as it 
pertains neither to the issue of burden reduction nor the provisions of 
the proposed rule; nonetheless, we believe that the remedies we have 
outlined in this final rule, as well as those which already exist, are 
the most appropriate ones.
    Comment: One commenter recommended that CMS remove the ordering and 
referring file from the CMS Web site. The commenter argued that 
providing the names of physicians and non-physician practitioners and 
their active National Provider Identifiers to the public increases the 
likelihood of fraud, waste and abuse. The commenter also: (1) Contended 
that CMS has no statutory or regulatory requirement mandating the 
issuance of ordering and referring information to the public, and (2) 
requested that CMS explain why it is posting the ordering and referring 
file when it has not yet implemented any ordering and referring claims 
edits.
    Response: We believe that this comment, too, is out-of-scope, as it 
is unrelated to the issue of burden reduction and the provisions of the 
proposed rule. We note, however, that making NPIs available online is 
important for the processing of many standard health care transactions, 
for Medicare and other payers.
    The above summarizes this proposal and the comments we received. As 
noted above, we are not finalizing our proposed changes to Sec.  
424.540(a)(1) and intend to study this issue further and possibly 
address in future rulemaking or another suitable vehicle. However, we 
are finalizing our provision to add a new Sec.  424.540(a)(3) as 
proposed.
    Contact: Morgan Burns, 202-690-5145.
5. Duration of Agreement for Intermediate Care Facilities for 
Individuals With Intellectual Disabilities (Referred to in Current 
Regulations as Intermediate Care Facilities for the Mentally Retarded) 
(Sec.  442.15 Through Sec.  442.109)
    As described elsewhere in this preamble, we are replacing the use 
of the term ``mentally retarded'' with the term ``individuals with 
intellectual disabilities'' as described in this program, so we have 
used the new term in these final provisions.
    Section 1910 of the Act provides for the certification and approval 
of Intermediate Care Facilities for the Individuals with Intellectual 
Disabilities (ICF/IIDs). These facilities were formerly known as 
Intermediate Care Facilities for the Mentally Retarded (ICF-MRs) and 
are renamed through the change in nomenclature described below in this 
rule. Current regulations at Sec.  442.109 and Sec.  442.110 address 
ICFs-IIDs provider agreements and limit the ICFs-IIDs provider 
agreements under Medicaid to annual time limits. We proposed to remove 
the time limited agreements for ICF/IIDs at Sec.  442.16. We also 
proposed to eliminate this requirement at Sec.  442.15, Sec.  442.109, 
and Sec.  442.110. In order to give more flexibility to States, we 
proposed to replace the requirement with an open ended agreement which, 
consistent with nursing facilities (NFs), would remain in effect until 
the Secretary or a State determines that the ICF/IID no longer meets 
the conditions of participation for ICF/IIDs at subpart I part 483.
    Also, we proposed to add a requirement that a certified ICF/IID 
must be surveyed on average every 12 months with a maximum 15 month 
survey interval. Current regulations at 42 CFR part 442 require that 
ICF/IIDs be surveyed for compliance with conditions of participation at 
least every 12 months on a relatively fixed schedule. By contrast, 
nursing homes must be surveyed for compliance with

[[Page 29015]]

certification standards at intervals of between 12 and 15 months. We 
anticipate the change in the certification period will have positive 
impacts on the care provided in these facilities because the new 
process will be less predictable and will require facilities to be more 
proactive in maintaining high standards of care. The new process will 
also improve the efficient and effective operation of State survey 
agencies responsible for regulating ICF/IIDs.
    In addition, State survey agency resources are strained by the 
rigid timelines imposed in the current regulation. For example, if a 
complaint results in an abbreviated survey 10 or 11 months into the 
facility's certification period, the current regulation does not allow 
the State agency to expand the complaint survey for the purpose of 
completing the requirements of annual certification at the same time. 
Instead, the State is required to conduct another full survey at 12 
months, which is duplicative. More flexibility would allow States to 
use their survey staff in a targeted fashion, allocating resources 
where needed to assure resident safety and quality of care, rather than 
being forced to meet rigid regulatory timelines that do not bear a 
relationship to the needs of residents.
    We received three public comments on our proposed changes to the 
duration of agreement for ICF/IID.
    Comment: One commenter representing a state survey agency agreed 
with CMS's belief that the change will provide opportunities to 
increase operational efficiency at the state level by enabling more 
flexible scheduling and by reducing duplication when complaint survey 
timing may coincide with annual recertification. The commenter noted 
that with the proposed changes survey times would be less predictable 
and the expanded interval range will improve the quality improvement 
impact of surveys. The commenter also noted that the changes will 
provide a reduction in paperwork at the survey agency, the state 
Medicaid agency, and certified facilities, and that the additional 
flexibility afforded by the change will allow resources to be focused 
on problematic facilities and validation processes.
    The commenter requested the survey time for ICF/IIDs be expanded to 
24 months to provide States opportunities to focus resources on poor 
performing facilities.
    The commenter also requested that CMS consider relaxing the 
requirement that surveys be unannounced. The state has recently 
implemented a system of announced state surveys and believes the 
practice contributes to improved quality improvement efforts by 
encouraging state agency cooperation.
    Response: The commenter's observations regarding the efficiencies 
and process improvements afforded by this change reinforce the 
rationale for revising the duration of the agreement.
    The change to the survey time will make ICF/IID's consistent with 
certified nursing facilities regarding survey scheduling. At this time 
CMS has not found that extending the survey time for ICF/IID's beyond 
12 months on average could be accomplished without negative impacts on 
the quality of care delivered by these facilities. Therefore, the same 
standard survey time period for nursing facilities has been applied to 
ICF/IID's. However, the proposed change will allow states greater 
latitude to survey poor performing facilities more frequently and high 
quality facilities less frequently, as long as the overall time-frames 
are observed. The requirement that surveys be unannounced is intended 
to assure that facilities provide a consistent quality of services and 
care required under the conditions of participation. While announced 
surveys may improve state and facility cooperation, CMS has not 
determined that overall program performance or the quality of care for 
residents would benefit by announcing survey visits.
    Comment: One commenter requested that CMS allow states, through the 
State Performance Standards, as much flexibility as possible during the 
first year of implementation to modify survey schedules and thereby 
produce a higher level of survey unpredictability.
    Response: CMS seeks to eliminate the administrative burden of the 
completion of forms which extend the provider agreement in cases where 
the survey activity has not been completed within the required 12 month 
period. These forms, currently exchanged between two units of State 
government and the provider, require administrative work without adding 
value or increasing the survey frequency. They also serve, to some 
extent, in alerting ICF/IID facilities to the prospect of an imminent 
survey. Therefore, in addition to reducing administrative burden the 
regulatory change also provides an increased opportunity for the State 
Survey Agencies to more greatly vary their survey schedules and to 
decrease the predictability of the survey visits by the provider. We 
agree with the commenter with regard to State performance expectations, 
and will ensure that the State Performance Standards for this measure 
will be listed as ``developmental'' to encourage the State Survey 
Agencies to make significant changes to their survey schedules for ICF/
IID and thus enhance the unpredictability of surveys
    Comment: Another commenter from a state agency expressed the 
concern that the 12 month average survey interval is inconsistent with 
the 15 month maximum time interval allowed. The commenter also 
expressed concern that the rule does not specify whether the state or 
CMS will determine the statewide average interval, nor how the state 
may appeal a determination of compliance with the interval if the state 
disagrees.
    Response: As discussed above, the proposed change in the rule will 
make the timing of ICF/IID surveys consistent with the requirements for 
surveys of certified nursing facilities. Each facility will be surveyed 
at least once every 15 months, and facilities must be surveyed an 
average of every 12 months. Necessarily, this means that if some 
facilities are surveyed only after 12 months but before the end of 15 
months from the last survey, other facilities in the state must be 
surveyed more frequently than 12 months. We will publish in our Mission 
and Priority Document (MPD) the methodology to be applied in computing 
the maximum and average survey intervals for ICF/IID's. While there is 
no formal appeal process for States to dispute the calculations 
included in the MPD, this methodology will be available to the states 
which can use it to verify CMS's calculation of the average survey 
interval.
    The above summarizes this provision as proposed in our proposed 
rule and the comments we received. We are finalizing the policy above 
as proposed.
    Contact: Thomas Hamilton, 410-786-9493.

B. Removes Obsolete or Duplicative Regulations or Provides Clarifying 
Information

    The following provisions remove requirements in the Code of Federal 
Regulations (CFR) that are no longer needed or enforced. We have 
identified regulations that have become obsolete and need to be 
updated.
1. OMB Control Numbers for Approved Collections of Information (Sec.  
400.300 and Sec.  400.310)
    Part 400 subpart C requires the collection and display of control 
numbers assigned by the Office of Management and Budget (OMB) to 
collections of information contained in CMS regulations. The chart at 
Sec.  400.310 that displays the OMB control numbers has not been 
updated since December 8, 1995. We believe that, it is no longer 
necessary to maintain the chart, because

[[Page 29016]]

an inventory of currently approved CMS information collections, 
including OMB control numbers, is displayed on a public Web site at 
http://www.reginfo.gov/public/do/PRAMain. The Web site provides more 
timely access to the OMB control numbers for CMS information collection 
requests than the process of publishing updates in the CFR. Also, as 
part of our quarterly notice of CMS issuances, which is published each 
quarter in the Federal Register, we will remind reviewers where they 
can find the most current list of information collections and OMB 
control numbers. For these reasons, we proposed to remove and reserve 
subpart C since the content of the information contained in this 
subpart is obsolete and more readily available on the public Web site.
    We did not receive any public comments on our proposed changes to 
remove the list of OMB control and approval numbers in subpart C. 
Therefore, we are finalizing the policy as proposed.
    Contact: Ronisha Davis, 410-786-6882.
2. Removal of Obsolete Provisions Related to Initial Determinations, 
Appeals, and Reopenings of Part A and Part B Claims and Entitlement 
Determinations (Sec.  405.701 Through Sec.  405.877)
    In the proposed rule, we proposed to remove obsolete provisions 
contained in 42 CFR part 405 subparts G and H governing initial 
determinations, appeals, and reopenings of Medicare Part A and Part B 
claims, and determinations and appeals regarding an individual's 
entitlement to benefits under Medicare Part A and Part B. See 76 FR 
65913, October 24, 2011. Currently, initial determinations, appeals and 
reopenings of Medicare Part A and B claims are governed by the 
provisions in section 1869 of the Act and in 42 CFR part 405 subpart I. 
Initial determinations and reconsiderations of an individual's 
entitlement to Medicare Parts A and B are governed by the provisions in 
20 CFR part 404, subpart J, and entitlement appeals beyond the 
reconsideration level are governed by part 405 subpart I. The part 405 
subpart I regulations implemented pertinent sections of the Medicare, 
Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 
(BIPA) (Pub. L. 106-554) and the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173). 
(For more detail see 76 FR 65913-65914).
    Part 405 subparts G and H contain policies that applied to initial 
determinations, appeals, and reopenings of Medicare Part A and Part B 
claims, as well as determinations and appeals regarding an individual's 
entitlement to benefits under Medicare Part A and Part B, prior to the 
implementation of the part 405 subpart I provisions (collectively 
referred to as ``pre-BIPA'' actions). Although we phased in the 
implementation of the part 405 subpart I regulations, these regulations 
were effective for all claims processed on or after January 1, 2006 
(See 70 FR 11425, March 8, 2005). Once all pre-BIPA claims appeals were 
completed, the provisions in part 405 subparts G and H would be 
considered obsolete and replaced by the provisions in part 405 subpart 
I.
    As explained in the proposed rule (76 FR 65914), we believe that 
all pre-BIPA claims appeals have been processed. Therefore, we proposed 
to remove the obsolete provisions in part 405 subparts G and H. 
However, since we cannot be completely certain that there are no 
pending pre-BIPA claims appeals, we also proposed that any newly 
identified pre-BIPA claims appeals would be handled under the current 
appeals provisions set forth in the part 405 subpart I regulations to 
ensure that parties would have due process for their disputes (See 76 
FR 65914). We believe maintaining a separate pre-BIPA claim appeals 
process in the unlikely event such an appeal is discovered is 
inefficient and impracticable. Using the current appeals provisions in 
part 405 subpart I for all claim appeal requests filed on or after the 
effective date of this final rule, reduces potential confusion about 
applicable appeal procedures, and enables parties to take advantage of 
the reduced decision-making timeframes and other process improvements 
offered throughout the part 405 subpart I regulations.
    We proposed that parties who demonstrate that they requested an 
appeal of a pre-BIPA claim but did not receive a decision would be 
entitled to refile their appeal request, and would have their appeal 
processed under the part 405 subpart I regulations in the manner set 
forth below. Any pre-BIPA claims appeals identified on or after the 
effective date of this final rule (``newly identified pre-BIPA 
appeals'') that are still pending at the first level of appeal (a 
reconsideration for Part A claims (42 CFR 405.710) and review of the 
initial determination for Part B claims (42 CFR 405.807)) would be 
processed beginning at the redetermination level under the part 405 
subpart I regulations (see 42 CFR 405.940-405.958). Any newly 
identified pre-BIPA appeals that are still pending at the second level 
of appeal (ALJ hearing for Part A claims (42 CFR 405.720) and carrier 
hearing for Part B claims (42 CFR 405.821)) would be processed 
beginning at the QIC reconsideration level under the part 405 subpart I 
regulations (see 42 CFR 405.960-405.978). In addition, any newly 
identified pre-BIPA appeals of Part B claims that are pending at the 
ALJ hearing level (42 CFR 405.855) would be processed as QIC 
reconsiderations under the part 405 subpart I regulations. Any newly 
identified pre-BIPA appeals that are still pending at the final level 
of administrative appeal, Departmental Appeals Board review (42 CFR 
405.724 for Part A claims and 42 CFR 405.856 for Part B claims) would 
be processed at the Medicare Appeals Council review level under the 
part 405 subpart I regulations (see 42 CFR 405.1100-405.1134). See 76 
FR 65914-65915 for additional information.
    We also explained that several sections in part 405 subparts G and 
H were either unrelated to claims or entitlement appeals and were still 
in effect, or were inadvertently not included in part 405 subpart I. 
See 76 FR 65915. We proposed to retain Sec.  405.874, ``Appeals of CMS 
or a CMS contractor'' and redesignate it as Sec. Sec.  405.800-405.818 
in part 405 subpart H, and to retain Sec.  405.706, ``Decisions of 
utilization review committees'' and redesignate it as Sec.  405.925 in 
part 405 subpart I. Finally, we proposed to remove Sec.  405.753 and 
Sec.  405.877 (``Appeal of a categorization of a device.'') because 
these sections are obsolete and no longer comport with the definition 
of ``national coverage determination'' in section 1869(f) of the Act, 
as amended by section 522 of BIPA. See 76 FR 65915.
    We received one public comment regarding several of the appeals 
proposals described above. A summary of the commenter's concerns 
regarding these proposals and our responses are included below.
    Comment: The commenter stated that the proposed changes do not 
afford appeal rights to all initial determinations, and expressed 
concern that the complexity and length of the appeals process requires 
legal counsel to navigate, is expensive, and does not provide 
physicians a meaningful opportunity to challenge claim determinations.
    Response: In this rule, we are not changing existing policy with 
respect to appeal rights under part 405 subpart I. Rather, we are 
removing obsolete provisions in part 405 subparts G and H, and 
redesignating existing policy that is not obsolete. We are also 
finalizing our proposal that any newly identified pre-BIPA appeals that 
are still pending in

[[Page 29017]]

the administrative process will be handled under the current appeals 
regulations in 42 CFR part 405 subpart I. As discussed previously, 
these regulations were effective for all claims processed on or after 
January 1, 2006 (See 70 FR 11425, March 8, 2005).
    The appeals process for claim determinations set forth in the 42 
CFR part 405 subpart I regulations implements the statutory 
requirements found in section 1869 of the Act. In this rule, we are not 
changing what we consider to be initial determinations under part 405 
subpart I (42 CFR 405.924). When contractors make initial 
determinations, as defined in 42 CFR 405.924, those determinations may 
be appealed by the parties to the determination. However, some actions 
taken by CMS or its contractors are not initial determinations and, 
therefore, do not trigger appeal rights. See 42 CFR 405.926. For 
example, there is no initial determination and, therefore, no right to 
appeal when there is no valid claim or request for payment for which a 
determination is made (such as when claims are returned to providers as 
incomplete or invalid, in which case they must be resubmitted rather 
than appealed), or when administrative review is precluded by statute 
(such as for coinsurance amounts prescribed by regulation for 
outpatient services under the prospective payment system, see Sec.  
1833(t)(12)(B) of the Act).
    We respectfully disagree with the commenter's characterization of 
the administrative appeals process as overly complex, expensive and 
lengthy, and the commenter's assertion that it does not provide 
physicians a meaningful opportunity to challenge claim determinations 
and requires legal counsel to navigate. As we explain above, the 
appeals process for claim determinations set forth in the 42 CFR part 
405 subpart I regulations implements the statutory requirements found 
in section 1869 of the Act. Although there are four levels of 
administrative claims appeals, an overwhelming majority of disputes are 
resolved at the first level of appeal through informal proceedings with 
the claims processing contractor. In addition, we offer parties the 
opportunity to correct minor claims errors through the reopening 
process set forth in 42 CFR 405.980, et seq. For disputes that are not 
resolved at the first level of appeal, parties have an opportunity for 
review by a Qualified Independent Contractor, a hearing before an 
Administrative Law Judge, and review by the Medicare Appeals Council 
prior to commencing litigation in federal district court. Furthermore, 
adjudicators have relatively short timeframes for issuing decisions (60 
days at the first and second levels and 90 days at the third and fourth 
levels). In most cases, these administrative proceedings are non-
adversarial, and less formal than proceedings in federal or state 
court. We believe the administrative process crafted by the Congress 
under section 1869 of the Act adequately balances the need to develop a 
full and complete administrative record should a case result in a civil 
action in federal district court, with the ability for parties to 
obtain quick, informal and independent review of claim determinations.
    Comment: The commenter also expressed concern that adequate time 
may not have elapsed for the resolution of all pre-BIPA claims, and 
that channeling pre-BIPA appeals through the procedures in 42 CFR part 
405 subpart I does not streamline the process for such appeals. The 
commenter also urged CMS to develop materials that are widely available 
to explain the claims appeals process.
    Response: It has been over six years since we began to transition 
from the claims appeals process in 42 CFR part 405 subparts G and H to 
the current process in 42 CFR part 405 subpart I. As explained in the 
preamble to the proposed rule, it is our expectation that in the 6 
years since implementation began for the part 405 subpart I appeals 
process, any party with a pending pre-BIPA claims appeal would have 
received a decision or would have brought the pending matter to our 
attention (see 76 FR 65914). We proposed, and are finalizing in this 
rule, that parties who demonstrate that they requested an appeal of a 
pre-BIPA claim but did not receive a decision would be entitled to 
refile their appeal request, and would have their appeal processed 
under the part 405 subpart I regulations (see 76 FR 65914-65915). We 
believe that channeling appeals of pre-BIPA claims through the current 
process in part 405 subpart I will eliminate confusion and uncertainty 
by having parties and adjudicators follow a single set of rules that 
have been in place for over six years. In addition, as explained in the 
proposed rule (76 FR 65914), using the current appeals process under 
part 405 subpart I for all claims appeal requests filed on or after the 
effective date of this final rule, will enable parties to take 
advantage of reduced decision-making timeframes and other process 
improvements offered throughout part 405 subpart I. For example, pre-
BIPA claims appeals did not have timeframes within which decisions must 
be issued. Applying the decision making timeframes for current claims 
appeals to pre-BIPA claims appeals will likely result in quicker 
turnaround times for pre-BIPA claims appeals, and a more streamlined 
process in comparison to the pre-BIPA appeals process. Thus, we believe 
our proposal to channel all claims appeals through the current process 
in part 405 subpart I will be more efficient and effective than 
maintaining separate appeals processes.
    Materials that explain the steps in the first and second levels of 
the claims appeals process are currently available at: http://www.cms.gov/OrgMedFFSAppeals/ and also at: http://www.medicare.gov/navigation/medicare-basics/understanding-claims/medicare-appeals-and-grievances.aspx. Information about hearings before an ALJ is available 
at: http://www.hhs.gov/omha, and information about the proceedings 
before the Medicare Appeals Council is available at: http://www.hhs.gov/dab. In addition, shortly after this rule becomes 
effective, we will update the CMS online manuals and CMS' Web site to 
provide instructions on how requests for newly identified pre-BIPA 
claims appeals should be made, and how such appeals will be processed.
    Comment: The commenter raised additional concerns about existing 
policies regarding effective dates of revocation actions and enrollment 
determinations and existing policies regarding submission of claims 
during the appeal of an enrollment determination (see, 42 CFR 405.800-
818).
    Response: The commenter's concerns regarding existing policies for 
enrollment appeals are outside the scope of this rule. In this rule, we 
are not changing existing policy with respect to enrollment appeals or 
the submission of claims while appeals of enrollment determinations are 
pending. Rather, we are removing obsolete provisions in part 405 
subparts G and H, and redesignating existing policy that is not 
obsolete. The technical corrections proposed with respect to enrollment 
appeals are purely editorial in nature. We are maintaining existing 
policies in 42 CFR 405.874 that were previously subject to formal 
notice and comment rulemaking (see 73 FR 36460, June 27, 2008) and 
redesignating them as 42 CFR 405.800-818. However, we will consider the 
concerns raised by the commenter. Should we determine that changes to 
current enrollment appeals policy are necessary, we will conduct 
separate rulemaking.
    Comment: Finally, the commenter disagreed with our policy that 
decisions of utilization review committees are not

[[Page 29018]]

``initial determinations'' and may not be appealed under the part 405 
subpart I regulations. The commenter stated that such decisions have an 
impact on substantive rights.
    Response: Decisions of utilization review committees (URC) are 
decisions made by health care professionals at hospitals. They are not 
initial determinations made by the Secretary within the meaning given 
in section 1869 of the Act. It has been our longstanding policy that 
URC decisions are not initial determinations, and thus, are not 
appealable; however, the decision of a URC may be considered by CMS 
along with other pertinent medical evidence in determining whether or 
not an individual has the right to have payment made under Medicare 
Part A (42 CFR 405.706). In this rule, we are not changing existing 
policy with respect to URC decisions. We are simply redesignating the 
existing provisions in Sec.  405.706 as Sec.  405.925.
    Accordingly, we are finalizing our proposed policies without 
modification.
    Contact: David Danek (617) 565-2682.
3. ASC Infection Control Program (Sec.  416.44)
    In existing regulations at 42 CFR 416.51, we require all ASCs to 
adhere to regulations regarding Infection Control, which include the 
requirement that all ASCs develop an infection control program. The 
regulations also describe how ASCs must set up their infection control 
program, such as the requirement that the ASC designate a qualified 
professional who has training in infection control and the ASC's 
obligation to establish a plan of action regarding preventing, 
identifying, and managing infections and communicable diseases.
    Current regulations also contain a provision for infection control 
that is located within the physical environment standard in 42 CFR 
416.44(a)(3). The requirement states that an ASC must establish a 
program for identifying and preventing infections, maintaining a 
sanitary environment, and reporting the results to the appropriate 
authorities. This regulatory requirement was part of the original CfCs 
first published for ASCs in 1982. The revised CfC final rule published 
in the Federal Register November 2008 (73 FR 68502) elevated the 
infection control requirements from a standard level under the 
Environment condition to a separate condition level requirement, thus 
making the regulatory requirement in the Environment CfC section of the 
CFR duplicative. The Infection Control CfC located at 42 CFR 416.51 
expands and broadens the infection control requirements that were part 
of the original ASC requirements in the Environment CfC section. 
Therefore, we proposed to remove the requirement at Sec.  416.44(a)(3), 
located in the Environment CfC section, as it is unnecessary and 
obsolete. We believe this change will alleviate any duplicative efforts 
and confusion regarding the infection control requirements.
    We received two public comments on our proposed changes to the ASC 
Environment CfC section.
    Comment: One commenter supported our proposal to remove the 
unnecessary and redundant requirement regarding infection control. In 
addition, the commenter supported the elevation of the infection 
control requirements from a standard level under the Environment CfC 
section to a separate condition level requirement.
    Response: We thank the commenter for the comment and appreciate the 
commenter's support for the proposed changes.
    Comment: We received one comment that opposed the removal of a 
particular section of the requirement that states ASCs must report the 
results of any identified infections to the appropriate authorities. In 
addition, the commenter stated it was ill-advised to remove the 
reporting requirement and that the Centers for Disease Control recently 
published studies analyzing infection rates in ASCs.
    Response: The Federal regulations for ASCs do not have specific 
infection control reporting requirements. The language we have proposed 
to delete states that ``ASCs must report the results to the appropriate 
authorities''. We have not changed the normal procedures that ASCs must 
follow in order to meet their State reporting requirements. Currently, 
there is sufficient authority in the infection control CfC at 42 CFR 
416.51(b)(3) that will continue to support CMS requirements for such 
reporting. In addition, CMS has similar hospital infection control 
regulations and the guidance includes complying with reportable disease 
requirements of the local health authorities.
    The above summarizes this provision made in our proposed rule and 
the comments we received. We are finalizing the policy above as 
proposed.
    Contact: Jacqueline Morgan, 410-786-4282.
4. E-prescribing (Sec.  423.160)
    The MMA amended title XVIII of the Act to establish a voluntary 
prescription drug benefit program. Under those provisions, prescription 
Drug Plan (PDP) sponsors and Medicare Advantage (MA) organizations 
offering Medicare Advantage-Prescription Drug Plans (MA-PD) are 
required to establish electronic prescription drug programs to provide 
for electronic transmittal of certain information to the prescribing 
provider and dispensing pharmacy and pharmacist. This includes 
information about eligibility, benefits (including drugs included in 
the applicable formulary, any tiered formulary structure and any 
requirements for prior authorization), the drug being prescribed or 
dispensed and other drugs listed in the medication history, as well as 
the availability of lower cost, therapeutically appropriate 
alternatives (if any) for the drug prescribed. The MMA directed the 
Secretary to promulgate uniform standards for the electronic 
transmission of this data.
    In the November 7, 2005, final rule (70 FR 67568), titled 
``Medicare Program; E-Prescribing and the Prescription Drug Program,'' 
CMS adopted three e-prescribing foundation standards to be used for e-
prescribing for the Medicare Part D program. The three foundation 
standards are--(1) The National Council for Prescription Drug Programs 
(NCPDP) SCRIPT version 5.0., which provides for communications between 
the prescriber and dispenser; (2) the NCPDP Telecommunication Standard 
Version 5 release 1 and equivalent NCPDP Batch Standard Batch 
Implementation Guide version 1.,1 (NCPDP Telecom 5.1) which provides 
for communication between the dispenser and the Plan, and the ASC X12N 
270/271 Health Care Eligibility Benefit Inquiry and Response, Version 
4010; and (3) the Addenda to Health Care Eligibility Inquiry and 
Response, Version 4010A1 (4010/4010A) for conducting eligibility and 
benefit inquiries between the prescriber and Plan Sponsor. The latter 
two transactions, NCPDP Telecom 5.1 and the 4010/4010A are also adopted 
as HIPAA transaction standards.
    In the November 7, 2005 final rule, we discussed the means for 
updating the Part D e-prescribing standards. In instances in which an 
e-prescribing standard has also been adopted as a HIPAA transaction 
standard in 45 CFR Part 162, the process for updating the e-prescribing 
standard would have to be coordinated with the maintenance and 
modification of the applicable HIPAA transaction standard. Additional 
discussion on the updating of the Medicare Part D e-Prescribing 
standards can be found in the October 24, 2011 proposed rule (76 FR 
65909).
    For consistency with the current HIPAA transaction standards, and 
the need for covered entities (prescribers

[[Page 29019]]

and dispensers) to comply with HIPAA, we proposed to revise Sec.  
423.160(b)(3), to--(1) Update Version 4010/4010A with the ASC X12 
Standards for Electronic Data Interchange Technical Report Type 3--
Health Care Eligibility Benefit Inquiry and Response (270/271), April 
2008, ASC X12N/005010X279, (2) adopt the NCPDP Telecommunication 
Standard Implementation Guide, Version D, Release 0 (Version D.0) and 
equivalent NCPDP Batch Standard Implementation Guide, Version 1, 
Release 2 (Version 1.2); and (3) retire NCPDP Telecommunication 
Standard Implementation Guide, Version 5, Release 1 (Version 5.1) and 
equivalent NCPDP Batch Standard Implementation Guide, Version 1, 
Release 1 (Version 1.1), for transmitting eligibility inquiries and 
responses between dispensers and Part D sponsors. As noted above, this 
change will promote consistency and ensure that covered entities are 
compliant with the most current transaction standards.
    We received three public comments on our proposed changes to the 
Medicare Part D e-prescribing foundation standards (Sec.  423.160). One 
commenter was from a standards development organization (SDO) and two 
were from professional medical organizations.
    Comment: All commenters agreed with our proposal to adopt the 
above-referenced standards and guide for transmitting eligibility 
inquiries and responses between dispensers and Part D sponsors.
    Response: For consistency with the current HIPAA transaction 
standards, and the need for covered entities (prescribers and 
dispensers) to comply with HIPAA, we agree with the commenters and we 
are finalizing what we proposed for Sec.  423.160.
    Comment: One commenter supports finalizing what was proposed, but 
noted disappointment that CMS has not yet finalized a comprehensive set 
of standards that would fully support the Medicare Part D e-prescribing 
program. They commented that, although CMS has finalized the formulary 
and benefits, medication history, and fill status notification e-
prescribing standards, it has not addressed the National Committee on 
Vital and Health Statistics' (NCVHS) recommendations about the adoption 
of standards for a clinical drug terminology, electronic prior 
authorization (ePA), and Structured and Codified Sig Format (SIG) 
(instructions on the prescription label). They suggested that CMS 
should propose and finalize such standards. Response: We appreciate the 
commenter's support of our proposed changes, and appreciate their 
interest in the adoption of a comprehensive set of e-prescribing 
standards. While several of the necessary standards are still under 
development, we are not currently in a position to propose additional 
standards that, if finalized, would more fully support the Medicare 
Part D e-prescribing Program. Some of the standards that the commenter 
mentioned as having support from NCVHS, such as ePA and SIG are still 
in the development stage and have not yet been pilot tested by 
industry. Thus, it would be premature for us to propose the adoption of 
standards that have not been fully developed and tested.
    Since all commenters agreed with our proposal to adopt the ASC X12 
Technical Reports Type 3, Version 005010 (Version 5010), as a 
replacement of the current X12 Version 4010 and 4010A1 standards 
(Version 4010/4010A) and to adopt the NCPDP Telecommunication Standard 
Implementation Guide, Version D, Release 0 and equivalent NCPDP Batch 
Standard Implementation Guide, Version 1, Release 2 as a replacement to 
NCPDP Telecommunication Standard Version 5.1, we are finalizing the 
proposals in this final rule. We note that we updated the regulatory 
text at Sec.  423.160(c) to adopt the updated standards and retire the 
old standards as discussed above. Compliance with these new adopted 
standards will be 60 days after the publication of this final rule.
    Contact: Andrew Morgan, 410-786-2543.
5. Physical and Occupational Therapist Qualifications (Sec.  440.110)
    Current regulations detail provider qualifications for a `qualified 
physical therapist' under Medicaid at 42 CFR 440.110(a)(2). Current 
regulations detail provider qualification for a ``qualified 
occupational therapist'' under Medicaid at 42 U.S.C. 440.110(b)(2). 
These current regulations contain outdated terminology referencing 
several professional organizations. Additionally, some of the current 
qualification requirements do not address individuals who have been 
trained outside of the United States, or refer to outdated 
requirements, which could unintentionally exclude otherwise qualified 
therapists resulting in diminished access to care for Medicaid 
beneficiaries.
    Medicare regulations at Sec.  484.4 were updated through a November 
27, 2007 final rule (72 FR 66406), effective January 1, 2008. While 
these personnel qualifications are detailed under home health services, 
we indicated in the preamble to the November 27, 2007 final rule, that 
therapy services must be provided according to the same standards and 
policies in all settings, to the extent possible and consistent with 
statute, and we revised multiple regulations to cross-reference the 
personnel qualifications for therapists in Sec.  484.4 to the personnel 
requirements in many other sections.
    We proposed at Sec.  440.110 to remove the outdated personnel 
qualifications language in the current Medicaid regulations and instead 
cross reference the updated Medicare personnel qualifications for 
physical therapists and occupational therapists under Sec.  484.4. This 
proposal has the potential to broaden the scope of providers that may 
be able to provide PT and OT services, by streamlining the 
qualifications so that certain providers are not excluded from 
providing services under Medicaid. In addition, it strengthens the 
consistency of standards across Medicare and Medicaid.
    We received 12 public comments on this proposed change.
    Comment: We received several comments in support of the proposed 
revisions.
    Response: We appreciate the expressions of support.
    Comment: We received several comments requesting that we also allow 
individuals who meet State licensure requirements to be recognized in 
the Medicaid program as a qualified physical or occupational therapist.
    Response: State licensure is already taken into account in existing 
Medicare requirements found at 42 CFR 484.4. Aligning Medicaid provider 
qualifications with Medicare will continue this practice. Adopting 
these qualifications for the Medicaid program will ensure consistency 
among programs and enhance the scope of individuals qualified to 
deliver Medicaid services. If practices at the State level are 
prohibiting individuals from meeting Medicaid qualifications, we 
suggest addressing those concerns with the State Medicaid Agency.
    Comment: We received one comment requesting retroactive 
applicability of these revised provider qualifications.
    Response: The effective date of these changes must be prospective, 
rather than retrospective, as it would be impractical to do otherwise.
    Comment: One commenter urged HHS to review the ``therapy incident-
to'' rule contained in the 2005 physician fee schedule regulation, 
which disallowed Medicare Part B payments for outpatient rehabilitative 
therapy services provided as incident to services furnished by other 
practitioners.

[[Page 29020]]

    Response: We appreciate this comment, but it is outside the scope 
of this regulation.
    Comment: We received two comments in opposition to the proposed 
revisions, as they would exclude other health care professionals from 
providing PT and OT services, even when they are under the direct 
supervision of a physician.
    Response: We disagree with these commenters. Aligning Medicare and 
Medicaid provider qualifications will increase the number of 
individuals eligible to furnish PT and OT services under the Medicaid 
program. We also point out that current regulations for PT and OT at 
Sec.  440.110 require therapy providers to either meet the specified 
qualifications themselves, or furnish services under the direction of a 
qualified therapist. Individuals not meeting these qualifications could 
potentially still be qualified providers of Medicaid services, however, 
these services could not be billed to CMS as PT or OT services.
    Comment: We received one comment suggesting that HHS modify 
policies set forth in the final provider enrollment rule.
    Response: We appreciate this comment, but it is outside the scope 
of this regulation.
    Comment: We received one comment suggesting that we also 
incorporate by reference into 42 CFR 440.110 the Medicare definition of 
Occupational Therapy Assistant found at 42 CFR 484.4.
    Response: We do not believe that such action is necessary at this 
time. As the commenter noted, Medicaid regulations are silent as to the 
qualifications of a PT or OT assistant. This is partly due to the fact 
that individuals other than a PT or OT assistant could furnish PT or OT 
services under the direction of a qualified therapist. However, we do 
agree that States utilizing PT or OT assistants would be well served to 
follow the Medicare definition found at 42 CFR 484.4, to ensure 
consistency across programs.
    The above summarizes this provision made in our proposed rule and 
the comments we received. We are finalizing the policy above as 
proposed.
    Contact: Adrienne Delozier, 410-786-0278.
6. Definition of Donor Document (Sec.  486.302)
    Section 486.302 includes the following definition: ``Donor document 
is any documented indication of an individual's choice in regard to 
donation that meets the requirements of the governing State law.'' In 
recent years, the concept of the donor document and the opportunities 
for individuals to express their wishes concerning organ and/or tissue 
donation have changed. An individual can indicate his or her wishes not 
only on a driver's license through a State's Department of Motor 
Vehicles, but also on various registries or even in separate documents. 
Therefore, we believe that our definition in Sec.  486.302 should be 
updated. Moreover, the focus on patient rights has increased over the 
last several years. For example, we published a final rule on November 
19, 2010 titled, ``Changes to the Hospital and Critical Access Hospital 
Conditions of Participation to Ensure Visitation Rights for All 
Patients'' (CMS-3228-F). In light of this increased focus, we believe 
that the current definition, does not fully allow for the various ways 
individuals can express their choices in the donor process. In 
addition, we believe it is important to emphasize that the decision to 
donate organs and/or tissue before death is the decision of the 
individual.
    We proposed replacing the current definition of ``donor document'' 
in Sec.  486.302 with the following definition, ``[D]onor document 
means any documented indication of an individual's choice that was 
executed by the patient, in accordance with any applicable State law, 
before his or her death, and that states his or her wishes regarding 
organ and/or tissue donation.'' The definition as finalized in this 
rule modifies the previous definition in two ways. First, while the 
current definition refers to ``an individual's choice'' it does not 
recognize the right of the individual to identify their wishes more 
specifically. Donor documents may simply allow for the choice of 
whether or not to be an organ and/or tissue donor, however, some 
individuals may choose to use documents that allow them to express 
their wishes in more detail. For example, some people may choose to be 
an organ donor, but not a tissue donor. Others may not want to consent 
to the donation of specific organs. Therefore, we believe that the 
definition as finalized should cover documents or other ways for 
individuals to express their wishes more specifically, and we have 
modified the definition accordingly.
    Second, we also believe that it is important to include the 
requirement that the donor document be ``executed by the patient.'' 
While this may appear self-evident, we want to emphasize that the 
decision by a living person to donate organs and/or tissue after his or 
her death is always a voluntary decision. Therefore, we have modified 
the definition to account for this.
    These changes to the definition of the donor document only affect 
the documentation of an individual's wishes concerning organ and/or 
tissue donation while they are alive and can legally make those 
decisions. In the absence of a valid donor document, the donation 
decisions would rest with the individual who is legally responsible for 
making these decisions, usually the person's next of kin.
    We received three public comments on our proposed changes to the 
donor document definition located in Sec.  486.302. The commenters 
represented a major patient advocacy organization, a major industry 
organization, and a state health and human services commission. All 
three commenters suggested changes to the proposed definition of donor 
document.
    Comment: Two of the commenters were opposed to the new definition 
for donor document because the proposed definition does not appear to 
be consistent with the Uniform Anatomical Gift Act (UAGA). The 
commenters suggested that under the UAGA, there are other individuals 
who can make a legally binding gift on behalf of the donor before his 
or her death. In addition, they felt the new definition did not fully 
address alternatives, such as a situation where people may choose to be 
an organ donor but not a tissue donor, or may only want to consent to 
the donation of specific organs. The commenters noted that the UAGA 
does allow for such alternatives.
    Response: We agree that the proposed definition does not 
acknowledge that the UAGA allows other individuals to make a legally 
binding anatomical gift during the donor's lifetime. Section 4 of the 
2006 revision of the UAGA allows for ``an agent of the donor, unless 
the power of attorney for health care or other record prohibits the 
agent from making an anatomical gift; a parent of the donor, if the 
donor is an unemancipated minor; or the donor's guardian'' to make an 
anatomical gift for the donor while he or she is still alive. We 
believe this is an unusual circumstance; however, we want to avoid any 
confusion. If another individual is authorized to make an anatomical 
gift and documents his or her decision to do so in accordance with any 
applicable state law, we believe that constitutes a valid donor 
document under the OPO CfCs. Therefore, we have modified the definition 
of donor document to include that circumstance.
    We agree that the proposed definition does not fully address 
alternatives. One commenter noted the use of the word ``executed'' 
implied that donor documents must be in writing and noted

[[Page 29021]]

that under Texas law (citing Tex. Health & Safety Code Ann. Sec.  
692A.005(West), a valid donation can be made if a terminally ill or 
injured donor communicates in any way his or her desire to donate to at 
least two adult witnesses. One of these individuals must be a 
disinterested witness. We believe that a non-written communication can 
be a valid expression of the donor's wishes, as long as it is made in 
accordance with any applicable state law. However, there must be some 
documentation of that non-written communication. For example, if a 
terminally ill or injured patient communicates to his or her next of 
kin and a nurse that he or she wants to donate his or her organs in a 
non-written communication and that satisfies any applicable state law, 
we would agree that was a valid consent to donate from the patient. The 
next-of-kin or the nurse should then document the patient's consent 
consistent with requirements under state law, if applicable, and 
hospital policy. That documentation of the patient's consent to donate 
would then become the donor document. Therefore, we have modified the 
definition of ``donor document''. We have removed the word ``executed'' 
and inserted the word ``made.''
    We disagree that the definition does not allow for individuals to 
indicate consent to donation of specific organs. The proposed 
definition allows for individuals to indicate ``his or her wishes 
regarding organ and/or tissue donation.'' We believe this allows 
individuals to express their wishes concerning organ and/or tissue 
donation, including their wishes regarding any specific organs.
    Comment: One commenter asked for clarification whether, under the 
amendment to the definition of ``donor document'', an organ procurement 
organization may continue to recognize a donation made by a 
communication between the patient and at least two witnesses.
    Response: Yes, if the communication between the patient or 
potential donor and the two witnesses is in accordance with any 
applicable state law.
    The above summarizes our proposal in this rule and the comments we 
received. After consideration of the public comments, we are finalizing 
the definition of ``donor document'' as follows: ``Donor document means 
any documented indication of an individual's choice regarding his or 
her wishes concerning organ and/or tissue donation that was made by 
that individual or another authorized individual in accordance with any 
applicable State law.''
    Contact: Diane Corning, 410-786-8486.
7. Administration and Governing Body (Sec.  486.324)
    On May 31, 2006, we published a final rule in the Federal Register 
(71 FR 30982) titled, ``Conditions for Coverage for Organ Procurement 
Organizations (OPOs).'' The final rule established several 
requirements, for OPOs at Sec.  486.324, including a number of 
requirements related to the administration and governing body of an 
OPO. Due to an error in publishing the final rule, paragraph (e) was 
inadvertently inserted twice (71 FR 31052).
    In the proposed rule (76 FR 65917), we proposed to remove the 
duplicate paragraph (e), which appears immediately after Sec.  
486.324(d). We stated that this deletion will not alter or change the 
legal requirement, nor will it create a change in information 
collection requirements or other regulatory burden.
    We received no comments on this proposed change and are therefore 
finalizing it as proposed.
    Contact: Diane Corning, 410-786-8486.
8. Requirement for Enrolling in the Medicare Program (Sec.  424.510)
    We have identified an incorrect reference in Sec.  424.510(a), due 
to a typographic error. We are proposing to replace the incorrect 
reference to paragraph (c) (the effective date for reimbursement for 
providers and suppliers seeking accreditation from a CMS-approved 
accreditation organization) with a reference to paragraph (d) (the 
enrollment requirements).
    We received no comments on this proposed change and are therefore 
finalizing it as proposed.
    Contact: Morgan Burns, 202-690-5145.

C. Responds to Stakeholder Concerns

    The following provisions responded to some of the concerns and 
feedback that we have received from the public. We have identified 
nomenclature and definition changes that will increase transparency and 
enhance our relationship with the public.
Nomenclature Changes
1. Redefining the Term ``Beneficiary'' (Sec.  400.200 through Sec.  
400.203)
    In response to comments from the public to discontinue our use of 
the term ``recipient'' under Medicaid, we have been using the term 
``beneficiary'' to mean all individuals who are entitled to, or 
eligible for, Medicare or Medicaid services. We proposed to add a 
definition of ``beneficiary'' in Sec.  400.200 that applies to patients 
under the Medicare and Medicaid programs. We will remove the terms 
``beneficiary'' and ``recipient'' from Sec.  400.202 and Sec.  400.203, 
respectively, and we will make a nomenclature change to replace 
``recipient'' with ``beneficiary'' throughout 42 CFR chapter IV. The 
action to refer to beneficiaries instead of recipients has already been 
implemented. We are simply conforming our regulations to our current 
use of the term ``beneficiary.'' In creating this definition it is not 
our intent to exclude or include anyone who would or would not have 
previously been understood to be a beneficiary. We sought comments on 
whether this definition could be improved to attain that objective.
    We received no comments on this proposed change and are therefore 
finalizing it as proposed.
    Contact: Ronisha Davis, 410-786-6882.
2. Replace All the Terms: ``the Mentally Retarded; ``Mentally Retarded 
Persons;'' and ``Mentally Retarded Individuals'' With ``Individuals 
With Intellectual Disabilities'' and Replace ``Mentally Retarded or 
Developmentally Disabled'' With ``Individuals With Intellectual 
Disabilities or Developmental Disabilities''
    We proposed to change the terminology we use in the program 
currently called Intermediate Care Facilities for the Mentally 
Retarded. Section 1905 (d) of the Act states that, ``The term 
``intermediate care facility for the mentally retarded'' means an 
institution (or distinct part thereof) for the mentally retarded or 
persons with related conditions * * *.'' In 2010, Rosa's Law (Pub. L. 
111-256) amended statutory language in several health and education 
statues, directing that ``in amending the regulations to carry out this 
Act, a Federal agency shall ensure that the regulations clearly state--
(A) That an intellectual disability was formerly termed ``mental 
retardation''; and (B) that individuals with intellectual disabilities 
were formerly termed ``individuals who are mentally retarded.''
    CMS regulations at 42 CFR chapter IV include numerous references to 
``mental retardation.'' These regulatory provisions reflect the 
statutory benefit category at section 1905(d) of the Act, which uses 
the term ``mental retardation'' in the facility type designation, 
``Intermediate Care Facility for the Mentally Retarded.'' Rosa's Law

[[Page 29022]]

did not specifically list the Act within its scope, and therefore did 
not require any change to existing CMS regulations. However, consistent 
with Rosa's Law and in response to numerous inquiries from provider and 
advocate organizations as to when CMS will comply with the spirit of 
Rosa's Law, we proposed to adopt the term ``intellectual disability'' 
(as used under Rosa's Law) in our regulations at Sec.  400.203. We 
proposed to define the term ``individuals with intellectual 
disabilities'' to mean the condition referred to as ``mentally 
retarded'' in section 1919(e)(7)(G)(ii) of the Act. This nomenclature 
change does not represent any change in information collection 
requirements or other burden for the provider community or the State 
survey agencies. Current forms may be used by the State survey agencies 
until current supplies are exhausted. The change will require revision 
of forms CMS-3070G and CMS-3070H, as discussed below.
    We received four public comments on our proposed nomenclature 
change, changing ``mental retardation'' to ``intellectual disability.''
    Comment: One commenter expressed appreciation for the effort to 
change the term. He recommends that person-first terminology 
``individuals with intellectual disabilities'' be substituted for 
``intellectually disabled.''
    Response: We appreciate and agree with the comment that the term 
``individuals with intellectual disabilities'' is preferable to 
``intellectually disabled'' and CMS will use ``person first'' language 
in our agency policies and our internal and external communications. 
The nomenclature changes included in the NPRM were, by design, intended 
to make the current nomenclature in the regulation consistent with the 
language of Rosa's Law (Pub. L. 111-256). After due consideration of 
the commenter's suggestion, we believe that reasonable consistency with 
Rosa's law can be maintained with the adoption, in this final rule, of 
``person first'' language, and have made the change accordingly. In the 
rule itself, we therefore use the term Intermediate Care Facilities for 
Individuals with Intellectual Disabilities (ICF/IID) in place of 
Intermediate Care Facilities for the Mentally Retarded (ICF/MR).
    Comment: Two commenters ask for clarification of the definition of 
Intellectual Disability. The commenters suggest that CMS is unclear 
when it defines Intellectual Disability to be equivalent to the term 
Mental Retardation. They point out that the definition of Mental 
Retardation at 42 CFR 483.102(b)(3) is from 1983 and is no longer in 
use. Furthermore, the definition in the Social Security Act still 
references Mental Retardation and the rule has no effect on that 
definition. In addition, one commenter notes that in medical usage the 
terms mental retardation and intellectual disability are not 
equivalent.
    Response: The rule's intent is to extend the intent of Rosa's Law, 
that ``in amending the regulations to carry out this Act, a Federal 
agency shall ensure that the regulations clearly state--(A) That an 
intellectual disability was formerly termed ``mental retardation''; and 
(B) that individuals with intellectual disabilities were formerly 
termed ``individuals who are mentally retarded'' to include those 
regulations that implement the Social Security Act. While the term 
``mental retardation'' has various definitions in a variety of 
contexts, and those definitions may have varied over time, within 42 
CFR chapter IV the term has uses in determining benefit eligibility and 
describing provider types. The change simply makes the terms mental 
retardation and mentally retarded equivalent to intellectual disability 
and individuals with intellectual disabilities, respectively, for the 
purposes of the regulations.
    Comment: One commenter notes that the term Mental Retardation also 
appears in Chapter V at 42 CFR 1001.1301.
    Response: We thank the commenter for finding this omission and will 
review the Chapter V reference for future action.
    Comment: One commenter correctly notes that the rule has no effect 
on the language in section 1919(e)(7)(G)(ii) of the Act.
    Response: Making this change to the Act will require legislation. 
We believe that the Congress will consider doing so in the future. 
Meanwhile, cross-references can be changed as necessary.
    Comment: One commenter correctly notes the incorrect use of 
``title'' for ``chapter'' in the discussion.
    Response: This error has been corrected.
    Comment: One commenter notes that the change might have unintended 
consequences if applied to historical references.
    Response: We will review the suggested sections and make changes if 
necessary to avoid confusion regarding the meaning of the term as used 
in the regulations.
    The above summarizes this provision made in our proposed rule and 
the comments we received. We are finalizing the policy above as 
proposed, while adopting a commenter's suggestion of using person-first 
terminology.
    Contact: Peggye Wilkerson, 410-786-4857.

IV. Provisions of the Final Regulations

    For the most part, this final rule incorporates the provisions of 
the proposed rule without changes. Those provisions of this final rule 
that differ from the proposed rule are as follows:
     In section II.A.4.a, and for reasons stated in that 
section, we have decided not to finalize our proposed revisions to 
Sec.  424.540(a)(1).
     In section II. B. 6, we have revised our proposed 
definition of ``donor document'' to be defined as ``any documented 
indication of an individual's choice regarding his or her wishes 
concerning organ and/or tissue donation that was made by that 
individual or another authorized individual in accordance with any 
applicable State law.''
     In the regulatory text, we have revised the proposed 
language to clarify that the requirement for sprinklers in facilities 
housed in high rise buildings was intended to be applicable to those 
buildings constructed after January 1, 2008.
     Also in the regulatory text, we are changing what we 
proposed to clarify that the term ``Individuals with Intellectual 
Disabilities'' will replace all of the following terms: ``the mentally 
retarded''; ``mentally retarded persons''; and ``mentally retarded 
individuals''. Also we clarify that ``individuals with intellectual 
disabilities or developmental disabilities'' will replace ``mentally 
retarded or developmentally disabled.''
    We are implementing all other provisions as proposed.

V. Collection of Information Requirements

    In the proposed rule, pursuant to the Paperwork Reduction Act, we 
solicited public comments for 60 days on each of the following issues 
regarding information collection requirements (ICRs). No comments were 
received. For the purpose of this final rule, we are soliciting public 
comment for 30 days for the following sections of this rule regarding 
ICRs:

A. Removes Unnecessarily Burdensome Requirements

1. ICRs Regarding End-Stage Renal Disease Facilities Condition for 
Coverage: Physical Environment (Sec.  494.60)
    This rule limits the number of ESRD facilities that must meet the 
LSC

[[Page 29023]]

requirements found in chapters 20 and 21 of NFPA 101. This action will 
reduce burden on ESRD facilities in terms of costly structural 
modifications and will not impact any information collections under the 
Paperwork Reduction Act.
2. ICRs Regarding Condition for Coverage: Emergency Equipment--
Ambulatory Surgical Centers (ASCs) (Sec.  416.44)
    Section 416.44(c) requires that ASCs coordinate, develop, and 
revise ASC policies and procedures to specify the types of emergency 
equipment required for use in the ASC's operating room. The equipment 
must be immediately available for use during emergency situations, be 
appropriate for the facility's patient population and be maintained by 
appropriate personnel. The burden associated with these requirements is 
the time and effort required by an ASC to develop revised policies and 
procedures governing the identification and maintenance of emergency 
equipment that would typically be required to address the intra- or 
post-operative emergency complications specific to the types of 
procedures performed in the ASC and the needs of their specific patient 
population.
    We believe that approximately 5,200 ASCs are subject to these 
requirements. We estimate that Sec.  416.44(c) imposes a one-time 
burden of two hours associated with revising the policies and 
procedures pertaining to the list of the emergency equipment and 
supplies maintained and commonly used by the ASC during emergency 
responses to their specific patient population. The total burden 
associated with this task is estimated to be 10,400 (5,200 ASCs x 2 
hours) hours. The cost associated with this requirement is estimated to 
be $90 per ASC ($45.00--based on an hourly nurse's salary--x 2 hours) 
or $468,000 total (10,400 x $45), including fringe benefits, as 
specified by the Bureau of Labor Statistics for 2009).
    Consistent with this provision, we are submitting a revision to 
CMS-10279 (OMB control number 0938-1071; expiration date October 31, 
2012) to the Office of Management and Budget for review/approval.
3. ICRs Regarding Revocation of Enrollment and Billing Privileges in 
the Medicare Program (Sec.  424.535)
    This rule eliminates the re-enrollment bar in instances when 
Medicare providers and suppliers have not responded timely to requests 
for revalidation of enrollment or other requests for information. This 
will allow providers and suppliers to attempt to re-enroll in Medicare 
sooner than would be the case if the re-enrollment bar applied. 
However, the overall information collection burden involved--
specifically, the need to submit a Form CMS-855 (OMB control number 
0938-0685) initial enrollment application--will not change and, 
therefore, will neither increase nor decrease the existing information 
collection burden related to this requirement.
4. ICRs Regarding Duration of Agreement for ICFs/ID (Sec.  442.15)
    This rule removes the time limited agreements for intermediate care 
facilities. There is no reduction in burden or cost for the 
intermediate care facility providers but the regulation change will 
help to reduce the paperwork and staff time required by State agencies 
in processing temporary extensions of the provider agreements that are 
required until the onsite survey occurs. In addition, providers and 
State agencies will no longer face the uncertainty created by the 
issuance of the multiple temporary extensions due to the provider 
agreements. Extensions may be made for a maximum of 60 days. We 
estimate that an extension is made for most ICF/IID facilities (about 
5900 of the current 6500 facilities). We further estimate that each 
extension requires approximately one hour of staff time to complete. 
Based on CMS' FY 2012 rate for State survey agency Medicaid staff of 
$77.23 per hour, we project an annual national savings of State 
Medicaid administrative expenditures totaling $455,700 ($77.23 x 5900 
ICF/IID facilities), of which 75 percent consists of Federal funds and 
25 percent of State funds. Consistent with this change, we are 
submitting a revision to OMB control number 0938-0062 (CMS-3070G).

B. Removes Obsolete or Duplicative Regulations or Provides Clarifying 
Information

1. ICRs Regarding Display of Currently Valid OMB Control Numbers (Sec.  
400.310)
    This rule removes the chart that displays OMB control numbers since 
that information has become obsolete. This action does not produce any 
reduction or increase in burden, but will ensure that the public is 
viewing the most current information regarding OMB control numbers.
2. ICRs Regarding Removal of Obsolete Provisions Related to Initial 
Determinations, Appeals, and Reopenings of Part A and Part B Claims and 
Entitlement Determinations (Sec.  405.701 through Sec.  405.877)
    This rule, removes obsolete provisions from part 405 subparts G and 
H, and channels any remaining pre-BIPA claims appeals through the 
current appeals process under part 405 subpart I. In addition, we are 
redesignating certain sections of part 405 subparts G and H that are 
still in effect. We do not expect an increase or reduction in burden 
and believe that using the current appeals process under part 405 
subpart I for all claims appeals will be beneficial for appellants and 
other parties.
3. ICRs Regarding Condition for Coverage: Infection Control--Ambulatory 
Surgical Centers (ASCs) (Sec.  416.44)
    This rule removes the requirement at Sec.  416.44(a)(3) regarding 
infection control that substantially duplicates the requirements of 
Sec.  416.51. The removal of this requirement will not result in any 
additional burden on ASCs, but will alleviate any duplicative efforts 
and confusion regarding the infection control requirements.
4. ICRs Regarding Standards for Electronic Prescribing (Sec.  423.160)
    This rule updates the current e-prescribing standards to mirror the 
HIPAA standards that will become effective after publication of this 
final rule. There is no burden (addition or reduction) associated with 
this action.
5. ICRs Regarding Physical Therapy, Occupational Therapy, and Services 
for Individuals With Speech, Hearing, and Language Disorders (Sec.  
440.110)
    This rule updates and aligns provider qualifications for PT and OT 
professionals. This action has the potential to broaden the scope of 
providers that may be able to provide PT and OT services, by 
streamlining the qualifications so that certain providers are not 
excluded from providing services under Medicaid. However, this change 
does not impact any information collections under the Paperwork 
Reduction Act.
6. ICRs Regarding Definitions (Sec.  486.302)
    This rule modifies the definition of ``donor document'' to 
acknowledge that there are multiple ways for patients or potential 
donors to indicate their wishes regarding the donation of organs and 
tissues, while also emphasizing that the

[[Page 29024]]

patient's decision is voluntary. We do not expect that there will be 
any changes in the collection of information requirements for OPOs. We 
anticipate that the enhanced ability individuals initially will have to 
more specifically identify their wishes will reduce burden associated 
with vague and unclear designations.
7. ICRs Regarding Condition: Administration and Governing Body (Sec.  
486.324)
    This rule removes the duplicate paragraph (e). This action will not 
result in any change in information collection or other regulatory 
burden.
8. ICRs Regarding Requirement for Enrolling in the Medicare Program 
(Sec.  424.510)
    This rule corrects a typographical error found in Sec.  424.510(a). 
This action will create no change in information collection or other 
regulatory burden.

C. Responds to Stakeholder Concerns

Nomenclature Changes
1. ICRs Regarding General Definitions (Sec.  400.200)
    This rule adds a definition of ``beneficiary'' that applies to 
patients under the Medicare and Medicaid programs. This action will 
create no change in information collection or other regulatory burden.
2. ICRs Regarding Definitions Specific to Medicaid (Sec.  400.203)
    This rule adds to a definition of ``individuals with intellectual 
disabilities'' for purposes of the Medicaid program that would define 
it, consistent with Rosa's law (Pub. L. 111-256), as the condition 
formerly referred to as ``mental retardation'' and replaces all 
references in CMS regulations to, ``mental retardation'' with 
``intellectual disability.'' Furthermore, we are replacing the term 
``the mentally retarded,'' as defined in section 1919(e)(7)(G)(ii) of 
the Act, with ``individuals with intellectual disabilities.'' This 
action creates no change in information collection or other regulatory 
burden. The change will require the revision of forms CMS-3070G and 
CMS-3070H, which are approved under OMB control number 0938-0062 
(expiration date April 30, 2013). CMS is submitting this revised ICR to 
OMB for their review/approval.
    If you comment on these information collection and recordkeeping 
requirements, please submit your comments to the Office of Information 
and Regulatory Affairs, Office of Management and Budget, Attention: CMS 
Desk Officer, [CMS-9070-F], Fax: (202) 395-5806; or Email: OIRA_submission@omb.eop.gov.

VI. Regulatory Impact Analysis

    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 
(February 2, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 
1995; Pub. L. 104-4), and 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). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
A regulatory impact analysis (RIA) must be prepared for major rules 
with economically significant effects ($100 million or more in any 1 
year). We estimate that this final rule will reduce costs to regulated 
entities and to patients by more than $100 million annually and by more 
than $200 million in the first year. Accordingly, over five years this 
rule will save about $600 million dollars. It will also create 
significant life saving benefits. It is therefore an economically 
significant rule under section 3(f)(1) of Executive Order 12866. 
Accordingly, this proposed rule was reviewed by the Office of 
Management and Budget.

A. Statement of Need

    In Executive Order 13563, the President recognized the importance 
of a streamlined, effective, efficient regulatory framework designed to 
promote economic growth, innovation, job-creation, and competitiveness. 
To achieve a more robust and effective regulatory framework, the 
President has directed each executive agency to establish a plan for 
ongoing retrospective review of existing significant regulations to 
identify those rules that can be eliminated as obsolete, unnecessary, 
burdensome, or counterproductive or that can be modified to be more 
effective, efficient, flexible, and streamlined. This final rule 
responds directly to the President's instructions in Executive Order 
13563 by reducing outmoded or unnecessarily burdensome rules, and 
thereby increasing the ability of health care entities to devote 
resources to providing high quality patient care.

B. Overall Impact

    There are cost savings in many areas. Two areas of one-time savings 
are particularly substantial. First, as indicated earlier in the 
preamble, we estimate that one-time savings to ESRD facilities are 
likely to range from about $47.5 to $217 million, but we are using 
$108.7 million as our point estimate. Second, we also estimate a one-
time savings of $18.5 million to ASCs through reduced emergency 
equipment requirements. Both of these estimates are conservative and 
total savings could be significantly higher. The many types of 
recurring savings that these provisions will create include avoidance 
of business and payment losses for physicians and other providers that 
are difficult to estimate but likely to be in the tens of millions of 
dollars annually through the reforms we propose for reenrollment and 
billing processes. We have identified other kinds of savings that 
providers and patients will realize throughout this preamble. All of 
these are summarized in the table that follows.

                         Table 3--Section-by-Section Economic Impact Estimates for 2012
----------------------------------------------------------------------------------------------------------------
                                                                                      Likely five year saving or
           Section                     Frequency               Likely savings or         benefits (rounded to
                                                             benefits  (millions)        nearest ten million)
----------------------------------------------------------------------------------------------------------------
                                A. Removes Unnecessarily Burdensome Requirements
----------------------------------------------------------------------------------------------------------------
1. End-Stage Renal Disease    One-Time..................  $108.7....................  $110.
 (ESRD) Facilities (Sec.
 494.60).
2. ASC Emergency Equipment    One-Time..................  $18.5.....................  $20.
 (Sec.   416.44).
3. Revocation of Enrollment/  Recurring.................  $100.0....................  $500.
 Billing Privileges (Sec.
 424.535).

[[Page 29025]]

 
4. Duration of Agreement for  Recurring.................  <$1.......................  <$1.
 ICFs/ID (Sec.   442.15-Sec.
   442.109).
----------------------------------------------------------------------------------------------------------------
                                 B. Removes Obsolete or Duplicative Regulations
----------------------------------------------------------------------------------------------------------------
1. OMB Control Numbers for    Recurring.................  <$1.......................  <$1.
 Information Collection
 (Sec.   400.300 and Sec.
 400.310).
2. Removal of Obsolete        Recurring.................  <$1.......................  <$1.
 Provisions Related to
 Processing Part A and Part
 B Claims and Entitlement
 Determinations (Sec.
 405.701 through Sec.
 405.877).
3. ASC Infection Control      Recurring.................  <$1.......................  <$1.
 Program (Sec.   416.44).
4. E-prescribing (Sec.        Recurring.................  <$1.......................  <$1.
 423.160).
5. Physical and Occupational  Recurring.................  <$1.......................  <$1.
 Therapist Qualifications
 (Sec.   440.110).
6. Definition of Donor        Recurring.................  See Text..................  See Text.
 Document (Sec.   486.302).
7. Administration and         Recurring.................  <$1.......................  <$1.
 Governing Body (Sec.
 486.324).
8. Requirement for Enrolling  Recurring.................  <$1.......................  <$1.
 in the Medicare Program
 (Sec.   424.510).
----------------------------------------------------------------------------------------------------------------
                                       C. Responds to Stakeholder Concerns
----------------------------------------------------------------------------------------------------------------
 Nomenclature Changes:
    1. Redefining the Term    Recurring.................  <$1.......................  <$1.
     ``Beneficiary'' (Sec.
     400.200 through Sec.
     400.203).
    2. Replace ``Mental       Recurring.................  See Text..................  See Text.
     Retardation''
     terminology with
     ``Intellectual
     Disability''
     (throughout 42 CFR
     chapter IV).
----------------------------------------------------------------------------------------------------------------

    There are two areas of potentially significant benefits, beyond the 
cost savings to providers. First, the rule acknowledges that 
individuals can specifically express their wishes and not simply make 
the choice to donate or not donate. We believe this will encourage 
individuals to be clearer and more specific concerning their wishes or 
intentions regarding donation. We also believe that families will be 
more willing to accept the potential donor's decision if it is a clear 
and specific statement of his or her wishes concerning donation. There 
are approximately 8,000 cadaveric organ donors annually in the United 
States. These donors provide a total of about 21,000 transplanted 
organs (see the OPTN/SRTR Annual Report at http://optn.transplant.hrsa.gov/ar2009/). The decision to make a clear and 
specific decision concerning donation, and on the willingness of 
families to honor that decision, can turn on personal preference. We 
believe that the change we are making could and likely will tip that 
decision in some cases. However, we do not have a basis for quantifying 
this potential increase in donations. We requested comment on the 
extent to which this policy change may increase organ donation, but 
received no comments on this issue.
    In addition, while Rosa's Law began the elimination of official 
Federal government use of the pejorative term ``mental retardation,'' 
our final rule will complete this step for CMS regulations. The reform 
undoubtedly has substantial value to millions of Americans, not only to 
individuals with intellectual disabilities, but also to their families 
and friends, and also to the many millions who simply object to such 
labeling. However, we have no data that would enable a precise 
calculation of this value.
    Taking all of the reforms together, we estimate that the overall 
cost savings that this rule will create will exceed $200 million in the 
first year. This includes the one-time savings related to ESRD and ASC 
reforms, as well as the savings to providers in reductions in lost 
billings, paperwork costs, confusion, and other burden reductions 
discussed throughout this preamble.

C. Anticipated Impacts

    The potential cost savings from reduced ESRD requirements are 
discussed extensively in that preamble section on those reforms. 
Although total cost estimates range from about $47.5 to $217 million, 
assuming that the average cost for a facility to meet three structural 
standards would have been $77,659, and that one half of all facilities 
would have needed to make these investments, total savings will be 
$108.7 million (2,800 x ($77,659/2)). We received no specific comments 
on these savings estimates and have not reestimated them.
    The only other large one-time savings estimates are those resulting 
from reforms of Ambulatory Surgical Center Emergency equipment 
requirements, and reforms in the revocations or deactivation of billing 
privileges. As to ASC, we estimate that the three most costly types of 
equipment are as follows: Tracheostomy kit $100.00, cricothyrotomy kit 
$200.00 and mechanical ventilator $12,000. We utilized fiscal year 2010 
surveyor worksheets completed by the States when conducting ASC surveys 
to project the distribution of the types of ASC services nationally. We 
estimate that about two-thirds of the approximately Medicare 5,200 
certified ASCs are functioning as multipurpose facilities. Those that 
are not multipurpose facilities would not have to spend $12,300 in 
total for costly equipment that would not be utilized. We have 
estimated the savings by breaking down each specialty type of ASC that 
will not be considered a multipurpose facility and that may not 
eliminate all three pieces of equipment or choose just one or two 
depending on the needs of the facility (1500 ASCs x $12,300 = total 
savings of about $18.5 million). We received no specific comments on 
these savings estimates and have not reestimated them.
    With respect to our revision to Sec.  424.535(c), the number of 
affected providers is certainly very small as a proportion of the total 
universe of over 1.4 million Medicare providers, of whom over 800,000 
are physicians and over 300,000 are non-physician practitioners. Based 
on administrative data, we estimate that the number of providers and 
suppliers that will be affected by this reform is between 1,000

[[Page 29026]]

and 2,000, a fraction of one percent of these.
    We have no concrete statistical data on the resultant economic 
effects. We have, however, re-estimated billing losses from the 
unnecessarily conservative figure of $10 million (or $10,000 per each 
of the aforementioned 1,000 providers/suppliers) used in the proposed 
rule. We instead believe that our revision to Sec.  424.535(c) could 
result in total savings of roughly $100 million annually.
    We note that gross annual physician practice revenue in America 
often exceeds $1 million a year (see, for example, http://www.merritthawkins.com/pdf/2010_revenuesurvey.pdf).
    (We chose physician revenue as the basis for our estimate because 
the majority of Medicare providers/suppliers are physicians.) Though it 
varies widely by physician type and geographic locality, roughly one-
third of physician practice revenue is Medicare-related. While, on 
paper, this could result in up to $333 million in projected savings 
(1,000 providers x $1 million x \1/3\), we believe that a $100 million 
figure is more appropriate for two reasons. First, non-physician 
practitioners are likely to be affected by our revision. Their annual 
revenue, on average, is significantly less than that of physicians. 
Second, a fair proportion of potentially affected physicians will be 
those who infrequently bill Medicare, as they may have limited 
involvement with Medicare and, in turn, may be less familiar with 
revalidation and other Medicare enrollment requirements. These smaller 
billers, in our view, bring down the projected savings to closer to 
$100 million. Although we unfortunately do not, as explained above, 
have concrete data regarding the actual projected savings, we believe 
that $100 million is a reasonable estimate.
    Of the remaining reforms, most have minor cost savings as shown in 
Table 1 through entries of $1 million or less.
    We received several comments on our cost and burden estimates 
related to our proposed revisions to Sec.  424.540(a)(1) and Sec.  
424.535(c), but none of these comments addressed the average billings 
estimates we decided to revise.
    Comment: Several commenters requested that CMS explain its estimate 
that only 12,000 physicians and non-physician practitioners per year 
would have their Medicare billing privileges deactivated pursuant to 
Sec.  424.540(a)(1). One commenter stated that CMS previously announced 
that it had deactivated 20,000 Part B billing numbers each month 
beginning in January 2007--which, the commenter states would have 
resulted in 240,000 Part B deactivations per year. The commenter 
requested that CMS recalculate the regulatory impact analysis using the 
240,000-figure minus the 12,000-estimate used in the proposed rule.
    Response: CMS indeed deactivated approximately 20,000 Provider 
Transaction Identification Numbers (PTANs) per month between 2007 and 
2010. This does not mean, however, that 20,000 physicians and non-
physician practitioners had their billing privileges deactivated, as 
the vast majority of these suppliers had multiple PTANs. We based our 
estimate on the number of physicians and non-physician practitioners 
who would be affected, not the number of PTANs. Nonetheless, the issue 
is largely moot, as we are not finalizing our proposed revision to 
Sec.  424.540(a)(1).
    Comment: Several commenters requested that CMS explain why it did 
not consider any alternatives to its proposed change to Sec.  
424.540(a)(1). They suggested that CMS contemplate alternatives, such 
as: (1) Having the Medicare contractor attempt to contact the provider 
by telephone or email prior to deactivating their Medicare billing 
privileges, or (2) utilizing a 2-year or 3-year deactivation period for 
non-billing physicians and non-physician practitioners, rather than 
eliminating deactivation altogether.
    Response: CMS did, in fact, explore various ways to reduce the 
burden of the deactivation process on physicians and non-physicians. 
Although we are not finalizing our proposed revision to Sec.  
424.540(a)(1), we intend, as explained earlier, to examine other 
possibilities for burden reduction.
    Comment: A commenter asked why CMS did not consider alternatives to 
its proposal to revise Sec.  424.535(c) to eliminate the re-enrollment 
bar in situations where the provider or supplier has failed to respond 
to a revalidation or other informational request.
    Response: As stated earlier, the goal of the October 24, 2011 
proposed rule was to set forth approaches to alleviate unnecessary 
burdens on providers and suppliers. With respect to provider 
enrollment, the issue of the re-enrollment bar in cases where the 
provider or supplier failed to respond to a revalidation or other 
informational request was one of the two principal concerns expressed 
by the provider and supplier communities, the other being the 
deactivation of billing privileges for 12 consecutive months of non-
billing. We therefore focused our primary efforts on these two 
approaches.
    Comment: One commenter recommended that CMS provide the number of 
provider enrollment reactivations that were entered into PECOS in FY 
2009, FY 2010 and FY 2011. The commenter also recommended that CMS 
estimate the annual costs in FY 2009, FY 2010 and FY 2011 associated 
with: (1) The systematic deactivation process, and (2) reactivation.
    Response: As we are not finalizing our proposed revision to Sec.  
424.540(a)(1), we do not believe that the requested statistics would be 
material to our discussion.
    Comment: To gauge the impact of the proposed change to Sec.  
424.540(a)(1), several commenters recommended that CMS provide 
information regarding: (a) The number of physicians, non-physician 
practitioners, and Part B organizations whose billing privileges were 
deactivated each year from 2006 through 2011, (b) the number of 
physicians, non-physician practitioners and Part B organizational 
entities whose billing privileges were reactivated in 2008, 2009, 2010 
and 2011, and (c) the number of Medicare contractor-initiated 
deactivations that have occurred based on the provider or supplier's 
failure to respond to revalidation or other informational requests.
    Response: Again, since we are not finalizing our proposed revision 
to Sec.  424.540(a)(1), we do not believe that furnishing the requested 
statistics is necessary.
    The above is a summary of all the comments that we received on our 
impact analysis section.

D. Uncertainty

    Our estimates of the effects of this regulation are subject to 
significant uncertainty. While the Department is confident that these 
reforms will provide flexibilities to facilities that will yield cost 
savings, we are uncertain about the magnitude of these effects. In 
addition, as we previously explained, there may be significant 
additional health benefits. Thus, we are confident that the rule will 
yield substantial net benefits. In this analysis we have provided 
estimates to suggest the potential savings these reforms could achieve 
under certain assumptions. We appreciate that those assumptions are 
simplified, and that actual results could be substantially higher or 
lower. We plan to evaluate these reforms over time, and welcome 
independent external evaluations of their effects by professional 
societies, individual providers, provider associations, academics, and 
others.

[[Page 29027]]

E. Accounting Statement

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), we have prepared an 
accounting statement. We estimate that the overall cost savings that 
this rule will create will exceed $200 million in the first year, and 
will be approximately $100 million per year thereafter. This includes 
the one-time savings related to ESRD reforms, as well as the savings to 
providers in lost billings, paperwork costs, confusion, and other 
burden reductions discussed throughout this preamble. There are also 
potentially substantial life-saving benefits that could reach hundreds 
of millions of dollars annually. Annualized savings are shown in the 
accounting statement below.

                                          Table 4--Accounting Statement
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                   Discount rate      Period
               Category                     Primary estimate       Year dollars      (percent)        covered
----------------------------------------------------------------------------------------------------------------
                                                    Benefits
----------------------------------------------------------------------------------------------------------------
Unquantified Qualitative Value of       Potentially hundreds of             2012               7         2012-16
 Lives Saved Through Increases in        lives saved but no
 Organ Donations.                        precise estimate.
                                        Potentially hundreds of             2012               3         2012-16
                                         lives saved but no
                                         precise estimate.
Annualized savings from reduced ESRD    $30.....................            2012               7         2012-16
 facility investments and reduced ASC
 costs (see Table 3).
                                        $30.....................            2012               3         2012-16
Annualized savings to providers from    $100....................            2012               7         2012-16
 billing improvements and other
 reforms (see Table 3).
                                        $100....................            2012               3         2012-16
----------------------------------------------------------------------------------------------------------------
                                                      Costs
----------------------------------------------------------------------------------------------------------------
None.
----------------------------------------------------------------------------------------------------------------
                                                    Transfers
----------------------------------------------------------------------------------------------------------------
None.
----------------------------------------------------------------------------------------------------------------

F. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) requires agencies to analyze 
options for regulatory relief of small entities when proposed rules 
create a significant economic impact on a substantial number of small 
entities. For purposes of the RFA, small entities include small 
businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospitals and most other Medicare or Medicaid 
providers and suppliers are small entities, either by nonprofit status 
or by having revenues of $7.0 million to $34.5 million in any 1 year. 
Individuals and States are not included in the definition of a ``small 
entity.'' This final rule will reduce costs to tens of thousands of 
physicians, ASCs, ESRD facilities, and other small entities. Provisions 
in this final rule will benefit some providers or suppliers in all or 
virtually all of the industries identified as ``Ambulatory Health Care 
Services'' under the Census Bureau's North American Industry 
Classification System (NAICS, codes 621111 through 621999). While most 
of the effects will be minimal (for example, eliminating obsolete and 
redundant or confusing regulatory requirements), we estimate that the 
impact on at least several thousand of these small entities will be 
economically significant. The purpose of the RFA is to reduce burdens 
on regulated entities, and HHS interprets the RFA as requiring a Final 
Regulatory Flexibility Analysis (FRFA) only when a rule creates an 
adverse economic impact. Accordingly, we certify that this final rule 
will not have a significant economic impact on a substantial number of 
small entities. HHS nonetheless voluntarily prepares a FRFA for final 
rules that, like this one, create a significant positive economic 
impact by reducing burden on small entities. In this case all of the 
economic effects of the final rule are positive, and some are 
economically significant.
    Substantial savings will also accrue to most of about 6,500 ESRD 
providers from our proposal to eliminate fire safety requirements that 
are vital in residential provider settings, but unnecessary in 
ambulatory care facilities such as these. Approximately half of the 
5,200 ASCs will benefit from more sensible emergency equipment 
policies. In addition, while we cannot estimate the number of 
positively affected entities for every provision we proposed, these 
reforms will benefit about 6,400 Intermediate Care Facilities through 
elimination of pejorative nomenclature that pervasively affects their 
names and operations. All of the provisions included in the final rule 
aim to identify and eliminate duplicative, overlapping, outdated and 
conflicting regulatory requirements that unnecessarily add confusion or 
costs to various providers or patients as they attempt to navigate 
excessive or obsolete or contradictory regulatory requirements. By 
making these changes, we believe health professionals will have 
increased resources to devote to improving patient care, increasing 
accessibility to care and reducing associated health care costs. We 
invited and welcomed comments on any and all of the provisions of the 
proposed rule with regard to the impacts of the burden reductions, as 
well as alternatives, if any, we should consider in the final rule or 
in future rulemaking on other regulatory provisions.
    In addition, section 1102(b) of the Social Security Act requires us 
to prepare a regulatory impact analysis if a rule may have a 
significant impact on the operations of a substantial number of small 
rural hospitals. This analysis must conform to the provisions of 
section 604 of the RFA. For purposes of

[[Page 29028]]

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. This rule has no direct effects on hospitals. 
Therefore, we are not preparing an analysis for section 1102(b) of the 
Act because we have determined, and the Secretary certifies, that this 
final rule will not have a significant impact on the operations of a 
substantial number of small rural hospitals.

G. Unfunded Mandates Reform Act

    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 expenditures in any 1 year of 
$100 million in 1995 dollars, updated annually for inflation on either 
State, local, or tribal governments, or the private sector. In 2011, 
that threshold is approximately $139 million. This proposed rule 
mandates no new expenditures by either State, local, or tribal 
governments, or by the private sector.

H. 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.

List of Subjects

42 CFR Part 400

    Grant programs--health, Health facilities, Health maintenance 
organizations (HMO), Medicaid, Medicare, Reporting and recordkeeping 
requirements.

42 CFR Part 405

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

42 CFR Part 416

    Health facilities, Health professions, Medicare, Reporting and 
recordkeeping requirements.

42 CFR Part 423

    Administrative practice and procedure, Emergency medical services, 
Health facilities, Health maintenance organizations (HMO), Health 
professionals, Medicare, Penalties, Privacy, Reporting and 
recordkeeping requirements.

42 CFR Part 424

    Emergency medical services, Health facilities, Health professions, 
Medicare, Reporting and recordkeeping requirements.

42 CFR Part 440

    Grant programs--health, Medicaid.

42 CFR Part 442

    Grant programs--health, Health facilities, Health professions, 
Medicaid, Nursing homes, Reporting and recordkeeping requirements.

42 CFR Part 486

    Grant programs--health, Health facilities, Medicare, Reporting and 
recordkeeping requirements, X-rays.

42 CFR Part 494

    Health facilities, Kidney diseases, Medicare, Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, and under the authority 
of sections 1102(a), 1871(a)(1), and 1871(a)(4) of the Social Security 
Act, the Centers for Medicare & Medicaid Services amends 42 CFR chapter 
IV as set forth below:

Chapter IV

Nomenclature Changes

0
1-2. In 42 CFR chapter IV:
0
a. Remove ``Recipient'' and ``Recipients'' wherever they appear and add 
in their place ``Beneficiary'' and ``Beneficiaries,'' respectively; and
0
b. Remove ``Mental Retardation,'' ``the Mentally Retarded'' and the 
abbreviated form ``MR'' wherever they appear and add in their place 
``Intellectual Disability,'' ``Individuals with Intellectual 
Disabilities'' and ``IID,'' respectively.

PART 400--INTRODUCTION; DEFINITIONS

0
3. The authority citation for part 400 continues to read as follows:

    Authority:  Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh) and 44 U.S.C. Chapter 35.

Subpart B--Definitions

0
4. Section 400.200 is amended by adding the definition of 
``beneficiary'' in alphabetical order to read as follows:


Sec.  400.200  General definitions.

* * * * *
    Beneficiary means a person who is entitled to Medicare benefits 
and/or has been determined to be eligible for Medicaid.
* * * * *


Sec.  400.202  [Amended]

0
5. Section 400.202 is amended by removing the definition of 
``beneficiary.''

0
6. Section 400.203 is amended by removing the definition of 
``recipient'' and adding the definition of ``intellectual disability'' 
in alphabetical order to read as follows:


Sec.  400.203  Definitions specific to Medicaid.

* * * * *
    Intellectual disability means the condition that was previously 
referred to as mental retardation.
* * * * *

Subpart C--[Removed and Reserved]

0
7. Subpart C, consisting of Sec. Sec.  400.300 and 400.310, is removed 
and reserved.

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

0
8. The authority citation for Part 405 continues to read as follows:

    Authority: Secs. 205(a), 1102, 1861, 1862(a), 1869, 1871, 1874, 
1881, and 1886(k) of the Social Security Act (42 U.S.C. 405(a), 
1302, 1395x, 1395y(a), 1395ff, 1395hh, 1395kk, 1395rr and 
1395ww(k)), and sec. 353 of the Public Health Service Act (42 U.S.C. 
263a).


Sec.  405.706  [Redesignated as Sec.  405.925]

0
9. Redesignate Sec.  405.706 in subpart G as Sec.  405.925 in subpart 
I.

Subpart G--[Removed and Reserved]

0
10. Remove and reserve subpart G consisting of Sec.  405.701 through 
Sec.  405.705 and Sec.  405.708 through Sec.  405.753.

0
11. Subpart H is revised to read as follows:

Subpart H--Appeals Under the Medicare Part B Program

Sec.
405.800 Appeals of CMS or a CMS contractor.
405.803 Appeals rights.
405.806 Impact of reversal of contractor determinations on claims 
processing.
405.809 Reinstatement of provider or supplier billing privileges 
following corrective action.
405.812 Effective date for DMEPOS supplier's billing privileges.
405.815 Submission of claims.
405.818 Deadline for processing provider enrollment initial 
determinations.

[[Page 29029]]

Subpart H--Appeals Under the Medicare Part B Program

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


Sec.  405.800  Appeals of CMS or a CMS contractor.

    A CMS contractor's (that is, a carrier, Fiscal Intermediary or 
Medicare Administrative Contractor (MAC)) determination that a provider 
or supplier fails to meet the requirements for Medicare billing 
privileges.
    (a) Denial of a provider or supplier enrollment application. If CMS 
or a CMS contractor denies a provider's or supplier's enrollment 
application, CMS or the CMS contractor notifies the provider or 
supplier by certified mail. The notice includes the following:
    (1) The reason for the denial in sufficient detail to allow the 
provider or supplier to understand the nature of its deficiencies.
    (2) The right to appeal in accordance with part 498 of this 
chapter.
    (3) The address to which the written appeal must be mailed.
    (b) Revocation of Medicare billing privileges--(1) Notice of 
revocation. If CMS or a CMS contractor revokes a provider's or 
supplier's Medicare billing privileges, CMS or a CMS contractor 
notifies the supplier by certified mail. The notice must include the 
following:
    (i) The reason for the revocation in sufficient detail for the 
provider or supplier to understand the nature of its deficiencies.
    (ii) The right to appeal in accordance with part 498 of this 
chapter.
    (iii) The address to which the written appeal must be mailed.
    (2) Effective date of revocation. The revocation of a provider's or 
supplier's billing privileges is effective 30 days after CMS or the CMS 
contractor mails notice of its determination to the provider or 
supplier, except if the revocation is based on a Federal exclusion or 
debarment, felony conviction, license suspension or revocation, or the 
practice location is determined by CMS or its contractor not to be 
operational. When a revocation is based on a Federal exclusion or 
debarment, felony conviction, license suspension or revocation, or the 
practice location is determined by CMS or its contractor not to be 
operational, the revocation is effective with the date of exclusion or 
debarment, felony conviction, license suspension or revocation or the 
date that CMS or its contractor determined that the provider or 
supplier was no longer operational.
    (3) Payment after revocation. Medicare does not pay, and the CMS 
contractor rejects, claims for services submitted with a service date 
on or after the effective date of a provider's or supplier's 
revocation.


Sec.  405.803  Appeals rights.

    (a) A provider or supplier may appeal the initial determination to 
deny a provider or supplier's enrollment application, or if applicable, 
to revoke current billing privileges by following the procedures 
specified in part 498 of this chapter.
    (b) The reconsideration of a determination to deny or revoke a 
provider or supplier's Medicare billing privileges is handled by a CMS 
Regional Office or a contractor hearing officer not involved in the 
initial determination.
    (c) Providers and suppliers have the opportunity to submit evidence 
related to the enrollment action. Providers and suppliers must, at the 
time of their request, submit all evidence that they want to be 
considered.
    (d) If supporting evidence is not submitted with the appeal 
request, the contractor contacts the provider or supplier to try to 
obtain the evidence.
    (e) If the provider or supplier fails to submit the evidence before 
the contractor issues its decision, the provider or supplier is 
precluded from introducing new evidence at higher levels of the appeals 
process.


Sec.  405.806  Impact of reversal of contractor determinations on 
claims processing.

    (a) Claims for services furnished to Medicare beneficiaries during 
a period in which the supplier billing privileges were not effective 
are rejected.
    (b) If a supplier is determined not to have qualified for billing 
privileges in one period but qualified in another, Medicare contractors 
process claims for services furnished to beneficiaries during the 
period for which the supplier was Medicare-qualified. Subpart C of this 
part sets forth the requirements for the recovery of overpayments.
    (c) If a revocation of a supplier's billing privileges is reversed 
upon appeal, the supplier's billing privileges are reinstated back to 
the date that the revocation became effective.
    (d) If the denial of a supplier's billing privileges is reversed 
upon appeal and becomes binding, then the appeal decision establishes 
the date that the supplier's billing privileges become effective.


Sec.  405.809  Reinstatement of provider or supplier billing privileges 
following corrective action.

    If a provider or supplier completes a corrective action plan and 
provides sufficient evidence to the CMS contractor that it has complied 
fully with the Medicare requirements, the CMS contractor may reinstate 
the provider's or supplier's billing privileges. The CMS contractor may 
pay for services furnished on or after the effective date of the 
reinstatement. The effective date is based on the date the provider or 
supplier is in compliance with all Medicare requirements. A CMS 
contractor's refusal to reinstate a supplier's billing privileges based 
on a corrective action plan is not an initial determination under part 
498 of this chapter.


Sec.  405.812  Effective date for DMEPOS supplier's billing privileges.

    If a CMS contractor, contractor hearing officer, or ALJ determines 
that a DMEPOS supplier's denied enrollment application meets the 
standards in Sec.  424.57 of this chapter and any other requirements 
that may apply, the determination establishes the effective date of the 
billing privileges as not earlier than the date the carrier made the 
determination to deny the DMEPOS supplier's enrollment application. 
Claims are rejected for services furnished before that effective date.


Sec.  405.815  Submission of claims.

    A provider or supplier succeeding in having its enrollment 
application denial or billing privileges revocation reversed in a 
binding decision, or in having its billing privileges reinstated, may 
submit claims to the CMS contractor for services furnished during 
periods of Medicare qualification, subject to the limitations in Sec.  
424.44 of this chapter, regarding the timely filing of claims. If the 
claims previously were filed timely but were rejected, they are 
considered filed timely upon resubmission. Previously denied claims for 
items or services furnished during a period of denial or revocation may 
be resubmitted to CMS within 1 year after the date of reinstatement or 
reversal.


Sec.  405.818  Deadline for processing provider enrollment initial 
determinations.

    Contractors approve or deny complete provider or supplier 
enrollment applications to approval or denial within the following 
timeframes:
    (a) Initial enrollments--Contractors process new enrollment 
applications within 180 days of receipt.
    (b) Revalidation of existing enrollments--Contractors process 
revalidations within 180 days of receipt.
    (c) Change-of-information and reassignment of payment request--
Contractors process change-of-information and reassignment of payment 
requests within 90 days of receipt.

[[Page 29030]]

PART 416--AMBULATORY SURGICAL SERVICES

0
12. The authority citation for Part 416 continues to read as follows:

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

Subpart C--Specific Conditions for Coverage

0
13. Section 416.44 is amended by removing paragraph (a)(3) and revising 
paragraph (c) to read as follows:


Sec.  416.44  Condition for coverage--Environment.

* * * * *
    (c) Standard: Emergency equipment. The ASC medical staff and 
governing body of the ASC coordinates, develops, and revises ASC 
policies and procedures to specify the types of emergency equipment 
required for use in the ASC's operating room. The equipment must meet 
the following requirements:
    (1) Be immediately available for use during emergency situations.
    (2) Be appropriate for the facility's patient population.
    (3) Be maintained by appropriate personnel.
* * * * *

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

0
14. The authority citation for Part 423 continues to read as follows:

    Authority: Section 1860D-4(e) of the Social Security Act (42 
U.S.C. 1395w-104(e)).

Subpart D--Cost Control and Quality Improvement Requirements

0
15. In Sec.  423.160, paragraphs (b)(3)(i) and (ii) and (c)(1)(iii) and 
(c)(2)(i) are revised to read as follows:


Sec.  423.160  Standards for electronic prescribing.

* * * * *
    (b) * * *
    (3) Eligibility. (i) The Accredited Standards Committee X12N 270/
271-Health Care Eligibility Benefit Inquiry and Response, Version 5010, 
April 2008, ASC X12N/005010x279 (incorporated by reference in paragraph 
(c)(2)(i) of this section), for transmitting eligibility inquiries and 
responses between prescribers and Part D sponsors.
    (ii) The National Council for Prescription Drug Programs 
Telecommunication Standard Specification, Version D, Release 0 (Version 
D.0), August 2007, and equivalent NCPDP Batch Standard Batch 
Implementation Guide, Version 1, Release 2 (Version 1.2), January 2006 
supporting Telecommunications Standard Implementation Guide, Version D, 
Release 0 (Version D.0), August 2007, for the NCPDP Data Record in the 
Detail Data Record (incorporated by reference in paragraph (c)(1)(iii) 
of this section), for transmitting eligibility inquiries and responses 
between dispensers and Part D sponsors.
* * * * *
    (c) * * *
    (1) * * *
    (iii) National Council for Prescription Drug Programs 
Telecommunication Standard Specification, Version D, Release 0 (Version 
D.0), August 2007 and equivalent National Council for Prescription Drug 
Programs (NCPDP) Batch Standard Batch Implementation Guide, Version 1, 
Release 2 (Version 1.2), August 2007 supporting Telecommunication 
Standard Implementation Guide, Version D, Release 0 (Version D.0) for 
the NCPDP Data Record in the Detail Data Record.
* * * * *
    (2) * * *
    (i) Accredited Standards Committee (ASC X12 Standards for 
Electronic Data Interchange Technical Report Type 3--Health Care 
Eligibility Benefit Inquiry and Response (270/271), April 2008, ASC 
X12N/005010X279.
* * * * *

PART 424--CONDITIONS FOR MEDICARE PAYMENT

0
16. The authority citation for Part 424 continues to read as follows:

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

Subpart P--Requirements for Establishing and Maintaining Medicare 
Billing Privileges

0
17. Section 424.510 is amended by revising paragraph (a) to read as 
follows:


Sec.  424.510  Requirements for enrolling in the Medicare program.

    (a) Providers and suppliers must submit enrollment information on 
the applicable enrollment application. Once the provider or supplier 
successfully completes the enrollment process, including, if 
applicable, a State survey and certification or accreditation process, 
CMS enrolls the provider or supplier into the Medicare program. To be 
enrolled, a provider or supplier must meet enrollment requirements 
specified in paragraph (d) of this section.
* * * * *

0
18. Section 424.535 is amended by revising paragraph (c) to read as 
follows:


Sec.  424.535  Revocation of enrollment and billing privileges in the 
Medicare program.

* * * * *
    (c) Reapplying after revocation. After a provider, supplier, 
delegated official, or authorizing official has had their billing 
privileges revoked, they are barred from participating in the Medicare 
program from the effective date of the revocation until the end of the 
re-enrollment bar. The re-enrollment bar is a minimum of 1 year, but 
not greater than 3 years, depending on the severity of the basis for 
revocation. The re-enrollment bar does not apply in the event a 
revocation of Medicare billing privileges is imposed under paragraph 
(a)(1) of this section based upon a provider or supplier's failure to 
respond timely to a revalidation request or other request for 
information.
* * * * *

0
19. Section 424.540 is amended by:
0
a. Revising paragraph (a) introductory text;
0
b. Revising paragraph (a)(2);
0
c. Adding paragraph (a)(3).
    The revisions and addition read as follows:


Sec.  424.540  Deactivation of Medicare billing privileges.

    (a) Reasons for deactivation. CMS may deactivate the Medicare 
billing privileges of a provider or supplier for any of the following 
reasons:
* * * * *
    (2) The provider or supplier does not report a change to the 
information supplied on the enrollment application within 90 calendar 
days of when the change occurred. Changes that must be reported 
include, but are not limited to, a change in practice location, a 
change of any managing employee, and a change in billing services. A 
change in ownership or control must be reported within 30 calendar days 
as specified in Sec.  424.520(b) and Sec.  424.550(b).
    (3) The provider or supplier does not furnish complete and accurate 
information and all supporting documentation within 90 calendar days of 
receipt of notification from CMS to submit an enrollment application 
and supporting documentation, or resubmit and certify to the accuracy 
of its enrollment information.
* * * * *

[[Page 29031]]

PART 440--SERVICES: GENERAL PROVISIONS

0
20. The authority citation for Part 440 continues to read as follows:

    Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 302).

Subpart A--Definitions

0
21. Section 440.110 is amended by revising paragraphs (a)(2) and (b)(2) 
to read as follows:


Sec.  440.110  Physical therapy, occupational therapy, and services for 
individuals with speech, hearing, and language disorders.

    (a) * * *
    (2) A ``qualified physical therapist'' is an individual who meets 
personnel qualifications for a physical therapist at Sec.  484.4.
    (b) * * *
    (2) A ``qualified occupational therapist'' is an individual who 
meets personnel qualifications for an occupational therapist at Sec.  
484.4.
* * * * *

PART 442--STANDARDS FOR PAYMENT TO NURSING FACILITIES AND 
INTERMEDIATE CARE FACILITIES FOR INDIVIDUALS WITH INTELLECTUAL 
DISABILITIES

0
22. The authority citation for Part 442 continues to read as follows:

    Authority:  Sec. 1102 of the Social Security Act (42 U.S.C. 
1302), unless otherwise noted.

Subpart B--Provider Agreements

0
23. Section 442.15 is revised to read as follows:


Sec.  442.15  Duration of agreement for ICF/IIDs.

    (a) The agreement for an ICF/IID remains in effect until the 
Secretary determines that the facility no longer meets the applicable 
requirements. The State Survey Agency must conduct a survey of the 
facility to determine compliance with the requirements at a survey 
interval of no greater than 15 months.
    (b) FFP is available for services furnished by a facility for up to 
30 days after its agreement expires or terminates under the conditions 
specified in Sec.  441.11 of this subchapter.


Sec.  442.16  [Removed and Reserved]

0
24. Section 442.16 is removed and reserved.

Subpart C--Certification of ICF/IIDs

0
25. Section 442.109 is revised to read as follows:


Sec.  442.109  Certification period for ICF/IIDs: General provisions.

    (a) A survey agency may certify a facility that fully meets 
applicable requirements. The State Survey Agency must conduct a survey 
of each ICF/IID not later than 15 months after the last day of the 
previous survey.
    (b) The statewide average interval between surveys must be 12 
months or less, computed in accordance with paragraph (c) of this 
section.
    (c) The statewide average interval is computed at the end of each 
Federal fiscal year by comparing the last day of the most recent survey 
for each participating facility to the last day of each facility's 
previous survey.

0
26. Section 442.110 is amended by revising paragraph (b) to read as 
follows:


Sec.  442.110  Certification period for ICF/IID with standard-level 
deficiencies.

* * * * *
    (b) The survey agency may certify a facility for a period that ends 
no later than 60 days after the last day specified in the plan for 
correcting deficiencies. The certification period must not exceed 15 
months, including the period allowed for corrections.
* * * * *

PART 486--CONDITIONS FOR COVERAGE OF SPECIALIZED SERVICES FURNISHED 
BY SUPPLIERS

0
27. The authority citation for Part 486 continues to read as follows:

    Authority: Secs. 1102, 1138, and 1871 of the Social Security Act 
(42 U.S.C. 1302, 1320b-8, and 1395hh) and section 371 of the Public 
Health Service Act (42 U.S.C. 273).

Subpart G--Requirements for Certification and Designation and 
Conditions for Coverage: Organ Procurement Organizations

0
28. Section 486.302 is amended by revising the definition of ``donor 
document'' to read as follows:


Sec.  486.302  Definitions.

* * * * *
    Donor document means any documented indication of an individual's 
choice regarding his or her wishes concerning organ and/or tissue 
donation that was made by that individual or another authorized 
individual in accordance with any applicable State law.''
* * * * *


Sec.  486.324  [Amended]

0
29. Section 486.324 is amended by removing the second paragraph (e).

PART 494--CONDITIONS FOR COVERAGE FOR END-STAGE RENAL DISEASE 
FACILITIES

0
30. The authority citation for Part 494 continues to read as follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. l302 and l395hh).

Subpart B--Patient Safety

0
31. In Sec.  494.60, paragraphs (e)(1) and (2) are revised to read as 
follows:


Sec.  494.60  Condition: Physical environment.

* * * * *
    (e) * * *
    (1) Except as provided in paragraph (e)(2) of this section, by 
February 9, 2009, dialysis facilities that are located adjacent to high 
hazardous occupancies or do not provide one or more exits to the 
outside at grade level from the patient treatment area level, must 
comply with applicable provisions of the 2000 edition of the Life 
Safety Code of the National Fire Protection Association (which is 
incorporated by reference at Sec.  403.744(a)(1)(i) of this chapter).
    (2) Notwithstanding paragraph (e)(1) of this section, dialysis 
facilities participating in Medicare as of October 14, 2008 that 
require sprinkler systems are those housed in multi-story buildings 
construction Types II(000), III(200), or V(000), as defined in the 2000 
edition of the Life Safety Code of the National Fire Protection 
Association (which is incorporated by reference at Sec.  
403.744(a)(1)(i) of this chapter), section 21.1.6.3, which were 
constructed after January 1, 2008, and those housed in high rise 
buildings over 75 feet in height, which were constructed after January 
1, 2008.
* * * * *

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

    Dated: February 2, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.

    Approved: April 2, 2012.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2012-11543 Filed 5-10-12; 9:15 am]
BILLING CODE 4120-01-P