Medicare Program; Criteria and Standards for Evaluating Intermediary and Carrier Performance During FY 1995

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

[BPO-123-GNC]

Medicare Program; Criteria and Standards for Evaluating

Intermediary and Carrier Performance During FY 1995

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

ACTION: General notice with comment period.

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SUMMARY: This notice describes the criteria and standards to be used

for evaluating the performance of fiscal intermediaries and carriers in

the administration of the Medicare program beginning October 1, 1994.

The results of these evaluations are considered whenever HCFA enters

into, renews, or terminates an intermediary agreement or carrier

contract or takes other contract actions (for example, assigning or

reassigning providers of services to an intermediary or designating

regional or national intermediaries).

This notice is published in accordance with sections 1816(f) and

1842(b)(2) of the Social Security Act. We are publishing for public

comment in the Federal Register those criteria and standards against

which we evaluate intermediaries and carriers.

EFFECTIVE DATE: The criteria and standards are effective October 1,

1994.

COMMENTS: Comments will be considered if we receive them at the

appropriate address as provided below no later than 5 p.m. (EDT) on

October 7, 1994.

ADDRESSES: Mail written comments (1 original and 3 copies) to the

following address: Health Care Financing Administration, Department of

Health and Human Services, Attention: BPO-123-GNC, P.O. Box 26676,

Baltimore, MD 21207.

If you prefer, you may deliver your written comments (1 original

and 3 copies) to one of the following addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,

Washington, D.C. 20201, or

Room 132, East High Rise Building, 6325 Security Boulevard, Baltimore,

Maryland 21207.

Because of staffing and resource limitations, we cannot accept

comments by facsimile (FAX) transmission. In commenting, please refer

to file code BPO-123-GNC. Comments received timely will be available

for public inspection as they are received, generally beginning

approximately 3 weeks after publication of a document, in Room 309-G of

the Department's office at 200 Independence Avenue, SW., Washington,

D.C., on Monday through Friday of each week from 8:30 a.m. to 5 p.m.

(phone: (202) 690-7890).

FOR FURTHER INFORMATION CONTACT: Bob Loyal, (410) 966-7403.

SUPPLEMENTARY INFORMATION:

I. Background

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 the Secretary of Health and Human Services. These agencies or

organizations, known as fiscal intermediaries, determine whether

medical services are covered under Medicare and determine correct

payment amounts. The intermediaries then make payments to the health

care providers 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. We evaluate intermediary performance through the contract

management process.

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 payable amount 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 carrier's performance

of its functions under its contract. We also evaluate carrier

performance through the contract management process.

We are publishing the criteria and standards in the Federal

Register in order to allow the public an opportunity to comment before

implementation. In addition to the statutory requirement, our

regulations at 42 CFR 421.120 and 421.122 provide for publication of a

Federal Register notice to announce criteria and standards for

intermediaries prior to implementation. Regulations at 42 CFR 421.201

provide for publication of a Federal Register notice to announce

criteria and standards for carriers prior to implementation. The

current criteria and standards were published in the Federal Register

on September 30, 1993 (58 FR 51085).

To the extent possible, we make every effort to publish the

criteria and standards prior to the beginning of the Federal fiscal

year, which is October 1st.

If we do not publish a Federal Register notice before the new

fiscal year begins, readers may presume that until and unless notified

otherwise, the criteria and standards which were in effect for the

previous fiscal year remain in effect.

In those instances where we are unable to meet our goal of

publishing the subject Federal Register notice before the beginning of

the fiscal year, we may publish the criteria and standards notice at

any subsequent time during the year. If we choose to publish a notice

in this manner, the evaluation period for any such criteria and

standards which are the subject of the notice will be revised to be

effective on the first day of the first month following publication.

Hence, any revised criteria and standards will measure performance

prospectively; that is, we will not apply new measurements to assess

performance on a retroactive basis.

Also, it is not our intention to revise the criteria and standards

which 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 mandate or Congressional action, there

may be a need for changes which have direct impact upon the criteria

and standards previously published, or which require the addition of

new criteria or standards, or that cause the deletion of previously

published criteria and standards. Should such changes be necessitated,

we will issue a Federal Register notice prior to implementation of the

changes.

In all instances, necessary manual issuances will be published each

year to ensure that the criteria and standards are implemented

uniformly and accurately. Also, as in previous years, the 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. Incentive Payments to Carriers

In accordance with section 1842(c)(1)(B) of the Act, this notice

also describes the current methodology that will be used to award

incentive payments to carriers that successfully increase the

proportion of physicians in the carrier's service area who are

participating physicians, or the proportion of payments to

participating physicians.

Section 1842(h) of the Act sets forth the Medicare participating

physician program. ``Participating'' means accepting assignment on all

Medicare claims. ``Accepting assignment'' means physicians accept

Medicare's approved amount as full payment, with the beneficiary

responsible for only the Medicare deductible and coinsurance amounts.

The main goal of the program is to reduce the financial impact of

medical costs upon beneficiaries by establishing incentives for

physicians to accept assignment on all Medicare claims. The provisions

give all physicians an annual opportunity to enroll or disenroll as a

Medicare participating physician.

Section 1842(b)(3)(H) of the Act requires Medicare carriers to

implement programs to recruit and retain physicians as participating

physicians. These programs include educational and outreach activities

and the use of professional relations personnel to handle billing and

other problems relating to payment of claims of participating

physicians. These programs are also designed to familiarize

beneficiaries with the participating physician program and to assist

the beneficiaries in locating participating physicians. Carriers also

increase participation through the use of public relations, literature,

and training in the physician community. We believe carriers continue

to perform these activities because they are advantageous to their

operations. By properly educating the provider community, carriers save

staff time and produce cleaner claims which result in fewer inquiries

as well as fewer exceptions.

Also, we believe that the implementation of the resource-based

relative value scale (RBRVS) fee schedule has contributed largely to

the increase in the number of physicians participating in the Medicare

program. Nonparticipation is discouraged by the ``limiting charges''

imposed under physician payment reform.

We will continue to pay incentive bonuses to any carrier that

achieves an increase of at least one-tenth of one percent in the

participating physicians' rate or proportion of payments for

participating physicians' services in the carrier's total service area.

Carriers that achieve an increase in physicians' participation or

payments for participating physician services of less than 2 percentage

points will be paid a partial incentive payment. Carriers that achieve

an increase of at least 2 percentage points, but less than 4 points,

will be paid the full incentive payment. Carriers that achieve an

increase equal to or greater than 4 percentage points will be paid a

bonus for each additional 2 percentage point increase over and above

the initial 2 percentage point increase.

As required by section 1842(c)(1)(B) of the Act, the amount of the

total incentive payable to carriers is one percent of the total

payments to carriers for claims processing costs for the fiscal year.

The total incentive pool is calculated by summing the total claims

processing costs reported by each carrier in fiscal year (FY) 1985 and

multiplying the total by one percent. The total claims processing costs

in that fiscal year amounted to $380 million. Therefore, carrier

bonuses in FY 1995 will be one percent of this amount or $3.8 million.

Fiscal year 1985 has been used as a base because it reflects the claims

processing costs and workload at the inception of the participating

physician program.

For the purpose of determining each carrier's eligibility for an

incentive payment, we make two comparisons. We compare the carrier's

physician participation rate after the latest enrollment period with

the physician participation rate after the prior enrollment date. We

make a similar comparison of the proportion of covered charges for

services by participating physicians during the quarter following the

enrollment period with those of the quarter following the prior

enrollment period. We intend to use whichever difference yields the

higher percentage increase to determine eligibility for award of the

incentive payment. Currently, we issue carrier incentive payments by

September 30 following each annual enrollment period. The amount of

these payments will be included in line 11 (other) of the carrier's

Notice of Budget Approval, Form HCFA-1524.

III. Criteria and Standards--General

Basic tenets 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. We have developed a contractor management program for FY

1995 that sets expectations for the contractor; measures the

performance of the contractor; evaluates the performance against the

expectations; and, takes appropriate contract action based upon

evaluation of the contractor's performance. The goal of performance

evaluation is to ensure that contractors meet their contractual

obligations. We measure contractor performance to ensure that the

following objectives are met: contractors do what is required of them

by law, regulation and HCFA directive; do it well; and continually

improve what they do. We have restructured contractor evaluation into

five criteria, designed to meet those objectives. This restructuring

effort considered comments from HCFA components as well as beneficiary

and provider groups which have commented on past Federal Register

notifications.

The first criterion in the FY 1995 contractor performance

evaluation is ``Claims Processing'', which measures contractual

performance against claims processing accuracy and timeliness

requirements. Within the Claims Processing criterion, we have

identified those performance standards which are mandated by either

legislation, regulation or judicial decision. These standards include

claims processing timeliness, the rate of cases reversed by an

Administrative Law Judge, the timeliness of intermediary

reconsideration cases, and the accuracy and timeliness of carrier

reviews and hearings. Further evaluation in the Claims Processing

criterion may include, but is not limited to, the accuracy of bill and

claims processing, the level of electronic claims payment, and the

accuracy of intermediary reconsideration cases.

The second criterion is ``Customer Service'', which assesses the

completeness of the service provided to customers by the contractor in

its administration of the Medicare program. Mandated standards in the

Customer Service criterion include the accuracy of Explanations of

Medicare Benefits, and the accuracy and timeliness of carrier replies

to beneficiary telephone inquiries. In FY 1995, customer feedback may

be used to collect comparable data on customer satisfaction and

identify areas in need of improvement. Among the specific contractor

services that may be included in the evaluation process under the

Customer Service criterion are: beneficiary relations; provider

education; appropriate telephone inquiry responses; and the tone and

accuracy of all correspondence.

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 medical review, Medicare secondary payer,

fraud and abuse, and audit and reimbursement. Mandated performance

standards 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. Further

evaluation in this criterion may include, but is not limited to, the

efficient and effective compilation and analysis of data to bring about

continuous improvement in contractor efforts to safeguard Medicare

program dollars.

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

payment of benefits and cost of administration under the Medicare

program. Proper financial and budgetary controls must be in place to

ensure contractor compliance with its agreement with HHS and HCFA.

Additional functions reviewed under this criterion may include, but are

not limited to, bottom line unit cost, compliance with the Budget and

Performance Requirements, adherence to Chief Financial Officer's Act.

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 to assure constant improvement in the way it does business.

Proper systems security, 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.

Internal controls include all aspects of a contractor's operation. It

can include implementation reviews of corrective action plans, task

management plans, data and reporting requirements, and management

improvement plans.

We have also developed separate measures for evaluating unique

activities of Regional Home Health Intermediaries (RHHIs).

Section 1816(e)(4) of the Act requires the Secretary to designate

regional agencies or organizations, which are already Medicare

intermediaries under section 1816, to perform bill processing functions

with respect to freestanding home health agency (HHA) bills. The law

requires that we limit the number of such regional intermediaries

(i.e., RHHIs) to not more than ten; there are currently nine (see 42

CFR 421.117 and the Federal Register published on May 19, 1988 (53 FR

17936) for more details about the RHHIs).

In addition, section 1816(e)(4) of the Act requires the Secretary

to develop criteria and standards in order to determine whether to

designate an agency or organization to perform services with respect to

hospital affiliated HHAs. We have developed separate measures for RHHIs

in order to evaluate the distinct RHHI functions. These functions

include the processing of freestanding HHA, hospital affiliated HHA,

and hospice bills. Through an evaluation using these criteria and

standards we may determine whether the RHHI functions should be moved

from one intermediary to another in order to ensure effective and

efficient administration of the program benefit.

Below we list the criteria and standards to be used for evaluating

the performance of intermediaries and carriers. In a number of

instances, we identify a HCFA manual as a source of more detailed

requirements. Intermediaries and carriers have copies of the various

Medicare manuals referenced in this notice. Members of the public also

have access to our manualized instructions.

Medicare manuals are available for review at local Federal

Depository Libraries (FDLs). Under the FDL Program, government

publications are sent to approximately 1400 designated libraries

throughout the United States. Interested parties may examine the

documents at any one of the FDLs. Some may have arrangements to

transfer material to a local library not designated as an FDL. To

locate the nearest FDL, individuals should contact any library.

In addition, individuals may contact regional depository libraries,

which 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.

Finally, all HCFA regional offices maintain all Medicare manuals

for public inspection. To find the location of the nearest available

HCFA regional office, individuals may contact the individual listed at

the beginning of this notice. That individual can also provide

information about purchasing or subscribing to the various Medicare

manuals.

IV. Criteria and Standards for Intermediaries

Claims Processing Criterion

The Claims Processing criterion contains 4 mandated standards.

Standard 1--95% of clean electronically submitted non-Periodic

Interim Payment (PIP) bills paid within statutorily specified time

frames. Specifically, clean, non-PIP 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).

Standard 2--95% of clean paper non-PIP bills paid within specified

time frames. Specifically, clean, non-PIP 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).

Standard 3--Reversal rate by Administrative Law Judges (ALJ) is at

or below 5.0%.

Standard 4--75% of reconsiderations are processed within 60 days

and 90% are processed within 90 days.

Additional functions may be evaluated under this criterion. These

functions include, but are not limited to:

Accurate Bill Processing;

Attainment of Electronic Media Claims goals;

Accurate processing of reconsideration cases with clear

responses and appropriate customer-friendly tone and clarity;

Management of shared processing sub-contract;

Relationship with Common Working File Host;

Data analysis and validation.

Customer Satisfaction Criterion

We may review the intermediary's efforts to enhance customer

satisfaction through the use of customer feedback. Results of the

feedback may be used to establish comparable data on customer

satisfaction and to identify areas in need of improvement. The results

may be summarized for publication in the report of contractor

performance and shared with individual contractors.

We may also evaluate, but are not limited to, the following

functions:

The accuracy, timeliness and appropriateness of responses

to telephone inquiries;

The accuracy, clearness and timeliness of responses to

written inquiries with appropriate customer-friendly tone and clarity;

Relationships with professional and beneficiary

organizations and use of focus groups;

Educational and outreach efforts.

Payment Safeguards Criterion

The Payment Safeguard criterion contains 2 mandated standards.

Standard 1--Decisions of SNF demand bills are accurate.

Standard 2--TEFRA target rate adjustments, exceptions, and

exemptions are processed within mandated timeframes.

Additional functions may be evaluated under this criterion. These

functions include, but are not limited to:

Medical Review: We may assess the ability of the Medicare

contractors to apply their analytical skills and focus resources on

particular providers or claim types which represent unnecessary or

inappropriate care. We may review contractor efforts in developing

local and national data that identify aberrancies and form the basis of

corrective actions, such as educating the provider, and/or become the

basis of medical review policies or review screens as directed by the

Medicare Intermediary Manual (MIM) Sec. 3939 and Budget and Performance

Requirements. We may also review the effectiveness of the contractor's

identification and corrective action. We may also review a sample of a

contractor's medical review decisions to assure that the decisions

comply with current coverage guidelines and that the contractor's use

of each medical review screen is supported by sufficient documentation.

We may assess contractors' medical review efforts at developing

effective means of addressing aberrancies identified during the

analysis of all local and national data, and take action to assure that

the focused medical review procedures and systems designed and utilized

by the contractor have allowed it to meet program requirements. We may

also review a contractor's efforts to review information or

documentation located in the fraud unit.

Audit and Reimbursement: We may assess the quality of

fiscal intermediaries' activities in the audit and settlement of

Medicare cost reports. We may assess the timeliness of Medicare cost

report settlements and the accuracy by which fiscal intermediaries have

established interim provider payments.

Medicare Secondary Payer: The Medicare Secondary Payer

(MSP) program may use the MSP review guide to review the intermediary's

MSP processes in administering the program and for identifying and

recovering mistaken Medicare payments in accordance with MIM, Part 3,

Secs. 3400ff and 3600ff, and pertinent HCFA instructions and

transmittals. We may develop outcome measures to assess the

intermediary's accuracy in reporting savings and to determine if claim

development procedures are followed. We may also evaluate the accuracy

and timeliness of claims payment and determine if the Common Working

File, internal systems and required software are utilized as

prescribed. We may also evaluate the contractor's ability to prioritize

and process recoveries in compliance with instructions, determine if

recoveries of all payers are processed equally, and ensure that audit

trail documentation exists.

Fraud and Abuse: The Fraud and Abuse program may use the

formally established mechanism to review the intermediaries in the

basic level of fraud detection, deterrence and development as described

in MIM, Part 3, Sec. 3950ff, and pertinent HCFA instructions and

transmittals. We may assess the ability of the contractor to identify

fraud cases that exist within its service area, and to take appropriate

action to dispose of these cases. We may review the contractor's

efforts in investigating allegations of fraud made by beneficiaries,

providers, HCFA, OIG, and other sources. We may develop an outcome

measure to assess the contractor's ability to put in place an effective

fraud detection and deterrence program.

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

HCFA.

Additional matters to be reviewed under the Fiscal Responsibility

criterion may include, but are not limited to:

Bottom line unit cost;

Compliance with the Budget and Performance Requirements;

Adherence to Chief Financial Officer's Act;

Overall control of administrative cost and benefit

payments.

Administrative Activities Criterion

We may measure a contractor's administrative ability to manage the

Medicare program. We may address the efficiency and effectiveness of

their operation, their system of internal controls and the compliance

with HCFA directives and initiatives. A contractor's evaluation under

the Administrative Activities criterion may include, but is not limited

to, implementation reviews of:

Proper systems security;

ADP maintenance;

Disaster recovery plan;

Corrective action plans;

Task management plans;

Data and reporting requirements;

Management improvement plans.

V. Criteria and Standards for Carriers

Claims Processing Criterion

The Claims Processing criterion contains 4 mandated standards.

Standard 1--95% of clean electronically submitted claims processed

within statutorily specified time frames. 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).

Standard 2--95% of clean paper claims 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).

Standard 3--95% of reviews are accurate and clear with appropriate

customer-friendly tone and clarity and are completed within 45 days.

Standard 4--90% of carrier hearings are accurate and clear with

appropriate customer-friendly tone and clarity and are completed within

120 days.

Additional functions may be evaluated under this criterion. These

functions include, but are not limited to:

Accuracy of Claims Processing;

Attainment of Electronic Media Claims goals;

Management of shared processing sub-contract;

Relationship with Common Working File Host;

Data analysis and validation.

Customer Satisfaction Criterion

The Customer Satisfaction criterion contains 2 mandated standards.

Standard 1--98% of Explanations of Medicare Benefits (EOMBs) are

properly generated.

Standard 2--Telephone inquiries are timely answered.

Telephone calls are to be answered within 120 seconds and callers

are not to get a busy signal more than 20% of the time.

We may review the carrier's efforts to enhance customer

satisfaction through the use of customer feedback. Results of the

feedback may be used to establish comparable data on customer

satisfaction and to identify areas in need of improvement. The results

may be summarized for publication in the report of contractor

performance and shared with individual contractors.

We may also evaluate, but are not limited to evaluating, the

following functions:

The accuracy and appropriateness of responses to telephone

inquiries;

The accuracy, clearness and timeliness of responses to

written inquiries with appropriate customer-friendly tone and clarity;

Relationships with professional and beneficiary

organizations and use of focus groups;

Educational and outreach efforts.

Payment Safeguards Criterion

Carrier functions that may be reviewed under this criterion

include, but are not limited to:

Medical Review: We may assess the ability of the Medicare

contractors to apply their analytical skills and focus resources on

particular providers or claim types which represent unnecessary or

inappropriate care. We may review contractor efforts in developing

effective means of addressing aberrancies identified through analyzing

data to target prepay and postpay review. This forms the basis of

corrective actions such as educating the provider and/or become the

basis of medical review policies or review screens as directed by the

carrier manual and Budget and Performance Requirements. We may also

review a sample of the contractor's use of medical coverage guidelines

to determine if the contractor's use of each medical review screen is

supported by sufficient documentation. We may assess the effectiveness

of contractors' medical review efforts at developing means of

addressing aberrancies identified during the analysis of all local and

national data and take action to assure that the focused medical review

procedures and systems designed and utilized by the contractor have

allowed it to meet program requirements. We may also review a

contractor's efforts to review information or documentation located in

the fraud unit.

Medicare Secondary Payer: The Medicare Secondary Payer

(MSP) program may use the MSP review guide to review the carrier's MSP

processes in administering the program and for identifying and

recovering mistaken Medicare payments in accordance with the Medicare

Carrier Manual (MCM), Part 3, Secs. 3375, 4306.3, and 4307-4308.1, and

pertinent HCFA instructions and transmittals. We may develop outcome

measures to assess the carrier's accuracy in reporting savings and to

determine if claim development procedures are followed. We may also

evaluate the accuracy and timeliness of claims payment and determine if

the Common Working File, internal systems and required software are

utilized as prescribed. We may also evaluate the contractor's ability

to prioritize and process recoveries in compliance with instructions,

determine if recoveries of all payers are processed equally, and ensure

that audit trail documentation exists.

Fraud and Abuse: The Fraud and Abuse program may use the

formally established mechanism to review the carriers in the basic

level of fraud detection, deterrence and development as described in

MCM, Part 3, Sec. 14000ff, and pertinent HCFA issued instructions and

transmittals. We may assess the ability of the contractor to identify

fraud cases that exist within its service area, and to take appropriate

action to dispose of these cases. We may review the contractor's

efforts in investigating allegations of fraud made by beneficiaries,

providers, HCFA, OIG, and other sources. We may develop an outcome

measure to assess the contractor's ability to put in place an effective

fraud detection and deterrence program.

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 agreements with

HCFA.

Additional matters to be reviewed under the Fiscal Responsibility

criterion may include, but are not limited to:

Bottom line unit cost;

Compliance with the Budget and Performance Requirements;

Adherence to Chief Financial Officer's Act;

Overall control of administrative cost and benefit

payments.

Administrative Activities Criterion

We may measure a carrier's administrative ability to manage the

Medicare program. We may address the efficiency and effectiveness of

their operation, their system of internal controls and compliance with

our directives and initiatives. A carrier's evaluation under this

criterion may include, but is not limited to, implementation reviews

of:

Proper systems security;

ADP maintenance;

Disaster recovery plan;

Corrective action plans;

Task management plans;

Data and reporting requirements;

Management improvement plans.

VI. Regional Home Health Intermediaries (RHHIs) Criterion

The following standards are mandated for the Regional Home Health

Intermediaries criterion:

Standard 1--95% of clean electronically submitted non-PIP HHA/

hospice bills paid within statutorily specified time frames.

Specifically, clean, non-PIP 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).

Standard 2--95% of clean paper non-PIP HHA/hospice bills paid

within specified time frames. Specifically, clean, non-PIP 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).

Standard 3--75% of HHA/hospice reconsiderations are processed

within 60 days and 90% are processed within 90 days.

We may use this criterion to review a RHHI's performance with

respect to handling the HHA/hospice workload. This includes processing

HHA/hospice bills timely and accurately, properly paying and settling

HHA cost reports, and timely and accurately processing reconsiderations

from beneficiaries, HHAs, and hospices.

VII. Action Based on Performance Evaluations

A contractor's performance is evaluated against applicable program

requirements for each criterion. Each contractor must certify that all

information submitted to HCFA relating to contractor management

process, including without limitation all records, reports, files,

papers and other information, 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 contractor management process under the authority of

applicable law(s), regulation(s), contracts, or HCFA 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. Such

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.

Any performance measured below basic operational expectations

constitutes a deficiency. The contractor may be required to develop and

implement a corrective action plan when performance problems are

identified. The contractor will be monitored to assure effective and

efficient compliance with the corrective action plan and improved

performance where requirements are not met.

The results of performance evaluations and assessments under all

five criteria will be used for contract management activities and will

be published in the contractor's annual performance report. 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 on:

Entering into, renewing, or terminating agreements or

contracts with contractors.

Decisions concerning 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,

they depend on:

+ Relative overall performance compared to other contractors;

+ Number of criteria in which deficient performance occurs;

+ Extent of each deficiency;

+ Relative significance of the requirement for which deficient

performance occurs within the overall evaluation program; and

+ Efforts to improve program quality, service, and efficiency.

Decisions concerning 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 or carrier to

meet its contractual requirements exceeds the amount which the

Secretary finds to be reasonable and adequate to meet the cost which

must be incurred by an efficiently and economically operated

intermediary or carrier, such high costs may also be grounds for

adverse action.

VIII. 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 DATES

section of this preamble, and, if we proceed with a subsequent

document, we will respond to the comments in the preamble of that

document.

In accordance with Executive Order 12866, this notice has not been

reviewed by the Office of Management and Budget.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical

Assistance Program)

(Catalog of Federal Domestic Assistance Program No. 93.773,

Medicare--Hospital Insurance; and Program No. 93.774, Medicare--

Supplementary Medical Insurance Program)

Dated: August 11, 1994.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

[FR Doc. 94-21914 Filed 9-6-94; 8:45 am]

BILLING CODE 4120-01-P