Federal Register, Volume 77 Issue 95 (Wednesday, May 16, 2012)

[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.

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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