[Federal Register Volume 68, Number 247 (Wednesday, December 24, 2003)]
[Rules and Regulations]
[Pages 74792-74818]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-31572]
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Part V
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 405 and 491
Medicare Program; Rural Health Clinics: Amendments to Participation
Requirements and Payment Provisions; and Establishment of a Quality
Assessment and Performance Improvement Program; Final Rule
Federal Register / Vol. 68, No. 247 / Wednesday, December 24, 2003 /
Rules and Regulations
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 405 and 491
[CMS-1910-F]
RIN 0938-AJ17
Medicare Program; Rural Health Clinics: Amendments to
Participation Requirements and Payment Provisions; and Establishment of
a Quality Assessment and Performance Improvement Program
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule amends Medicare certification and payment
requirements for rural health clinics (RHCs) as required by the
Balanced Budget Act of 1997 (BBA). It changes the definition of a
qualifying rural shortage area in which a Medicare RHC must be located;
establishes criteria for identifying RHCs essential to delivery of
primary care services that we can continue to approve as Medicare RHCs
in areas no longer designated as medically underserved; and limits
waivers of certain nonphysician practitioner staffing requirements.
This final rule imposes payment limits on provider-based RHCs and
prohibits ``commingling'' (the use of the space, professional staff,
equipment, and other resources) of an RHC with another entity. The rule
also requires RHCs to establish a quality assessment and performance
improvement program that goes beyond current regulations. Finally, this
final rule addresses public comments received on the February 28, 2002
proposed rule and makes other revisions for clarity and uniformity and
to improve program administration.
EFFECTIVE DATE: These regulations are effective on February 23, 2004.
FOR FURTHER INFORMATION CONTACT: David Worgo (payment and certification
policy), (410) 786-5919.
Mary Collins (quality policy issues), (410) 786-3189.
SUPPLEMENTARY INFORMATION: Copies. To order copies of the Federal
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This Federal Register document is also available from the Federal
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Government Printing Office. The Web site address is http://www.access.gpo.gov/nara/index.html.
I. Background
A. General
The Rural Health Clinic Services Act of 1977 (Pub. L. 95-210,
enacted December 13, 1977), amended the Social Security Act (the Act)
by enacting section 1861(aa) to extend Medicare and Medicaid
entitlement and payment for primary and emergency care services
furnished at a rural health clinic (RHC) by physicians and certain
nonphysician practitioners, and for services and supplies incidental to
their services. ``Nonphysician practitioners'' included nurse
practitioners and physician assistants. (Subsequent legislation
extended the definition of covered RHC services to include the services
of clinical psychologists, clinical social workers, and certified nurse
midwives).
According to House Report No. 95-548(I), the purpose of Pub. L. 95-
210 was to address an inadequate supply of physicians to serve Medicare
and Medicaid beneficiaries in rural areas. The program addressed this
problem by providing qualifying clinics located in rural, medically
underserved communities with payment on a cost-related basis for
outpatient physician and certain nonphysician services furnished to
Medicare and Medicaid beneficiaries. (The Medicare payment provisions
for rural health clinics are in sections 1833(a)(3) and 1833(f) of the
Act and in our regulations beginning at 42 CFR 405.2462.)
Qualifying clinics, among other criteria, had to be located in a
nonurbanized area as defined by the Census Bureau and in a health
professional shortage area or medically underserved area as designated
by the Health Resources and Services Administration or (since the
Omnibus Budget Reconciliation Act of 1989 (OBRA '89, Pub. L. 101-239,
enacted on December 19, 1989), section 6213(c)) by the chief executive
officer of the State. (See section 1861(aa)(2) of the Act, following
subparagraph (K).) There are three types of shortage area designations
applicable to RHC qualification: health professional shortage areas,
medically underserved areas, and governor-designated shortage areas.
The clinic's service area must have, in addition to being located in a
nonurbanized area, one of these shortage area designations if the
clinic is to qualify to receive RHC status.
Qualifying clinics also must employ a nonphysician practitioner
and, to meet requirements of the OBRA '89, must have a nurse
practitioner, a physician assistant, or a certified nurse midwife
available to furnish patient care services at least 50 percent of the
time the RHC operates.
Growth of RHCs in the Medicare Program
After a slow start, the program has recently grown at a rapid
rate--from less than 1,000 Medicare-approved RHCs in 1992 to more than
3,300 in early 2001. While part of this increase has improved access to
primary care services in rural areas for Medicare and Medicaid
beneficiaries, there are instances in which these additional RHCs have
not expanded access.
Continuing Participation
A significant factor in the growth of RHCs stems from the original
(pre-BBA) RHC legislation, which included a ``grandfather clause'' to
promote the development of RHCs. (See section 1(e) of Pub. L. 95-210,
42 U.S.C. 1395x note. Also see 42 CFR 491.5(b)(2).) Specifically, the
third sentence of section 1861(aa)(2) of the Act stated that:
A facility that is in operation and that qualifies as a rural
health clinic (under the Medicare or Medicaid program) and that
subsequently fails to satisfy the requirements of clause (i) (in the
second sentence of section 1861(aa)(2), pertaining to the rural and
underserved location requirement), is considered as still satisfying
the requirement of this clause.
This provision protected the clinic's RHC status despite any
possible changes to the rural or underserved status of its service
area. It allowed clinics to remain in the RHC program even though their
service areas were no longer considered rural or medically underserved.
The Congress established this protection to encourage clinics to
attract needed health care professionals to underserved rural areas and
to retain them without being concerned about losing the shortage area
designation, which would make the clinics ineligible for RHC status and
its reimbursement
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incentives. Once the clinic successfully attracted the needed health
care professionals to the area, the Congress wanted to ensure that the
service area did not return to its previous underserved status because
we removed the clinic's RHC status and reimbursement incentives.
Although the grandfather provision was based on justifiable policy
considerations, we are now confronted with RHC participation in some
service areas with extensive health care delivery systems where
Medicare and Medicaid beneficiaries are not having difficulty obtaining
primary care. Both the General Accounting Office (GAO) and the
Department of Health and Human Services' Inspector General (DHHS/IG)
recommended the establishment of a mechanism, under the survey and
certification process for Medicare facilities, to discontinue RHC
status and its payment incentives in those service areas where they are
no longer justified. (See the next paragraph.) In section 4205(d)(3) of
the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33, enacted on
August 05, 1997), the Congress responded to these recommendations by
amending the grandfather provision to provide protection only to
clinics essential to the delivery of primary care.
Medically Underserved Designations
Another reason for the continued growth of the RHC program was that
two types of shortage area designations, specifically the medically
underserved area (MUA) and Governor's designations, did not have a
statutory requirement for regular review and were not systematically
reviewed and updated for some time. As a result, some new RHCs may have
been certified in areas that would no longer be designated as
underserved if reviewed with current data. In response, as discussed
below, the Congress amended the legislation by requiring that only
those clinics located in shortage areas that were recently designated
or updated will qualify for purposes of the RHC program.
Commingling
The growth of RHCs has also been stimulated by industry practices
that are designed to maximize Medicare payment by obtaining RHC status
for an integrated practice that submits both RHC and non-RHC Medicare
claims. We define the term ``commingling'' to mean the simultaneous
operation of an RHC and another physician practice, thereby mixing the
two practices. The two practices share hours of operation, staff,
space, supplies, and other resources. Commingling occurs in RHCs that
are an integral part of another provider, such as a hospital, as well
as in RHCs that are independent.
A common approach taken by independent RHCs is to operate a private
physician practice in the RHC at the same time the physician is
furnishing RHC services to patients. We believe this could lead to
incorrect billing or duplicate payments.
Government Reports
Both the GAO and the DHHS/IG concluded that the growth of RHCs is
not proportional to community need and that many RHCs no longer require
cost-based reimbursement as a payment incentive. They also concluded
that the payment methodology for provider-based RHCs lacks sufficient
cost controls and recommended establishing payment limits and screens
on reasonable costs for these providers. (A provider-based RHC is an
integral and subordinate part of a Medicare participating hospital,
skilled nursing facility, or home health agency, and is operated with
other departments of the provider under common licensure, governance,
and professional supervision. All other RHCs are considered to be
independent.) For more information on these reports see ``Rural Health
Clinics: Rising Program Expenditures Not Focused on Improving Care in
Isolated Areas'' (GAO/HEHS-97-24, November 22, 1996), and ``Rural
Health Clinics: Growth, Access and Payment'' (OEI-05-94-00040, July
1996).
B. Legislation
Refinement of Shortage Area Requirements
Refinement of the shortage area requirements involves two phases.
1. Phase I. Section 4205(d)(1) and (2) of the BBA pertain to the
requirements in the second sentence of section 1861(aa)(2) of the Act
that RHCs must be located in a nonurbanized area as defined by the
Bureau of the Census, as well as in a health professional shortage area
(HPSA), an MUA, or in a shortage area designated by a State governor.
The Congress amended those provisions to state that the rural area must
also be one in which there are insufficient numbers of needed health
care practitioners as determined by the Secretary. This BBA change will
be addressed by our sister agency, the Health Resources and Services
Administration (HRSA), under separate rules. The Congress also amended
that sentence to specify that, to be used in RHC certification,
shortage area designations made by the Department or by a State
governor must have been made within the previous 3-year period.
2. Phase II. Section 4205(d)(3)(A) of the BBA, which amended the
third sentence of section 1861(aa)(2) of the Act, the Congress revised
the ``grandfather clause'' that permitted an exception to the
termination of RHC status for a clinic located in an area that is no
longer a rural area or a shortage area. This revision amended the
grandfather clause to specify that an exception is available only if
the RHC is determined to be essential to the delivery of primary care
services that would otherwise be unavailable in the geographic area
served by the RHC. These amendments were made effective upon issuance
of implementing regulations that the Congress directed us to issue by
January 1, 1999.
Staffing Waiver
Previous to the Omnibus Budget Reconciliation Act of 1990 (OBRA
'90) (Pub. L. 101-508, enacted on November 5, 1990), an RHC was
required to employ a physician assistant, nurse practitioner, or
certified nurse midwife who must furnish their services 50 percent of
the time the RHC operates. Section 4161(b)(2) of the OBRA added section
1861(aa)(7) to the Act to provide us with the authority to grant a 1-
year staffing waiver of this requirement if the clinic can demonstrate
that it has been unable, in the previous 90-day period, to hire one of
these non-physician primary care providers.
Section 4205(c) of the BBA amended section 1861(aa)(7)(B) of the
Act to restrict our authority to waive RHC staffing requirements. Under
section 4205(c) of the BBA, a staffing waiver may only be granted to an
RHC that is qualified and participating in the Medicare program.
Payment Limits for Provider-Based RHCs
Before the BBA, the payment methodology for an RHC depended on
whether it was ``provider-based'' or ``independent.'' Payment to
provider-based RHCs for services furnished to Medicare beneficiaries
was made on a reasonable cost basis by the provider's fiscal
intermediary in accordance with our regulations at part 413. Payment to
independent RHCs for services furnished to Medicare beneficiaries was
made on the basis of a uniform all-inclusive rate payment methodology
in accordance with part 405, subpart X. Payment to independent RHCs was
also subject to a maximum payment per visit as set forth in section
1833(f) of the Act.
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Section 4205(a) of the BBA amended section 1833(f) of the Act. It
now holds provider-based RHCs to the same payment limit and all-
inclusive payment methodology as independent RHCs. This provision also
provides an exception to the payment limit for those clinics based in
small rural hospitals with fewer than 50 beds.
Expanding Access to Rural Health Clinics
Under the BBA, the independent RHC all-inclusive payment
methodology and annual payment limit was also used for provider-based
RHCs. This BBA provision also provided an exception to the RHC payment
limit for those RHCs based in small ``rural'' hospitals.
Section 224 of BIPA expanded the eligibility criteria for receiving
an exception to the RHC annual payment limit, effective July 1, 2001.
Specifically, this section of BIPA extends the exemption to RHCs based
in small urban hospitals. Thus, all hospitals of less than 50 beds (see
section 1833(f) of the Act) are now eligible to receive an exception
from the per visit payment limit for their RHCs.
Payment for Certain Physician Assistant Services
Sections 4511 and 4512 of the BBA removed the restrictions on the
types of areas and settings in which the Medicare Part B program pays
for the professional services of nurse practitioners, clinical nurse
specialists, and physician assistants. This provision also expanded the
professional services benefits for nurse practitioners and clinical
nurse specialists by authorizing them to bill the program directly for
their services when furnished in any area or setting. However, these
BBA provisions maintained the current policy that payment for physician
assistant services can be made only to the physician assistant's
employer regardless of whether the physician assistant is directly
employed or serving as an independent contractor.
Section 4205(d)(3)(B) of the BBA amended section 1842(b)(6)(C) of
the Act to provide that payment for physician assistant services may be
made directly to a physician assistant under certain circumstances. As
an exception to the payment requirement under the physician assistant
professional services benefit, this provision permits Medicare to pay a
physician assistant directly who was the owner of an RHC (as described
in section 1861(aa)(2) for a continuous period beginning before the
date of the enactment of the BBA and ending on the date the Secretary
determines the RHC no longer meets the requirements of section
1861(aa)(2) of the Act, for those services provided before January 1,
2003).
Section 222 of the Medicare, Medicaid, and SCHIP Benefits
Improvement and Protection Act (BIPA) (Pub. L. 106-554, enacted on
December 21, 2000) amended section 1842(b)(6)(C) of the Act to permit
physician assistants who owned RHCs, and subsequently lost RHC status,
to receive direct Medicare payment for their services, effective
December 21, 2000. This BIPA provision eliminates the January 1, 2003
sunset date.
Quality Assessment Program
Currently, quality of RHC care is addressed in Sec. 491.11, which
requires a clinic to evaluate its total program annually. The
evaluation must include reviewing the utilization of the clinic's
services, a representative sample of both active and closed clinical
records, and the clinic's health care policies. The purpose of the
evaluation is to determine whether the utilization of services was
appropriate, the established policies were followed, and any changes
are needed. The clinic's staff considers the findings of the evaluation
and takes the necessary corrective action. These requirements focus on
the meeting and documentation of the clinic's evaluation of its quality
care and do not account for the outcome of these activities. Section
4205(b) of the BBA amended section 1861(aa)(2)(I) of the Act to
authorize us to require that an RHC have a quality assessment and
performance improvement program. A quality assessment and performance
improvement program enables the organization to systematically review
its operating systems and processes of care to identify and implement
opportunities for improvement.
We recognize that some RHCs are already incorporating a QAPI
program into their normal operating activities. Others will begin to
search for guidance in developing an appropriate QAPI program as they
transition from complying with the current annual evaluation
requirement. For some time now, professional and governmental
organizations have been engaged in formulating guidance and in
providing samples of QAPI related activities to entities interested in
developing QAPI programs. In addition, state offices of rural health
are excellent resources at a local level.
The Department of Health and Human Services has previously
contracted with the National Association of Rural Health Clinics to
develop technical assistance materials for Rural Health Clinics to
provide guidance in complying with QAPI requirements. The Department,
working through the Health Resources and Services Administration's
Office of Rural Health Policy (http://www.ruralhealth.hrsa.gov), will
make those materials available widely and develop other technical
assistance material as needed to help RHCs make the transition to the
quality requirements of the final rule.
There are additional on-line resources that offer a wide range of
support services to RHCs. Some of the more well known are as follows:
The Rural Assistance Center (http://www.raconline.org), The National
Rural Health Association (http://www.nrharural.org), The Rural Policy
Research Center (http://www.rupri.org), and The National Association
for Rural Health Clinics (http://www.narhc.org).
We expect RHCs that have no experience with QAPI programs to take
advantage of the resources that are available. RHCs are encouraged to
explore a variety of resources so that they can become familiar with
the variety of approaches that exist to develop a QAPI program. An RHC
that chooses to implement the QAPI resources (that is, model QAPI
programs) provided by the Department and other on-line resources
mentioned in this regulation will be considered to meet the QAPI
condition for certification (CfC) provided that the model program
chosen is one that is relevant to the RHC and its patient population.
II. Provisions of the Proposed Rule
On February 28, 2000, we published a proposed rule in the Federal
Register (65 FR 10450) to implement the BBA amendments concerning the
participation of RHCs in Medicare or Medicaid programs.
Definition of Shortage Area for RHC Certification
Section 6213 of OBRA '89 amended 1861(aa)(2) of the Act to expand
the types of shortage areas eligible for RHC certification. Until then,
the eligible areas included only those designated by the Secretary as
areas having a shortage of personal health services and those
designated as geographic health professional shortage areas under
section 332(a)(1)(A) of the PHS Act. The OBRA '89 amendment expanded
the eligible areas to also include high impact migrant areas designated
under section 329(a)(5) of the PHS Act; areas containing a population
group HPSA designated under section 332(a)(1)(B) of the PHS Act; and
areas designated by
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the Governor of a State and certified by the Secretary as having a
shortage of personal health services. Later, however, the Health
Centers Consolidation Act of 1996 (Pub. L. 104-299) renumbered section
329 of the PHS Act and repealed the requirement for designation of high
migrant impact areas.
We proposed to amend Sec. 491.2 to conform the regulations to the
above statutory changes, by defining shortage areas for RHC purposes to
include all four remaining types of designated areas. The types of
shortage areas eligible for RHC certification are geographic and
population based HPSAs, MUAs, and areas designated by the Governor of
the State.
A. Refinement of Shortage Area Requirements
As noted above, section 4205(d)(1) of the BBA amended the second
sentence of section 1861(aa)(2) of the Act to require the use of
shortage areas designated ``within the previous 3-year period.'' We
proposed to amend Sec. 491.3(b), to refer to ``a current shortage area
for which a designation is made or updated within the current year or
the previous 3 years.'' In Sec. Sec. 491.3 and 491.5, we proposed to
establish the procedures and standards for granting an exception to
clinics essential to the delivery of primary care that would otherwise
be unavailable in the geographic area served by the clinic.
Eligibility for an Exception
In Sec. 491.3, we specified that an RHC located in a rural area
that is no longer designated as medically underserved, is eligible to
apply for an exception. Those RHCs located in an area no longer
designated as a nonurbanized area as defined by the Census Bureau are
not eligible to apply for an exception.
Additionally, in Sec. 491.3(c), we specified procedures for
submitting an exception request.
Criteria for Exception
We proposed, in Sec. 491.5, to allow an exception to an existing
RHC that can satisfy one of the following tests:
Sole Community Provider. We proposed to classify an existing RHC as
``essential'' if it is the only Medicare or Medicaid primary care
provider within the service area. Specifically, it is the only
participating provider within 30 minutes travel time.
Traditional Community Provider. We also proposed to classify an
existing RHC as essential if it is the sole RHC for its community and
the only primary care provider that has traditionally served Medicare,
Medicaid, and uninsured patients in the community despite the fact that
there may be other primary care providers that have recently begun
participating within reasonable travel time of the RHC.
Major Community Provider. We also proposed to classify an existing
RHC as essential if it is treating a disproportionate greater share of
the patients in its community compared to other RHCs that are within 30
minutes travel time.
Specialty Clinic Test. We proposed to classify an existing RHC as
``essential'' if it exclusively provides pediatric services or
obstetrical/gynecological (OB/GYN) services for its community.
Graduate Medical Education (GME) Test. We proposed to classify an
existing RHC as ``essential'' if it is actively participating in an
accredited GME program.
B. Payment Limits for Provider-Based RHCs
We proposed to amend Sec. 405.2462 to provide payment to all RHCs
on the basis of an all-inclusive rate per visit, subject to the per-
visit payment limit. We also proposed to include within this section
the definition for identifying small rural hospitals with fewer than 50
beds for purposes of the exception to the payment limit.
For hospitals that are the primary source of health care in their
rural community as defined at Sec. 412.92, we proposed to look to the
hospital's average daily census rather than bed size in determining
whether RHC services are subject to the upper payment limit.
C. Staffing Requirements
Practitioners Available 50 Percent of the Time
Under our current regulations, an NP or PA must be available to
furnish patient care services at least 60 percent of the time the RHC
operates. However, section 6213(a)(3) of OBRA '89 amended the staffing
requirements for an RHC, described in section 1861(aa)(2)(J) of the
Act, to require that a CNM, NP, or PA be available to furnish patient
care services at least 50 percent of the time the RHC operates.
Therefore, we proposed to revise Sec. 491.8(a) to require that a
nurse practitioner, physician assistant, or certified nurse midwife be
available to furnish patient care at least 50 percent of the time the
RHC operates.
Temporary Staffing Waiver
We proposed to amend Sec. 491.8 to provide that only currently
participating RHCs (not facilities applying for participation) are
eligible for this waiver. We also proposed to amend Sec. 491.8 to
include procedures for when the waiver expires.
D. Commingling
We proposed to revise Sec. 405.2401(b), ``Scope and definitions,''
to clarify that the term ``rural health clinic'' means a facility that
meets certain other requirements, and does not share professional
staff, space, supplies, records, and other resources with another
Medicare and Medicaid entity.
E. Quality Assessment and Performance Improvement Program
We proposed the requirement that an RHC set priorities for
performance improvement based on the prevalence and severity of
identified problems. We proposed to replace the existing requirements
in Sec. 491.11 with the proposed quality assessment and performance
improvement (QAPI) program that contains three standards that would
address: (1) The components of a performance improvement program; (2)
monitoring performance activities; and (3) program responsibilities. In
Sec. 491.11(a), the first standard, would require that an RHC
objectively evaluate the following critical areas: clinical
effectiveness; access to care; and patient satisfaction. We did not
propose specific language to set a minimum level of effort for clinics.
Instead, we specifically invited comments on the best approaches to
achieve a minimum level of effort.
Section 491.11(b), the second standard, would require that for each
of the areas listed under the standard in Sec. 491.11(a), the clinic
must measure, analyze, and track aspects of performance that the clinic
adopts or develops that reflect processes of care and clinic
operations.
Section 491.11(c), the third proposed standard, would require that
the RHC's professional staff, administration officials, and governing
body (where applicable) ensure that there is an effective quality
assessment and performance improvement program as well as the current
requirement for assessing utilization.
III. Analysis of and Responses to Public Comments on the Proposed Rule
On February 28, 2000, we published a proposed rule on RHCs in the
Federal Register (65 FR 10450), on which we received 110 letters of
comments. Commenters included individuals and health care
professionals. A summary of those comments and responses follows:
Several comments were not directed to a specific provision of the
February
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2000 proposed rule, but concerned the implementation of the proposed
rule and the potential impact on RHCs financial viability and access to
care. Specifically, the loss of RHC status and the cost of additional
regulatory requirements on clinics could negatively impact providers,
especially small clinics, and their patients.
We share the commenters' concerns with preserving access to care
for Medicare and Medicaid beneficiaries and the cost impact of
establishing additional regulatory requirements. However, we believe
the clarifications and changes that we are making to the regulations
will eliminate or significantly reduce negative impact on rural
providers and their communities.
Several commenters raised issues unrelated to the provisions of
this rule. In this final rule, we only address the comments pertaining
to the RHC proposed rule published on February 28, 2000, in the Federal
Register (65 FR 10450).
Scope and Definitions (Sec. 405.2401)
Comment: Several commenters indicated that the definition of
``shared space'' should be clarified. For example, can an RHC lease or
rent to a specialist during RHC hours of operation? Also, can an
independent laboratory operate within RHC space during clinic hours as
long as the cost is not included on the clinic's cost report?
Response: We are revising, in Sec. 405.2401(b), the definition of
Rural health clinic (RHC) to state that the RHC definition applies to
physicians and nonphysician practitioners working for the entity to
furnish RHC services. These practitioners are prohibited from operating
a private Medicare or Medicaid practice during RHC hours of operation.
Therefore, a specialist and an independent diagnostic laboratory can
operate practices in leased or rented space within the RHC. The RHC
definition was never intended to prohibit the operation of a
multipurpose facility. The operation of a multipurpose facility and the
sharing of common space (for example, waiting room), staff, and other
resources is permissible as long as the costs are appropriately
excluded from the RHC cost report.
Comment: Several commenters indicated belief that the proposed rule
would prohibit RHCs from performing nonprimary care services. The
commenters suggested that we not force the provider to set up two
separate facilities.
Response: As discussed above, the RHC definition was never intended
to prohibit the operation of a multipurpose facility. The operation of
a multipurpose facility and sharing a common space, staff, and
resources is permissible as long as the costs are appropriately
excluded from the RHC cost report. Therefore, in Sec. 405.2401(b)(1),
we are revising the regulation to clarify that physicians and
nonphysician practitioners working for the RHC cannot operate a private
Medicare or Medicaid practice during RHC hours of operation, using
clinic resources.
Comment: Several commenters pointed out that problems associated
with commingling should be addressed by improving cost reporting. The
commenters stated that we should require the fiscal intermediaries to
pay close attention to the Medicare Part B services on the Medicare
cost report.
Response: We disagree with the commenters. We believe that the
issue of commingling cannot be effectively addressed through the cost
reports. When a practitioner who is working for an RHC shifts from
patient to patient for billing Medicare and Medicaid (for example,
simultaneously operates as a private practice under Medicare Part B and
as an RHC under Medicare Part A), both the provider and the Medicare
fiscal intermediary would have a difficult time accurately apportioning
the cost associated with RHC patients. We believe the administrative
burden of accurately allocating cost for the Medicare and Medicaid
programs, as well as for the provider, would out weigh the benefits
derived from this type of commingling.
Comment: One commenter suggested that we prohibit a single health
care professional from billing both Medicare Part A and Part B in the
RHC setting.
Response: Our proposed policy was established for the primary
purpose of prohibiting health care professionals assigned to the RHC
from billing Medicare Part B during clinic hours, using clinic
resources. Therefore, we are revising proposed Sec. 405.2401(b)(1) to
clarify that physicians and nonphysician practitioners working for the
RHC cannot operate a private Medicare or Medicaid practice during RHC
hours of operation, using RHC space and resources.
Comment: A commenter indicated that it would be extremely difficult
to conduct a pediatric practice in which publicly funded patients and
privately funded patients were not treated equally in the same
environment at the same time.
Response: The RHC definition prohibits physicians and nonphysician
practitioners who are working for the RHC from billing fee-for-service
under Medicare and Medicaid during RHC hours, using RHC space and
resources. We do not intend to regulate clinic policies for privately
insured patients.
Comment: A commenter suggested that we allow more flexibility in
the provisions of this regulation to recognize unique rural situations.
Improving or maintaining access to care in rural communities requires
adaptability to local situations.
Response: RHCs should not be paid for professional and facility
costs through the Medicare cost reports while its practitioners
simultaneously use RHC space and resources to bill fee-for-service
benefits, which include these costs. Furthermore, we believe that the
clarifications and changes that we are making to this policy, based on
public comments, will provide sufficient flexibility for rural clinics
to address access problems within their communities.
Comment: A commenter asked us to clarify Sec. 495.2401(b)(1) that
addresses practices other than Medicare, such as Medicaid and private
pay, to ensure that practitioners are able to comply with the
commingling rule.
Response: The RHC definition will preclude RHC practitioners from
operating private Medicare and Medicaid practices during clinic hours,
using RHC space and resources.
Comment: A commenter suggested that RHCs eligible for essential
provider status should be given an exception to the commingling rules.
Response: The proposed changes to the RHC definition are intended
to remove opportunity to duplicate billing and payments. This concern
applies to all RHCs. Therefore, all RHCs must comply with the
definition as stated in Sec. 405.2401(b).
Comment: A commenter recommended that we provide RHCs with a
specific list of CPT codes that should be included in the cost report.
Many RHCs provide services beyond primary care and bill these services
to Medicare Part B and deduct the costs from the RHC cost report. The
commenter believes that an RHC definition specifying CPT codes would
resolve the current issue of commingling.
Response: We disagree with the commenter. We do not believe it is
appropriate to dictate the scope of the RHC practice by creating a list
of medical services that must be billed and paid for outside the RHC
benefit. We would run the risk of creating either an incomplete or
overly inclusive list for participating RHCs, which vary in size and
scope. Moreover, to do so would be contrary to the statute and
therefore unenforceable. We believe the best approach for maintaining
program
[[Page 74797]]
integrity for the RHC benefit is to require that RHC physicians and
nonphysician practitioners remain devoted to the RHC and its patients
during clinic hours of operation as stated in Sec. 405.2401(b)(1).
Comment: Several commenters suggested that an exception to the
commingling rule should be granted to all rural hospitals or at a
minimum to small rural hospitals with less than 50 beds. Rural
hospitals, other than critical access hospitals (CAHs), experience
difficulty recruiting sufficient staff to cover the RHC and emergency
room simultaneously.
Response: We wish to clarify that the sharing of staff between
hospital and the RHC is not commingling. We agree that any rural
hospital with limited resources should be allowed to share staff
between its RHC and emergency room. As discussed above, the primary
purpose of Sec. 405.2401 is to preclude physicians and nonphysician
practitioners working for the RHC from operating a private Medicare or
Medicaid practice during RHC hours of operation, using RHC space and
resources. Therefore, it is permissible for any hospital-based RHC to
share its health care practitioners with emergency rooms, as long as
the clinic continues to meet RHC certification requirements and
sufficient documentation is provided to allocate costs on consistent
and rational basis.
Comment: A commenter expressed belief that the CAH exemption should
be expanded to include rural hospitals that meet CAH requirements, but
have chosen not to participate in the CAH program.
Also, several commenters suggested that in proposed Sec. 405.2401,
we should consider exempting RHCs located in extremely rural
communities, such as frontier areas (less than six persons per square
mile). These facilities face limitations on their available medical
resources similar to CAHs.
Response: We agree that any rural hospital with limited resources
should be allowed to share staff between its RHC and emergency room. We
removed references to CAH and have clarified the purpose and scope of
Sec. 405.2401 to address both concerns.
Comment: Two commenters raised concerns about the necessary
documentation to receive an exception to the commingling rule. The
commenters suggested that the documentation should be done through the
cost reports instead of through detailed practitioner logs, which can
be very burdensome.
Response: We revised the regulation to clarify that any rural
hospital with limited resources should be allowed to share staff
between its RHC and emergency room. With regard to the documentation
issue, we will delegate to our intermediaries the decisions regarding
acceptable accounting methods for allocation of staff costs between the
RHC and other entities to be used in this documentation. We agree that
maintenance of detailed practitioner logs on an ongoing basis is very
burdensome, and other alternatives exist to achieve the desired results
of assuring a proper allocation of costs, on a consistent and rational
basis.
Comment: Several commenters recommended that RHCs be allowed to
have nonclinic providers and medical specialists in their
establishments during RHC hours of operation as long as all expenses
are deducted out of the cost report.
Response: We never intended to restrict or preclude these
arrangements. We are revising the regulation to clarify that physicians
and nonphysicians who are employed to furnish RHC services are
precluded from billing fee-for-service under Medicare and Medicaid
during RHC hours of operation. Medical specialists who lease or rent
space from the clinic can bill for their services during the clinic's
hours. RHCs are also allowed to share common space (for example,
waiting room), staff, and other resources with these specialists as
long as the RHC appropriately removes the costs from its cost report.
Comment: Two commenters asked us to clarify whether RHC physicians
who are on-call with an emergency room would violate the commingling
rule. RHC physicians who provide on-call services, as opposed to being
on-duty, should be allowed under this rule. Failure to amend the
regulations to clarify this issue could reduce the availability of
emergency room care for many rural communities.
Response: We agree that RHC physicians who provide on-call services
for an emergency room should not be considered in violation of the
commingling rule. It is clearly permissible for RHC physicians to
provide on-call services for an emergency room as long as the clinic
continues to meet RHC certification requirements and costs are
appropriately excluded from the RHC cost report.
Comment: A commenter believes that sole community providers also
need to commingle staff and equipment for financial and operational
reasons.
Response: We agree with the commenter. We are revising proposed
Sec. 405.2401 to state that any hospital-based RHC is allowed to share
its health care practitioners with the emergency room as long as
sufficient documentation is provided allocating costs.
Comment: A commenter believes providers should be allowed to
operate an RHC and an emergency room in the same facility (especially
small rural hospitals). There should be no sharing of staff during the
hours of RHC operation, but we should acknowledge there are instances
of common resource sharing. For example, it is customary for providers
to share medical supply cabinets.
Response: We agree that providers should be allowed to operate an
RHC and an emergency room in the same facility. In the case of shared
storage space (shared medical supply cabinets), patient care supplies
should be clearly distinguishable from those of any other entity in
every respect.
Payment for Rural Health Clinic Services and Federally Qualified Health
Clinic Services (Sec. 405.2462)
Comment: Several commenters suggested that the United States
Department of Agriculture (USDA) Urban Influence Codes 5 through 7
should also be considered for rural hospital eligibility for the
exception. There are many smaller rural communities surrounding cities,
but they do not fall within the codes of 8 or 9.
Response: In defining rural for the Medicare program, we have
consistently used the definition of Metropolitan Statistical Area (MSA)
as established by the Office of Management and Budget (OMB). The
available bed definition at Sec. 412.105 is also a longstanding
definition used in the Medicare program. We believe that these
definitions are reasonable and appropriate for identifying eligible
RHCs based in small rural hospitals. The alternative definition of bed
size and rural was proposed to accommodate, based on industry concerns,
extremely rural hospitals operating under extenuating circumstances.
Communities that fall in the levels 5 through 7 are considerably less
rural than those in level 8 or level 9. For example, a level 5 is a
rural county with a city exceeding a population of 10,000 adjacent to a
metropolitan area where a level 8 is a rural county that has a city
with a population of less than 10,000 not adjacent to a metropolitan
area. In light of the stark differences in rurality of these areas, we
see no basis for changing the standard.
Comment: Several commenters strongly urged the adoption of the
[[Page 74798]]
broader rural definition under the Balanced Budget Refinement Act of
1999 (BBRA) for the exception to the payment limit for RHCs based in
small rural hospitals. This definition, which is purported to be an
improvement over the MSA definition, addresses the problem experienced
in certain western States.
Response: In 2000, section 224 of BIPA expanded the eligibility
criteria for receiving an exception to the RHC annual payment limit,
effective July 1, 2001. Specifically, this section of BIPA extends the
exemption from the upper payment limit to RHCs based in small urban
hospitals. Thus, all hospitals of less than 50 beds are now eligible to
receive an exception from the per visit payment limit for their RHCs.
Therefore, we are revising Sec. 405.2462(a)(3) to reflect changes made
by BIPA. Please note that we will continue to use the bed size
definition at Sec. 412.105(b) to determine which RHCs are eligible for
the payment limit exception. We will continue to apply to the
alternative definition of bed size (patient census) only extremely
rural hospitals operating under extenuating circumstances as set forth
at Sec. 405(a)(3)(ii)(A).
Comment: A commenter encouraged us to adopt the RHC definition of
rural for purposes of exemption to the payment limit. This rural
definition resolves the problems with the MSA definition as it relates
to western States.
Response: As discussed above, we are revising Sec. 405.2462(a)(3)
to reflect changes made by BIPA.
Comment: A commenter recommended that the payment limit exception
should be based on whether the provider is in a rural area or whether
its average daily census is less than 50 beds.
Response: Although section 224 of BIPA expanded the eligibility
criteria for receiving an exception to recognize RHCs based in small
urban and rural hospitals, it maintained the bed size test.
Consequently, we are retaining that requirement in our rules at Sec.
405.2462(a)(3).
Comment: A commenter believes that allowing any hospitals with an
average daily census of 40 is very generous and will probably continue
the abuse of the RHC program.
Response: We agree with the commenter; therefore, we will retain
the requirement in Sec. 405.2462(a)(3)(ii)(A), which states that the
average daily census criterion would apply only to extremely rural,
sole community hospitals.
Comment: Several commenters indicated that the 50-bed requirement
should be defined using average daily census. Rural hospitals with an
average daily census of below 50 beds are the types of facilities the
Congress is concerned about. Also, this information is reflective of
the number of patients served and the size of the hospital.
Response: Although there are a number of ways to define a hospital
bed size (that is, licensed, certified, staffed, or patient census), we
believe our available bed definition (staffed) is appropriate and
generous compared to the other existing definitions. We believe it is
the most reflective method for identifying the actual size of a
hospital. As a general measure, the average daily census definition for
counting inpatient hospital beds would be too generous for this
provision, as it is less reflective in terms of identifying the actual
size of a hospital. For example, this definition could qualify
hospitals staffed or licensed for 75 beds or more. We believe
qualifying those hospitals for the RHC payment limit exception would be
inconsistent with the congressional intent.
Comment: Several commenters suggested changing the proposed
threshold pertaining to the fluctuation of patient census at or above
150 percent of the lowest monthly average census to a more reasonable
level or eliminating the standard. Many vulnerable hospitals do not
have a single period of seasonal fluctuation in census, but instead
experience multiple, and unpredictable, fluctuation in patient census.
Response: We share the commenters' concerns that some rural
hospitals may experience multiseasonal activity making it impossible,
for an otherwise eligible facility, to meet the 150 percent fluctuation
occupancy threshold. Therefore, we are revising proposed Sec.
405.2462(a)(3)(ii) to eliminate the proposed 150 percent fluctuation
threshold for patient census.
Comment: Two commenters suggested that we use the ambulatory
payment classification (APC) system when defining rural for the payment
limit exception. The commenters believe that this system would allow
physicians in the rural census tracks of MSAs to be considered rural.
The commenter asked us to use the same rural definition being used for
the APC system.
Response: The current APC system uses the OMB ``rural'' definition
as well as the Goldsmith modifier. As discussed above, the BIPA
expanded the location requirement to include rural and urban areas.
Consequently, the Congress has resolved this issue by recognizing small
hospitals in urban and rural communities as qualifying for the payment
exception.
Comment: Two commenters suggested an automatic exception should be
given to small rural hospitals with an average daily census of 15 beds
or less, regardless of the number of licensed or staffed beds, and any
hospital in a frontier area.
Response: We do not have the discretion to waive the 50-bed
requirement for hospitals located in frontier areas. Furthermore, we
fail to see the merit, as it relates to the intent of this provision,
in providing an automatic exception to hospitals with very low
occupancy rates that are staffed or licensed with more than 50 beds.
This provision was established to help small rural hospitals and their
clinics that represent the sole source of health for their communities
remain financially viable. An automatic exception of this type could
grant an exception to hospitals with significant excess capacity
located in marginally rural areas. Even for hospitals in frontier
areas, we do not have the authority to grant an automatic exception to
extremely rural hospitals that cannot satisfy the 50-bed requirement.
Comment: A commenter recommended extending the payment limit
exception in Sec. 405.2462 to clinics based in rural hospitals with
less than 50 beds and to freestanding clinics in the same rural area.
Response: We do not have the authority to grant exceptions to the
RHC payment limit for these providers. Only RHCs based in small
hospitals with fewer than 50 beds are eligible for the exception.
Comment: Two commenters recommended that the 40 or less average
daily patient census requirement should be increased to 45. Hospitals
in remote rural areas should not be required to hold their inpatient
acute care occupancy to a level that is significantly below the 50-bed
maximum requirement in the BBA. Very rural hospitals do not have the
ability to transfer, and should not be required to reject patients just
to meet this requirement.
Response: We believe this requirement is necessary and appropriate
for this provision. The 40 or less average daily patient census
requirement was established to meet the needs of small hospitals in
extremely rural areas experiencing seasonal fluctuations. Without
significant fluctuations in patient census, these hospitals would be
operating with less than 50 staffed beds. Hospitals with an average
daily patient census in excess of 40, in spite of seasonal
fluctuations, would likely have to operate with more
[[Page 74799]]
than 50 staffed beds, which is contrary to the statute.
Definition of Shortage Area for RHC Purposes (Sec. 491.2)
Comment: Several commenters suggested that we clarify in proposed
Sec. 491.2 that an area designated as a low-income HPSA would qualify
for RHC certification.
Response: We believe the rule is sufficiently clear regarding the
applicability of low-income HPSAs for RHC certification. Section
491.2(c) states that population group HPSAs, which include low-income
population group HPSAs, meet the definition of shortage area for RHC
purposes.
Comment: A commenter asked for clarification of the guidelines that
would be used to determine HPSAs. Specifically, will there be changes
that would impact those areas that are currently designated as HPSAs?
Response: The designation of HPSAs and medically underserved
populations (MUPs) is delegated by the Secretary to HRSA, and is not
covered by these RHC regulations. HRSA issued a proposed rule in
September 1998 (63 FR 46538) to revise the regulations for designation
of shortage areas, but this proposal was withdrawn in July 1999 because
of a high level of public concern about its potential impact. HRSA has
been conducting further analysis to address these concerns, and plans
to issue new proposed rules for designation of HPSAs and MUPs in 2004.
Comment: A commenter pointed out that the BBA amended the RHC
provisions to state that ``the rural area must also be one in which
there are insufficient numbers of needed practitioners as determined by
the Department.'' The January 2000 proposed rule does not address this
amendment. There is a need for regulations in this area because current
designations do not define an acceptable range for supply of providers
to population.
Response: By statute, we are required to rely on HRSA to designate
areas as medically underserved. As previously discussed, HRSA is
currently developing another proposed rule to revise its methods and
standards for designating shortage areas. HRSA's regulation will
address the issue of provider supply to population.
RHC Procedures (Sec. 491.3)
Comment: A commenter pointed out that it is unfair to apply the 3-
year currency requirement for MUAs. There is not a systematic review of
MUAs. The 3-year requirement should only apply to underserved
designations that are systematically reviewed.
Response: Section 4205(d) of the BBA requires clinics entering the
RHC program, as well as participating RHCs, to be located in a service
area designated or updated within the previous 3-year period. This
statutory requirement also applies to all medically underserved
designations for RHC qualification purposes. We do not have the
authority to exclude certain designations, such as MUAs. However, we
believe that affected clinics must be given sufficient time to submit
an application to update their service areas. We believe it is
imperative that these clinics be given adequate time to submit
applications to avoid being unnecessarily disqualified from the RHC
program. We also believe these clinics should be protected from RHC
disqualification while their applications are under review. Therefore,
we are revising Sec. 491.3(b)(2) to clarify that RHCs located in
service areas with outdated shortage area designations will have 120
days, from the date we notify the facility about its compliance issue,
to submit an application to update its medically underserved
designation. In addition, we clarify in new Sec. 491.3(b)(3) that the
RHC will be protected from disqualification while its applications are
under review. That is, affected clinics will not be considered out of
compliance with the 3-year currency requirement for 120 days from the
date HRSA formally receives the application. In rare cases where HRSA
or the State cannot complete their review within 120 days, clinics will
continue to be protected from RHC disqualification until a formal
decision is made.
Typically, applications for updating shortage area designations are
reviewed within 90 days. We will work closely with HRSA to ensure that
all applications are processed within this timeframe.
As stated above, HRSA is responsible for the designation of HPSAs
and MUAs, and certification of Governor's designations of eligible
areas for the RHC program. HRSA works closely with the State Primary
Care Office (PCO) in each State in administering the HPSA and MUA
review activity, and in the certification of Governor's designations.
Individuals or facilities interested in seeking a new or updated HPSA
or MUA, or who wish to inquire regarding a possible Governor's
designation, are encouraged to contact the appropriate State PCO. (A
list of these contacts is available by calling 1-800-400-2742, or
online at http://www.bphc.hrsa.gov/.) Information on the HPSA and MUA
criteria, procedures, frequently asked questions, and current
designation status is also available at this web site. (For further
information on HPSAs and MUAs, please contact Andy Jordan, Acting
Chief, Shortage Designation Branch, National Center for Health
Workforce Analysis, Bureau of Health Professions, at HRSA (301-594-
0816).)
Comment: Several commenters indicate belief that an extension from
RHC disqualification should be granted to clinics while their medically
underserved status is being formally updated. The application process
for updating underserved designation may unintentionally disqualify
otherwise eligible clinics.
Response: We agree that some clinics, that are otherwise eligible,
may be disqualified as an RHC if their service area cannot be updated
in a timely manner. In Sec. 491.3, paragraphs (b)(2) and (b)(3), we
clarify the regulation to protect RHCs from disqualification that are
in the process of formally updating their shortage area designations.
Clinics that exceed the 3-year requirement will not be disqualified
from RHC participation while their service area is in the process of
being formally updated by HRSA or the State.
Comment: Two commenters suggested that the 3-year currency
requirement in Sec. 491.3(b) is too short. The costs and structural
changes needed to set up an RHC cannot be recouped in 3 years.
Response: Section 4205(d) of the BBA requires clinics entering the
RHC program, as well as participating RHCs, to be located in a service
area designated or updated within the previous 3-year period. We do not
have the authority to modify this requirement.
Comment: A commenter recommended that we require States to contact
all providers by mail before an underserved area designation is
revoked. If the community or clinic appeal the decision, CMS regional
offices should have the authority to stop an RHC from having its
designation revoked.
Response: We rely on HRSA to designate shortage areas. HRSA's
review process provides affected communities and providers with
advanced notice of a designation withdrawal and the right to appeal
this decision. Our process for terminating RHC status does not start
until HRSA formally withdraws the shortage area designation.
Comment: A commenter suggested that we should continue to recognize
an area for RHC certification unless the area has been de-designated
two times in a 3-year succession.
Response: We do not have the authority to recognize an area for RHC
[[Page 74800]]
participation unless it has been recently designated or updated (within
the previous 3 years). The BBA mandates the use of current shortage
area designations.
Comment: A commenter suggested the proposed rule should be
coordinated with the rules for designating shortage areas. Some RHCs
may have a difficult time coping with these regulations if they are
finalized all at once.
Response: We are aware of the interrelationship between these
regulations and their potential impact on rural providers. HRSA is
developing a new proposed rule that would address the major issues
raised through the public comment period on its proposed rule published
on September 1, 1998 in the Federal Register (63 FR 46538) Designation
of Medically Underserved Populations and Health Professional Shortage
Areas. Although we do not know exactly when a new proposed rule will be
issued, the two agencies are in close contact and are striving to
establish and coordinate their policies in a way that is sensitive to
the needs and concerns of rural underserved communities.
Comment: Several commenters recommended that we revise the proposed
90-day timeframe for submitting an application for an exception.
Several commenters recommended a 6-month timeframe. The commenters
believe that the data needed to qualify for exception may not be
readily available; therefore, RHCs should be given ample time to gather
and submit the necessary information.
Another commenter supported the proposed 90-day timeframe as
reasonable, but recommended that we build in some flexibility to extend
this application period if the time is too short.
Further, a commenter suggested that the sole and traditional
community provider tests are needed, but suggested that the 90-day
timeframe for submitting an exception application based on this test be
extended. The commenter indicated belief that it will be difficult for
providers to research and demonstrate compliance.
Response: Although we believe the proposed 90-day timeframe for
submitting an application for an exception is sufficient for most
cases, we recognize that some applicants may need additional time.
Thus, we revise Sec. 491.3(c)(2) to provide clinics with 180 days to
submit an application.
Comment: Several commenters recommended extending the proposed 90-
day timeframe for removing RHC status. The adjustment period following
de-certification needs to be longer to allow practitioners who choose
to remain after de-certification to establish independent practices.
For example, the affected RHCs will need to obtain a new provider
number, which could take 4 to 6 months.
Response: Although we believe that the 90-day timeframe for
removing RHC status is a sufficient amount of time for most providers
to arrange to receive Medicare and Medicaid fee-for-service payments,
we acknowledge that some providers may need additional time.
Consequently, we are revising Sec. 491.3(c)(5) to provide until the
final day of the 6th month from the date of notification for ineligible
clinics to transition from RHC status to a different Medicare and
Medicaid payment and billing system.
Comment: Several commenters, in addition to extending the timeframe
for removing RHC status, suggested making the termination effective
date the last day of the month for administrative reasons.
Response: In terms of cost reporting and billing, we see merit in
making the effective date for RHC termination the last day of the
month. Consequently, we are revising proposed Sec. 491.3(c)(5) to
specify that the effective date for termination will be the final day
of the 6th month from the date of notification that the clinic's
location no longer meets program requirements. However, the RHC may be
terminated earlier based on noncompliance with other certification
requirements.
Comment: A commenter recommended that the regulation clearly state
that we are responsible for notifying a clinic that its RHC status is
in jeopardy and the 90-day timeframe should begin after receipt of this
notice.
Response: We believe that this final rule is sufficiently clear
regarding this issue. Sections 491.3(c)(2) and 491.3(c)(5) state that
we notify the clinic of its ineligibility to participate in the
Medicare program as an RHC.
Comment: A commenter suggested making an exception permanent unless
the community is no longer considered rural. To reapply is an
unnecessary waste of the provider's limited time.
Response: Clinics receiving essential provider status must meet
certain conditions. Therefore, we believe it is necessary and
reasonable to expect these clinics to demonstrate continued compliance
with these conditions. Clinics receiving this special status will be
required to provide to us, every 3 years, assurances that they continue
to meet the conditions for being an essential clinic.
Comment: A commenter asked us to clarify that an exception can be
renewed every 3 years.
Response: We are revising proposed Sec. 491.3(c)(3) to clarify
that an essential clinic can renew its RHC status every 3 years as long
as the facility can provide assurances to us that they continue to meet
one of the tests at Sec. 491.5(b).
Location of Clinic (Sec. 491.5)
Comment: A commenter suggested that we extend the grandfather
provision for a limited period of 10 years for existing clinics in
areas no longer designated as rural and underserved. A less favorable
option would be to implement a phase-out over a minimum of 10 years,
with reimbursement reduced from 100 percent to 80 percent. In a 10-year
period, an RHC affected by de-designation would have adequate time to
plan for its future.
Response: Section 4205(d) of the BBA requires us to terminate RHC
status for clinics no longer located in a rural or underserved area. An
exception from termination is only available if the RHC is determined
to be essential to the delivery of primary care. Consequently, we do
not have the authority to grant an automatic 10-year extension from RHC
disqualification, nor do we have the discretion to implement a phase-
out of RHC reimbursement.
Comment: A commenter believes an RHC should be considered
``essential'' if there is a lack of resources to absorb and
appropriately serve the client population in the absence of the RHC. If
an RHC has a Medicaid, Medicare, uninsured payer mix of 60 percent or
greater, it should be considered an essential RHC.
Response: The major community provider test is based on the premise
that the clinic is essential because it cares for a substantial number
of low-income patients (Medicaid and uninsured) within the community
and that there are insufficient providers willing or capable of serving
these patients. In order to ensure that the major community provider
test takes into account this issue, CMS will consider willingness and
resources of other providers to accept Medicare, Medicaid, and
uninsured patients when determining essential provider status. For
example, CMS will look at the size and scope of the other participating
providers as well as their level of participation in the Medicaid
program. Additional guidance regarding this review criterion will be
provided through Medicare manuals following issuance of this final
rule. As explained in the proposed rule, the issuance of an
[[Page 74801]]
exception as a major community provider was not intended to be a
routine occurrence. We examined the issue of using an absolute
Medicare, Medicaid and uninsured payer mix threshold for defining a
major community provider and we rejected this idea because it may not
accurately determine essential clinics at the community level due to
wide variability in population composition and utilization. However,
for those clinics applying as major community providers, CMS would
require the RHC applicant to have, at a minimum, Medicare, Medicaid and
uninsured utilizations rates reasonably consistent with the national
average.
The Office of Rural Health Policy, within the Department of Health
and Human Services, recently conducted a national RHC survey. Their
survey-based data indicate that the average RHC utilization rates are
as follows: Medicare (30 percent), Medicaid (25 percent) and uninsured
(15 percent). An RHC applicant would be required to demonstrate under
the major community provider test that their combined utilization rates
for low-income patients (Medicaid and uninsured) would, at a minimum,
equal or exceed 31 percent to even be considered eligible to apply for
a major community provider exception. An RHC applicant could also meet
a combined minimal utilization rate for Medicare, Medicaid and
uninsured patient threshold of 51 percent to satisfy this screen. CMS
believes the above minimal national utilization patient threshold is
reasonable in light of the national average utilization rates and
necessary to ensure consistency and fairness with respect to
identifying major community providers.
Comment: A commenter suggested that priority be given to clinics
that provide a real medical home for their patients. For example,
clinics that have a full time physician with hospital admitting
privileges and provide 24-hour coverage for their patients should be
granted priority as essential clinics.
Response: The proposed tests for identifying an essential clinic
are based on whether the RHC is the sole or major source of primary
care for Medicare beneficiaries and low-income patients (Medicaid
beneficiaries and uninsured). Although we believe that an after hours
coverage system and full time physician care are important factors, the
clinic must still demonstrate that it has an open door policy regarding
low-income patients. As discussed above, CMS is requiring that these
essential provider tests must take into account the willingness and
resources of other providers to accept and treat Medicare and Medicaid
beneficiaries and the uninsured.
Comment: Several commenters believe clinics that have lost their
rural status should be allowed to apply for an exception as an
essential clinic. The regulation could exclude some RHCs that are still
in medically underserved communities but fail to meet the rural
location requirement. The CMS proposed policy could result in the loss
of an essential RHC for uninsured and Medicaid patients.
Response: We agree with the commenters that an RHC that has lost
its rural status but is still located in a valid shortage (geographic
and population-based HPSAs, MUAs, and areas designated by the Governor
of the State) area should be permitted an opportunity to apply for an
exception from RHC disqualification. CMS recognizes that there may be
some RHCs located in small, isolated urbanized service areas that are
marginally above the minimum population threshold for qualifying as
non-urbanized but represent the sole or major source of outpatient
physician care for outlying rural areas designated as medically
underserved. Consequently, we are revising Sec. 491.5 to allow RHCs
located in medically underserved ``urban'' service areas to apply for
an exception as a sole, major, or specialty community provider.
However, we believe that these clinics should also be required to
demonstrate that they are an essential provider of primary care for
patients residing in a rural area. The RHC program was established for
the purpose of improving and maintaining access to primary care for
``rural'' underserved communities. In order to retain RHC status, CMS
believes every RHC must be able to show that it continues to satisfy
this basic program objective. It would be inconsistent with
Congressional intent to grant exceptions from RHC disqualification to
clinics non-essential to the delivery of primary care for rural
patients. Consequently, CMS is requiring that at least 51 percent of
the applicant's clinic patients reside in rural areas. We believe that
a rural patient origin threshold of 51 percent is very reasonable in
light of the statutory objective of the RHC.
Comment: Two commenters suggested that we conduct an extensive
needs assessment of each community before rescinding the clinic's
designation. If RHC status is removed, it may diminish the quantity and
quality of health care services to an already underserved population.
Response: We believe that an extensive needs assessment is
unnecessary in light of the fact that HRSA already has made a
determination that the area is no longer medically underserved.
Furthermore, the purpose of granting essential provider status to RHCs
is to ensure that access to quality care for Medicare, Medicaid, and
uninsured patients is preserved despite the fact that the area is no
longer considered rural or medically underserved.
Comment: A commenter suggested that the grandfather protection
regarding essential provider status should be extended to rural clinics
that lose their medically underserved designation. The commenter
believes that if protection cannot be provided to these clinics in this
manner, we should amend the exception process by including poverty
level and access problems to transportation as eligibility factors.
Response: Section 4205(b) of the BBA requires us to determine
whether a clinic is essential despite the fact that its area is no
longer considered rural or medically underserved. We believe it would
be inconsistent with congressional intent to provide an automatic
exception to every clinic no longer located in a designated shortage
area without making a determination whether the clinic is essential.
Comment: A commenter believes that any clinic that received its
underserved designation to establish an RHC should be able to retain
its status. Providers that have established clinics in very rural areas
and successfully recruited physicians to these areas should receive an
exception.
Response: We believe clinics that can demonstrate that they are
essential based on the proposed conditions should be granted an
exception. With regard to expanding the exception process to include
clinics located in very rural areas, we believe this suggestion merits
consideration. Please see the discussion below on how we intend to
address this concern.
Comment: A commenter pointed out that some of the proposed
exception tests may not be based on community need. Some of the tests
do not distinguish between clinics with one physician and clinics with
several physicians.
Response: We agree that the proposed tests need to take into
account the willingness and resources of other providers to accept and
treat Medicare, Medicaid, and uninsured patients. In light of this, we
are requiring that the essential provider test must take into account
the willingness and resources of other providers to treat and accept
Medicare and Medicaid beneficiaries, and the uninsured.
[[Page 74802]]
Comment: A commenter encouraged us to establish an extension
process for the RHC certification of the area losing its underserved
designation if it can be demonstrated that with the closure of the RHC,
the areas would qualify as an underserved area.
Response: We believe the proposed conditions for being considered
essential addresses this type of situation. However, as discussed
above, we are clarifying Sec. 491.5 to require that the proposed tests
for determining essential provider status must take into account the
willingness and resources of other providers to accept and treat
Medicaid, Medicaid, and uninsured patients.
Comment: A commenter encouraged us to look at why and how the
service area has solved its shortage problem. It may to be due the RHC
recruiting additional providers.
Response: We believe that our proposed conditions for granting
essential provider status speak directly to this issue. This is
particularly true for the sole community provider test. We will grant
an exception when the successful recruitment of additional health care
professionals by an RHC results in the dedesignation of the shortage
area. This was proposed to make sure that these sole community clinics
and their new practitioners remain viable providers.
Comment: A commenter encouraged us to more clearly define
``community'' as it is used in the exception process. For example, does
it mean the service area of the RHC or the town in which the clinic
operates?
Response: The RHC's service area for determining essential provider
status is based on 30 minutes travel time from the RHC applicant. We
are revising proposed Sec. 491.5(b)(1) to clarify this determination
at it relates to all the essential provider tests.
Comment: A commenter questioned whether more than one RHC could
qualify for an exception in a given geographic area, assuming that each
RHC meets the requirements for an exception.
Response: It is very possible that more than one RHC within a
particular service area could receive essential provider status. In
other words, there is no restriction on granting multiple exceptions
within a specific service area as long as each RHC meets the conditions
for receiving an exception.
Comment: Several commenters believe special consideration should be
given to clinics that make house calls and provide after hours coverage
for their community. These providers may be essential in communities
with inadequate transportation services.
Response: We believe that these are important factors, but
supplementary to the provider's overall importance to community. In
other words, providers that have devoted their practice to treating
Medicare beneficiaries and low-income patients (Medicaid beneficiaries
and the uninsured) should be able to satisfy one of the tests in this
final rule without relying on an after hours coverage system or on
making house calls. Our proposed essential provider tests were designed
to recognize clinics that are the sole or major source of primary care
for Medicare beneficiaries and low-income patients (Medicaid
beneficiaries and the uninsured.)
Comment: The commenter suggested that special consideration should
be given to clinics that provide pharmacy, x-ray, and lab services that
otherwise would be unavailable.
Response: Although these are important services, we believe that
essential provider status must focus on the professional services of
physicians and nonphysicians, which are core RHC services. We also
believe that these exceptions must be based on the clinic's dedication
towards treating low-income patients (Medicaid beneficiaries and the
uninsured).
Comment: Several commenters believe that the criteria for
identifying essential clinics should factor in rural service areas with
inadequate transportation services.
Response: We believe the proposed tests for identifying essential
providers should address the issue of inadequate transportation
services. However, since this condition cannot be easily measured or
identified on a national level, we believe the best way of addressing
this issue is by allowing for more than one RHC in a given service area
to receive an exception as an essential clinic under the major and
specialty provider tests. As discussed below, we are revising the
proposed rule to permit, when warranted, multiple exceptions in a
service area.
Comment: A commenter suggested that in counties that lose their
underserved classification, we should apply a standard deviation or
percentage test to determine if the county is so vulnerable that they
should be granted an exception.
Response: Section 4205(d) of the BBA requires us to determine
whether the facility is essential to the delivery of primary care for
its community. Although the tests in this final rule indirectly take
into account these issues, we cannot grant an exception without
assessing the importance of the clinic to primary care for Medicare,
Medicaid, and uninsured patients within that community. In other words,
we are obligated by statute to determine whether the facility is
essential to the delivery of primary care.
Comment: A commenter believes that we should provide our regional
offices the authority to grant an exception on a case-by-case basis.
There may be legitimate circumstances that would warrant an exception
as an essential clinic that cannot be properly identified under our
specific tests.
Response: We disagree with the commenter. We believe that the
proposed specific tests and the additional refinements that we have
made to these conditions, based on provider comments, will minimize or
eliminate any negative impact on access to care for rural communities.
We also believe the additional clarifications and changes to the
essential provider tests should provide our regional offices with
enough flexibility to recognize these circumstances.
Comment: Several commenters believe clinics located in very rural
areas should automatically be granted an exception. We should recognize
frontier areas and consider at least the inclusion of level 8 and level
9 USDA urban influence codes. Recruiting and retaining practitioners in
remote areas is a constant struggle and we should eliminate the anxiety
and cost associated with the possible loss of RHC status.
Response: We believe this suggestion has merit. Rural areas that
are sparsely populated are more vulnerable to losing their shortage
area designations. For example, the recruitment of just one additional
practitioner in a frontier area could trigger a disqualification of the
area's underserved status. In light of this, we believe clinics located
in very rural areas should receive an exception. Consequently, we are
revising Sec. 491.5 to grant an exception to any RHC located in a
frontier county or a rural area or in a level 8 or level 9
nonmetropoltan county using urban influence code as defined by the
USDA. However, we will only provide an exception to these very rural
clinics if they can demonstrate that they have traditionally served
Medicare, Medicaid, and uninsured patients and continue to maintain an
open door policy.
Comment: A commenter suggested that any RHC 50 miles or more from
the next nearest hospital should be granted an exception.
Response: We believe that these clinics will qualify as an
essential RHC under one of the tests. The commenter seems to be
describing a situation where
[[Page 74803]]
the area is very remote and has limited health care resources. Because
our proposed tests target these situations, we see no reason for
changing the regulation.
Comment: Several commenters indicate that we should automatically
recognize essential provider status for clinics affiliated with
critical access hospitals (CAHs), Medicare dependent hospitals (MDHs),
and sole community hospitals (SCHs). The criteria for essential
provider status are extensive, ranging from shortage area status to
treating the uninsured. Consequently, it would seem appropriate and
consistent with essential provider status for the RHC program.
Response: Although we agree that some of the criteria for CAH and
SCH status are consistent with essential provider status for the RHC
program, clinics applying for this special status should not
automatically receive an exception because of their hospital
affiliation. There could be cases where the clinic of the CAH or SCH
would not satisfy the requirements for being an essential RHC.
Therefore, the RHC should be required on its own to demonstrate
compliance with the essential provider conditions.
Comment: Several commenters suggested that we should reduce the
time and distance standard, for example, change it to 20 minutes or 15
miles. Many Medicare and Medicaid patients have a barrier to
transportation services in rural areas. Furthermore, some rural
communities have special populations, such as prison, indigent, or
Medicaid.
Response: We agree that the proposed tests for identifying
essential providers should address the issue of inadequate
transportation services. However, regarding this specific issue, we
believe it more appropriate and effective to grant an exception to more
than one RHC in a given service area under the major and specialty
provider tests than reducing the time and distance standards.
Consequently, we are revising Sec. 491.5 to clarify that we will, for
the major and specialty provider tests, grant multiple exceptions
within a specific service area as long as each RHC meets the conditions
for receiving an exception.
Comment: A commenter suggested that we should establish a special
population exception criteria to reflect certain populations (for
example, the Amish) and rural communities with a high proportion of
elderly or low-income residents. Additionally, rural areas designated
as a low income HPSA or MUA should also qualify for the special
population exception.
Response: The proposed essential provider tests already address the
issue of special populations. All of the tests focus on the clinic's
devotion to treating Medicaid, Medicaid, and uninsured patients. For
establishing a special population exception for low-income HPSAs or
MUAs, rural clinics located in service areas that have a current
(within the previous 3 years) designation of this type are not in
jeopardy of RHC disqualification.
Sole Community Provider Test
Comment: Several commenters suggested that the sole community
provider test should be applied to clinics that are the sole source of
primary care for their small rural town that are 8 to 10 miles apart
from other small rural towns. The commenter believes that, under the
proposed 30-minute test, the time and distance of the roundtrip may
deny access to care for Medicare and Medicaid patients.
Response: Although we believe the time and distance standards in
the proposed rule are reasonable, we acknowledge the need to preserve
RHC status for sole community clinics located in small rural towns. The
residents of these rural towns, especially those who lack access to
transportation, may experience difficulty obtaining needed health care
if the clinic cannot remain financially viable. Consequently, we are
revising proposed Sec. 491.5(b) at Sec. 491.5(b)(l)(ii) to clarify
that we will, when appropriate, grant an exception to more than one RHC
within a specific service area, as long as each RHC meets the
conditions for receiving an exception. We believe this will allow RHCs
that are the major or primary source of health care for their small
rural town to receive an exception.
Comment: A commenter believes the our proposed 30-mile test is
inconsistent with published HPSA criteria of 25 miles.
Response: We agree that HRSA applies a 25-mile test for areas
connected by interstate highways. We are revising proposed Sec.
491.5(b)(1)(iii) to correct this inconsistency.
Comment: A commenter asked how the distances would be measured for
determining the sole community provider test. The commenter questioned,
for example, whether the distance will be based on actual driving time
or on results from a mapping software program.
Response: For administrative efficiency, we will apply the time and
distance test using a mapping software program.
Comment: A commenter pointed out that using the RHC as the
geographic center does not take into account the distance a large
percentage of patients travel in the opposite direction of the
``other'' primary care practice.
Response: We believe the proposal to use the RHC as the geographic
center for identifying sole community provider status is reasonably
accurate and feasible from an administrative standpoint. We have
applied this method for the SCH and CAH programs. Therefore, we believe
it is also appropriate for the RHC program.
Comment: A commenter believes that we need to provide a standard
definition under this rule for the terms such as ``secondary roads''
and ``primary roads.'' The use of these terms without providing a clear
definition could lead to misinterpretation.
Response: HRSA has consistently applied the definitions in the Rand
McNally Road Atlas for identifying primary, secondary, and interstate
highways for purposes of the 30-minute travel test. We will also apply
these standard definitions when reviewing essential provider
applications.
Comment: A commenter recommended that RHCs requesting exception
status should be immune from the 30-minute test if they have a formal
sliding fee scale in place and 10 percent or more of their encounters
are indigent patients.
Response: The sole community provider test already requires the
applicant to demonstrate that it accepts Medicare, Medicaid, and
uninsured patients that present themselves for treatment. Therefore, to
waive the 30-minute test would simply make the sole community provider
test a weakened form of the major community test, and would mean that
it would no longer be focused on clinics that are the sole source of
primary care for Medicare and Medicaid patients in their community.
This specific essential provider test recognizes clinics as sole
community providers for Medicare beneficiaries and low-income patients
(Medicaid beneficiaries and the uninsured). For example, a clinic could
receive this sole clinic status if it is the sole source of primary
care for Medicaid and uninsured patients. If the clinic is not the sole
source of care for Medicare, Medicaid, or uninsured patients, it can
qualify as a major community provider by demonstrating it is a
significant source of health care for indigent patients, such as
Medicaid and uninsured patients.
Comment: A commenter recommended that the ``participating primary
care provider'' language under
[[Page 74804]]
the sole and traditional community provider test should be expanded to
require that these other providers must actively accept and treat
uninsured patients, be engaged in full-time practice and be currently
accepting new patients. Allowing an RHC to be de-designated because of
the presence of other primary care providers who are semi-retired or
only work part-time would place access to care for the community at
risk.
Response: We agree that the proposed tests need to take into
account the willingness and resources of other providers to accept and
treat Medicaid, Medicaid, and uninsured patients. In light of this, we
are requiring that the essential provider test must take into account
the willingness and resources of other providers to treat and accept
Medicare, Medicaid, and uninsured patients. The major and specialty
provider tests must take into account the acceptance and treatment of
Medicare and Medicaid beneficiaries, and the uninsured (regardless of
their ability to pay.) The sole community provider test already
stipulates that other providers in the community must accept Medicare,
Medicaid, and uninsured patients to be considered.
Comment: A commenter suggested consideration for a system of care
network under the exception process for essential clinics. A single
multisite health care system is often the sole organization providing
health care in a rural area. The commenter believes a system's clinics
could lose their designation due to the physical location of another
clinic.
Response: If the service area is no longer considered medically
underserved or rural, each RHC will be required to demonstrate that it
is essential based on the specific tests set forth in this final rule.
An entity that owns and operates several RHCs would not be permitted to
submit one application on behalf of all its clinics. The essential
provider tests can only be appropriately applied on a facility specific
basis.
Comment: A commenter questioned why we did not establish a time and
distance standard based on the standard used for sole community
hospitals. The commenter indicated belief that we should make the
criteria more consistent to avoid confusion and ensure more equitable
treatment of sole community RHCs and hospitals.
Response: Our proposed time and distance criteria are based on
published HPSA criteria because these shortage area designations
represent a core qualification requirement for RHC participation. In
light of this linkage, we believe it is more appropriate to apply the
HRSA criteria instead of the SCH standards.
Traditional Community Provider Test
Comment: Several commenters believe the traditional community
provider test should require that new providers must demonstrate that
they have been accepting Medicare, Medicaid, and uninsured patients for
a 5-year period. In addition, a determination should be made whether
the non-RHC providers have the resources to treat an expanded patient
population that would be created if the RHC would be closed.
Response: We are folding the traditional community provider test
into the major community provider test to streamline and simplify the
exception process for potential applicants. CMS believes, based on the
many comments and different scenarios presented, that it would be more
reasonable to combine these two tests. Clinics with an open door policy
that are also the sole participating RHC for its community should be
allowed to receive an exception as long as they represent a major
source of primary care for its community. With regard to the specific
issue of non-RHC providers having sufficient resources, we are
requiring that the major community provider test must take into account
the willingness and resources of other providers to accept Medicare,
Medicaid and uninsured patients.
Comment: A commenter asked for clarification regarding the 5-year
status for treating Medicare, Medicaid, and uninsured patients and how
it is affected by a change of ownership.
Response: As stated above, CMS is combining the traditional and
major community provider test for simplification. Consequently, CMS is
no longer explicitly imposing the 5-year requirement. However, CMS
expects the sole participating RHC to be a traditional primary care
provider compared to other Medicare and Medicaid participating
providers within the community.
Comment: A commenter suggested that the traditional community
provider test should be expanded to address the situation where the
rural community has two RHCs and both see Medicare, Medicaid, and
uninsured patients.
Response: In addition to combining the traditional and major
community provider tests, we are revising the major community provider
test to address this issue. We acknowledge that there could be a
situation where a rural community may have more than one RHC that
represents a major source of primary care for its Medicare, Medicaid,
and uninsured patients. We are revising proposed Sec. 491.5(b) at
(b)(1)(ii) to clarify that more than one RHC in a given service area
may receive an exception as a major community provider.
We are also revising this provision to eliminate the requirement
that an RHC must be treating a ``disproportionately greater share'' of
Medicare, Medicaid, and uninsured patients compared to other
participating RHCs to allow for more than one exception. As stated
above, there could be a situation where there are two RHCs in the
service area and both equally share the responsibility of treating the
indigent patients within the community.
Comment: A commenter asked us to clarify the length of time
requirement for treating Medicare, Medicaid, and uninsured patients.
Response: As stated above, CMS is combining the traditional and
major community provider test for simplification. Consequently, CMS is
no longer explicitly imposing the 5-year requirement.
Comment: Several commenters recommended, for the essential provider
tests, independent verification of information submitted by another
community provider. This type of information is critical to accurately
determining whether the provider has an open or closed practice to
Medicaid and uninsured patients.
Response: Our regional offices require supporting information to
verify these claims and use, when feasible, their own data (enrollment
and billing information) to determine whether the other primary care
providers have an open practice to Medicare, Medicaid, and uninsured
patients.
Major Community Provider Test
Comment: Several commenters requested specific guidelines for the
major community provider. The proposed language could lead to
misapplications and misuse. For example, how will the term
``disproportionate'' be defined and how will the percentages be
calculated?
Response: The applicant will not be required to meet an absolute
threshold in terms of Medicare and Medicaid utilization. The premise
behind this test is to grant an exception to an RHC that has an open
practice to indigent patients (Medicaid and uninsured) and represents a
major source of health care for these patients when other RHCs in the
same service area do not provide or limit services to these patient
groups. The applicant will be required to demonstrate that it has
devoted its practice to serving Medicare, Medicaid,
[[Page 74805]]
and uninsured patients, and continues to maintain this open door
policy. Furthermore, the clinic's utilization rates for low-income
patients would have to be consistent with the claim that it is a major
source of primary care for its service area. For example, if there are
three RHCs located in a rural town, which is no longer considered
medically underserved, and two of the RHCs claim to be major community
providers because their utilization rates for low-income patients
exceed 45 percent, we would consider these RHCs with the higher
utilization rates as major community providers if the third RHC has
utilization rates of less than 10 percent for low-income patients.
Also, as explained above, CMS would require the RHC applicant to have,
at a minimum, Medicare, Medicaid and uninsured utilization rates
consistent with the national minimal patient utilization threshold. An
RHC applicant would be required to demonstrate under the major
community provider test that their combined utilization rates for low-
income patients (Medicaid and uninsured) would, at a minimum, equal or
exceed 31 percent to be eligible to apply for a major community
provider exception.
Comment: Several commenters pointed out that multiple RHCs may be
necessary to share the uncompensated and indigent care load. Multiple
RHCs do not necessarily mean excess capacity.
Response: We acknowledge that there may be a situation where more
than one RHC in a particular rural area represents the major source of
primary care for Medicare, Medicaid, and uninsured patients. For
example, there may be three RHCs located in a rural town that is no
longer considered medically underserved, but only two of the three RHCs
treat the Medicaid and uninsured population for that rural community.
Therefore, we are revising proposed Sec. 491.5(b)(1)(ii) to clarify
that more than one RHC in a given service area can receive an exception
as a major community provider. However, as discussed above, there must
be supporting evidence that the applicants represent a major source of
primary care for the patient population of the service area.
Comment: A commenter recommended that if we establish a national
minimum utilization standard for the major community provider test, it
should be set no higher than a combined Medicare, Medicaid, and
uncompensated care rate of 60 percent.
Response: We rejected the idea of using a specified Medicare,
Medicaid, and uninsured payer mix for defining a major community
provider because it may not accurately determine essential clinics at
the community level due to a wide variability in utilization from
region to region. We believe the best approach is to require the clinic
to demonstrate that it represents a significant source of primary care
for Medicare and indigent patients (Medicaid and uninsured).
Comment: Several commenters requested clarification of the
situation when a ``provider'' may not be limited to one discreetly
certified site.
Response: Health care entities that own and operate multiple RHCs
would not be permitted to submit one application on behalf of all its
clinics. The essential provider tests can only be appropriately applied
on a facility specific basis.
Comment: A commenter believes we should state, for the major
community provider test, that a disproportionate share of Medicare,
Medicaid, and uninsured patients is defined as serving a higher
percentage of these patients than the percentage in the community at
large.
Response: The goal of this essential provider test is to identify
clinics that are the major source of primary care for Medicare,
Medicaid, and uninsured patients. We believe the test must not be
solely based on whether the clinic is serving a higher percentage of
these patients compared to other RHCs in the community, but based on
whether the clinic represents a major source of primary care for these
patients. The test, for example, will identify whether, without the
presence of the clinic, other RHCs have the capacity or willingness to
fill the void in terms of furnishing care to Medicare, Medicaid, and
uninsured patients.
Comment: A commenter asked whether the RHC applying for the
exception would be compared to other RHCs or all primary care
providers.
Response: Clinics applying under this exception test will be
compared only to other RHCs. However, in situations where the clinic is
the only participating RHC, the test will compare the RHC to other
primary care providers.
Specialty Provider Test
Comment: Several commenters expressed belief that the specialty
provider test should be expanded to include mental health services.
Recent reports have indicated a serious need for mental health services
in rural underserved areas.
Response: We acknowledge that many rural areas are seriously
underserved in terms of mental health services. We see the merit of
expanding the specialty provider test to include RHCs that provide
mental health services. Therefore, we are revising proposed Sec.
491.8(a)(6) to expand this essential provider test to recognize RHCs
that employ a clinical psychologist or clinic social worker. We are
expanding the specialty provider test in Sec. 491.5 to grant
exceptions to RHCs that represent the sole source of mental health care
for their communities and that furnish these covered mental health
services on-site.
Comment: Several commenters recommended that the exclusive provider
language under the specialty provider test should be changed to give
exemptions to specialty providers that see the majority of Medicare,
Medicaid, and uninsured patients. There could be two pediatric clinics
in the community, but only one clinic sees a disproportionate share of
Medicare, Medicaid, and uninsured patients.
Response: We agree with the commenters that this essential provider
test should take into account the possibility that there may be more
than one specialty clinic furnishing primary care to Medicare,
Medicaid, and uninsured patients. We share the commenters' concern that
there may be two specialty clinics in the service area that equally
share in treating indigent patients or, as described above, there may
be two clinics and only one sees the majority of low-income patients.
Consequently, we are revising Sec. 491.5(b)(1)(ii) to eliminate the
sole source of care requirement. We clarify that more than one RHC
within a service area can receive an exception under this test as long
as the applicant can demonstrate that it represents a major source of
care for indigent patients (Medicaid and uninsured). Furthermore, the
RHC applicants would be required to demonstrate that their utilization
rates for low-income patients (Medicaid and uninsured) would, at a
minimum, exceed equal or 31 percent to even be considered eligible to
apply for a specialty clinic test as a major source of pediatric or OB/
GYN care. We are making this change to be consistent with the major
community provider test.
Comment: A commenter believes clarification may be needed, under
the specialty test, regarding general medicine RHCs that include part-
time or full-time OB/GYN or pediatric care.
Response: This test was established to specifically target clinics
that exclusively provide pediatric and OB/GYN care. We believe the
other tests in this final rule will give those clinics that do not
limit their practice by gender or
[[Page 74806]]
age an opportunity to qualify as an essential provider.
Comment: Several commenters suggested that the specialty provider
test should recognize other services, such as geriatrics, cardiology,
gastroenterology, orthopedics, oncology, and other specialty services
at the discretion of the Secretary.
Response: The specialty provider test was established to
specifically target clinics that exclusively provide pediatric and OB/
GYN care. Although we agree that these are vital services, they go
beyond the intended scope of the RHC program. The only exception to
this will be geriatrics, which we believe is addressed by the other
essential provider tests.
Comment: A commenter asked us to consider expanding the test over a
wider geographic area. RHCs may be the sole providers of specialty
services in the surrounding communities.
Response: We are revising Sec. 491.5(b)(2)(iii) for this test to
grant exceptions to specialty clinics that are the sole or major source
of primary care for their communities. We believe this change
diminishes the importance of how we define the boundaries of the
clinic's service area.
Comment: A commenter recommended that the definition of specialty
clinic provider should be revised to address a defined population
rather than the entire census population.
Response: We are revising Sec. 491.5(b)(2)(iii) to grant
exceptions to specialty clinics that are the sole or major source of
primary care for Medicare (where applicable), Medicaid, and uninsured
patients. We acknowledge that pediatric clinics that have lost their
medically underserved status may only be able to demonstrate that they
are the sole or major source of primary care for Medicaid, and
uninsured patients.
Comment: A commenter suggested that this test should be expanded to
include women's health services as an essential service provider. In
some States, RHCs are the exclusive provider of breast and cervical
screening for Medicare, Medicaid, and uninsured patients.
Response: The specialty provider test was established to
specifically target clinics that exclusively provide pediatric and OB/
GYN care. We believe it is unnecessary to further target other
specialties. Rural clinics that provide these important services should
easily qualify under one of the other tests as set forth in this final
rule.
GME Test
Comment: Several commenters recommended that RHCs providing
supervised training to nonphysician practitioners should also be
eligible under the GME test. They pointed out that this would bolster
the Congress' intent to encourage the use of these practitioners to
improve access in rural areas. The commenters also indicated that the
Federal government has for many years actively supported training
through title VII and title VIII of the PHS Act.
Response: We disagree that this essential provider test should be
expanded to include RHCs that are part of a formal training program for
nonphysician practitioners. CMS believes that the GME test is no longer
needed in light of all the refinements and clarifications made to the
other essential community provider tests. In other words, CMS strongly
believes that any RHC receiving direct GME payment will now be able to
easily satisfy one of the several other tests for being considered
essential to the delivery of primary care. When this test was first
proposed on February 28, 2000, CMS expected that there would be a
significant number of RHCs receiving direct GME payments by the time
this test was formally issued. Unfortunately, this has not occurred. In
light of this fact and the many refinements to the rule, which have
expanded on the other essential community provider tests, CMS is
revising the regulation to eliminate the GME test.
Comment: Several commenters suggested that we should expand the GME
test to include clinics that have a formal arrangement with a medical
school to rotate medical students through the clinic.
Response: As discussed above, we are eliminating the GME test.
Staffing and Staff Responsibilities (Sec. 491.8)
Comment: A commenter suggested that an RHC that can document
ongoing recruitment efforts should be allowed additional time for
waivers in filling the vacancy. The commenter stated that for some
rural communities it is difficult to attract nonphysician providers.
Response: We disagree with the commenter. Section 4161(b)(2) of the
OBRA '90 added section 1861(aa)(7) to the Act to provide us with the
authority to grant a 1-year waiver of the mid-level requirement for
existing RHCs and RHC applicants. The BBA amended section
1861(aa)(7)(B) of the Act to restrict our authority to allow a waiver
for RHC applicants. Therefore, we are retaining the requirement in the
new Sec. 491.8(d)(1).
Comment: We received several comments regarding the nonphysician
practitioner requirement for RHCs. One commenter recommended that the
requirement be eliminated for areas that are no longer health
professional shortage areas. The commenter believes that a community
that has been successful in recruiting physicians may no longer need a
nonphysician practitioner to serve the area. A second commenter
believes that the requirement may be difficult to comply with and
mandate the hiring of personnel that are not cost effective.
Response: We do not have the authority to eliminate the
nonphysician staffing requirement. Both the Federal statute and
regulations mandate the use of nonphysician practitioners.
Specifically, Sec. 491.8(a)(6) clearly specifies that a nonphysician
practitioner must be available to furnish patient care services at
least 50 percent of the time the RHC operates.
Comment: A commenter suggested that start-up RHCs in extremely
rural areas, such as a designated frontier county (less than six
persons per square mile) should receive an exception from the staffing
requirements in Sec. 491.8 The difficulty in establishing, much less
maintaining providers in frontier areas is well documented.
Response: Section 491.8(a)(6) states that a physician or
nonphysician practitioner must be available to furnish patient services
at all times during RHC hours of operation. Section 4205(c) of the BBA
restricts our authority to grant a waiver to clinics applying for RHC
status. The RHC applicant must demonstrate that it employs a
nonphysician practitioner before it can receive approval as an RHC.
Comment: A commenter asked us to clarify the term ``operates'' as
it relates to the requirement of staffing a nonphysician practitioner
50 percent of the time. For example, does it mean normal business hours
and excludes extended hours?
Response: The term ``operates'' in Sec. 491.8(a)(6) means the
total operating schedule during which the clinic furnishes RHC
services.
Quality Assessment and Performance Improvement (Sec. 491.11)
(Condition for Certification (CFC) for Rural Health Clinics)
Comment: Most of the commenters agree that a quality assessment and
performance improvement program is needed for RHCs. They also agreed
with the flexibility of RHCs to design and carry out their own
performance
[[Page 74807]]
improvement programs. One commenter stated support for our
interpretation of congressional intent to implement quality assessment
and performance improvement (QAPI) programs in RHCs. Another commenter
was in favor of replacing the current ``annual evaluation'' process,
stating that the current process is of little value.
Response: We appreciate the supportive comments. Our revised
quality requirements in Sec. 491.11 are directed at improving outcomes
of care and satisfaction for patients while eliminating unnecessary
procedural requirements. A QAPI program must be based on a continuous,
proactive approach to both managing the RHC and improving outcomes of
care and patient satisfaction. As stated in section II. E of this
preamble discussion, the BBA requirement, the new QAPI standard will
replace the current program evaluation condition for certification at
Sec. 491.11.
Comment: Many commenters stated that the requirement, as proposed,
is too burdensome and would be counterproductive for clinics with
limited staff and resources. They stated the clinics do not have the
resources to carry out the volume of evaluation proposed. Further, some
commenters stated that a QAPI program would increase the cost to
deliver care at a rural health clinic. One commenter suggested a pilot
program in provider-based facilities that can be later expanded to
independent clinics with a cost allowance. Also, two commenters
suggested a phase-in period be considered.
Response: There are two distinct steps to a QAPI program. The first
step is to compare care delivered against an identified standard for a
particular type of health care provider or delivery system. The second
step is to correct or improve processes of care and clinic operations
that are predictive of improved outcomes of care or actual care
outcomes. Currently, RHCs are required to carry out or arrange for an
annual evaluation or assessment of their total program, take necessary
actions to correct remedial problems, review policies and guidelines
for medical management of health problems, and review the utilization
of clinic services. Currently, resources that are allocated to the
annual program evaluation can be used to comply with the new QAPI
requirement.
We anticipate that both large and small RHCs will use a variety of
performance measures in their QAPI program. These measures may be
designed by the clinic itself or by other sources outside the clinic.
We are clarifying proposed Sec. 491.11(b)(3) to state that the RHC
will determine the number and frequency of distinct improvement
projects it will conduct. The QAPI program could result in some
immediate costs to an individual clinic. However, we believe that the
QAPI program will result in real, but difficult to estimate, long-term
economic benefits to the clinics (such as cost-effective performance
practices or higher patient satisfaction that could lead to increased
business for the clinic).
We disagree with a phase-in or pilot approach for the QAPI program.
Clinics are currently performing, at a minimum, the evaluation or
assessment portion of the new standard. The final rule will change the
focus in performing the evaluations. Instead of focusing on the
processes, we want clinics to focus on improving outcomes and patient
satisfaction. Rather than making remedial changes (fixing problems once
they occur), we prefer clinics to continuously improve the quality of
care they provide. We expect a clinic's assessments to be based on
objective data or information that will enable them to assess if
changes are needed and to subsequently evaluate the effectiveness of
the changes or interventions. Striving to improve care that is given
must be the number one priority in delivering care for any provider. As
currently permitted in existing Sec. 491.11 for annual evaluation,
clinics will be free to arrange for or to solicit outside assistance
with their QAPI efforts.
Comment: A few commenters stated many RHCs already have quality
assurance programs in place and those current programs should be
considered for content and value. To eliminate duplication for
provider-based clinics, several commenters recommended that we should
accept QAPI programs designed to meet the requirement of an accrediting
agency (that is, the Joint Commission on Accreditation of Healthcare
Organizations (JCAHO)) as meeting the minimum level of effort required
by the proposed rule.
Response: There are no accrediting organizations that have been
approved and granted deemed status for RHCs. Any assertion that RHC
meet the QAPI requirements of any accrediting body does not substitute
for onsite inspection by State survey agencies to ensure compliance
with the Medicare requirements. We believe that the standards in Sec.
491.11 are very basic to any QAPI program. For example, JCAHO's
accreditation process for ambulatory care providers requires
measurement in areas of clinical effectiveness, access to care, and
patient satisfaction. All of these areas are under the umbrella of
``organizational processes, functions and services'' areas in which we
require clinics to perform a self-assessment and improve performances.
If a clinic currently has a QAPI program that addresses the
requirements of this final rule, we do not see a need to require a
clinic to duplicate its quality activities. To the extent that clinics
are currently evaluating their processes, functions and services, they
will be better prepared to comply with our QAPI rule. We expect RHCs
that have no experience with QAPI programs to take advantage of the
resources that are available. RHCs are encouraged to explore a variety
of resources so that they can become familiar with the variety of
approaches that exist to develop a QAPI program. An RHC that chooses to
implement the QAPI resources (that is, model QAPI programs) provided by
the Department and other on-line resources mentioned elsewhere in this
regulation will be considered to meet the QAPI CfC provided that the
model program chosen is one that is relevant to the RHC and its patient
population.
Comment: One commenter stated that because of the physician
credentialing process, board oversight process, State sentinel event
laws, and malpractice suits, there is very little need for more quality
assessment regulations from us. A few commenters stated that the
introduction of the issue of specific attention to medical errors is
troublesome in that there appears to be no legislative requirement for
this specific area. These commenters believe that medical errors should
not be addressed or required in the QAPI requirement. Another commenter
stated that the responsibility for medical errors should be left to
each State's licensing authority.
Response: While we agree that credentialing, oversight, and the
reporting of sentinel events are fundamental activities that occur and
are required on a State level, we disagree that these activities, or
malpractice suits, negate the requirement for RHCs to have a QAPI
program. The focus of any QAPI is to improve outcomes and patient care
without being prompted by negative activities such as sentinel events
or lawsuits. In fact, the prevention of the occurrences must be
considered by the clinic when developing its QAPI strategy.
In the 1999 report entitled ``To Err is Human: Building a Safer
Health System,'' the Institute of Medicine (IOM) of the National
Academy of
[[Page 74808]]
Sciences discussed medical errors as one of the nation's leading causes
of death and injury. The report estimated that more people die from
medical errors each year than from highway accidents, breast cancer, or
autoimmune deficiency syndrome. The Administration called for increased
awareness and accountability in America's health care system. Further,
the Secretary may impose requirements on providers if they are found
necessary in the interest of the health and safety of the individuals
who receive services from the providers. We believe it is appropriate
to include a discussion on medical errors in the preamble language for
the QAPI standards. In lieu of proposing a specific standard requiring
RHCs to track and analyze medical errors, we believe that errors and
the potential for errors will be detected and resolved through the
clinic's QAPI activities.
Comment: Several commenters expressed caution about the elimination
of structure and process criteria in favor of outcome measures. They
stated that quality of care is a function, as well as a result of all
three of the domains (clinical effectiveness, access to care, and
patient satisfaction) in the proposed rule. One commenter further
stated that there is insufficient evidence and experience to support a
comprehensive shift solely to outcome standards. They also stated that
care involving low-volume and high-risk procedures should also be a
focus of assessment and improvement as needed.
Also, several commenters stated that the QAPI requirement provides
very little flexibility and seems to require that improvement projects
be done in all clinical and nonclinical areas annually on the basis of
performance criteria that have yet to be determined.
Response: The fundamental purpose of the QAPI requirement is to set
a clear expectation that RHCs must take a proactive approach to improve
their performance and focus on outcomes of care. This does not
eliminate the need for improving structures and processes that are
indicative of improving outcomes.
However, after further consideration, in response to the
commenters' concerns, we have removed, in this final rule, reference to
the specific domains: access to care, patient satisfaction, and
clinical effectiveness. While the domains are critical areas in which a
clinic must evaluate its performance, the final rule allows clinics the
flexibility to identify their own areas to address. RHCs are required
to use objective measures to analyze organizational processes,
functions, and services annually. RHCs are required to develop,
implement, maintain, and evaluate an on-going self-assessment of the
quality and appropriateness of care provided through their data-driven
QAPI program. We do not intend and are not in a position to judge the
measures themselves; instead, we will assess their utility for the
clinic in its own efforts to improve its performance.
We also believe that it is critically important that RHCs identify
opportunities to improve and expand the use of information technology
(IT) to prevent medical errors and improve quality of care. This
Administration is committed to working with other public and private
stakeholders to develop means for improving and expanding the use of
information technologies (such as, computerized patient records). We
encourage RHCs, as they assess their organizational processes,
functions, and services, to identify opportunities and make use of
information technologies. We believe that the effective use of IT
systems could prove invaluable to improving the quality and safety of
patient care over time. We will allow RHCs to undertake programs of
investment and development of IT systems that are designed to result in
improvements in patient safety and quality of care as an alternative to
performance improvement projects (see Sec. 491.11(b)(5)). In
recognition of the time and resources required to develop and implement
these IT programs, we would not require that associated activities have
a demonstrable benefit in their initial stages, but would expect that
quality improvement goals and their achievement would be incorporated
in the plans for these programs. We believe that this modification
demonstrates this Administration's deep commitment to patients, high
quality care, and flexibility to our partners.
Comment: Several commenters stated that quality assurance programs
should be applied to all clinics that provide care to Medicare and
Medicaid beneficiaries, not just those in underserved areas.
Response: We agree that all providers must have an effective
quality assurance program. The purpose of this final rule is to
implement requirements for RHCs as required by the BBA. We plan to
systematically update regulations for all Medicare and Medicaid
providers to require quality assessment and performance programs. We
have already required quality assessment and performance programs for
certain Medicare providers.
Comment: Several commenters stated that the proposed rule grossly
underestimated the time required to implement the data requirements
mandated by the QAPI program. Commenters further stated that it would
take approximately 70 to 80 hours per year for an RHC to maintain this
program. Commenters requested we minimize the data requirement in light
of limited staff time.
Response: Under the Paperwork Reduction Act of 1995, we are
required to provide notice and solicit comment before a collection of
information requirement is submitted to OMB. In that proposed rule,
under section III of that preamble, Collection of Information
Requirements, we estimated that it would take each clinic a total of 1
hour per year to maintain the data required by the QAPI requirement.
This estimation does not include the time it will take to collect and
analyze data or perform the activities for the program. The hour is an
estimation of the time it will take a member of the clinic's staff to
store or file the documentation of the QAPI program activities. RHC
resources that are currently used to comply with existing annual
program evaluation can be used to comply with the new QAPI requirement.
We have not established a specific amount of data to be collected. The
minimum data, or information, required is that which will enable a
clinic, with its available staff and resources, to assess change or
improvement.
This QAPI CoP will replace the existing program evaluation CoP
found at Sec. 491.11. RHCs are currently required to perform an annual
program evaluation and the burden reported for the annual evaluation
will be used in the new QAPI requirement. We agree that the PRA
collection (0938-0334) should be updated to increase burden for RHCs to
develop a QAPI program and train staff. The estimation of 70 to 80
hours to maintain a QAPI program may be realistic for the clinic that
commented. However, it is difficult to accurately state the impact of
the QAPI requirement on RHCs without knowing the size and scope of the
clinics and how complex the QAPI program will be for each clinic. We
have developed this requirement with the flexibility that allows both
large and small clinics to develop a program that reflects the
resources and complexity of each clinic's organization and services.
We estimate that on average it will take a clinic approximately 40
hours to develop a QAPI program. For those clinics that are provider
based and have experience with the QAPI process, this time will be
reduced. This time will also vary based on the simplicity or complexity
of the program that a clinic
[[Page 74809]]
develops. The QAPI CfC will replace the existing annual program
evaluation CfC (42 CFR 491.11). The activities that are currently
covered by the existing PRA on file with OMB are found in Sec. 491.9--
``Provisions of Services.'' These activities include--Patient care
policies; guidelines for medical management of health care problems;
and procedures to review and evaluate services furnished by the RHC. In
the existing PRA for the current regulations, the burden hours for
provisions of services include 10 hours (one time) for initial
development, and 2 hours annually for review and revision. The next
time we update its PRA submission for Part 491, we will add the 10
hours and 2 hours with the 40-hour initial burden for the QAPI program.
We used the previous burden estimate for the annual evaluation, in
part, to estimate the new QAPI requirement. It is difficult to
accurately state the impact of the QAPI requirement on RHCs without
knowing the size and scope of the clinics and how complex the QAPI
program will be for each clinic. In developing the requirement, we
wanted to assure flexibility for RHCs so that both large and small
clinics can develop a program that reflects the resources and
complexity of each clinic's organization and services. We estimate it
will take a clinic approximately 40 hours to develop a QAPI program
from a variety of assumptions. First, the hospital QAPI condition of
participation estimates 80 hours for a hospital to develop the program.
We expect that at the level-of-effort for a RHC would be less than that
for a hospital QAPI program as hospitals provide more services than
RHCs. For hospital provider-based clinics, we expect that they would
already have experience with the QAPI process. Therefore, their level-
of-effort would be reduced. The 40-hour time estimate also recognizes
that the time will vary based on the simplicity or complexity of the
program that a clinic develops. We also estimate that the RHC will
spend an additional 4 hours a year collecting and analyzing data. In
addition, we estimate that clinics will spend 3 hours a year training
and or updating staff on their QAPI program. Since the QAPI program
will replace the current annual evaluation requirement, the
administrative burden and annual review of policies and procedures are
currently covered by 0938-0334.
----------------------------------------------------------------------------------------------------------------
Annual burden
Requirement hours One-time burden hours
----------------------------------------------------------------------------------------------------------------
Program Development................................................ .............. 40 hrs x 3,300 = 132,000
Data Collection and Analysis....................................... 13,200
Training........................................................... .............. 3 hrs x 3,300 = 9,000
--------------------------------------------
Total.......................................................... 13,200 141,000
----------------------------------------------------------------------------------------------------------------
These are preliminary projections that may change slightly as we update
the PRA submission.
Comment: Most of the commenters recommended that, rather than
requiring a minimum number of QAPI projects, we require RHCs to
demonstrate to the survey agency what projects they are doing and what
progress is being achieved. Some commenters suggested requiring two
projects annually, while others suggested only one project annually.
Another commenter stated that the minimum level should be defined as
requiring the RHCs to choose a single domain in which to undertake an
evaluation and to perform a single performance improvement project
within that selected domain on an annual basis. Still, other commenters
stated that the rule should include specific and limited definition of
minimal expectations of the QAPI program, particularly for the smaller
clinics. Several commenters wanted clarification on how our expectation
that the use of performance measures will be commensurate with the size
and resources available to the clinic.
Response: We appreciate the comments regarding what must be the
minimum expectation for the quality standard. We believe it is
important to allow RHCs the flexibility to fulfill this requirement in
a variety of ways. As evidenced by the variance in the comments
received, clinics have different views regarding the manner in which a
clinic must comply with the standard. Each clinic will approach this
requirement differently based on its resources and orientation to
performance improvement.
The final rule does not require a specific number of improvement
projects to be conducted annually. However, we will require that an RHC
conduct distinct improvement projects. The number and frequency of
distinct improvement projects to be conducted by the clinic as a result
of its self-assessment must reflect the level and complexity of the
clinic's organization and services. While large provider-based clinics
might be involved in a complex QAPI program with its host facility,
small independent clinics might develop very simple straightforward
mechanisms to evaluate and improve their performance. The QAPI standard
is the same for both large and small clinics but it can be fulfilled in
a number of ways. We do not expect or insist that very small
independent clinics develop a complex program. In both instances, we
expect clinics to be proactive in assessing and improving outcomes and
patient satisfaction.
Comment: One commenter stated that proposed Sec. 491.11(a)(2) and
(a)(3) are misplaced and inappropriate as regulation. They recommended
that these instructions be included in the interpretive guidance for
surveyors. They further suggested that we replace ``and'' with ``or''
and remove the ``at a minimum'' statement.
Response: We agree with replacing ``and'' with ``or'' and removing
the ``at a minimum'' statement and have done so in the final rule.
We disagree that proposed Sec. 491.11(a)(2) and (a)(3) are
misplaced and inappropriate for regulation. However, we have made minor
clarifying changes to these provisions. Since we allow flexibility in
areas of performance measures and the number and frequency of
improvement projects, we maintain that it is important to state in the
QAPI standards that RHCs are expected to prioritize their improvement
activities that most directly affect patient safety and clinical
outcomes. Therefore, we have combined the provisions of proposed Sec.
491.11(a)(2) and (a)(3) and included them at Sec. 491.11(b)(2) under
the program activities standard.
In section II of the preamble, page 10459, of the February 28, 2000
proposed rule, we included a discussion clarifying how we would apply
the term ``measure'' as it pertains to the QAPI requirement for RHCs.
We defined the word ``measure'' to mean that the RHC would have to use
objective means of
[[Page 74810]]
tracking performance that enables a clinic (and a surveyor) to identify
the difference in performance between two points in time. Not all
objective measures would have to be shown to be valid and reliable
based on scientific methodology in order to be usable in improvement
projects. These measures may be designed by the clinic itself or by
other sources outside the clinic. We anticipate that both large and
small RHCs will use a variety of performance measures in their QAPI
program. The proposed standard at Sec. 491.11(b) is now stated in
paragraphs (b)(l)(i) and (b)(l)(ii).
In order to promote consistency in the language to describe quality
activities, we have replaced the term ``performance criteria'' in the
first sentence of the proposed provision at Sec. 491.11(b) with
``performance measures'' in Sec. 491(b)(l)(i). We also replaced the
word ``criteria'' in the second sentence of Sec. 491(b) with the word
``measures'' in Sec. 491(b)(l)(ii).
Comment: One commenter recommended that there be requirements for
providing preventive health care services. However, a few commenters
stated that the issue of prevention should be withdrawn from the rule,
unless we would agree to reimburse for preventive services provided.
Response: Section 1861(aa)(1)(A) of the Act describes rural health
clinic services as physicians' services and those services and supplies
covered under section 1861(s)(2)(A) of the Act if they are furnished as
an incident to a physician's professional service and items and
services described in section 1861(s)(10) of the Act. We agree that
there are no requirements for the provision of preventive primary
health services for an RHC and stated so in the February 28, 2000
proposed rule. However, since section 1861(s)(10) of the Act allows
RHCs to provide pneumococcal, influenza, and hepatitis B vaccines, the
topic of prevention was included under clinical effectiveness as an
example of an area to evaluate if clinics were involved in these
activities.
Comment: One commenter stated that availability of personnel to
communicate with the patients they serve should be included under
cultural competency.
Response: We agree that the ability to communicate with the patient
population is an important part of cultural competency. However, the
list in the February 2000 proposed rule under the ``access to care''
domain was given as an example and was not meant to be all-inclusive.
Clinics will be free to identify and concentrate on areas that are
priorities for them.
Comment: One commenter asked if emergency intervention meant that
the clinic should have staff trained and competent in the delivery of
cardiopulmonary resuscitation (CPR) and other services that might be
necessary to maintain a very ill patient until care could be
transferred to the emergency medical services system.
Response: A clinic is required to provide medical emergency
procedures as a first response to common life threatening injuries and
acute illnesses. The Emergency Medical Services (EMS) Systems Act
defines first response services as a preliminary level of prehospital
emergency care that includes CPR, monitoring vital signs and control of
bleeding. Therefore, the clinic's staff should be competent in the
delivery of first response emergency services.
Comment: One commenter stated that the surveyor should not be the
only one to determine what constitutes an ``identifiable unit of
measure.''
Response: As stated in section II of the preamble of the February
2000 proposed rule, we will not judge the measures themselves. Instead,
we will assess how useful the measures are to the clinic in its overall
program.
Comment: One commenter stated that surveyors should not have the
authority to require an RHC to demonstrate what projects they are doing
and the progress of the projects. Surveyors should only review and
offer suggestions.
Response: The authority for surveyors to conduct onsite reviews of
RHCs is contained in section 1864(a) of the Act. Surveyors acting on
our behalf are expected to interview staff and probe on significant
issues to determine if an entity meets RHC qualifications under section
1861(aa) of the Act.
We will develop interpretive guidelines and survey procedures to
train surveyors on how to review QAPI program requirements, in addition
to all other RHC requirements. As stated above, surveyors will not
judge the performance measures but will look at elements that comprise
each RHC's QAPI program, such as assessment data, rationale for
prioritizing improvement activities, and progress on achieving
improvement goals. As part of oversight, we would expect an RHC to make
information on its QAPI program available to surveyors during initial
certification, routine recertification, and complaint surveys to
demonstrate how they meet the requirement.
We have stressed improvement in systems in order to improve
processes and patient outcomes. The RHC's QAPI program will be
evaluated for its effectiveness on the quality of care provided.
Surveyors will not criticize the performance measures that RHCs choose
to use in their QAPI program. Rather, surveyors will look at how well
the RHC was able to mount an effective QAPI program. The surveyors will
look at what the RHC has identified as an area for improvement, what
the clinic did to address those areas of concern and what they are
doing to maintain their improvement efforts. We will train surveyors on
how to survey for an effective QAPI program. QAPI standards are
designed to ensure that the providers have an effective process for
continually measuring and improving care. The RHC QAPI supports the
flexibility to establish, implement, maintain, and evaluate its
individual QAPI program. Each RHC can custom-design a program that
analyzes its own organizational processes, functions, and services,
while maintaining the appropriate accountability. Performance
improvement, as the basis for QAPI, fosters a ``blame-free''
environment and encourages providers to be proactive instead of being
reactive.
Comment: One commenter suggested that the rule explicitly state
that RHCs include the medical director of the clinic, a health care
professional with experience in the delivery of services, or other
``reasonable'' individuals in determining appropriate measures.
Response: In Sec. 491.11(c), we state that the RHC's professional
staff, administrative officials, and governing body (if applicable) are
responsible for the development, implementation, and evaluation of
improvement actions. In addition, the clinic may develop a QAPI program
using staff and resources it deems appropriate in accordance with its
policies and procedures.
Comment: One commenter expressed concern regarding the reporting
requirements, especially on small clinics. The commenter stated that
small clinics should either be exempt from the proposed requirements or
we should develop different standards for large and small clinics.
Response: The Congress has mandated that RHCs have a QAPI program
as specified by the Secretary of the Department of Health and Human
Services. We have not proposed that RHCs report the results of their
evaluation and subsequent improvement activities to us. As a result,
there is no need for any exemptions. However, as stated in Sec.
491.11(b)(4), we will require a clinic to maintain records on its
program and have them available for review by a surveyor.
[[Page 74811]]
Comment: One commenter noted that we did not emphasize the
importance of pharmacists to quality care. As medication experts,
pharmacists can play a significant role in ensuring that appropriate
medications are given to patients in RHCs.
Response: We agree that pharmacists play a significant role in
ensuring that appropriate medications are given to patients. The focus
of the QAPI requirement is for RHCs to have a program to assess its
processes, functions and services. If a clinic identifies a medication
administration or dispensing problem, or is interested in assessing
other quality of care issues, that involves pharmaceutical services, it
would be appropriate for the RHC to solicit a pharmacist input into the
QAPI activity.
Comment: One commenter stated the current requirements regarding
protocols for the mid-level practitioners are restrictive and, in many
cases, conflict with scopes of practices permitted in States' law. The
commenter believes that midlevels should be allowed to practice to the
highest level of scope of practice permitted by State law. This will
ensure appropriate care to patients and enhance patient care and
satisfaction.
Response: While we appreciate the commenter's concern, this issue
is beyond the scope of this final rule.
Comment: Two commenters stated that since Sec. 405.243(a) provides
that a Federally Qualified Health Center (FQHC) must agree in its
provider agreement with us to maintain compliance with requirements set
forth in part 491, it could be read to apply to FQHCs. The commenter
requested that we revise the February 2002 proposed rule to
specifically state that Sec. 491.11 does not apply to FQHCs stating
that it would be duplicative to require FQHCs to meet this QAPI
requirement because they are currently required to meet extensive
performance standards established by the PHS. Section 330 of the Public
Health Service Act requires grantees to undergo a rigorous PHS grant
application process and the grantees are answerable to PHS in carrying
out their grant activities; it is unnecessary to apply the RHC
certification compliance process to FQHCs.
Response: We agree with the commenters that FQHCs currently have a
QAPI program, as required under the PHS grant, that is more
comprehensive than the requirements for RHCs. FQHCs and other health
centers are required to have quality improvement systems to examine
topics such as patient satisfaction and access, quality of clinical
care, work force, work environment, and health status outcomes. In
addition, FQHCs' quality improvement systems must have the capacity to
measure performance using standard performance measures and accepted
scientific approaches. In analyzing performance data, FQHCs must
compare their results with other comparable providers at the State and
national level and set realistic goals for improvement.
Since the BBA language did not specifically include FQHCs, and
FQHCs are currently required under the section 330 grantees' program to
have a continuous quality improvement and performance measurement
program, we agree that it would be redundant to require health centers
to comply with this condition. Even though FQHCs are required to comply
with part 491 of the regulations, there are instances in part 491,
based on statutory requirements, where the RHC requirements are
different from the FQHC requirements. For example, FQHCs are allowed to
contract for midlevels but as specified in Sec. 491.8(a)(3), RHCs are
not. Therefore, FQHCs must continue to comply with part 491 of the
regulations except where noted.
IV. Provisions of the Final Rule
For the most part, this final rule incorporates the provisions of
the February 28, 2002 proposed rule. However, we are making the
following changes to the regulations:
We are revising, in Sec. 405.2401(b), the definition of rural
health clinic as follows:
[sbull] The definition of RHC only applies to physicians and
nonphysician practitioners working for the entity to furnish RHC
services.
[sbull] Those physicians and nonphysician practitioners may not
operate a private Medicare or Medicaid practice during RHC hours of
operation, using clinic resources.
We are revising Sec. 405.2462 to eliminate a standard used to
qualify RHCs that are based in small rural hospitals for an exception
to the national RHC payment limit.
We are revising Sec. 491.3(b)(l) to clarify that both
participating RHCs as well as applicants must be located in a current
shortage area.
We are revising Sec. 491.3(b)(2) to specify that RHCs with
outdated shortage area designations will have 120 days to submit an
application to update their medically underserved designation with
protection from disqualification while the application is under review.
We are revising Sec. 491.3(c)(2) to increase the period that RHCs
may apply for an exception from disqualification.
We are revising Sec. 491.5(b) to clarify the test used to
determine if an RHC is essential to the delivery of primary care.
We are revising Sec. 491.5(b) to establish rural patient
utilization thresholds for RHCs located in nonurbanized areas that
demonstrate they are essential to the delivery of primary care.
We are revising Sec. 491.5(b) to combine the traditional community
provider test with the major community provider test.
We are revising Sec. 491.5(b) to establish a minimum national
utilization patient threshold for RHCs applying for an exception as a
major community provider.
We are removing the graduate medical education test at proposed
Sec. 491.5(b)(5). This test is no longer needed due to the refinements
and clarifications we have made to the other essential community
provider tests.
We are revising Sec. 491.11 to clarify the requirements of the
quality assessment performance improvement program the RHCs must
develop, implement, evaluate, and maintain.
V. Regulatory Impact Analysis
Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review) and the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354).
Executive Order 12866 directs agencies to assess all costs and benefits
of available regulatory alternatives and, if regulation is necessary,
to select regulatory approaches that maximize net benefits (including
potential economic, environmental, public health and safety effects,
distributive impacts, and equity). A regulatory impact analysis (RIA)
must be prepared for major rules with economically significant effects
($100 million or more in any one year).
The RFA requires agencies to analyze options for regulatory relief
of small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and government agencies.
Most hospitals and most other providers and suppliers are small
entities, either by nonprofit status or by having revenues of $5 to $25
million or less annually (see 65 FR 69432). For purposes of the RFA,
all RHCs are considered to be small entities. Individuals and States
are not included in the definition of a small entity.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory
[[Page 74812]]
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 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.
Section 202 of the Unfunded Mandates Reform Act of 1998 (UMRA)
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in an expenditure in any 1 year by
State, local, or tribal government, in the aggregate, or by the private
sector of $110 million. The rule does not have an effect on the
governments mentioned, and private sector costs are less than the $110
million threshold.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a final rule that imposes
substantial direct compliance costs on State and local governments,
preempts State law, or otherwise has Federalism implications. The rule
does not have an effect on the governments mentioned.
Although we view the anticipated results of these regulations as
beneficial to the Medicaid and Medicare programs as well as to Medicare
and Medicaid beneficiaries and State governments, we recognize that
some of the provisions could be controversial and may be responded to
unfavorably by some affected entities. We also recognize that not all
of the potential effects of these provisions can definitely be
anticipated, especially in view of their interaction with other
Federal, State, and local activities regarding outpatient services. In
particular, considering the effects of our simultaneous efforts to
improve the delivery of outpatient services, it is impossible to
quantify meaningfully a projection of the future effect of all of these
provisions on RHC's operating costs or on the frequency of substantial
noncompliance and termination procedures.
We believe the foregoing analysis concludes that this regulation
does not have a significant financial impact on a substantial number of
small entities, such as RHCs. This analysis, in combination with the
rest of the preamble, is consistent with the standards for analysis set
forth by the RFA.
Anticipated Effects
Effects on Rural Health Clinics
The total number of participating RHCs under Medicare and Medicaid
as of February 1, 2001, was 3,341. Using 2000 Census data, there are
approximately 100 urban clinics. At least 20 of these urban clinics do
``not'' have valid shortage area designations and would lose their RHC
status.
With regard to the participating clinics that are still located in
rural areas (about 3,200), at least 100 of these RHCs no longer have
valid shortage area designations. Based on the above estimates, we know
that about 180 would be eligible to apply for exception from RHC
disqualification, but it is impossible to accurately predict how many
will qualify for an exception. However, the estimated Medicare savings
associated with the disqualification of certain RHCs from the Medicare
program would be less than $10 million. Participating RHCs that are no
longer located in rural, underserved areas could lose their RHC status
and their cost-based reimbursement, which could cause them to reduce
services or discontinue serving our beneficiaries. We believe, based on
a recent study by the Maine Rural Health Research Center, that
approximately 150 clinics will lose their RHC status. However, to
minimize the impact of this provision on rural health care, the
Congress has authorized us to grant, if needed, an exception to clinics
essential to the delivery of primary care in these affected areas. Our
criteria in Sec. 491.5 identify the areas and clinics where RHC status
and its payment methodology are still needed despite the fact the
service area is no longer considered medically underserved.
Implementing the statutory requirement to replace the current
payment method used by provider-based RHCs to the payment method used
by independent RHCs will establish payment equity and consistency
within the RHC program. Before the BBA, payment to provider-based RHCs
was made without considering the number of patient visits provided by
the RHC, and without a limit on the payment per visit. These criteria
are applicable to independent RHCs that furnish the same scope of
services. We have codified the statutory requirement to pay all RHCs
under an all-inclusive rate per visit, which will avoid allocation of
excessive administration costs to RHCs. We believe that about a
thousand RHCs are affected by this rule.
We believe the fiscal impact of limiting payment to provider-based
RHCs to the independent RHC rate per visit will result in program
savings. Provider-based RHCs that have costs above the all-inclusive
cost-per-visit limit required by the law could experience some decrease
in their current reasonable cost basis payments. To reduce detrimental
impacts of this decrease, the Congress authorized an exception to the
annual payment limit to those clinics affiliated with small hospitals,
that is, a hospital with fewer than 50 beds.
The QAPI requirement may increase burden in the short term because
resources currently used for quality measurement will need to be
directed to the development of a quality assessment and performance
improvement program that covers the complexity and scope of the
particular clinic. However, while the requirements could result in some
immediate costs to an individual clinic, we believe that the QAPI
program will result in real, but difficult to estimate, long-term
economic benefits to the clinic (for example, cost-effective
performance practices or higher patient satisfaction that could lead to
increased business for the clinic).
Moreover, the QAPI and utilization review requirements replace the
current annual evaluation requirement. Resources that the clinics are
currently using for the annual evaluation could be devoted to the QAPI
program. Therefore, we believe that there is no long-term increased
burden to the clinics. Currently, a number of RHCs, primarily provider-
based, have some type of quality improvement program in place. To the
extent that clinics are familiar with collecting data on their
operations and measuring quality, the new requirement will not impose
significant additional burden.
Impact of the QAPI Provisions
We estimate that the additional one-time impact for the initial
development of the QAPI provisions will be as follows:
------------------------------------------------------------------------
Hours/Estimated Salary/Number of RHCs One-time cost Annual cost
------------------------------------------------------------------------
1 physician/administrator at $58/hr x 3 $574,200
hrs x 3,300 clinics for medical
direction and overview of QAPI program.
1 Mid-level practitioner (physician 2,956,800
assistant, nurse practitioner) at $28/
hr x 32 hrs x 3,300 clinics for program
development............................
[[Page 74813]]
1 clerical staff at $6/hr x 5 hrs x 99,000
3,300 clinics..........................
1 mid-level practitioner at $28/hr x 4 .............. 369,600
hrs x 3,300 clinics for data collection
and analysis...........................
1 mid-level practitioner--3 hrs training 277,200
Totals.............................. 3,907,200 369,000
------------------------------------------------------------------------
In developing our estimates, we obtained information on the
salaries and wage estimation from the American Medical Association.
OBRA '89 reduced the nonphysician staffing requirement for RHC
qualification from 60 percent to 50 percent. This reduction should have
a positive effect on RHCs by providing them more flexibility in
satisfying their overall staffing needs.
Effects on Other Providers
We are aware of situations in which an RHC and a physician's
private practice occupy the same space and Medicare is billed for the
service, either as an RHC or physician service, depending upon which
payment method produces the greater payment. Our revision requires an
RHC to be a distinct entity that is not used simultaneously as a
private physician office or the private office of any other health care
professional. As a result, private physicians or other practitioners
who have used this approach under the Medicare program may experience
some change in the operation of their practices from an administrative
standpoint.
Effects on the Medicare and Medicaid Programs
As a result of this final rule, most provider-based RHCs are
subject to payment limits and some RHCs will lose their RHC status and
cost-based payment rates. Although these changes will likely result in
program savings, we believe the aggregate amount is negligible for both
programs. We cannot accurately estimate the payment differential
between the new payment system for provider-based RHCs and the previous
payments because the old system made payments without considering the
number of patient visits. Without these data, we cannot precisely
determine the fiscal impact.
However, in light of the fact that total expenditures for this
program represent a small fraction of the Medicare and Medicaid total
budget and that less than half of all RHCs will experience changes to
their payment rates, we believe any aggregate savings will be
insignificant. We also believe an insignificant amount of Medicare and
Medicaid program savings will result from the provision that will
terminate RHC status for certain providers. Less than 5 percent of all
participating RHCs could lose their status, and these affected clinics
will continue to participate under Medicare and Medicaid and receive
payment for their services on a fee-for-service basis.
Alternatives Considered
Section 4205 of the BBA imposes new requirements that an RHC
program must meet. We considered some of the following alternatives to
implement these provisions:
[sbull] ``Essential'' RHCs. Since the statute mandates an exception
process for essential clinics, we considered using a national
utilization test to recognize clinics that are accepting and treating a
disproportionately greater number of Medicare, Medicaid, and uninsured
patients, compared to other participating RHCs, for the purpose of
addressing the situation of RHC clusters. For example, using an
aggregate threshold based on the average Medicare, Medicaid, and
uninsured utilization rates of participating RHCs, applicants will have
to demonstrate that their utilization rates exceed the threshold.
Although this test would be administratively feasible, we
concluded, based on our analysis of available Medicare and Medicaid RHC
data, that it would not accurately determine ``essential'' clinics at
the community level because of the wide variability in the percentage
of services furnished to Medicare and Medicaid patients by RHCs.
Despite our rejection of a national utilization test, we are open to
suggestions on developing a minimum national percentage, which could be
integrated with our major community provider test. We also considered
the option of establishing less generous tests for identifying RHCs as
essential clinics to the delivery of primary care. That is, the
establishment of tests narrowly focused on a few extreme cases, such as
an exception test for only sole community providers for a very rural
community. We rejected this option because of concern that the
disqualification of a clinic from the RHC program could harm access to
primary care for the entire community. We believe a comprehensive set
of tests is needed to avoid harming access to care for rural areas.
[sbull] QAPI Program. Because the statute mandates that an RHC have
a QAPI program, and appropriate procedures for review of utilization of
clinic services, no alternatives for the requirement were considered.
However, in the preamble of the February 28, 2002 proposed rule, we
described alternative ways of satisfying the ``minimum level
requirement'' for the QAPI program and asked for comments. Among the
alternatives that we considered were the following:
[sbull] Require RHCs to engage in an improvement project in each
domain annually.
[sbull] Require a minimum number of improvement projects in any
combination of the domains annually.
[sbull] Require a minimum number of projects annually based on
patient population.
[sbull] Rather than requiring a minimum number of projects, require
RHCs to demonstrate to the survey agency what projects they are doing
and what progress is being achieved. After considering the public
comments, which were not conclusive, we decided not to establish a
minimum requirement. We did consider alternatives for the final rule.
One alternative was to take a more rigid approach to QAPI whereby the
final rule would be more prescriptive in the process RHCs must follow
to develop the QAPI program including setting forth specific
performance measures to be utilized, the frequency and number of QAPI
``interventions'' that must be done, as well as the type and frequency
of data to be collected. While a more rigid approach would increase RHC
burden, we realize there would be no assurance that it would result in
better or more predictable outcomes.
We decided to promote a more flexible and less prescriptive
approach to the QAPI condition. We are more concerned with an RHC
identifying its own best practices and the outcomes of an agency
individualized QAPI program than in specific steps one takes to achieve
the improvement. A more moderate QAPI requirement will allow an RHC the
flexibility to utilize staff and other resources in ways that more
directly supports its needs. An RHC can design a program to analyze its
own
[[Page 74814]]
organizational processes, functions and services, while still being
held accountable for results. This decision allows clinics the
flexibility to fulfill this requirement based on their resources.
Conclusion
We do not expect a significant change in the operations of RHCs
generally, nor do we believe a substantial number of small entities in
the community, including RHCs and a substantial number of small rural
hospitals, will be adversely affected by these changes. The commingling
provision of this regulation adds little savings. One reason for this
conclusion is that the outpatient visit rate for HCPCS code 99214 was
about $59.00 and the RHC visit was also about $59.00. If an adjustment
is made for lower physician overhead than that of the RHC, the savings
will probably be marginal.
Therefore, we are not preparing analyses for either the regulatory
impact analysis or section 1102(b) of the Act since we believe that
this rule will not result in a significant economic impact on a
substantial number of small entities and will not have 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 OMB.
VI. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment when a collection of information requirement is submitted to
the OMB for review and approval. In order to fairly evaluate whether
OMB should approve an information collection, section 3506(c)(2)(A) of
the Paperwork Reduction Act of 1995 requires that we solicit comment on
the following issues:
[sbull] The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
[sbull] The accuracy of our estimate of the information collection
burden.
[sbull] The quality, utility, and clarity of the information to be
collected.
[sbull] Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
Therefore, we are soliciting public comment on each of these issues
for the information collection requirements discussed below.
Section 491.3 Rural Health Clinic (RHC) Procedures
Section 491.3(c)(2) states that an existing RHC located in an area
no longer considered a shortage area may apply for an exception from
disqualification by submitting a written request to our regional
offices within 180 days from the date we notify it that it is no longer
located in a shortage area. We believe that this information collection
requirement is exempt in accordance with 5 CFR 1320.4(a)(2) since this
activity is in accordance with the conduct of an investigation or audit
against specific individuals or entities.
Section 491.3(c)(4) states that clinics can renew their essential
provider status by submitting written assurances to our regional office
that they continue to meet the conditions at Sec. 491.5.
The burden associated with this requirement is the time and effort
for the clinic to prepare and submit written assurances that they
continue to meet the conditions. It is estimated that this requirement
will take each clinic 30 minutes. There are approximately 400 clinics
that may be affected by this requirement for a total of 200 burden
hours.
Section 491.8 Staffing and Staff Responsibilities
Section 491.8(d)(1) states that we may grant a temporary waiver if
the RHC requests a waiver and demonstrates that it has been unable,
despite reasonable efforts in the previous 90-day period, to hire a
nurse midwife, nurse practitioner, or physician assistant to furnish
services at least 50 percent of the time the RHC operates.
The burden associated with this requirement is the time and effort
for the RHC to request a waiver and demonstrate that it has been unable
to hire a nurse midwife, nurse practitioner, or physician assistant to
furnish services at least 50 percent of the time the RHC operates. It
is estimated that this requirement will take each RHC 3 hours. There
are approximately 45 RHCs that will be affected by this requirement for
a total of 135 burden hours.
Section 491.11 Quality Assessment and Performance Improvement
Section 491.11 states that the RHC must develop, implement,
evaluate, and maintain an effective, ongoing, data-driven quality
assessment and performance improvement program. The self-assessment and
performance improvement program must be appropriate for the complexity
of the RHC's organization and services and focus on maximizing outcomes
by improving patient safety, quality of care, and patient satisfaction.
Most of the burden of this section is covered by the paperwork
requirements of Sec. 491.9(b)(3), patient care policies, which
requires the RHCs to have in place a description of services the clinic
furnishes, guidelines for management of health problems, and procedures
for periodic review and evaluation of clinic services. This burden is
approved under 0938-0334 and expires in April, 2003.
This QAPI CoP will replace the existing program evaluation CoP
found at Sec. 491.11. RHCs are currently required to perform an annual
program evaluation and the burden reported for the annual evaluation
will be used in the new QAPI requirement. We agree that the PRA
collection (0938-0334) should be updated to increase burden for RHCs to
develop a QAPI program and train staff. The estimation of 70 to 80
hours to maintain a QAPI program may be realistic for the clinic that
commented. However, it is difficult to accurately state the impact of
the QAPI requirement on RHCs without knowing the size and scope of the
clinics and how complex the QAPI program will be for each clinic. We
have developed this requirement with the flexibility that allows both
large and small clinics to develop a program that reflects the
resources and complexity of each clinic's organization and services.
We estimate that on average it will take a clinic approximately 40
hours to develop a QAPI program. For those clinics that are provider
based and have experience with the QAPI process, this time will be
reduced. This time will also vary based on how simplicity or complexity
of the program that a clinic develops. The QAPI CfC will replace the
existing annual program evaluation CfC (42 CFR 491.11). The activities
that are currently covered by the existing PRA on file with OMB are
found in Sec. 491.9--``Provisions of Services.'' These activities
include: Patient care policies, guidelines for medical management of
health care problems, and procedures to review and evaluate services
furnished by the RHC. In the existing PRA for the current regulations,
the burden hours for provisions of services include 10 hours (one time)
for initial development, and 2 hours annually for review and revision.
The next time we updates its PRA submission for Part 491, we will add
the 10 hours and 2 hours with the 40 hr initial burden for the QAPI
program. We used the previous burden estimate for the annual
evaluation, in part, to estimate the new QAPI requirement. It is
difficult to accurately state the impact of the QAPI requirement on
RHCs without knowing
[[Page 74815]]
the size and scope of the clinics and how complex the QAPI program will
be for each clinic. In developing the requirement, we wanted to assure
flexibility for RHCs so that both large and small clinics can develop a
program that reflects the resources and complexity of each clinic's
organization and services. We estimate it will take a clinic
approximately 40 hours to develop a QAPI program from a variety of
assumptions. First, the hospital QAPI condition of participation
estimates 80 hours for a hospital to develop the program. We expect
that at the level-of-effort for a RHC would be less than that for a
hospital QAPI program as hospitals provide more services than RHCs. For
hospital provider-based clinics, we expect that they would already have
experience with the QAPI process. Therefore, their level-of-effort
would be reduced. The 40-hour time estimate also recognizes that the
time will vary based on the simplicity or complexity of the program
that a clinic develops. We also estimate that the RHC will spend an
additional 4 hours a year collecting and analyzing data. In addition,
we estimate that clinics will spend 3 hours a year training and or
updating staff on their QAPI program. Since the QAPI program will
replace the current annual evaluation requirement, the administrative
burden and annual review of policies and procedures are currently
covered by 0938-0334.
----------------------------------------------------------------------------------------------------------------
Annual burden
Requirement hours One-time burden hours
----------------------------------------------------------------------------------------------------------------
Program Development................................................ .............. 40 hrs x 3,300 = 132,000
Data Collection and Analysis....................................... 13,200
Training........................................................... .............. 3 hrs x 3,300 = 9,000
--------------------------------------------
Total.......................................................... 13,200 141,000
----------------------------------------------------------------------------------------------------------------
These are preliminary projections that may change slightly as we update
the PRA submission.
To maintain the data required by Sec. 491.11, we estimate it will
take each clinic 1 hour per year to meet this requirement. Since there
are an estimated 3,341 facilities, the total burden associated with
this requirement is 3,341 annual hours.
We have submitted a copy of this final rule to OMB for its review
of the information collection requirements described above. These
requirements are not effective until they have been approved by OMB.
If you comment on these information collection and recordkeeping
requirements, please mail copies directly to the following:
Centers for Medicare & Medicaid Services, Office of Information
Services, Information Technology Investment Management Group, Attn.:
Dawn Willinghan (Attn: CMS-1910-F), Room N2-14-26, 7500 Security
Boulevard, Baltimore, MD 21244-1850; and
Office of Information and Regulatory Affairs, Office of Management and
Budget, Room 10235, New Executive Office Building, Washington, DC
20503, Attn: Allison Herron Eydt, CMS Desk Officer.
List of Subjects
42 CFR Part 405
Administrative practice and procedure, Health facilities, Health
professions, Kidney diseases, Medicare, Reporting and recordkeeping
requirements, Rural areas, X-rays.
42 CFR Part 491
Grant programs--health, Health facilities, Medicaid, Medicare,
Reporting and recordkeeping requirements, Rural areas.
0
For the reasons set forth in the preamble, The Centers for Medicare &
Medicaid services amends 42 CFR chapter IV as set forth below:
PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED
Subpart X--Rural Health Clinic and Federally Qualified Health
Center Services
0
1. The authority citation for part 405 continues to read as follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
0
2. In Sec. 405.2401(b), revise the definition of ``rural health
clinic'' to read as follows:
Sec. 405.2401 Scope and definitions.
* * * * *
(b) Definitions.
* * * * *
Rural health clinic (RHC) means an entity that:
(1) Meets the requirements of section 1861(aa)(2) of the Act and
part 491 of this chapter concerning RHC services and conditions for
approval.
(2) Has filed an agreement with CMS that meets the basic
requirements described in Sec. 405.2402 to provide RHC services under
Medicare.
(3) Does not share space, staff, supplies, records, and other
resources during RHC hours of operation with a private Medicare or
Medicaid practice operated by the same physicians and nonphysician
practitioners working for the RHC. Operation of a multipurpose clinic
with other types of health providers or suppliers is permissible
subject to the provisions in paragraph (4) of this definition.
(4) Appropriately allocates and excludes from the RHC cost report
the net non-RHC costs if it operates at a multipurpose location that
involves the sharing of common space, medical support staff, or other
physical resources with other health care providers or suppliers.
* * * * *
0
3. Revise Sec. 405.2410 to read as follows:
Sec. 405.2410 Application of Part B deductible and coinsurance.
(a) Application of deductible. (1) Medicare payment for RHC
services begins only after the beneficiary has incurred the deductible.
Medicare applies the Medicare Part B deductible as follows:
(i) If the deductible is fully met by the beneficiary before the
RHC visit, Medicare pays 80 percent of the all-inclusive rate.
(ii) If the deductible is not fully met by the beneficiary before
the visit and the amount of the RHC's reasonable customary charge for
the service that is applied to the deductible is--
(A) Less than the all-inclusive rate, the amount applied to the
deductible is subtracted from the all-inclusive rate and 80 percent of
the remainder, if any, is paid to the RHC; or
(B) Equal to or exceeds the all-inclusive rate, no payment is made
to the RHC.
(2) Medicare payment for FQHC services is not subject to the usual
Part B deductible.
[[Page 74816]]
(b) Application of coinsurance. (1) The beneficiary is responsible
for the coinsurance amount that cannot exceed 20 percent of the
clinic's reasonable customary charge for the covered service.
(2) The beneficiary's deductible and coinsurance liability for any
one service furnished by the RHC may not exceed a reasonable amount
customarily charged by the RHC for that particular service.
(3) For any one service furnished by an FQHC, the coinsurance
liability may not exceed 20 percent of reasonable amount customarily
charged by the FQHC for that particular service.
0
4. Revise Sec. 405.2462 to read as follows:
Sec. 405.2462 Payment for rural health clinic services and Federally
qualified health clinic services.
(a) General rules. (1) RHCs and FQHCs are paid on the basis of 80
percent of an all-inclusive rate per visit determined by the fiscal
intermediary for each beneficiary visit for covered services, subject
to an annual payment limit.
(2) The fiscal intermediary determines the all-inclusive rate in
accordance with this subpart and instructions issued by CMS.
(3) If an RHC is an integral and subordinate part of a hospital, it
can receive an exception to the per-visit payment limit if the hospital
has fewer than 50 beds as determined by using one of the following
methods:
(i) The determination of the number of beds at Sec. 412.105(b) of
this chapter.
(ii) The hospital's average daily patient census count of those
beds described in Sec. 412.105(b) of this chapter, and the hospital
meets all of the following conditions:
(A) It is a sole community hospital as determined in accordance
with Sec. 412.92 or 412.109(a) of this chapter.
(B) It is located in a level 8 or level 9 nonmetropolitan county
using urban influence codes as defined by the U.S. Department of
Agriculture.
(C) It has an average daily patient census that does not exceed 40.
(b) Payment procedures. To receive payment, an RHC or FQHC must
follow the payment procedures specified in Sec. 410.165 of this
chapter.
(c) Mental health limitation. Payment for the outpatient treatment
of mental, psychoneurotic, or personality disorders is subject to the
limitations on payment in Sec. 410.155(c) of this chapter.
PART 491--CERTIFICATION OF CERTAIN HEALTH FACILITIES
0
1. The authority citation for part 491 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302); and sec. 353 of the Public Health Service Act (42 U.S.C.
263a).
0
2. Revise Sec. 491.2 to read as follows:
Sec. 491.2 Definition of shortage area for RHC purposes.
Shortage area means a geographic area that meets one of the
following criteria. It is--
(a) Designated by the Secretary as an area with shortage of
personal health services under section 330(b)(3) of the Public Health
Service Act;
(b) Designated by the Secretary as a health professional shortage
area under section 332(a)(1)(A) of the public Health Service Act
because of its shortage of primary medical care professionals;
(c) Determined by the Secretary to contain a population group that
has a health professional shortage under section 332(a)(1)(B) of that
Act; or
(d) Designated by the chief executive officer of the State and
certified by the Secretary as an area with a shortage of personal
health services.
0
3. Revise Sec. 491.3 to read as follows:
Sec. 491.3 RHC procedures.
(a) General. (1) CMS processes Medicare participation matters for
RHCs as specified in Sec. Sec. 405.2402 through 405.2404 of this
chapter, and with the applicable procedures in part 486 of this
chapter.
(2) If CMS approves or disapproves the participation request of a
prospective RHC, CMS notifies the State agency for that RHC.
(3) CMS deems an RHC that is approved for Medicare participation to
meet the standards for certification under Medicaid.
(b) Current designation. (1) Participating RHCs and an applicant
requesting entrance into the Medicare program as an RHC must be located
in a current shortage area for which a designation is made or updated
within the current year or within the previous 3 years.
(2) RHCs with outdated shortage area designations will have 120
days, from the date CMS notifies the facility that its designation is
no longer current, to submit an application to update its medically
underserved designation.
(3) RHCs located in service areas with outdated shortage area
designations will be protected, for 120 days, from RHC disqualification
while their applications for updating the medically underserved
designations are under review by HRSA.
(c) Exception process. (1) An RHC's location fails to satisfy the
definition of a shortage area if it is no longer designated by the
Secretary or by the chief executive officer of the State as medically
underserved, or if it is no longer designated as nonurbanized by the
Census Bureau.
(2) An existing RHC may apply for an exception from
disqualification by submitting a written request to a CMS regional
office within 180 days from the date CMS notifies the RHC that it is no
longer located in a shortage area. The request must contain all
information necessary to establish whether an exception is warranted.
(3) The CMS regional office may grant a 3-year exception based on
its review of an RHC request and other relevant information, if the CMS
regional office determines that the RHC is essential to the delivery of
primary care services that otherwise are not available in the
geographic area served by the RHC as specified in Sec. 491.5(b).
(4) Clinics can renew their essential provider status by submitting
written assurances to the CMS regional office that they continue to
meet the conditions at Sec. 491.5.
(5) CMS terminates an ineligible clinic from participation in the
Medicare program as an RHC, effective the final day of the 6th month
from the date CMS notifies the clinic of a final determination of
ineligibility (including denial of any exception request submitted).
CMS may terminate RHC status earlier based on noncompliance with other
certification requirements.
0
4. In Sec. 491.5, remove paragraphs (d) and (e), redesignate paragraph
(f) as paragraph (d), and revise paragraph (b) to read as follows:
Sec. 491.5 Location of clinic.
* * * * *
(b) Exceptions. CMS will not disqualify an RHC approved for
Medicare participation located in an area that no longer meets the
definition of a shortage or rural area, if it determines that the RHC
has established that it is essential to the delivery of primary care
services that otherwise are not available in the geographic area served
by the RHC. An RHC no longer located in a rural area must have a valid
shortage area designation (underserved area or population) and meet the
criteria set forth in paragraphs (b)(2)(i), (b)(2)(ii), or (b)(2)(iii)
of this setion. The RHC that is no longer located in a rural area must
also establish that it is essential to the delivery of primary care for
patients residing in a rural area by demonstrating that at least 51
percent of the clinic's patients reside in an adjacent nonurbanized
area.
(1) Essential provider exception criteria. In order to make the
final decision to grant an exception as an
[[Page 74817]]
essential provider under this section, CMS will:
(i) Grant an exception to one or more RHCs in a given service area
if CMS determines the clinics each meet the criteria set forth in
paragraphs (b)(2)(ii) or (b)(2)(iii) of this section.
(ii) Use the following criteria in determining distances
corresponding to 30 minutes travel time:
(A) Under normal conditions with primary roads available within 20
miles.
(B) In areas with only secondary roads available within 15 miles.
(C) In flat terrain or in areas connected by interstate highways
within 25 miles.
(2) Conditions for exception. To receive an exception, the RHC must
meet one of the following conditions:
(i) Sole community provider. The RHC is the only participating
primary care provider within 30 minutes travel time. For purposes of
this exception, a participating primary care provider means an RHC, an
FQHC, or a physician practicing in either general practice, family
practice, or general internal medicine that is actively accepting and
treating Medicare beneficiaries and low-income patients (Medicaid
beneficiaries and the uninsured, regardless of their ability to pay).
(ii) Major community provider. The RHC has Medicare and low-income
patient (Medicaid and uninsured) utilization rates equal to or above 51
percent or low-income patient utilization rates equal to or above 31
percent. The RHC is also actively accepting and treating a major share
of Medicare, Medicaid, and uninsured patients (regardless of their
ability to pay) compared to other participating RHCs that are within 30
minutes travel time; or, if the clinic is the only participating RHC
within 30 minutes travel, the RHC is actively accepting and treating a
major share of Medicare, Medicaid, and uninsured patients (regardless
of their ability to pay) compared to other participating primary care
providers.
(iii) Specialty clinic. The RHC (located within 30 minutes travel
time) is the sole or major source of pediatric or OB/GYN services for
Medicare (where applicable), Medicaid, and uninsured patients
(regardless of their ability to pay) and is actively accepting and
treating these patients. Only clinics that exclusively provide
pediatric or OB/GYN services can receive an exception under this test.
A specialty clinic is also an RHC that is the sole source of mental
health services, as defined in Sec. 405.2450. For purposes of meeting
this test, mental health services must be furnished onsite to clinic
patients. Clinics applying as a major source of pediatric or OB/GYN
services must have low-income patient (Medicaid and uninsured)
utilization rates equal to or above 31 percent.
(iv) Extremely rural community provider. The RHC is actively
accepting and treating Medicare, Medicaid, and uninsured patients
(regardless of their ability to pay) and is located in a frontier
county (less than six persons per square mile) or in a level 8 or level
9 nonmetropolitan county using urban influence codes as defined by the
U.S. Department of Agriculture.
* * * * *
0
5. In Sec. 491.8, revise paragraph (a)(6) and add a new paragraph (d)
to read as follows:
Sec. 491.8 Staffing and staff responsibilities.
(a) * * *
(6) A physician, nurse practitioner, physician assistant, nurse-
midwife, clinical social worker, or clinical psychologist is available
to furnish patient care services at all times the clinic or center
operates. In addition, for RHCs, a nurse practitioner, physician
assistant, or certified nurse midwife is available to furnish patient
care services at least 50 percent of the time the RHC operates.
* * * * *
(d) Temporary staffing waiver. (1) CMS may grant a temporary waiver
of the RHC staffing requirements in paragraphs (a)(1) and (a)(6) of
this section for a 1-year period to a qualified RHC, if the RHC
requests a waiver and demonstrates that it has been unable, despite
reasonable efforts in the previous 90-day period, to hire a nurse
midwife, nurse practitioner, or physician assistant to furnish services
at least 50 percent of the time the RHC operates.
(2) CMS terminates the RHC from participation in the Medicare
program, if the RHC is not in compliance with the provisions waived
under paragraphs (a)(1) and (a)(6) of this section at the expiration of
the waiver.
(3) The RHC may submit its request for an additional waiver of
staffing requirements under this paragraph no earlier than 6 months
after the expiration of the previous waiver.
0
6. Revise Sec. 491.11 to read as follows:
Sec. 491.11 Quality assessment and performance improvement.
The RHC must develop, implement, evaluate, and maintain an
effective, ongoing, data-driven quality assessment and performance
improvement (QAPI) program. The self-assessment and performance
improvement program must be appropriate for the complexity of the RHC's
organization and services and focus on maximizing outcomes by improving
patient safety, quality of care, and patient satisfaction.
(a) Standard: Components of a QAPI program. The RHC's QAPI program
must include, but not be limited to, the use of objective measures to
evaluate the following:
(1) Organizational processes, functions, and services.
(2) Utilization of clinic services, including at least the number
of patients served and the volume of services.
(b) Standard: Program activities. (1) For each of the areas listed
in paragraph (a)(1) of this section, the RHC must do the following:
(i) Adopt or develop performance measures that reflect processes of
care and RHC operation and is shown to be predictive of desired patient
outcomes or be the outcomes themselves.
(ii) Use the measures to analyze and track its performance.
(2) The RHC must set priorities for performance improvement,
considering either high-volume, high-risk services, the care of acute
and chronic conditions, patient safety, coordination of care,
convenience and timeliness of available services, or grievances and
complaints.
(3) The RHC must conduct distinct improvement projects; the number
and frequency of distinct improvement projects conducted by the RHC
must reflect the scope and complexity of the clinic's services and
available resources.
(4) The RHC must maintain records on its QAPI program and quality
improvement projects.
(5) An RHC may undertake a program to develop and implement an
information technology system explicitly designed to improve patient
safety and quality of care. This activity will be considered to fulfill
the requirement for a project under this section.
(c) Standard: Program responsibilities. The RHC's professional
staff, administrative officials, and governing body (if applicable) are
responsible for the following:
(1) Ensuring that quality assessment and performance improvement
efforts effectively address identified priorities.
(2) Identifying or approving those priorities and for the
development, implementation, and evaluation of improvement actions.
[[Page 74818]]
Dated: February 28, 2003.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
Approved: February 28, 2003.
Tommy G. Thompson,
Secretary.
Editorial note: This document was received at the Office of the
Federal Register on December 18, 2003.
[FR Doc. 03-31572 Filed 12-23-03; 8:45 am]
BILLING CODE 4120-01-P