[Federal Register: February 28, 2003 (Volume 68, Number 40)]
[Notices]
[Page 9681-9690]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28fe03-106]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-1225-GNC]
RIN 0938-ZA22
Medicare Program; Criteria and Standards for Evaluating
Intermediary, Carrier, and Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS) Regional Carrier Performance During
Fiscal Year 2003
AGENCY: Centers for Medicare & Medicaid Services (CMS), Health and
Human Services (HHS).
ACTION: General notice with comment period.
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[[Page 9682]]
SUMMARY: This notice describes the criteria and standards to be used
for evaluating the performance of fiscal intermediaries, carriers, and
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) regional carriers in the administration of the Medicare
program beginning on the first day of the first month following
publication of this notice in the Federal Register. The results of
these evaluations are considered whenever we enter into, renew, or
terminate an intermediary agreement, carrier contract, or DMEPOS
regional carrier contract or take other contract actions, for example,
assigning or reassigning providers or services to an intermediary or
designating regional or national intermediaries. We are requesting
public comment on these criteria and standards.
EFFECTIVE DATE: The criteria and standards are effective the March 3,
2003.
Comment Period: Comments will be considered if we receive them at
the appropriate address as provided below no later than 5 p.m. (EDT) on
March 31, 2003.
ADDRESSES: In commenting, please refer to file code CMS-1225-GNC.
Because of staff and resource limitations, we cannot accept comments by
facsimile (fax) transmission. Mail written comments (one original and
two copies) to the following address:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-1225-GNC, P.O. Box 8016, Baltimore, MD
21244-8016.
If you prefer, you may deliver (by hand or courier) your written
comments (one original and two copies) to one of the following
addresses:
Room 443-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC, 20201 or Room C5-14-03, 7500 Security Boulevard,
Baltimore, Maryland 21244-1850.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of the comments being
filed.)
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and could be considered late.
For information on viewing public comments, see the SUPPLEMENTARY
INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Sue Lathroum, (410) 786-7409.
SUPPLEMENTARY INFORMATION: In several instances, we identify a Medicare
manual as a source of more detailed requirements. Medicare fee-for-
service contractors have copies of the various Medicare manuals
referenced in this notice. Members of the public also have access to
our manual instructions.
Medicare manuals are available for review at local Federal
Depository Libraries (FDLs). Under the FDL Program, government
publications are sent to approximately 1,400 designated public
libraries throughout the United States. To locate the nearest FDL,
individuals should contact any public library.
In addition, individuals may contact regional depository libraries
that receive and retain at least one copy of nearly every Federal
government publication, either in printed or microfilm form, for use by
the general public. These libraries provide reference services and
interlibrary loans; however, they are not sales outlets. Individuals
may obtain information about the location of the nearest regional
depository library from any library. Information may also be obtained
from the following Web site: http://www.hcfa.gov/pubforms/progman.htm.
from the following Web site: http://www.hcfa.gov/pubforms/progman.htm.
Some manuals may be obtained from the following Web site: http://
www.cms.gov/pubforms/p2192toc.htm.
Finally, all of our Regional Offices (ROs) maintain all Medicare
manuals for public inspection. To find the location of our nearest
available RO, you may call the individual listed at the beginning of
this notice. That individual can also provide information about
purchasing or subscribing to the various Medicare manuals.
Response to Public Comments: Because of the large number of items
of correspondence we normally receive on Federal Register documents
published for comment, we are unable to acknowledge or respond to them
individually. We will consider all comments we receive by the date and
time specified in the Comment Period section of this preamble, and, if
we proceed with a subsequent document, we will respond to the comments
in the preamble of that document.
Inspection of Public Comments: Comments received timely are
available for public inspection beginning approximately 2 weeks after
the close of the comment period, at the headquarters of the Centers for
Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore,
Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4
p.m.
To schedule an appointment to view public comments, phone (410)
786-7197.
I. Background
A. Part A--Hospital Insurance
Under section 1816 of the Social Security Act (the Act), public or
private organizations and agencies participate in the administration of
Part A (Hospital Insurance) of the Medicare program under agreements
with us. These agencies or organizations, known as fiscal
intermediaries, determine whether medical services are covered under
Medicare, determine correct payment amounts and then make payments to
the health care providers (for example, hospitals, skilled nursing
facilities (SNFs), community mental health centers, etc.) on behalf of
the beneficiaries. Section 1816(f) of the Act requires us to develop
criteria, standards, and procedures to evaluate an intermediary's
performance of its functions under its agreement.
Section 1816(e)(4) of the Act requires us to designate regional
agencies or organizations, which are already Medicare intermediaries
under section 1816 of the Act, to perform claim processing functions
with respect to freestanding Home Health Agency (HHA) claims. We refer
to such organizations as Regional Home Health Intermediaries (RHHIs).
See 42 CFR 421.117 and the final rule published in the Federal Register
on May 19, 1988 at 53 FR 17936 for more details about the RHHIs.
Evaluations of Medicare fee-for-service contractor performance need
not be limited to the current fiscal year (FY), other fixed term basis,
or agreement term. We may evaluate performance using a time frame that
does not mirror the FY or other fixed term. The evaluation of
intermediary performance is part of our contract management process.
B. Part B Medical Insurance
Under section 1842 of the Act, we are authorized to enter into
contracts with carriers to fulfill various functions in the
administration of Part B (Supplementary Medical Insurance) of the
Medicare program. Beneficiaries, physicians, and suppliers of services
submit claims to these carriers. The carriers determine whether the
services are covered under Medicare and the amount payable for the
services or supplies, and then make payment to the appropriate party.
Under section 1842(b)(2) of the Act, we are required to develop
criteria, standards, and procedures to evaluate a
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carrier's performance of its functions under its contract. Evaluations
of Medicare fee-for-service contractor performance need not be limited
to the current FY, other fixed term basis, or contract term. We may
evaluate performance using a timeframe that does not mirror the FY. The
evaluation of carrier performance is part of our contract management
process.
C. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Regional Carriers
In accordance with section 1834(a)(12) of the Act, we have entered
into contracts with four DMEPOS regional carriers to perform all of the
duties associated with the processing of claims for DMEPOS, under Part
B of the Medicare program. These DMEPOS regional carriers process
claims based on a Medicare beneficiary's principal residence by State.
Section 1842(a) of the Act authorizes contracts with carriers for the
payment of Part B claims for Medicare covered services and items.
Section 1842(b)(2) of the Act requires us to publish in the Federal
Register criteria and standards for the efficient and effective
performance of carrier contract obligations. Evaluation of Medicare
fee-for-service contractor performance need not be limited to the
current FY, other fixed term basis, or contract term. We may evaluate
performance using a timeframe that does not mirror the FY. The
evaluation of DMEPOS regional carrier performance is part of our
contract management process.
D. Development and Publication of Criteria and Standards
In addition to the statutory requirements, Sec. 421.120 and Sec.
421.122 provide for publication of a Federal Register notice to
announce criteria and standards for intermediaries before
implementation. Section 421.201 provides for publication of a Federal
Register notice to announce criteria and standards for carriers before
implementation. The current criteria and standards for intermediaries,
carriers, and DMEPOS regional carriers were published in the Federal
Register on December 28, 2001 at 66 FR 67257.
To the extent possible, we make every effort to publish the
criteria and standards before the beginning of the Federal FY, which is
October 1. If we do not publish a Federal Register notice before the
new FY begins, readers may presume that until and unless notified
otherwise, the criteria and standards that were in effect for the
previous FY remain in effect.
In those instances in which we are unable to meet our goal of
publishing the subject Federal Register notice before the beginning of
the FY, we may publish the criteria and standards notice at any
subsequent time during the year. If we publish a notice in this manner,
the evaluation period for the criteria and standards that are the
subject of the notice will be effective on the first day of the first
month following publication. Any revised criteria and standards will
measure performance prospectively; that is, we will not apply new
measurements to assess performance on a retroactive basis.
It is not our intention to revise the criteria and standards that
will be used during the evaluation period once this information has
been published in a Federal Register notice. However, on occasion,
either because of administrative action or congressional mandate, there
may be a need for changes that have a direct impact on the criteria and
standards previously published, or that require the addition of new
criteria or standards, or that cause the deletion of previously
published criteria and standards. If we must make these changes, we
will publish an amended Federal Register notice before implementation
of the changes. In all instances, necessary manual issuances will be
published to ensure that the criteria and standards are applied
uniformly and accurately. Also, as in previous years, this Federal
Register notice will be republished and the effective date revised if
changes are warranted as a result of the public comments received on
the criteria and standards.
II. Analysis of and Response to Public Comments Received on FY 2001
Criteria and Standards
In response to the December 28, 2001 Federal Register general
notice with comment, we received comments from five entities. We
reviewed all comments, but none necessitated our reissuance of the FY
2002 criteria and standards. Not all comments submitted pertained
specifically to the FY 2002 criteria and standards. We advised Medicare
program components of the concerns as appropriate. When warranted, we
have incorporated revisions in this Federal Register notice. We are
responding to the following performance evaluation comments:
Comment: A commenter advised that we have established an
``acceptable reversal rate'' of intermediary reconsideration
determinations by Administrative Law Judges (ALJs), but that we have
not developed an acceptable reversal rate for DMEPOS regional carriers.
Response: Section 1816(f)(2) of the Act requires that we develop a
standard to evaluate the extent to which intermediary determinations
are reversed on appeal. This section of the Act applies only to
intermediaries. The statute does not include a similar requirement for
carriers and DMEPOS regional carriers, who by law employ a different
process in reviewing Part B claims, including an additional level of
contractor appeal known as the fair hearing. While there is no similar
mandate under the Part B program for carriers or DMEPOS regional
carriers, our reviewers routinely evaluate the accuracy of appeals
decisions when they conduct a CPE review of a contractor's appeals
operation. This review includes an evaluation of reversals both at the
fair hearing and the ALJ level. We believe that this process adequately
identifies problems with the accuracy of carrier and DMERC appeals
decisions.
Comment: A commenter advised that intermediaries must be given
specific customer service performance objectives, and providers must be
allowed to influence those objectives and to participate directly in
the evaluations of contractor performance. The commenter considers
provider input more critical if the Administration continues to support
contractor reform.
Response: Both intermediaries and carriers are required to have
Provider Communications Advisory Groups which are comprised of
representatives from the various Medicare provider types, such as
hospitals, home health agencies, skilled nursing facilities, and
physicians. These groups are to have meetings on a quarterly basis
during which the provider representatives give contractors feedback
about education and customer service needs and how well these needs are
being met. The contractors report the minutes of these meetings to
CMS's headquarters in quarterly update reports. We factor in this
feedback when setting customer service standards for the contractor. We
notify contractors of specific customer service performance standards
by means of administrative directives. However, because such standards
are not mandated by law or court decision, we do not specify them in
this notice.
Currently we evaluate contractor customer service by verifying
implementation and execution of administrative directives, reviewing
responses to correspondence, monitoring telephone responses, and
reviewing educational materials distributed to providers. As we prepare
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for the anticipated passage of contracting reform we will be doing even
more to seek provider input into customer service performance
objectives.
Comment: A commenter requested that we publish the annual
evaluations of all of the contractors so that the affected public will
know whether contractors meet performance requirements. The commenter
advised that currently, the evaluations are available only through a
Freedom of Information Act (FOIA) request. Many providers, particularly
smaller providers, are not aware of the procedures for making a FOIA
request.
Response: The current evaluation reports for Medicare fee-for-
service contractors are lengthy narratives, which are not conducive to
publication. They are, however, available to the public upon written
request. The policy that governs releasing these reports is explained
at Sec. Sec. 401.133(c), 401.135, 401.136, and 401.140. There is no
requirement that reports be requested under the FOIA. Written requests
for reports may be addressed to: Centers for Medicare & Medicaid
Services, ATTN: Center for Medicare Management, Mailstop S2-21-28, 7500
Security Boulevard, Baltimore, Maryland 21244-1850.
Comment: A commenter remarked that the Contractor Performance
Evaluation (CPE) Rebuttal Process introduced in FY 2001 which gives
contractors an opportunity to submit a written rebuttal within 7
calendar days from the CPE exit conference, needs to be clarified as to
how it applies to the review of provider audit workpapers under our
Audit Quality Review Program (AQRP). The commenter believes we should
have a consistent policy for responding to all CPE findings. The
commenter further suggests that CMS needs to clarify its policies with
respect to AQRP findings and how they relate to the summarized annual
CPE for Provider audit.
Response: The AQRP has an established procedure allowing
contractors 30 days to review and respond to draft findings prepared as
a result of the AQRP review. We review the contractor's responses for
each individual AQRP review, delete or modify the findings as
appropriate, prepare a rebuttal for those findings that are not
modified, and issue a Management Letter. We then prepare and send to
the contractor an Executive Summary of the results of all the
individual AQRP reviews. This Executive Summary is then used as a basis
for the preparation of a CPE report. Because the contractor has already
been given a formal review and rebuttal type process under AQRP that
exceeds the 7 calendar day CPE rebuttal process, and because the CPE
report adopts the final AQRP findings, we have determined the CPE
rebuttal process is unnecessary for AQRP reviews.
III. Criteria and Standards--General
Basic principles of the Medicare program are to pay claims promptly
and accurately and to foster good beneficiary and provider relations.
Contractors must administer the Medicare program efficiently and
economically. The goal of performance evaluation is to ensure that
contractors meet their contractual obligations. We measure contractor
performance to ensure that contractors do what is required of them by
law, regulation, contract, and our directives.
We have developed a contractor oversight program for FY 2003 that
outlines expectations of the contractor; measures the performance of
the contractor; evaluates the performance against the expectations; and
provides for appropriate contract action based upon the evaluation of
the contractor's performance.
Several times throughout this notice, we refer to the
``readability'' of letters, decisions, or correspondence that are going
to Medicare beneficiaries from intermediaries or carriers. In those
instances, ``readability'' is defined as being below the 8th grade
reading level unless it is obvious that an incoming request from the
beneficiary contains language written at a higher level. In such cases,
the readability level is tailored to the capacities and circumstances
of the intended recipient.
In addition to evaluating performance based upon expectations for
FY 2003, we may also conduct follow-up evaluations throughout FY 2003
of areas in which contractor performance was out of compliance with
laws, regulations, and our performance expectations during prior review
years and thus required the contractor to submit a Performance
Improvement Plan (PIP).
In FY 2001, we established the Contractor Rebuttal Process as a
commitment to continual improvement of CPE. We will continue the use of
this process in FY 2003. The Contractor Rebuttal Process provides the
contractors an opportunity to submit a written rebuttal of CPE findings
of fact. Whenever we conduct an evaluation of contractor operations,
contractors have 7 calendar days from the date of the CPE review exit
conference to submit a written rebuttal. The CPE review team or, if
appropriate, the individual reviewer will consider the contents of the
rebuttal before the issuance of the final CPE report to the contractor.
The FY 2003 CPE for intermediaries and carriers is structured into
five criteria designed to meet the stated objectives. The first
criterion is ``Claims Processing'' which measures contractual
performance against claims processing accuracy and timeliness
requirements as well as activities in handling appeals. Within the
Claims Processing Criterion, we have identified those performance
standards that are mandated by legislation, regulation, or judicial
decision. These standards include claims processing timeliness, the
accuracy of Explanations of Medicare Benefits (EOMBs) and Medicare
Summary Notices (MSNs), the appropriateness of determinations reversed
by ALJs, the timeliness of intermediary reconsideration cases, the
timeliness of carrier reviews and hearings, and the readability of
carrier reviews. Further evaluation in the Claims Processing Criterion
may include, but is not limited to, the accuracy of claims processing,
the percent of claims paid with interest, and the accuracy of
reconsiderations, reviews, and hearings.
The second criterion is ``Customer Service'' which assesses the
adequacy of the service provided to customers by the contractor in its
administration of the Medicare program. The mandated standard in the
Customer Service Criterion is the need to provide beneficiaries with
written replies that are responsive, that is, provide in detail the
reasons for a determination when a beneficiary requests such
information, have a customer-friendly tone and clarity, and are at the
appropriate reading level. Further evaluation of services under this
criterion may include, but is not limited to, the timeliness and
accuracy of all correspondence both to beneficiaries and providers;
monitoring of the quality of replies provided by the contractor's
customer service representatives (quality call monitoring); beneficiary
and provider education, training, and outreach activities; and service
by the contractor's customer service representatives to beneficiaries
who come to the contractor's facility (walk-in inquiry service).
The third criterion is ``Payment Safeguards'' which evaluates
whether the Medicare Trust Fund is safeguarded against inappropriate
program expenditures. Intermediary and carrier performance may be
evaluated in the areas of Benefit Integrity (BI), Medical Review (MR),
Medicare Secondary Payer (MSP), Overpayments (OP), and Provider
Enrollment (PE). In addition,
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intermediary performance may be evaluated in the area of Audit and
Reimbursement (A&R). Mandated performance standards for intermediaries
in the Payment Safeguards criterion are the accuracy of decisions on
Skilled Nursing Facility (SNF) demand bills, and the timeliness of
processing Tax Equity and Fiscal Responsibility Act (TEFRA) target rate
adjustments, exceptions, and exemptions. There are no mandated
performance standards for carriers in the Payment Safeguards criterion.
Intermediaries and carriers may also be evaluated on any Medicare
Integrity Program (MIP) activities if performed under their agreement
or contract.
The fourth criterion is ``Fiscal Responsibility'' which evaluates
the contractor's efforts to protect the Medicare program and the public
interest. Contractors must effectively manage Federal funds for both
the payment of benefits and costs of administration under the Medicare
program. Proper financial and budgetary controls, including internal
controls, must be in place to ensure contractor compliance with its
agreement with HHS and CMS.
Additional functions reviewed under this criterion may include, but
are not limited to, adherence to approved budget, compliance with the
Budget and Performance Requirements (BPRs), and compliance with
financial reporting requirements.
The fifth and final criterion is ``Administrative Activities''
which measures a contractor's administrative management of the Medicare
program. A contractor must efficiently and effectively manage its
operations. Proper systems security (general and application controls),
Automated Data Processing (ADP) maintenance, and disaster recovery
plans must be in place. A contractor's evaluation under the
Administrative Activities criterion may include, but is not limited to,
establishment, application, documentation, and effectiveness of
internal controls which are essential in all aspects of a contractor's
operation, and the degree to which the contractor cooperates with us in
complying with the Federal Managers' Financial Integrity Act of 1982
(FMFIA). Administrative Activities evaluations may also include reviews
related to contractor implementation of our general instructions and
data and reporting requirements.
We have developed separate measures for RHHIs in order to evaluate
the distinct RHHI functions. These functions include the processing of
claims from freestanding HHAs, hospital-affiliated HHAs, and hospices.
Through an evaluation using these criteria and standards, we may
determine whether the RHHI is effectively and efficiently administering
the program benefit or whether the functions should be moved from one
intermediary to another in order to gain that assurance.
Below, we list the criteria and standards to be used for evaluating
the performance of intermediaries, RHHIs, carriers, and DMEPOS regional
carriers.
IV. Criteria and Standards for Intermediaries
A. Claims Processing Criterion
The Claims Processing criterion contains the following four
mandated standards:
Standard 1. 95.0 percent of clean electronically submitted non-
Periodic Interim Payment claims are paid within statutorily specified
time frames. Clean claims are defined as claims that do not require
Medicare intermediaries to investigate or develop them outside of their
Medicare operations on a prepayment basis. Specifically, clean, non-
Periodic Interim Payment electronic claims can be paid as early as the
14th day (13 days after the date of receipt) and must be paid by the
31st day (30 days after the date of receipt). Our expectation is that
contractors will meet this percentage on a monthly basis.
Standard 2. 95.0 percent of clean paper non-Periodic Interim
Payment claims are paid within specified time frames. Specifically,
clean, non-Periodic Interim Payment paper claims can be paid as early
as the 27th day (26 days after the date of receipt) and must be paid by
the 31st day (30 days after the date of receipt). Our expectation is
that contractors will meet this percentage on a monthly basis.
Standard 3. The percentage of reconsideration determinations
reversed by ALJs is acceptable. We have defined an acceptable reversal
rate by ALJs as one that is at or below 5.0 percent.
Standard 4. 75.0 percent of reconsiderations are processed within
60 days, and 90.0 percent are processed within 90 days. Our expectation
is that contractors will meet this percentage on a monthly basis.
Standard 5. 95.0 percent of Part B review determinations are
completed within 45 days. Our expectation is that contractors will meet
this percentage on a monthly basis.
Standard 6. 90.0 percent of Part B hearing decisions are completed
within 120 days. Our expectation is that contractors will meet this
percentage on a monthly basis.
Additional functions that may be evaluated under this criterion
include, but are not limited to, the following:
[sbull] Claims processing accuracy.
[sbull] Establishment and maintenance of relationship with Common
Working File (CWF) Host.
[sbull] Accuracy of processing reconsideration cases with
determination letters that are clear and have appropriate customer-
friendly tone.
Because intermediaries process many claims for benefits under the
Part B Medical Insurance portion of the Medicare Program, we also may
evaluate how well an intermediary follows the procedures for processing
appeals of any Part B claims. This includes accuracy of reviews and
hearings, as well as the appropriateness of the reading level of any
review determination letters. (See Claims Process Criterion for
carriers under section VI.)
B. Customer Service Criterion
Functions that may be evaluated under this criterion include, but
are not limited to, the following:
[sbull] Providing timely and accurate replies to beneficiary and
provider telephone inquiries.
[sbull] Quality Call Monitoring.
[sbull] Training of Customer Service Representatives.
[sbull] Ensuring the validity of the call center performance data
that are being reported in the Customer Service Assessment and
Management System.
[sbull] Providing timely and accurate replies to beneficiaries and
providers that address the concerns raised and are written with
appropriate customer-friendly tone and clarity and that those written
to beneficiaries are at the appropriate reading level.
[sbull] Walk-in inquiry service.
[sbull] Conducting beneficiary and provider education, training and
outreach activities.
[sbull] Effectively maintaining an Internet Website dedicated to
furnishing providers and physicians timely, accurate, and useful
Medicare program information.
C. Payment Safeguards Criterion
The Payment Safeguard criterion contains the following two mandated
standards:
Standard 1. Decisions on SNF demand bills are accurate.
Standard 2. TEFRA target rate adjustments, exceptions, and
exemptions are processed within mandated time frames. Specifically,
applications must be processed to completion within 75 days after
receipt
[[Page 9686]]
by the contractor or returned to the hospitals as incomplete within 60
days of receipt.
Intermediaries may also be evaluated on any MIP activities if
performed under their Part A agreement. These functions and activities
include, but are not limited to the following:
[sbull] Audit and Reimbursement
+ Performing the activities specified in our general instructions for
conducting audit and settlement of Medicare cost reports.
+ Establishing accurate interim payments.
[sbull] Benefit Integrity
+ Identifying potential fraud cases that exist within the
intermediary's service area and taking appropriate actions to resolve
these cases.
+ Investigating allegations of potential fraud that are made by
beneficiaries, providers, CMS, Office of Inspector General (OIG), and
other sources.
+ Putting in place effective detection and deterrence programs for
potential fraud.
[sbull] Medical Review
+ Increasing the effectiveness of medical review activities.
+ Exercising accurate and defensible decision making on medical
reviews.
+ Effectively educating and communicating with the provider community.
+ Collaborating with other internal components and external entities to
ensure correct claims payment, and to address situations of fraud,
waste, and abuse.
[sbull] Medicare Secondary Payer
+ Accurately reporting MSP savings.
+ Accurately following MSP claim development and edit procedures.
+ Auditing hospital files and claims to determine that claims are being
filed to Medicare appropriately.
+ Supporting the Coordination of Benefits Contractor's efforts to
identify responsible payers primary to Medicare.
+ Identifying, recovering, and referring mistaken Medicare payments in
accordance with appropriate Medicare Intermediary Manual instructions
and our other pertinent general instructions, in the specified order of
priority.
[sbull] Overpayments
+ Collecting and referring Medicare debts timely.
+ Accurately reporting overpayments to us.
+ Adhering to our instructions for management of Medicare Trust Fund
debts.
[sbull] Provider Enrollment
+ Complying with assignment of staff to the provider enrollment
function and training the staff in procedures and verification
techniques.
+ Complying with the operational standards relevant to the process for
enrolling providers.
D. Fiscal Responsibility Criterion
We may review the intermediary's efforts to establish and maintain
appropriate financial and budgetary internal controls over benefit
payments and administrative costs. Proper internal controls must be in
place to ensure that contractors comply with their agreements with us.
Additional functions that may be reviewed under the Fiscal
Responsibility criterion include, but are not limited to, the
following:
[sbull] Adherence to approved program management and MIP budgets.
[sbull] Compliance with the BPRs.
[sbull] Compliance with financial reporting requirements.
[sbull] Control of administrative cost and benefit payments.
E. Administrative Activities Criterion
We may measure an intermediary's administrative ability to manage
the Medicare program. We may evaluate the efficiency and effectiveness
of its operations, its system of internal controls, and its compliance
with our directives and initiatives.
We may measure an intermediary's efficiency and effectiveness in
managing its operations. Proper systems security (general and
application controls), ADP maintenance, and disaster recovery plans
must be in place. An intermediary must also test system changes to
ensure the accurate implementation of our instructions.
Our evaluation of an intermediary under the Administrative
Activities criterion may include, but is not limited to, reviews of the
following:
[sbull] Systems security.
[sbull] ADP maintenance (configuration management, testing, change
management, security, etc).
[sbull] Disaster recovery plan.
[sbull] Implementation of our general instructions.
[sbull] Data and reporting requirements implementation.
[sbull] Internal controls establishment and use, including the
degree to which the contractor cooperates with the Secretary in
complying with the FMFIA.
V. Criteria and Standards for Regional Home Health Intermediaries
(RHHIs)
The following three standards are mandated for the RHHI criterion:
Standard 1. 95.0 percent of clean electronically submitted non-
Periodic Interim Payment HHA and hospice claims are paid within
statutorily specified time frames. Clean claims are defined as claims
that do not require Medicare intermediaries to investigate or develop
them outside of their Medicare operations on a prepayment basis.
Specifically, clean, non-Periodic Interim Payment electronic claims can
be paid as early as the 14th day (13 days after the date of receipt)
and must be paid by the 31st day (30 days after the date of receipt).
Our expectation is that contractors will meet this percentage on a
monthly basis.
Standard 2. 95.0 percent of clean paper non-Periodic Interim
Payment HHA and hospice claims are paid within specified time frames.
Specifically, clean, non-Periodic Interim Payment paper claims can be
paid as early as the 27th day (26 days after the date of receipt) and
must be paid by the 31st day (30 days after the date of receipt). Our
expectation is that contractors will meet this percentage on a monthly
basis.
Standard 3. 75.0 percent of HHA and hospice reconsiderations are
processed within 60 days and 90.0 percent are processed within 90 days.
Our expectation is that contractors will meet this percentage on a
monthly basis.
Standard 4. 95.0 percent of HHA and Hospice Part B review
determinations are completed within 45 days. Our expectation is that
contractors will meet this percentage on a monthly basis.
Standard 5. 90.0 percent of HHA and Hospice Part B hearing
decisions are completed within 120 days. Our expectation is that
contractors will meet this percentage on a monthly basis.
We may use this criterion to review an RHHI's performance with
respect to handling the HHA and hospice workload. This includes
processing HHA and hospice claims timely and accurately; properly
paying and settling HHA cost reports; and timely and accurately
processing reconsiderations from beneficiaries, HHAs, and hospices.
VI. Criteria and Standards for Carriers
A. Claims Processing Criterion
The Claims Processing criterion contains the following six mandated
standards:
Standard 1. 95.0 percent of clean electronically submitted claims
are processed within statutorily specified time frames. Clean claims
are defined as claims that do not require Medicare carriers to
investigate or develop them outside of their Medicare operations on a
prepayment basis. Specifically, clean electronic claims can be paid as
early as the 14th day (13 days after the date of receipt) and must be
paid by the 31st
[[Page 9687]]
day (30 days after the date of receipt). Our expectation is that
contractors will meet this percentage on a monthly basis.
Standard 2. 95.0 percent of clean paper claims are processed within
specified time frames. Specifically, clean paper claims can be paid as
early as the 27th day (26 days after the date of receipt) and must be
paid by the 31st day (30 days after the date of receipt). Our
expectation is that contractors will meet this percentage on a monthly
basis.
Standard 3. 98.0 percent of EOMBs and MSNs are properly generated.
Our expectation is that EOMB and MSN messages are accurately reflecting
the services provided.
Standard 4. 95.0 percent of review determinations are completed
within 45 days. Our expectation is that contractors will meet this
percentage on a monthly basis.
Standard 5. 90.0 percent of carrier hearing decisions are completed
within 120 days. Our expectation is that contractors will meet this
percentage on a monthly basis.
Standard 6. Review determination letters prepared in response to
beneficiary initiated appeal requests are written at an appropriate
reading level.
Additional functions that may be evaluated under this criterion
include, but are not limited to, the following:
[sbull] Claims Processing accuracy.
[sbull] Establishment and maintenance of relationship with the CWF
Host.
[sbull] Accuracy of processing review determination cases.
[sbull] Accuracy of processing hearing cases with decision letters
that are clear and have appropriate customer-friendly tone.
B. Customer Service Criterion
The Customer Service criterion contains the following mandated
standard:
Standard. Replies to beneficiary correspondence address the
beneficiary's concerns, are written with appropriate customer-friendly
tone and clarity, and are at the appropriate reading level.
Contractors must meet our performance expectations that
beneficiaries and providers are served by prompt and accurate
administration of the program in accordance with all applicable laws,
regulations, and our general instructions.
Additional functions that may be evaluated under this criterion
include, but are not limited to, the following:
[sbull] Providing timely and accurate replies to beneficiary and
provider telephone inquiries.
[sbull] Quality Call Monitoring.
[sbull] Training of Customer Service Representatives.
[sbull] Ensuring the validity of the call center performance data that
are being reported in the Customer Service Assessment and Management
System.
[sbull] Walk-in inquiry service.
[sbull] Conducting beneficiary and provider education, training, and
outreach activities.
[sbull] Effectively maintaining an Internet Website dedicated to
furnishing providers timely, accurate, and useful Medicare program
information.
C. Payment Safeguards Criterion
Carriers may be evaluated on any MIP activities if performed under
their contracts. In addition, other carrier functions and activities
that may be reviewed under this criterion include, but are not limited
to the following:
[sbull] Benefit Integrity
+ Identifying potential fraud cases that exist within the carrier's
service area and taking appropriate actions to resolve these cases.
+ Investigating allegations of potential fraud that are made by
beneficiaries, providers, CMS, OIG, and other sources.
+ Putting in place effective detection and deterrence programs for
potential fraud.
[sbull] Medical Review
+ Increasing the effectiveness of medical review activities.
+ Exercising accurate and defensible decision making on medical
reviews.
+ Effectively educating and communicating with the provider community.
+ Collaborating with other internal components and external entities to
ensure correct claims payment, and to address situations of fraud,
waste, and abuse.
[sbull] Medicare Secondary Payer
+ Accurately reporting MSP savings.
+ Accurately following MSP claim development/edit procedures.
+ Supporting the Coordination of Benefits Contractor's efforts to
identify responsible payers primary to Medicare.
+ Identifying, recovering, and referring mistaken Medicare payments in
accordance with the appropriate Medicare Carriers Manual instructions,
and our other pertinent general instructions.
[sbull] Overpayments
+ Collecting and referring Medicare debts timely.
+ Accurately reporting overpayments to us.
+ Compliance with our instructions for management of Medicare Trust
Fund debts.
[sbull] Provider Enrollment
+ Complying with assignment of staff to the provider enrollment
function and training staff in procedures and verification techniques.
+ Complying with the operational standards relevant to the process for
enrolling suppliers.
D. Fiscal Responsibility Criterion
We may review the carrier's efforts to establish and maintain
appropriate financial and budgetary internal controls over benefit
payments and administrative costs. Proper internal controls must be in
place to ensure that contractors comply with their contracts.
Additional functions that may be reviewed under the Fiscal
Responsibility criterion include, but are not limited to, the
following:
[sbull] Adherence to approved program management and MIP budgets.
[sbull] Compliance with the BPRs.
[sbull] Compliance with financial reporting requirements.
[sbull] Control of administrative cost and benefit payments.
E. Administrative Activities Criterion
We may measure a carrier's administrative ability to manage the
Medicare program. We may evaluate the efficiency and effectiveness of
its operations, its system of internal controls, and its compliance
with our directives and initiatives.
We may measure a carrier's efficiency and effectiveness in managing
its operations. Proper systems security (general and application
controls), Automatic Data Processing (ADP) maintenance, and disaster
recovery plans must be in place. Also, a carrier must test system
changes to ensure accurate implementation of our instructions.
Our evaluation of a carrier under this criterion may include, but
is not limited to, reviews of the following:
[sbull] Systems security.
[sbull] ADP maintenance (configuration management, testing, change
management, security, etc.).
[sbull] Disaster recovery plan.
[sbull] Implementation of our general instructions.
[sbull] Data and reporting requirements implementation.
[sbull] Internal controls establishment and use, including the
degree to which the contractor cooperates with the Secretary in
complying with the FMFIA.
VII. Criteria and Standards for Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS) Regional Carriers
For FY 2003 Contractor Performance Evaluation for DMEPOS regional
[[Page 9688]]
carriers has been structured into five criteria, which are the same
criteria used for intermediaries and carriers: Claims Processing;
Customer Service; Payment Safeguards; Fiscal Responsibility; and
Administrative Activities. These criteria for DMEPOS regional carriers
were referred to in prior Federal Register notices as Quality,
Efficiency, Service, and Benefit Integrity.
In these five criteria there are a total of seven mandated
standards against which all DMEPOS regional carriers must be evaluated.
There also are examples of other activities for which the DMEPOS
regional carriers may be evaluated. The mandated standards are in the
Claims Processing and Customer Service Criteria. In addition to being
described in these criteria, the mandated standards are also described
in Attachment J-37 to the DMEPOS regional carrier statement of work
(SOW).
A. Claims Processing Criterion
The Claims Processing criterion contains the following six mandated
standards:
Standard 1. 95.0 percent of clean electronically submitted claims
are processed within statutorily specified time frames. Clean claims
are defined as claims that do not require Medicare DMEPOS regional
carriers to investigate or develop them outside of their Medicare
operations on a prepayment basis. Specifically, clean electronic claims
can be paid as early as the 14th day (13 days after the date of
receipt) and must be paid by the 31st day (30 days after the date of
receipt). Our expectation is that contractors will meet this percentage
on a monthly basis.
Standard 2. 95.0 percent of clean paper claims are processed within
specified time frames. Specifically, clean paper claims can be paid as
early as the 27th day (26 days after the date of receipt) and must be
paid by the 31st day (30 days after the date of receipt). Our
expectation is that contractors will meet this percentage on a monthly
basis.
Standard 3. Properly generated 98.0 percent of MSNs. Our
expectation is that MSN messages are accurately reflecting the services
provided.
Standard 4. 95.0 percent of review determinations are completed
within 45 days. Our expectation is that contractors will meet this
percentage on a monthly basis.
Standard 5. 90.0 percent of DMEPOS regional carrier hearing
decisions are completed within 120 days. CMS's expectation is that
contractors will meet this percentage on a monthly basis.
Standard 6. Review determination letters prepared in response to
beneficiary initiated requests are written at an appropriate reading
level and state in detail the reasons for the determination.
Additional functions that may be evaluated under this criterion
include, but are not limited to, the following:
[sbull] Claims processing accuracy.
[sbull] Review determinations and hearing decisions are written
accurately and clearly.
[sbull] Telephone reviews are appropriately documented and
adjudicated timely.
[sbull] Requests for ALJ hearings are processed timely.
B. Customer Service Criterion
The Customer Service Criterion contains the following mandated
standard:
Standard 1. Replies to beneficiary correspondence address concerns
raised, are written with appropriate customer-friendly tone and
clarity, and are at the appropriate reading level.
Contractors must meet our performance expectations that
beneficiaries and suppliers are served by prompt and accurate
administration of the program in accordance with all applicable laws,
regulations, the DMEPOS regional carrier SOW, and our general
instructions.
Additional functions that may be evaluated under this criterion
include, but are not limited to, the following:
[sbull] Providing timely and accurate replies to beneficiary and
supplier telephone inquiries.
[sbull] Quality Call Monitoring.
[sbull] Training of Customer Service Representatives.
[sbull] Ensuring the validity of the call center performance data
that are being reported in the Customer Service Assessment and
Management System.
[sbull] Providing timely and accurate replies to beneficiaries,
providers, and suppliers that address their concerns and are written
with appropriate customer-friendly tone and clarity.
[sbull] Walk-in inquiry service.
[sbull] Conducting beneficiary and supplier education, training,
and outreach activities.
[sbull] Effectively maintaining an Internet Website dedicated to
furnishing suppliers timely, accurate, and useful Medicare program
information.
[sbull] Ensuring that communications are made to interested
supplier organizations for the purpose of developing and maintaining
collaborative supplier education and training activities and programs.
C. Payment Safeguards Criterion
DMEPOS regional carriers may be evaluated on any MIP activities if
performed under their contracts. The DMEPOS regional carriers must
undertake actions to promote an effective program administration with
respect to DMEPOS regional carrier claims. These functions and
activities include, but are not limited to the following:
[sbull] Benefit Integrity
+ Identifying potential fraud cases that exist within the DMEPOS
regional carrier's service area and taking appropriate actions to
resolve these cases.
+ Investigating allegations of potential fraud made by beneficiaries,
suppliers, CMS, OIG, and other sources.
+ Putting in place effective detection and deterrence programs for
potential fraud.
[sbull] Medical Review
+ Reducing the error rate by identifying patterns of in appropriate
billing.
+ Educating suppliers concerning Medicare coverage and coding
requirements.
[sbull] Medicare Secondary Payer
+ Accurately reporting MSP savings.
+ Accurately following MSP claim development/edit procedures.
+ Supporting the Coordination of Benefits Contractor's efforts to
identify responsible payers primary to Medicare.
+ Identifying, recovering, and referring mistaken Medicare payments in
accordance with the appropriate program instructions in the specified
order of priority.
[sbull] Overpayments
+ Determining that the DMEPOS regional carrier completely, accurately,
timely, and aggressively pursued all outstanding overpayments in
adherence with the Medicare Carriers Manual and CMS Program Memoranda
resulting from the Debt Collection Improvement Act (DCIA).
+ Verify that all overpayments were timely and accurately recorded.
D. Fiscal Responsibility Criterion
We may review the DMEPOS regional carrier's efforts to establish
and maintain appropriate financial and budgetary internal controls over
benefit payments and administrative costs. Proper internal controls
must be in place to ensure that contractors comply with their
contracts. Additional matters that may be reviewed under this criterion
include, but are not limited to the following:
[sbull] Compliance with financial reporting requirements.
[[Page 9689]]
[sbull] Adherence to approved program management and MIP budgets.
[sbull] Control of administrative cost and benefit payments.
E. Administrative Activities
We may measure a DMEPOS regional carrier's administrative ability
to manage the Medicare program. We may evaluate the efficiency and
effectiveness of its operations, its system of internal controls, and
its compliance with our directives and initiatives. Our evaluation of a
DMEPOS regional carrier under this criterion may include, but is not
limited to review of the following:
[sbull] Systems Security.
[sbull] Disaster recovery plan.
[sbull] Internal controls establishment and use, including the
degree to which the contractor cooperates with the Secretary in
complying with the FMFIA.
VIII. Action Based on Performance Evaluations
We evaluate a contractor's performance against applicable program
requirements for each criterion. Each contractor must certify that all
information submitted to us relating to the contract management
process, including, without limitation, all files, records, documents
and data, whether in written, electronic, or other form, is accurate
and complete to the best of the contractor's knowledge and belief. A
contractor will also be required to certify that its files, records,
documents, and data have not been manipulated or falsified in an effort
to receive a more favorable performance evaluation. A contractor must
further certify that, to the best of its knowledge and belief, the
contractor has submitted, without withholding any relevant information,
all information required to be submitted with respect to the contract
management process under the authority of applicable law(s),
regulation(s), contract(s), or our manual provision(s). Any contractor
that makes a false, fictitious, or fraudulent certification may be
subject to criminal and/or civil prosecution, as well as appropriate
administrative action. This administrative action may include debarment
or suspension of the contractor, as well as the termination or
nonrenewal of a contract.
If a contractor meets the level of performance required by
operational instructions, it meets the requirements of that criterion.
When we determine a contractor is not meeting performance requirements,
we will use the terms ``major nonconformance'' or ``minor
nonconformance'' to classify our findings. A major nonconformance is a
nonconformance that is likely to result in failure of the supplies or
services, or to materially reduce the usability of the supplies or
services for their intended purpose. A minor nonconformance is a
nonconformance that is not likely to materially reduce the usability of
the supplies or services for their intended purpose, or is a departure
from established standards having little bearing on the effective use
or operation of the supplies or services. The contractor will be
required to develop and implement a PIP for findings determined to be
either a major or minor nonconformance. The contractor will be
monitored to ensure effective and efficient compliance with the PIP,
and to ensure improved performance when requirements are not met.
The results of performance evaluations and assessments under all
criteria applying to intermediaries, carriers, RHHIs, and DMEPOS
regional carriers will be used for contract management activities and
will be published in the contractor's annual Report of Contractor
Performance (RCP). We may initiate administrative actions as a result
of the evaluation of contractor performance based on these performance
criteria. Under sections 1816 and 1842 of the Act, we consider the
results of the evaluation in our determinations when--
[sbull] Entering into, renewing, or terminating agreements or
contracts with contractors, and
[sbull] Deciding other contract actions for intermediaries and
carriers (such as deletion of an automatic renewal clause). These
decisions are made on a case-by-case basis and depend primarily on the
nature and degree of performance. More specifically, these decisions
depend on the following:
[sbull] Relative overall performance compared to other contractors.
[sbull] Number of criteria in which nonconformance occurs.
[sbull] Extent of each nonconformance.
[sbull] Relative significance of the requirement for which
nonconformance occurs within the overall evaluation program.
[sbull] Efforts to improve program quality, service, and efficiency.
[sbull] Deciding the assignment or reassignment of providers and
designation of regional or national intermediaries for classes of
providers.
We make individual contract action decisions after considering
these factors in terms of their relative significance and impact on the
effective and efficient administration of the Medicare program.
In addition, if the cost incurred by the intermediary, RHHI,
carrier, or DMEPOS regional carrier to meet its contractual
requirements exceeds the amount that we find to be reasonable and
adequate to meet the cost that must be incurred by an efficiently and
economically operated intermediary or carrier, these high costs may
also be grounds for adverse action.
IX. Regulatory Impact Statement
We have examined the impacts of this notice as required by
Executive Order 12866 (September 1993, Regulatory Planning and Review),
the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-
354), section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
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 in any one year). Since this notice
only describes criteria and standards for evaluating FIs (including
RHHIs), carriers, and DMEPOS regional carriers and has no significant
economic impact on the program, its beneficiaries, providers or
suppliers, this is not a major notice.
The RFA requires agencies to analyze options for regulatory relief
of small businesses. This notice does not affect small businesses;
individuals and States are not included in the definition of small
business entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
notice does not affect small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in expenditure in any 1 year by State,
local, or tribal governments, in the aggregate, or by the private
sector, of $110 million. In accordance with Section 202, we have
determined that the notice does not impose any unfunded mandates on
State, local or tribal governments, or on the private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a notice that imposes substantial
direct
[[Page 9690]]
requirement costs on State and local governments, preempts State law,
or otherwise has Federalism implications. We have determined that the
notice does not significantly affect the rights, roles, and
responsibilities of States.
We have not prepared a Regulatory Impact Analysis for this notice,
in accordance with Executive Order 12866, because it will not have a
significant economic impact, nor does it impose any unfunded mandates
on State, local, or tribal governments or the private sector.
Furthermore, we certify that the notice will not have a significant
impact on a substantial number of small entities or small rural
hospitals.
In accordance with the provisions of Executive Order 12866, this
notice was reviewed by the Office of Management and Budget.
X. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently it need not be reviewed by the
Office of Management and Budget under the authority of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
Authority: Sections 1816(f), 1834(a)(12), and 1842(b) of the
Social Security Act (42 U.S.C. 1395h(f), 1395m(a)(12), and
1395u(b)).
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance, and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: August 6, 2002.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 03-4087 Filed 2-27-03; 8:45 am]
BILLING CODE 4120-01-P