[Federal Register Volume 64, Number 141 (Friday, July 23, 1999)]
[Rules and Regulations]
[Pages 39934-39938]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-18802]



Health Care Financing Administration

42 CFR Parts 431 and 498

RIN 0938-AJ59

Medicare and Medicaid Program; Appeal of the Loss of Nurse Aide 
Training Programs

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Interim final rule with comment period.


SUMMARY: This interim final rule revises current Medicare and Medicaid 
regulations to provide participating nursing facilities, skilled 
nursing facilities, and dually participating nursing facilities an 
opportunity for an evidentiary hearing before an administrative law 
judge to challenge a facility's loss of its approved nurse aide 
training program. This rule also amends Medicaid regulations to permit 
States to provide evidentiary hearings for facilities that participate 
only in the Medicaid program and that face a loss of their nurse aide 
training programs. Previous regulations have provided only for an 
informal hearing when facilities lose training programs and do not 
otherwise face enforcement remedies under the Medicare and Medicaid 

DATES: Effective date: These regulations are effective July 23, 1999.
    Comment date: Comments will be considered if we receive them at the 
appropriate address, as provided below, no later than 5 p.m. on 
September 21, 1999.

ADDRESSES: Mail an original and 3 copies of written comments to the 
following address:

Health Care Financing Administration, Department of Health and Human 
Services, Attention: HCFA-2054-IFC, P.O. Box 9010, Baltimore, MD 21244-
Room 443-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., 
Washington, DC 20201, or
Room C5-16-03, 7500 Security Boulevard, Baltimore, Maryland 21244-1850.

    Comments may be submitted electronically to the following e-mail 
address: (filecode 2054ifc)@hcfa.gov. For e-mail procedures and 
information on ordering copies of the Federal Register containing this 
document and electronic access, see the beginning of

FOR FURTHER INFORMATION CONTACT: Jeffrey Golland, (202) 619-3377.


E-Mail, Comments, Procedures, Availability of Copies, and 
Electronic Access

    E-mail comments must include the full name and address of the 
sender, and must be submitted to the referenced address to be 
considered. All comments must be incorporated in the e-mail message 
because we may not be able to access attachments. Electronically 
submitted comments will be available for public inspection at the 
Independence Avenue address, below. Because of staffing and resource 
limitations, we cannot accept comments by facsimile (FAX) transmission. 
In commenting, please refer to file code HCFA-2054-IFC. Comments 
received timely will be available for public inspection as they are 
received, generally beginning approximately 3 weeks after publication 
of a document, in Room 443-G of the Department's offices at 200 
Independence Avenue, SW., Washington, DC, on Monday through Friday of 
each week from 8:30 a.m. to 5 p.m. (phone: (202) 690-7890).

I. Background

    To participate in the Medicare and Medicaid programs, facilities 
furnishing nursing services must satisfy certain requirements as a 
prerequisite to their receiving a provider agreement. Specifically, 
they must comply with the requirements set forth at section 1819(b), 
(c), and (d) of the Social Security Act (the Act) for the Medicare 
program, and section 1919(b), (c), and (d) of the Act for the Medicaid 
program. Implementing regulations further clarifying these statutory 
requirements are set forth at 42 CFR Part 483 (Requirements for States 
and Long Term Care Facilities). Facilities wishing to

[[Page 39935]]

participate in these programs may do so only after they have been 
surveyed, or inspected, by a survey team and found to be in substantial 
compliance with program requirements. While we administer these 
programs at the Federal level, typically these surveys are performed by 
State agencies acting under an agreement with us pursuant to section 
1864 of the Act. States conduct routine surveys on the average of once 
annually for each facility. When States perform these surveys, they 
make recommendations to us if Medicare determinations are involved, 
whereas determinations for facilities wishing to participate only in 
the Medicaid program are made predominately by the States. Facilities 
found to be furnishing services in substantial compliance with Federal 
requirements are issued a provider agreement and are thereby entitled 
to furnish reimbursable nursing services to Medicare beneficiaries and 
Medicaid recipients.
    Among the requirements that nursing facilities must meet is an 
obligation to employ only those nurse aides who are qualified to fill 
those positions. Sections 1819(b)(5)(A) and 1919(b)(5)(A) of the Act 
specifically prohibit nursing facilities from employing individuals as 
nurse aides for more than 4 months unless these individuals have 
completed a training and competency evaluation program and are 
competent to furnish nursing or nursing related services. These 
requirements are reflected in the regulations at Sec. 483.75(g) (Staff 
qualifications). According to sections 1819(f)(2)(B) and 1919(f)(2)(B) 
of the Act, States approve these training programs and have discretion 
to approve nurse aide training programs that are offered by or in 
    Under sections 1819(g)(2)(B) and 1919(g)(2)(B) of the Act, if a 
facility is found to have furnished substandard quality of care during 
a standard survey, it is subject to an extended survey that is designed 
to probe in more depth the facility's policies and procedures that 
produced substandard quality of care. If a facility is subjected to an 
extended survey and has been operating an approved nurse aide training 
program, it loses its ability to provide the program for 2 years as 
required by sections 1819(f)(2)(B)(iii)(I) and 1919(f)(2)(B)(iii)(I) of 
the Act.
    When we published the nursing home survey and enforcement 
regulations in the November 10, 1994 final rule (59 FR 56116), we 
addressed issues raised by a facility's loss of its nurse aide training 
program. In that final rule (59 FR 56228), we concluded that facilities 
facing this loss should have access to the informal dispute resolution 
process offered under Sec. 488.331, but that they should not have an 
opportunity for an administrative law judge (ALJ) hearing since we 
perceived a facility's loss in this context as not rising to the level 
of deprivation marked by sanctions described elsewhere in the statute 
such as facility agreement terminations or civil money penalties. It is 
only if a facility suffers an adverse and direct legal consequence 
under the Medicare program that it is entitled to administrative and 
judicial review. Accordingly, the regulations at Sec. 498.3(d)(10)(iii) 
(Scope and applicability), precluded the opportunity for an ALJ hearing 
when a facility loses its approval to train nurse aides. Similarly, 
Medicaid regulations, at Sec. 431.153(f)(2) (Evidentiary hearing), also 
precluded the opportunity for Medicaid-only certified facilities to 
receive a full evidentiary hearing for losses of their approved nurse 
aide training programs. Facilities have had the ability to challenge 
the loss of their nurse aide training programs only if they also were 
challenging the imposition of a remedy that was appealable.

II. Provisions of the Interim Final Rule

    We are amending the Medicare and Medicaid regulations to permit a 
facility an opportunity for an evidentiary hearing if it loses its 
approved nurse aide training program. In the context of the appeals 
system available to long term care facilities that are either Medicare 
or Medicaid certified or dually certified for both the Medicare and 
Medicaid programs, this means the opportunity for a hearing before an 
ALJ of the Departmental Appeals Board and to request review by the 
Board of an ALJ decision. As has always been the case, the nurse aide 
training program ceases to operate pending an appeal. While we are 
deleting the Medicaid regulation that foreclosed the possibility of an 
evidentiary hearing in these cases, we are leaving to States the 
details of whether or how they may provide hearings to those facilities 
participating only in the Medicaid program. However, nurse aid training 
programs provided by Medicaid-only facilities in States that elect to 
provide these hearings must cease to operate pending an appeal just has 
been the case for Medicare certified facilities.
    When we published the survey and enforcement final rule in November 
1994, we did not have the benefit of the experience we have had since 
that time. We could continue to advance the same arguments we made in 
the preamble to the November 1994 final rule as to the relative merits 
of losing a nurse aide training program compared with the impact of one 
or more of the remedies set out in the statute. We believe, however, 
that we should acknowledge the arguments that have been advanced by 
individual facilities on the magnitude of the loss to them when they 
are unable to train nurse aides themselves. Facilities have alerted us 
to the difficulty they sometimes have in finding qualified nurse aides 
once they are unable to train their own. Those employed as nurse aides 
are not highly paid and are not always available in abundance to 
facilities whenever they need to hire additional staff or replace those 
who leave. Turnover in these positions is high, thereby placing 
increased pressures on facilities to maintain the staff they need to 
furnish essential services to facility residents. Thus, the loss of an 
ability to train nurse aides can have significant consequences for a 
    Although the waiver provision in the statute, at sections 
1819(f)(2)(C) and 1919(f)(2)(C) of the Act, provides relief to some 
facilities in these situations, it is not universal in scope and, 
therefore, may not reach all facilities that have difficulty employing 
qualified individuals as nurse aides. The waiver provision authorizes a 
State to permit a facility that has lost its approval to train its 
nurse aides to continue that training in the facility (although not 
under the direction of the facility) if it determines that there is no 
other training program within a reasonable distance of the facility and 
the State can assure that there is an adequate environment to operate 
the program in the facility.
    Because the reason for the loss of nurse aide training is a fact-
driven conclusion that the facility has provided substandard quality of 
care, we recognize the desirability of furnishing a facility the 
opportunity to challenge these factual findings in a forum that is 
designed to hear identical disputes that arise when remedies are 
imposed on noncompliant facilities. Thus, there is sufficient reason to 
have a regulation that furnishes the same appeal process that has been 
available for the imposition of remedies on a facility.
    We view the provision of administrative hearings in cases involving 
the loss of nurse aide training, along with those that have been 
furnished up to now for most of the remedies imposed under Sec. 488.406 
(Available remedies), as being derived from sections 1866(b)(2) and 
1866(h) of the Act. These sections provide for the review of certain 
determinations we have made such as those in which we conclude that a 
facility is not complying substantially with the requirements of

[[Page 39936]]

the Act. We believe these sections of the statute are triggered when 
affected facilities sustain genuinely adverse legal consequences under 
the Medicare program as a result of action we have taken. As a matter 
governed by sections 1866(b)(2) and 1866(h) of the Act, these hearings 
are funneled through the administrative process described in section 
205(b) of the Act and to judicial review of our final decision 
according to section 205(g) of the Act. Both sections 205(b) and 205(h) 
are incorporated in the Medicare statute at section 1866(h) of the Act.
    Therefore, we are revising the Medicare and the Medicaid sections 
of the regulations. We are revising the Medicaid hearing regulations by 
deleting the reference at Sec. 431.153(b)(3) (Limit on grounds for 
appeal) that preclude States from granting evidentiary hearings to 
Medicaid facilities losing their nurse aide training programs. We are 
not affirmatively requiring States to provide a hearing in these cases 
because that is a decision we believe States should determine in light 
of circumstances that are apt to differ among the States.
    We are revising the Medicare hearing regulations that have 
precluded facilities from challenging the level of noncompliance we 
have found since findings of substandard quality of care are uniquely 
sensitive to specific findings of noncompliance. Specifically, a 
finding of substandard quality of care is premised upon a determination 
that there are discrete levels of noncompliance found under three 
regulations (Secs. 483.13 (Resident behavior and facility practices), 
483.15 (Quality of life), and 483.25 (Quality of care)). Thus, to 
adequately challenge a finding of substandard quality of care, a 
facility may need to be in a position to challenge the specific levels 
of noncompliance that gave rise to the finding. Accordingly, we are 
revising Sec. 498.3(b)(13) to permit this kind of challenge.
    We are also revising Sec. 498.3(b) (Initial determinations by HCFA) 
by adding a new paragraph (15) that will make a finding of substandard 
quality of care that results in the loss of the approval of a 
facility's nurse aide training program an initial determination for 
purposes of receiving an evidentiary hearing.
    Additionally, we are revising the regulations at 
Sec. 498.3(d)(10)(iii) (Administrative actions that are not initial 
determinations) by deleting the reference to the loss of nurse aide 
training as an administrative action that is not an initial 
determination. These revisions will affect the hearing rights of 
facilities that are participating in the Medicare or Medicaid program 
or are dually participating in the Medicare and Medicaid programs.
    We intend that these changes to the regulations be effective upon 
publication. Thus, we will apply the new rules to determinations made 
after the effective date of this interim final rule in which we or the 
States find substandard quality of care (communicated to the facility 
in a statement of deficiencies on HCFA Form 2567) that leads to the 
facility's loss of its ability to train nurse aides.

III. Response to Comments

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

IV. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite public comment on the proposed rule. The 
notice of proposed rulemaking includes a reference to the legal 
authority under which the rule is proposed, and the terms and 
substances of the proposed rule or a description of the subjects and 
issues involved. This procedure can be waived, however, if an agency 
finds good cause that a notice-and-comment procedure is impracticable, 
unnecessary, or contrary to the public interest and incorporates a 
statement of the finding and its reasons in the rule issued.
    We believe that engaging in proposed rulemaking in the context of 
this rule is unnecessary. We are not making substantive changes in the 
standards that nursing facilities must meet to participate in the 
Medicare and Medicaid programs. Facilities will continue to be 
obligated to meet the requirements of 42 C.F.R. Part 483 to retain 
program certification including the requirement that only trained nurse 
aides be employed by the facility. Nor are we changing in any way the 
basis for the imposition of remedies on long term care facilities when 
they are found to be out of compliance with Federal certification 
requirements. Facilities will still face the imposition of remedies, as 
they have before, when they fail to comply. They will continue to be 
subject to the consequences of a finding of substandard quality of care 
including the loss of nurse aide training programs and the required 
notifications to attending physicians and a State's Administrator 
Licensing Board. Thus, these rule changes will not affect the well 
being of residents by releasing facilities from any obligation they 
already owe under these programs. Indeed, under this rule, facilities 
that have lost their ability to train nurse aides will face that 
consequence unless our determination that the facility has provided 
substandard quality of care is reversed by an ALJ or by the 
Departmental Appeals Board upon its review of the hearing decision. 
This final rule only affects the type of review that nursing facilities 
may receive when they face the loss of their training programs.
    In addition, we do not believe that this rule will adversely impact 
States. While those States that choose to provide hearings in nurse 
aide training cases may experience some added burdens, we believe they 
will be minimal. Specifically, we expect that there will be very few 
cases involving the loss of nurse aide training in facilities certified 
only in the Medicaid program.
    Moreover, we are providing facilities with appeal rights that were 
not previously granted. In doing so, we are recognizing the industries' 
interest in having additional appeal rights.
    For the same reasons, we believe that we have good cause to 
dispense with the usual 30 day delay in the effective date of a rule, 
and believe that this rule should become effective immediately upon 
publication. Because we are not revising either a substantive standard 
that governs nursing home conduct or the consequences facilities may 
face because of their failure to comply with these requirements, we 
are, therefore, not affecting any provision that governs the manner in 
which nursing facilities must furnish safe and healthful conditions for 
the delivery of nursing services they furnish to their residents. 
Nursing home residents will continue to have all the protections they 
have always had under the nursing home requirements of participation 
and the survey and enforcement rules. Accordingly, we believe that we 
have good cause to make this procedural change effective immediately.
    Therefore, we find good cause to waive the notice of proposed 
rulemaking and to issue this final rule on an interim basis. We are 
providing a 60-day comment period for public comment.

[[Page 39937]]

V. Information Collection Requirements

    Ordinarily, we would be required to estimate the public reporting 
burden for information collection requirements for these regulations in 
accordance with Chapter 35 of Title 44 of the United State Code. 
However, sections 4204(b) and 4214(d) of the Omnibus Budget 
Reconciliation Act of 1987 provide for a waiver of Paperwork Reduction 
Act requirements for these regulations.

VI. Regulatory Impact Statement

    We have examined the impacts of this interim final rule as required 
by Executive Order 12866 and the Regulatory Flexibility Act (RFA) (Pub. 
L. 96-354). Executive Order 12866 directs agencies to assess all costs 
and benefits of available regulatory alternatives and, when regulation 
is necessary, to select regulatory approaches that maximize net 
benefits (including potential economic, environmental, public health 
and safety effects, distributive impacts, and equity). The RFA requires 
agencies to analyze options for regulatory relief of small businesses. 
For purposes of the RFA, small entities include small businesses, non-
profit organizations, and government agencies. Most hospitals and most 
other providers and suppliers are small entities, either by non-profit 
status or by having revenues of $5 million or less annually. For 
purposes of the RFA, all participating nursing facilities, skilled 
nursing facilities, and dually participating nursing facilities are 
considered to be small entities. Individuals and States are not 
included in the definition of a small entity.
    Section 1102(b) of the Social Security Act, (the Act) requires us 
to prepare a regulatory impact analysis if a rule may have a 
significant impact on the operations of a substantial number of small 
rural hospitals. Such an analysis must conform to the provisions of 
section 604 of the RFA. For purposes of section 1102(b) of the Act, we 
define a small rural hospital as a hospital that is located outside of 
a Metropolitan Statistical Area and has fewer than 50 beds.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4 also requires that agencies assess anticipated costs and benefits 
before issuing any rule that may result in an annual expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million. We believe that this interim final 
rule is not an economically significant rule as described in the 
Executive order, nor a significant action as defined in the Unfunded 
Mandates Reform Act. Aggregate impacts of the rule, and aggregate 
expenditures caused by the rule, would not approach $100 million for 
either the public or the private sector. Also, we believe that nursing 
facilities will not object to any additional costs they might incur in 
pursuing challenges to a loss of their nurse aide training programs 
because they have been advocating this type of hearing since we 
published our nursing facility enforcement final rule in November 1994.
    In addition, national provider organizations, as well as individual 
providers, have requested that we permit an appeal through our 
administrative process. Furthermore, this interim final rule would not 
affect a facility's decision to continue to serve beneficiaries.
    According to our survey estimates, approximately 400 of the 17,000 
long term care facilities participating in Medicare and Medicaid 
programs would be affected by this interim final rule. The facilities 
affected are those that have had an extended survey conducted as a 
result of an inspection finding substandard quality of care, with no 
remedies imposed. Whenever substandard quality of care is found, the 
facility may not conduct nurse aide training in its facility.
    Although there would be no economic impact on Medicare contractors 
or beneficiaries, some providers would incur the cost of preparing an 
appeal when an inspection triggers an extended survey (and subsequent 
loss of the ability to provide nurse aide training). This would be in 
addition to appealing the finding through the already available 
informal dispute resolution process. Also, States may incur additional 
costs if their surveyors need to testify in cases that previously would 
not have been permitted to be heard by an ALJ and would incur 
additional costs if they choose to provide hearings themselves for 
Medicaid-only facilities. These costs, however, would be minimal since 
we anticipate very few of these cases to arise in any State.
    As stated earlier, we believe that this interim final rule will not 
have a significant economic impact on providers, Medicare contractors, 
or beneficiaries. In addition, long term care facilities that lose the 
ability to conduct nurse aide training with no other remedies involved, 
will be supportive of their ability to appeal the findings that gave 
rise to the loss of their training programs since they have been 
seeking just this solution since the publication of the final nursing 
home enforcement rule in 1994.
    For these reasons, we are not preparing analyses for either the RFA 
or section 1102(b) of the Act because we have determined, and we 
certify, that this rule will not have a significant economic impact on 
a substantial number of small entities or a significant impact on the 
operations of a substantial number of small rural hospitals.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 431

    Grant programs-health, Health facilities, Medicaid, Privacy, 
Reporting and recordkeeping requirements.

42 CFR Part 498

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

    For the reasons set forth in the preamble, 42 CFR Chapter IV is 
amended as set forth below:


    A. Part 431 is amended as set forth below.
    1. The authority citation for part 431 continues to read as 

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

Sec. 431.153  [Amdended]

    2. In Sec. 431.153, paragraph (b)(3) is removed and reserved.


    B. Part 498 is amended as set forth below:
    1. The authority citation for part 498 continues to read as 

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

    2. In Sec. 498.3, paragraph (b)(13) is revised, a new paragraph 
(b)(15) is added, and paragraph (d)(10)(iii) is revised to read as 

Sec. 498.3  Scope and applicability.

* * * * *
    (b) Initial determinations by HCFA. * * *
    (13) The level of noncompliance found by HCFA in a SNF or NF but 

[[Page 39938]]

if a successful challenge on this issue would affect--
    (i) The range of civil money penalty amounts that HCFA could 
collect (The scope of review during a hearing on imposition of a civil 
money penalty is set forth in Sec. 488.438(e) of this chapter); or
    (ii) A finding of substandard quality of care that results in the 
loss of approval for a SNF or NF of its nurse aide training program.
* * * * *
    (15) The finding of substandard quality of care that leads to the 
loss by a SNF or NF of the approval of its nurse aide training program.
* * * * *
    (d) Administrative actions that are not initial determinations. * * 
    (10) * * *
    (iii) The imposition of State monitoring.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program)

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

    Dated: July 14, 1999.
Michael M. Hash,
Deputy Administrator, Health Care Financing Administration.

    Approved: July 16, 1999.
Donna E. Shalala,
[FR Doc. 99-18802 Filed 7-20-99; 12:04 pm]