Medicare and Medicaid Programs; Conditions of Coverage for Organ Procurement Organizations

SUMMARY: This interim final rule with comment sets forth changes to the

conditions of coverage for organ procurement organizations (OPOs). It

redefines an OPO service area, revises the qualifications for the Board

of Directors, specifies the assistance to be provided by an OPO to

hospitals in establishing and implementing protocols governing organ

procurement activity, requires an OPO to establish criteria for

allocating organs, and requires an OPO to ensure that tests are

performed on prospective organ donors to prevent the acquisition of

organs that are infected with the etiologic agent for Acquired Immune

Deficiency Syndrome. These changes are required by the Health Omnibus

Programs Extension Act of 1988 (Public Law 100-607) and the Transplant

Amendments Act of 1990 (Public Law 101-616).

We also clarify the distinction between certification and

designation and amend the criteria with respect to compliance with

performance standards, change of ownership, and termination procedures.

DATES: Effective date: This final rule is effective October 11, 1994.

Comment date: Written comments submitted in response to this final

rule will be considered if we receive them at the appropriate address,

as provided below, no later than 5 p.m. on November 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: BPD-646-IFC, P.O. Box 26688,

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 Ave., SW.,

Washington, DC 20201, or

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

MD 21207.

Due to staffing and resource limitations, we cannot accept comments

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

code BPD-646-FC. 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 offices at 200 Independence Ave., SW., Washington, DC, on

Monday through Friday of each week from 8:30 a.m. to 5 p.m. (phone:

202-245-7890).

FOR FURTHER INFORMATION CONTACT: Claude Mone, (410) 966-5666.

SUPPLEMENTARY INFORMATION:

I. Background

The Social Security Amendments of 1972 (Public Law 92-603) extended

Medicare coverage to individuals with end stage renal disease who

require dialysis or kidney transplantation. Section 1881 of the Social

Security Act (the Act) provides for Medicare payment for kidney

transplantation. Medicare also covers certain other organ transplants

that HCFA has determined are ``reasonable and necessary'', under

section 1862 of the Act, and pays for those transplants and related

organ procurement services.

Section 1138(b) of the Act, as added by section 9318 of the Omnibus

Budget Reconciliation Act of 1986 (Public Law 99-509), sets forth the

statutory qualifications and requirements an organ procurement

organization (OPO) must meet in order for the costs of its services in

procuring organs for hospitals and transplant centers to be payable

under the Medicare and Medicaid programs. The corresponding regulations

are found at 42 CFR part 485 (``Conditions of Participation and

Conditions for Coverage: Specialized Providers'') under subpart D

(``Conditions of Coverage: Organ Procurement Organizations'').

These regulations were published in the Federal Register on March

1, 1988 (53 FR 6550). In general, Sec. 485.303(a) states that payment

may be made under the Medicare and Medicaid programs for organ

procurement costs attributable to payments to an OPO only if the

organization has been designated by the Secretary as meeting the

conditions for coverage as an OPO. OPOs are not generally paid directly

for organ procurement costs; rather, the transplanting hospital pays

those costs to the OPO and claims them on its cost report. However, the

OPO does have to file a cost report with us at the end of its fiscal

year, at which time we settle with it any overpayment or underpayment

it has made vis-a-vis hospitals during the cost year. To be designated

as an OPO, Sec. 485.303(b) requires that an organization--

Apply to HCFA in writing using the application form

prescribed by HCFA;

Meet the qualifications listed at Sec. 485.304

(``Condition: Qualifications required of an organization for it to be a

designated organ procurement organization''); and

As specified in Sec. 485.305, be a member of, have

executed a written agreement with, and abide by the regulations of the

Organ Procurement and Transplantation Network (OPTN) established in

accordance with section 372 (42 U.S.C. 274) of the Public Health

Service Act.

The Health Omnibus Programs Extension Act of 1988 (Public Law 100-

607) was enacted on November 4, 1988. The Transplant Amendments Act of

1988, Title IV of Public Law 100-607, amends section 371 of the Public

Health Service Act (42 U.S.C. 273), which defines OPOs.

Specifically, section 402(c)(1)(A) of Public Law 100-607 amended

section 371(b)(1)(E) of the Public Health Service Act (42 U.S.C.

273(b)(1)(E)). It revised the definition of the ``service area'' that

must be encompassed by an entity in order for the entity to be

recognized by us as an OPO. Before enactment of Public Law 100-607, the

law provided that, unless the service area comprised an entire State,

it had to be of sufficient size to include ``at least 50 potential

organ donors'' each year. Section 402 of Public Law 100-607 revised

section 371 of the Public Health Service Act (42 U.S.C. 273) to require

the service area to be large enough that the OPO ``can reasonably

expect to procure organs from not less than 50 donors each year''.

Under section 371, we would determine whether the OPO can ``reasonably

expect'' to procure organs from not less than 50 donors.

We have determined that this change would have resulted in a

substantial number of existing OPOs failing to qualify for

redesignation, because we interpret the requirement that the OPO ``can

reasonably expect to procure organs from not less than 50 donors'' to

be more stringent than the requirement that the service area include

``at least 50 potential organ donors.'' According to a Departmental

study cited in the Report of the Committee on Energy and Commerce on a

precursor to the 1988 Public Health Service Act legislation, the

Transplant Amendments Act of 1987 (H.R. Rep. No. 383, 100th Cong., 1st

Sess. 5-6 (1987)), the average OPO was, at the time of the report,

procuring organs from only 44 donors per year. (Because more than one

organ may be obtained from a donor, the average number of organs

obtained per OPO per year is about 110.)

Most of the currently designated OPOs were scheduled for

redesignation beginning in March 1990 and would have been required to

meet the new requirement imposed by Public Law 100-607. Contacts with

many of the designated OPOs and with representatives of the Association

of Organ Procurement Organizations (AOPO) revealed that almost one-half

of the OPOs would not have been able to meet the new requirement. It

was also the opinion of some organ procurement and transplantation

experts that many of the OPOs that would not have a realistic

expectation of procuring organs from at least 50 donors were

nonetheless effective and efficient entities. The Department and other

interested parties sought statutory relief to avoid disruption to the

nation's organ procurement system. On April 23, 1990, Public Law 101-

274 was passed. It postponed to January 1, 1992, the effective date of

section 402(c)(1)(A) of Public Law 100-607, which changed the

definition of ``service area.'' Therefore, the ``at least 50 potential

donors'' requirement would have remained in full force and effect until

that date. But, the Transplant Amendments Act of 1990 (Public Law 101-

616) was enacted on November 16, 1990. It further amended section

371(b)(1)(E) of the Public Health Service Act (42 U.S.C. 273(b)(1)(E))

to require an OPO to have a defined service area that is of sufficient

size to assure maximum effectiveness in the procurement and equitable

distribution of organs, and that either includes an entire metropolitan

statistical area or does not include any part of the area. Section

201(d)(2) of Public Law 101-616 required the Secretary to publish a

proposed definition of ``service area'' by February 14, 1991, and final

regulations defining ``service area'' by November 16, 1991.

Section 201(d)(1) of Public Law 101-616 redesignated section

371(b)(2) of the Public Health Service Act as section 371(b)(3). That

section sets forth the functions an OPO must carry out. However, the

Congress did not amend two textual references in section 371(b)(1) to

the OPO functions formerly specified in paragraph (2). Since that was

clearly an oversight and failure to read the section 371(b)(1) text as

if those ``paragraph (2)'' references had been changed to ``paragraph

(3)'' would make part of the statute meaningless, we are using the

corrected references in this document.

II. Provisions of the Proposed Regulations

On June 21, 1991, we published a Notice of Proposed Rulemaking in

the Federal Register (56 FR 28513). In it, we proposed implementing

section 402 of Public Law 100-607 and section 201 of Public Law 101-616

by amending certain sections of part 482, which sets forth the Medicare

conditions of participation for hospitals, and subpart D of part 485,

which sets forth the Medicare and Medicaid conditions of coverage for

OPOs, to conform them to the statute.

In addition to the provisions that are necessary to implement these

statutes, we proposed some other amendments to current regulations that

are derived from our experience in administering the OPO program and

that are not related to either piece of legislation. The most

noteworthy of these latter provisions deals with change of ownership

and termination. To clarify our operational policies with regard to

change of ownership and terminations, we proposed to add two new

provisions to the current regulations. Specific provisions of these new

sections and of related sections are discussed in more detail below.

We proposed revising paragraph (c)(5)(ii) of Sec. 482.12

(``Condition of participation: Governing body.'') to state that no

hospital will be considered to be out of compliance with section

1138(a)(1)(B) of the Act or with the requirements at

Sec. 482.12(c)(5)(ii), unless the Secretary has given the OPTN formal

notice that he or she approves the decision to exclude the hospital

from the OPTN and has so notified the hospital in writing.

We proposed amending Sec. 485.301, which sets forth the basis and

scope of part 485, subpart D, by deleting the unnecessary reference to

section 9318 of Public Law 99-509. In Sec. 485.302 (``Definitions.''),

we proposed to change the definition of ``service area'' by including

new statutory language for the initial designation and redesignation of

OPOs. We proposed using the phrase ``is of sufficient size to assure

maximum effectiveness in the procurement and equitable distribution of

organs'' as opposed to the current phrase ``at least 50 potential organ

donors.'' We proposed several criteria for evaluating the sufficiency

of an OPO's size. We discuss those factors below. We proposed expanding

Sec. 485.302 to include definitions for ``certification'' or

``recertification'', ``designation'' or ``redesignation'', and ``open

area.''

Section 485.303 sets forth general qualifications for OPOs. We

proposed that paragraph (c) of Sec. 485.303 be amended and a new

Sec. 485.303(d) added to clarify the requirement for compliance with

performance standards at Sec. 485.306(a)(1) and (a)(2). Paragraph (e)

of Sec. 485.303 would state that an OPO must obtain our approval before

entering into any change of ownership, merger, consolidation, or change

in its service area. Failure to do so could result in termination. We

proposed that a new paragraph (f) set forth the specific terms of the

agreement each OPO must have with us.

We proposed that paragraph (d) of Sec. 485.304 (``Condition:

Qualifications required of an organization for it to be a designated

organ procurement organization.'') be amended to change the requirement

for an OPO in a service area of less than 2.5 million in population to

show that its area yields 50 or more potential donors per year to show

that the area ``is of sufficient size to ensure maximum effectiveness

in the procurement and equitable distribution of organs * * *.'' The

``less than 2.5 million in population'' stipulation would be deleted.

We also proposed that Sec. 485.304(f)(3) be amended to allow either a

physician or an individual with a doctorate degree in a biological

science with knowledge, experience, or skill in the field of

histocompatibility to serve on an OPO's board of directors or on an

advisory board. The current Sec. 485.304(f)(3) requires that the

individual be a physician.

We proposed that Sec. 485.304(i) be revised to require an OPO to

have a system to allocate donated organs equitably among transplant

patients according to established medical criteria. Additionally, we

proposed to add provisions to Sec. 485.304 that would require OPOs to

assist hospitals in establishing and implementing protocols for making

routine inquiries about organ donations by potential donors and ensure

that donors are tested for human immunodeficiency virus (HIV)

reactivity, consistent with OPTN rules and Center for Disease Control

and Prevention (CDC) guidelines for solid organ donations.

We proposed that Sec. 485.305 (``Condition: Organ Procurement and

Transplantation Network participation.'') be amended to: (1) Define

``rules and requirements of the OPTN,'' and (2) include the requirement

that OPTN rules be approved by the Secretary in order for them to be

binding on OPOs participating in Medicare or Medicaid.

We proposed that paragraph (a) of Sec. 485.306 (``Condition:

Performance standards for organ procurement organizations.'') be

revised to state that we will not ``redesignate'' (it currently reads

``recertify'') any OPO that fails to meet the performance standards

contained in the section. Paragraph (b) would be expanded to set forth

language that makes a distinction between an OPO designated for the

first time and a redesignated OPO with respect to the exemption from

meeting the performance standards in Sec. 485.306(a) for the first two

years.

We proposed that Sec. 485.307 (``Failure to meet requirements.'')

be revised and restructured. It would continue to state that a newly

designated OPO is exempt from meeting the performance standards at

Sec. 485.306(a)(1) and (a)(2) for 2 years. We proposed deleting the

statement in the current Sec. 485.307 that an OPO whose payment is

suspended or whose agreement is terminated may appeal the action. The

appeal right for termination actions would be included in the new

Sec. 485.311(c).

We proposed that the section heading of Sec. 485.308 (``Designation

of one OPO for each service area.'') be revised to read ``OPO service

area requirements'', and that paragraph (a) be amended to provide that

an entity may apply for designated status only when the service area is

open, as described in Sec. 485.302.

We proposed a new Sec. 485.309 (``Changes in ownership or service

area.'') to clarify the term ``change of ownership'' in terms of

changes in partnership, transfer of an unincorporated proprietorship,

merger, and consolidation. Paragraph (b) of Sec. 485.309 would state

that if our approval of a change in ownership is not obtained, the OPO

agreement may be terminated and could result in our declaring that

service area to be an open area. If a change of ownership results in

the creation of a new entity, the 2-year exception provision at

Sec. 485.303(c) is applicable. However, if a change in ownership does

not create a new entity, but consists of the absorption of one OPO by

another, the 2-year exception does not apply. When two or more OPOs

request our approval to merge or consolidate, we are under no

obligation to declare an open area. Paragraph (c) of Sec. 485.309 would

state that if our approval of an expansion of the service area is not

obtained, we may declare only the unauthorized expanded area to be an

open area.

We proposed a new Sec. 485.311 (``Terminations.'') to set forth

conditions for both voluntary and involuntary termination, describe the

effects of termination on payment and service area, set forth

procedures for giving public notice of termination, and set forth

procedures concerning reinstatement. Section 485.311 would also state

that the OPO may appeal its termination in accordance with the

provisions set forth in part 498 (``Appeals Procedures for

Determinations that Affect Participation in the Medicare Program'').

III. Discussion of Public Comments

We received 38 timely items of correspondence in response to the

June 21, 1991, proposed rule. Twenty-one were from OPOs, seven from

national associations, three from private individuals, one from a

transplant physician, one from a member of the Congress, and five from

hospitals. The comments and our responses to these comments follow:

General Comments

Comment: Several commenters noted that the proposed rule lists many

options for consideration. They requested that we publish a new

proposed rule once we narrow the criteria to those we actually intend

to utilize. One national organization suggested that we convene a 2-day

meeting of the leadership of the transplant community to discuss the

available options and to reach consensus.

Response: The proposed rule did include a broad range of proposed

qualifying and performance criteria. Nonetheless, it presented the

options we have selected in this interim final rule. While the

suggested 2-day meeting of the leadership of the transplant community

may be helpful, we believe that we already have been able to elicit a

wide range of interested public comment through the rulemaking process.

Among those commenters that supported a system of challenging

performance standards in order to promote effectiveness of organ

procurement and distribution, there was considerable agreement. Thus,

we believe we have obtained sufficient hard data and opinions to

formulate this rule. The comment has merit, however, in that the

proposal set forth varied options for setting qualifying and

performance standards. Therefore, we are affording another opportunity

for the public to comment on this interim final rule. In doing so, we

would emphasize that comments will be most useful if they are specific

and provide substantiating data.

Comment: Two commenters noted the value that emergency medical

services (EMS) staff can play in procuring organ donations. They

suggested several criteria they believe would be effective in

increasing organ donors.

Response: We believe that Federally-required use of EMS staff in

the organ donation process is neither desirable nor necessary at this

time. Section 1138(a)(1)(A) of the Act requires all Medicare and

Medicaid participating hospitals to develop protocols for encouraging

organ donation. Under section 1138(a)(1)(A)(i), these protocols must

encompass means for making families of potential organ donors aware of

the option of organ or tissue donation and of their right to decline.

Under section 1138(a)(1)(A)(ii), the protocols must ``encourage

discretion and sensitivity with respect to the circumstances, views,

and beliefs of such families''. We think that the encouragement and

facilitation of organ procurement (which the Federal Government has

strongly supported for many years) can be approached in varying ways

and that individuals and institutions (such as hospitals and OPOs)

directly engaged in this activity, as well as States, are generally

best able to construct and implement appropriate and effective means

for achieving these goals in their particular circumstances. Further,

OPOs are free to establish educational contacts with EMS personnel in

the community, and we encourage them to do so.

Section 482.12 (``Condition of Participation: Governing Body.'')

Comment: One commenter suggested we clarify the language at

Sec. 482.12(c)(5)(ii), which sets forth participation in the OPTN as

one of the Medicare conditions of participation for hospitals, to be

consistent with language in Sec. 485.305, which sets forth

participation in the OPTN as one of the Medicare and Medicaid

conditions for coverage for OPOs. While both sections require

compliance with the rules of the OPTN, only Sec. 485.305 defines the

term ``rules of the OPTN'' as those rules provided for in regulations

issued by the Secretary.

Response: We agree, and we have made this clarification.

Section 485.302 (``Definitions.'')

Comment: Several commenters objected to the ``open area'' concept.

They believed that once an area has been designated to an OPO, there

should be no recompetition for it unless the designated OPO's agreement

is terminated.

Response: We do not agree. Lack of competition would create a

``closed shop'' atmosphere, and new organizations would not have an

opportunity to thrive. We believe that we have an obligation to provide

an opportunity for new organizations to apply, instead of automatically

redesignating the existing OPOs. We have found that competition is

generally healthy and often results in improvements. Thus, we are

retaining this provision in this interim final rule with comment.

Comment: One commenter did not appear to understand the distinction

between certification and designation, since he believed that HCFA

would not designate an uncertified OPO or certify an OPO and then fail

to designate it. He suggested that a single word be used to limit

confusion.

Response: ``Certification'' signifies that a HCFA regional office

has found that an entity meets the standards for a ``qualified OPO''

under section 371(b) of the Public Health Service Act (42 U.S.C.

273(b)) and Sec. 485.303 of these regulations. Section 1138(b)(1)(A) of

the Act establishes ``certification'' or ``recertification'' as one of

several prerequisites for ``designation'' under section 1138(b)(1)(F).

Thus, a ``certified OPO'' is eligible for ``designation.'' After

completing its survey, the regional office may find that more than one

entity in a given service area meets the standards for OPO

``certification.'' The regional office recommends to HCFA's central

office which entity should be ``designated.'' ``Designation''

represents our approval of an OPO under section 1138(b)(1)(F) for

Medicare and Medicaid payment purposes. Entities may be designated only

if they meet all requirements of section 1138(b)(1)(A) through (E).

Even if more than one OPO has been certified in a given service area,

section 1138(b)(2) of the Act permits us to designate only one OPO per

service area.

Comment: Several commenters expressed concern with the requirement

that recertification be completed every 2 years. Many of these

commenters recommended that minimum recertification take place every 3

years.

Response: Section 1138(b)(1)(A) of the Act requires that

recertification be completed at least every 2 years. Thus, while we

have the authority to provide for more frequent recertification, we may

not legally provide for a recertification period that is less frequent

than once every 2 years.

Section 485.303 (``Condition: Organ Procurement Organization

Designations--General.'')

As discussed in sections that follow, comments on our proposed rule

suggested various standards for evaluating whether an entity should

become, and remain, a designated OPO. After thorough consideration, we

have concluded that we could improve our standards for determining

which entities should be designated as OPOs and for measuring OPO

effectiveness in organ procurement. The new qualification standards

applicable for designations beginning in 1996 would require OPOs to

procure organs from an average of at least 24 donors per calendar year

in the 2 years preceding designation or have a service area that

encompasses an entire State. Separate rules would apply to

noncontiguous States and other jurisdictions, and to entities not

previously designated as an OPO. We have established three performance

standards for these entities. The primary performance standard would

require that OPOs achieve at least 75 percent of the national mean for

four of the five following categories: 1) Actual donors per million

population, 2) number of kidneys recovered per million population, 3)

extrarenal organs recovered per million population, 4) number of

kidneys transplanted per million population, and 5) actual number of

extrarenal organs transplanted per million population.

Additional performance standards would require OPOs to procure

organs from an average of at least 24 donors per calendar year in the 2

preceding calendar years and to maintain an average procurement ratio

of 3 organs per donor. Simply stated, these criteria compare each

entity with other OPOs by setting a minimum level of organ procurement.

They consider an entity's history for the past 2 years. These measures

will be applied beginning with designations made in calendar year 1996.

We have determined that, in the meantime, the most effective means

for determining service areas and whether entities qualify and are

performing as designated OPOs are essentially the same criteria

currently published in 42 CFR part 485, subpart D. We have modified

those criteria to delete the requirement that a service area comprise

at least 2.5 million population. We discuss later in this preamble (in

our discussion of Sec. 485.304) our reasons for believing that a

minimum population base is no longer necessary. Generally stated, until

1996, an entity may qualify as an OPO if it can demonstrate that its

service area can produce a potential 50 donors per year or that it

comprises an entire State. Application of those rules until the 1996

designation cycle will allow a smooth transition, giving OPOs ample

time to meet the new criteria. At the same time, we will not run the

risk of disrupting the effectiveness of current OPO operations.

In the Transplant Amendments Act of 1990, the Congress recognized

the difficult task of adequately defining what constitutes an effective

OPO and gives the Secretary broad authority to define the OPO service

area under section 371(b)(1)(E) of the Public Health Service Act. It

was motivated by a concern to challenge entities to do more and better

while at the same time not abruptly change course and, thereby,

possibly derail effective entities. We believe the rules we have

adopted in this interim final rule serve both those purposes. We

continue, however, to solicit comments on: (1) The appropriateness of

these performance standards, in particular the primary standard, (2)

the future impact of the primary and other standards on the transplant

industry and patient care, and (3) what constitutes a desirable level

of OPO terminations and consolidations (taking into account the

benefits of a competitive OPO marketplace) and the cost-effectiveness

objectives of the statute.

Comment: Several commenters expressed concern with the proposed and

existing requirement that, in order to be redesignated, an OPO must

comply with the performance standards for OPOs. They believed that an

OPO should be provided an opportunity to improve its performance before

losing its designation. They proposed providing an opportunity to

submit a corrective action plan and providing an opportunity to

demonstrate that the OPO can indeed improve to meet the performance

standards.

Response: We agree that there may be extenuating circumstances that

could prevent an otherwise efficient and effective OPO from meeting all

of the performance standards at the time of redesignation. As we state

elsewhere in this preamble, we recognize the concern that some OPOs may

not be able to meet our standards. In doing so, we have allowed OPOs to

submit corrective action plans for the standards listed in Sec. 485.306

(a), (b)(2), or (b)(3), explaining why the standard or standards were

not met and setting forth actions they will take to ensure that they

meet those standards in the future. We are permitting this because we

believe the standards at Sec. 485.306 (a)(1), (a)(2), (b)(2), and

(b)(3) are static numbers and would not necessarily recognize dynamic

conditions that may be happening in the organ transplant field.

Therefore, we believe that it is acceptable to permit an OPO to submit

an explanation for not meeting the standards during a designation

period and to submit a corrective action plan.

We believe, however, that it is reasonable to expect an efficient

and effective OPO to be able to meet the primary performance standard

set forth in Sec. 485.306(b)(1) in order to be redesignated. That

paragraph requires OPOs to procure organs at the rate of 75 percent of

the national average for four of the five criteria listed above. It is

modeled after the AOPO standard. (We refer the reader elsewhere in the

preamble to the comments and responses dealing with the section on

performance standards for an indepth discussion of all of the standards

in that section, the rationale for their use, effective dates,

exceptions, and corrective action plan options.) The level of

performance set by this standard will enable us to evaluate an OPO

relative to its peers. Instead of evaluating OPOs solely on the basis

of an absolute criterion, OPOs will be measured against a realistic and

attainable standard. Therefore, at Sec. 485.303(d) in this interim

final rule with comment period, we are requiring that OPOs meet the

HCFA performance standards at Sec. 485.306.

Comment: One commenter suggested that the proposed language in

Sec. 485.303(f)(5) may be unclear, in that it was not limited to

acquisition fees. The proposed Sec. 485.303(f)(5) stated that an OPO,

in order to enter into an agreement with us, must agree to ``Pay to

HCFA amounts that have been paid by HCFA to transplant hospitals and

that are determined to be in excess of the reasonable cost of the

services provided by the OPO.'' The commenter recommended adding the

statement ``as Medicare reimbursement for organ recovery fees'' as a

modifier of payment to transplant hospitals.

Response: We agree. Our intent was to recover only acquisition

fees. We have made appropriate changes to the regulation.

Comment: The proposed regulation would require OPOs to maintain

data in a format that can be readily assumed by a successor OPO and to

turn over to us copies of all records and data necessary to ensure

uninterrupted service by a successor OPO that is newly designated. One

commenter noted that software licensure and other proprietary interests

may make such a requirement difficult.

Response: It is incumbent upon the OPO to maintain data that can be

readily assumed by a successor OPO and turned over to us. Therefore,

OPOs must not maintain their data in a format that would interfere with

meeting this requirement. If an OPO chooses to use software that has

licensure requirements that prohibit data transfer, it must ensure that

the data can be transferred readily to an alternative generally

available format.

Section 485.304 (``Condition: Qualifications Required of an

Organization for It To Be a Designated Organ Procurement

Organization.'')

Comment: One commenter noted that redistricting of service areas to

meet qualification standards would eliminate productive relationships

that have been established. The commenter recommended retaining current

service area assignments.

Response: We have no intention of changing OPO service areas

unnecessarily. However, the statute requires that the Secretary ensure

that OPO designations maximize effectiveness in the procurement and

distribution of organs. If an OPO has established an effective

relationship in its service area, there is no reason to believe that

these regulations in themselves would disrupt that effective

relationship. On the other hand, if an OPO is not operating effectively

in an area, the area may be awarded to a different OPO during an open

area competition.

Comment: Several commenters expressed concern that, in cases where

Metropolitan Statistical Areas (MSAs) cross State lines, an OPO will

not receive a Statewide service area designation if part of an MSA in

the State is in another OPO's service area.

Response: We continue to believe that Statewide service area

designations are appropriate. They have been recognized in the OPO

program by the Congress, which has not indicated dissatisfaction with

the use of such an area. Under prior statutory authority, such a

service area was required to include an entire State. Generally, the

term ``State'' is construed to include all the State's political

subdivisions. Indeed, under the prior law (section 371(b)(1)(E) of the

Public Health Service Act), the Congress did not allow us to break up

an MSA to achieve a Statewide service area.

We believe that a Statewide service area should continue to be a

qualifying criterion and represents vital political, historical, and

cultural identities that can potentially serve to encourage organ

donation and procurement. Thus, in places where an OPO serves the

population of an entire State, we believe that the service area would

meet the statutory requirement of promoting maximum effectiveness in

the procurement and equitable distribution of organs. Consequently, we

are retaining this as one of the qualifying criteria. However, an OPO

servicing a State where a portion is located in another OPO's service

area due to MSA boundaries cannot qualify under the ``entire State''

criterion, but may still qualify as an OPO by meeting other

qualification criteria in Sec. 485.304(d).

We note that an OPO, in reporting the population of its service

area, must use the most recent available census data. In reporting

population, an OPO must report its population within the service area

designated by us. If an OPO believes that use of such population

numbers results in its failure to comply with one or more of the

performance standards, it is permitted to demonstrate or document to us

why some other population number would be more appropriate.

Comment: Some commenters expressed concern that, if a hospital

located within an OPO's designated service area enters into an

agreement with some other OPO, it would affect the first OPO's ability

to meet one or more performance standards.

Response: We recognize the potential impact on an OPO's performance

if a hospital in its service area affiliates with another OPO. An OPO

faced with this situation may provide documentation to us that may

justify use of an adjustment to compensate for the lower population

base. We request comments on whether the ``lost'' population should be

attributed to another OPO.

Comment: Many commenters expressed concern with the proposal to

base qualification on a minimum population base. Some noted that there

is no correlation between population size and OPO effectiveness. Other

commenters noted that there is no evidence that ``bigger is better,''

and some provided data supporting the effectiveness of OPOs with a

relatively sparse population service area.

Response: After reviewing the data presented by these commenters,

we are persuaded that across-the-board qualifying criteria based on

population of the service area may not be the best alternative and that

there are some OPOs that can be very effective in the procurement of

organs serving a smaller population area. Therefore, we will not use

population base as a condition for qualification.

Comment: Some commenters said that we should not use 50 actual

donors per year as a qualification criterion because it would be

extremely disruptive to OPOs, would force inappropriate mergers, and is

not supported by data as a measure of effectiveness.

Response: We agree that a 50 actual donors per year criterion would

be, in all likelihood, severely disruptive to OPOs. Indeed, it was

congressional concern about such a result that led to the 1990

amendments. The commenters' concern for use of the 50 actual donors per

year criterion focuses on severely disadvantaging existing OPOs. For

designations made in 1996 and thereafter, in the continental United

States, we have defined an efficient and effective service area as one

that includes an entire State or is of sufficient size to produce an

average of at least 24 donors per year over a 2-year period and that

meets other performance standards. We have provided alternative

criteria for OPOs operating in a noncontiguous U.S. State, territory,

or commonwealth that allows the OPO to qualify if it procures organs at

the rate of 50 percent of the national average of all OPOs for kidney

procurement per million population and for kidney transplant per

million population. We note, however, that these criteria would

preclude entities that are not existing OPOs from qualifying as

Medicare-participating OPOs. Therefore, we are providing that the

service areas of entities that have not previously been designated must

have the potential to produce 50 donors per calendar year. The applying

entity must demonstrate this potential. This is the minimum requirement

for entry into the OPO field formerly established by the Congress for

all OPOs, and under which virtually all existing OPOs have entered and

continued in the program. We believe the standard by which experienced

designated OPOs should be measured should be increased and, therefore,

have strengthened the standard that will be applied to designations

occurring in 1996 or later. Nonetheless, we believe the 50-potential

donor criterion remains a reasonable and flexible measure by which to

determine whether new entities are initially qualified to serve as

designated OPOs and to determine whether currently designated OPOs

continue to qualify until the 1996 designation cycle. Newly designated

OPOs will be subject to the routine performance standards beginning 2

years after the OPO has been first designated.

Comment: Although many commenters supported no qualifying criteria

for service area designations, most commenters noted that, if

qualifying criteria were required, the proposal of specifying a minimum

number of donors per year is the preferable option. Of the total 38

comments, 14 specifically commented on this issue. Of the 14, 10 of the

commenters believed that 24 donors per year was a reasonable indicator

that a service area could potentially result in effective OPO

designation. This indicator would not preclude OPOs with relatively

small population areas from continuing involvement with Medicare and

Medicaid, if they were effective in securing adequate donors from that

small population. Others supported a lower threshold, such as 20. They

stated that a number of the current OPOs maintain a small service area

but are very effective in procuring organs within that area.

Response: Section 371(b)(1)(E) of the Public Health Service Act

requires that an OPO have a ``defined service area that is of

sufficient size to assure maximum effectiveness in the procurement and

equitable distribution of organs''. The Congress intended the Secretary

to further define ``service area'' in regulations under section

201(d)(2) of Public Law 101-616. We believe the Congress expected the

new regulations to set forth a measure of effectiveness that could be

monitored to ensure that effectiveness is being maintained. To that

end, we believe that establishing qualifying criteria for service area

designations meets the intent of the Congress.

We have discussed elsewhere in this preamble the commenters'

reactions to various proposals suggested in the June 21, 1991, proposed

rule. While numerous comments offered valuable suggestions, we have

concluded that it is essential to have a reasonably objective

measurement for this standard. We believe a numerical standard,

representing the number of organs actually procured by existing OPOs,

best satisfies these objectives for existing entities.

The nature of organ procurement at this time has made it difficult

to determine precisely what such a minimum number should be. In

determining that, we consulted data submitted by AOPO for calendar

years 1991 and 1992. The report covered the substantial majority of

OPOs designated during that period. In fact, 98 percent reported. That

data showed that the overwhelming majority of existing OPOs reporting

had procured organs from more than 24 donors a year. Of those

reporting, only 8 had procured organs from fewer than 24, and those

OPOs were generally close to the 24-mark (5 of the 8 had 22 or 23).

Several commenters suggested that 24 donors-per-year should

constitute a minimum. Some believed that should be an absolute minimum;

others believed that it should be a generally applicable minimum, but

that exceptions should be allowed or that it should be considered along

with other factors.

Our long-standing concern and efforts, in response to congressional

enactments and continuing strong interest in the organ procurement

program, has been to increase and maximize the level of organ

procurement. Nonetheless, in this still young field, determining a

single correct way to do this has been difficult. We must take

competing legitimate concerns into account. First, we must encourage

all OPOs to make greater efforts to increase the level of organ

procurement and distribution and to do so efficiently and equitably. At

the same time, we want to avoid discouraging or impeding OPOs that are

making an important contribution to organ procurement and distribution

and are working to improve their level of performance but that, for

various legitimate reasons, have not been able to achieve a particular

prescribed numerical standard to this point.

Based on these factors, we have determined that, beginning with

designations occurring in 1996, an entity that has had the experience

of operating as a designated OPO must show that it has procured organs

from at least 24 donors per year during the 2 calendar years

immediately preceding a new designation (for example, 1994 and 1995 for

a 1996 designation). Because circumstances can vary somewhat from year

to year, we will allow the OPO to average the number of donors over the

2-year period. We will apply this standard for designations made in

1996 and later years. This will allow all designated OPOs 2 full

calendar years, 1994 and 1995, to achieve this standard. In the

meantime, OPOs seeking designation will have to demonstrate that they

meet the requirements of Sec. 485.304(d)(1)(i) for a service area. We

emphasize that the 24 donors per year is a minimum standard. We will,

from time to time, make available the relevant national procurement

statistics so that existing and prospective OPOs will be aware of the

qualifying and performance requirements they must meet.

Comment: One commenter suggested the regulation specify whether the

``year'' that is used to derive the numbers of procurements is a

calendar year, fiscal year, or any 12-month period.

Response: We agree that the regulations should be as unambiguous as

possible. Most of our relevant OPO data is collected on a calendar year

basis. For this reason, we are specifying that the calendar year be

used for qualifying criteria and performance standards.

Comment: Some commenters noted that a well-functioning and

productive OPO could have a year when, through no fault of its own, it

could not meet the 24-donor qualifying standard. They suggested that

the criteria be evaluated over a 2-year period.

Response: We agree that unforeseen circumstances could result in an

OPO missing the threshold qualification criteria in any given year.

However, we believe that it is important that a numerical criterion be

employed in establishing OPO service area qualifications. We believe

that the qualification criteria should consist of a service area that

historically has averaged at least 24 donors per year. This is a

reasonable number because, as we stated previously, most OPO areas

currently meet this criterion. Beginning January 1, 1996, all entities

must procure organs from an average of at least 24 donors per calendar

year in the 2 years prior to the year of designation. In 1996, the

number of donors from whom organs are procured will be based upon 1994

and 1995 data. If an OPO is involved in a merger during this 2-year

period, the criterion will be applied by combining the data from the

entities involved in the merger.

In summary, based on the foregoing comments, we have decided that

the minimum service area designations will be based on areas that

include at least an entire State, or areas which have historically

averaged donations of organs from at least 24 donors per year.

Statewide service areas must include the entire State. Because

section 371(b)(1)(E) of the Public Health Service Act prohibits the

Secretary from breaking up an MSA if the MSA crosses State lines, the

entire MSA must be included in one OPO's service area. An OPO cannot be

considered to include an entire State if an MSA containing selected

counties in that State has been designated to another OPO in a

bordering State.

Comment: Several commenters wrote in support of the proposed change

regarding histocompatibility, which would permit the board of directors

or advisory board composition requirement to be met by either a

physician or by an individual with a doctorate degree in a biological

science. One commenter suggested, however, that the regulations be

further modified to ensure that the knowledge and experience in

histocompatibility be current. Another expressed concern that it is

equally important to recognize that other health professionals (such as

registered nurses and social workers) also have much to share in terms

of setting local organ donation policy. Another commenter requested

that the regulations be further modified to ensure that the individual

meeting the histocompatibility requirement serve on the OPO board which

is responsible for making policy decisions.

Response: We would expect that OPOs would generally meet the

histocompatibility requirement through an individual with current

experience in the field. We believe that the most important point is

that the skills of someone trained in histocompatibility are used.

Therefore, we do not believe it is necessary to modify the regulations

in this regard. We also think it is important to provide some

flexibility to an OPO in the staffing requirements in order that it may

respond to local situations.

We believe that a multidisciplinary board approach helps to ensure

equitable access to donated organs. In fact, the regulations specify

that the board of directors or advisory board of an OPO must include

members who represent hospital administrators, tissue banks, voluntary

health associations in its service area, and either intensive care or

emergency room personnel. In response to concerns about use of other

health professionals, certainly registered nurses and social workers

could be represented in one or more of these groups. Consequently, we

are not adopting suggestions to further change the requirement.

With respect to the concern that the regulation requires that an

individual with histocompatibility experience serve on the board that

sets OPO policy, we believe that the intent of the regulations is met

regardless of which board the OPO chooses to use in meeting the

histocompatibility requirement. In an effort to be responsive to these

comments, we have reviewed carefully the statutory provision regarding

the board issue. While we do not have specific public comments

regarding this particular issue, we realize there is concern by some

OPOs about whether an OPO can satisfy the statutory board composition

requirements by combining the membership of two boards--a board of

directors and an advisory board. We recognize that many OPOs presently

combine the membership of two such boards to achieve the diversity of

composition which section 371(b)(1)(G)(i) of the Public Health Service

Act mandates (42 CFR 485.304(f)). Also, we had assumed that this

practice met statutory requirements.

In reviewing this issue again, as part of the concerns raised

during the public comment period, we believe a different conclusion

must be drawn. We believe the statute dictates that the prescribed

representation must be achieved on a single board. The statute speaks

in the singular of a board which ``is composed'' of the designated

representatives (the OPO ``has a board of directors or an advisory

board which--(i) is composed of (I) members who represent * * *'').

Moreover, the Committee Conference Report (H.R. Cong. Rep. No. 1127,

98th Cong., 2d Sess., 15-16 (1984)) (1984 U.S. Code Cong. & Admin. News

3991-3992), in part, states the following:

The conference agreement eliminates the requirement in the House

amendment that OPOs eligible to receive grant support have a board

of directors whose participants are specified in statute. The

conferees believe that public and professional confidence in the OPO

system will be an essential factor if improvements in organ

procurement are to be made. Accordingly, each OPO should solicit the

active involvement of the community in which it operates in

developing operating policies. The conference agreement requires

that each OPO establish either an advisory board or board of

directors composed of hospital administrators, intensive care or

emergency room personnel, tissue banks, and voluntary health

associations in its service area; members of the public; physicians

with knowledge in the fields of histocompatibility and neurology;

and a transplant surgeon from each transplant center affiliated with

the OPO. * * * OPOs should, subject to review by the advisory

committee, adopt standards of quality for the acquisition of organs

which will give transplant surgeons confidence that the organs they

receive are suitable for transplantation. The conferees recognize

that as nonprofit entities, OPOs will have a board of directors to

establish organizational policy. If an OPO's board of directors

meets the criteria required, the conferees do not intend that OPOs

establish a separate and redundant advisory entity.

To the extent that any OPO does not now possess a single board

meeting the conditions of section 371(b)(1)(G), we would permit the OPO

that has been using two boards to submit a corrective action plan and

would provide a sufficient amount of time in which the OPO can come

into compliance with the statute. We should add that this does not

preclude an OPO from having additional advisory boards or governing

boards, as long as all the provisions at Sec. 485.304(f) are achieved

by a single board.

Comment: One commenter noted that decisions regarding acceptance of

an organ for transplant are routinely made by the transplant center.

Therefore, the commenter believed that equitable allocation is a shared

responsibility between the OPO and the transplant center.

Response: We acknowledge that transplant centers share a role in

the equitable distribution of organs under section 1138(a)(1)(A) and

(B) of the Act. Nonetheless, the OPO has a specific statutory

responsibility to allocate organs equitably under section 371(b)(3)(E)

of the Public Health Service Act. In addition, the OPTN has a

significant statutory role in equitable distribution under section

372(b)(2)(D) of the Public Health Service Act to ``assist [OPOs] in the

nationwide distribution of organs equitably among transplant

patients''.

Comment: One commenter noted that the proposed regulations did not

define ``equitable distribution'' of organs. The commenter recommended

that we adopt the following definition of equitable distribution: ``the

most medically suited and logistically feasible organ candidate within

the OPO geographic OPTN region shall have preference to a donated organ

before any local or non-regional candidates are considered.''

Response: There has been considerable debate regarding the priority

of local, regional, and national distribution of organs by some OPOs

and by the OPTN. To the extent a definition in regulations would be

appropriate, that question will be addressed in the forthcoming

proposed rule on the OPTN regulations.

Comment: Two commenters expressed concern with the language in

proposed Sec. 485.304(r) (designated as Sec. 485.304(s) in this interim

final rule) regarding testing to prevent the acquisition of organs

infected with the etiologic agent for AIDS. One commenter noted that

the CDC establishes guidelines for a wide variety of entities and

suggested we reference the CDC specific guidelines for ``solid organ

donations.''

Response: We are limiting the reference to CDC guidelines to those

specific to solid organ donations.

Comment: One commenter believed that, because of the incubation

period before a donor would test HIV positive and other factors

inherent in the disease, it is not possible to prevent the transmission

of AIDS with 100 percent assurance. Because of this concern, the

commenter suggested that we use language similar to that in paragraph

(d) of Sec. 493.1265 (``Condition: Histocompatibility.''), which states

that, for laboratories performing tests for organ transplantation to be

approved for Medicare and Medicaid coverage, the laboratory must ensure

that the donor is tested for HIV reactivity unless the recipient waives

the tests because of medical circumstances. This language is thought to

be more technically correct.

Response: At the time this comment was made, the commenter was

correct. However, regulations published on February 28, 1992 (57 FR

7002) implementing the Clinical Laboratory Improvement Amendments of

1988 (CLIA) addresses the commenters concern. We are revising proposed

Sec. 485.304(r) (now designated as Sec. 485.304(s)) to refer

specifically to the CDC guidelines on solid organ donations. We have

also revised it to use some of the same terminology as used in

paragraph (d) of Sec. 493.1265. We believe that neither revision

changes the intent or substance of the proposed requirement; the

revisions simply clarify it. Paragraph (s) of Sec. 485.304 now reads

that an OPO must: ``Ensure donors are tested for human immunodeficiency

virus reactivity consistent with OPTN rules and CDC guidelines for

solid organ donation.'' It should be noted that the governing

provision, section 371(b)(3)(C) of the Public Health Service Act, says

that OPOs must test for the virus ``to prevent the acquisition of

organs that are infected.'' We are not accepting the recommended

language that would permit a waiver of the tests by the recipient,

because we believe the statutory requirement does not provide for such

a waiver nor do the regulations implementing CLIA.

Comment: One commenter recommended that we require that organ

recipients be periodically tested to determine whether they are HIV

positive. Another commenter, who also supported HIV testing, said that

obtaining an accurate medical and social patient history is equally

important in preventing the transmission of communicable disease and

suggested that we make this a requirement too.

Response: We agree that an accurate medical and social patient

history is an important measure to discourage the transmission of

infected organs, and that organ recipients be periodically tested to

determine whether they are HIV positive.

Although there are existing recommendations for the prevention of

HIV transmission through transplantation, involving donors and

recipients, in 1991, the U.S. Public Health Service formed a workgroup

to address the need for additional federal oversight of organ and

tissue transplantation. The workgroup concluded that further

recommendations should be made. As of this writing, those revised

guidelines are expected to be published by the CDC in 1994. Both of the

above issues suggested by the commenters are addressed in these

guidelines. We would expect both hospitals and OPOs to follow the

recommendations. We are not, however, including these requirements in

the regulations.

Section 485.305 (``Condition: Organ Procurement and Transplantation

Network Participation.'')

Comment: One commenter expressed strong support for the proposed

requirement that the ``rules and requirements of the OPTN'' means those

rules and requirements that have been approved and issued by the

Secretary.

Response: The Secretary is developing proposed rules to implement

section 372 of the Public Health Service Act, which provides for the

operation of the OPTN. Those regulations will establish a framework for

Departmental oversight of the OPTN and its rules and requirements. Of

course, public comments will be invited on the proposed framework.

(Note that, in order to be more specific and to be consistent with

terminology used by the Public Health Service (PHS), we have revised

proposed Sec. 485.305. In this interim final rule, we specify that

``rules of the OPTN'' means ``those rules provided for in regulations

issued by the Secretary in accordance with section 372 of the PHS

Act.''

Section 485.306 (``Condition: Performance Standards for Organ

Procurement Organizations.'')

Comment: Some commenters expressed concern with the formula-based

approach to performance monitoring. Some said the current system is

working well. Others said the proposed formula was very complex and not

likely to be understood by many. They also expressed concern that the

formula failed to consider some important factors in organ procurement,

such as HIV infection rate and trauma rate for the area. In addition,

they expressed concern that the weighting of individual factors appears

to be arbitrary.

Response: Although we continue to believe there is merit in a

formula-based approach to performance monitoring, we have decided not

to go forward with one at this time. There are significant advantages

to the formula. The factors in the formula significantly influence

expected donation rates. They are relatively stable for a given area

over time, published by reputable sources, and readily available.

Nevertheless, the commenters suggested valid problems with using them.

We believe, in principle, it would be reasonable to add the cited

factors to the formula. It would, however, be extremely difficult in

most cases to do so because the factors suggested by the commenters are

subject to continuous change and are not indisputably available from a

single source on a timely basis. Further, adding additional factors to

the formula would complicate it.

Comment: Several commenters expressed concern over current

performance standards that require a minimum ratio of 23 cadaveric

kidneys procured per million population and transplantation of 19

cadaveric kidneys per million population. They recommended that we not

adopt these standards because these are static measures in an industry

where national norms are increasingly dynamic. The commenters suggested

we adopt the AOPO performance standard, which is based on population

and potential activity benchmarks.

Response: We agree that the AOPO standard, which is tied to

national norms and represents dynamic numbers, is an important one. We

also believe that the use of multiple performance standards can be most

beneficial. We believe that standards that represent more static

numbers can assist in measuring the effectiveness of an OPO if combined

with multiple standards based on national norms. This is especially

true since we have the flexibility to revise any static numerical

criteria, should state-of-the-art organ procurement practices make them

no longer appropriate. Therefore, we have accepted the commenters'

suggestion that we adopt the AOPO performance standard. An indepth

discussion of that standard is provided in response to other comments

in this section of the preamble.

Comment: Some commenters noted that the current performance

criteria for kidneys were too low to be an adequate measure of

effectiveness for OPOs, because nearly all OPOs currently exceed this

threshold. One commenter presented data supporting increasing the

threshold criteria to 28 cadaveric kidneys procured per million

population of service area and 25 kidneys transplanted.

Response: We agree with the commenters that the current performance

criteria for kidneys (23 cadaveric kidneys procured per million

population and 19 cadaveric kidneys transplanted per million

population) are too low to adequately measure effectiveness in other

than extremely poorly performing OPOs. Based on our data, we estimate

that the national average of kidneys recovered by designated OPOs per

million population has exceeded 28 since 1986. Nonetheless, we believe

these criteria are sufficient to be retained until the 1996 designation

cycle in order to maintain some performance criteria while transition

to the new standards. As stated elsewhere in this preamble, we have

decided to use criteria based on 75 percent of the national average.

The national average for kidneys recovered per million for combined

years 1991 and 1992 was 35.5. Seventy-five percent of that figure

yields an average of 26.6. Therefore, we believe we have responded to

the commenters' concerns in adopting these new standards.

Comment: Several commenters expressed concern with the proposal to

establish specific performance criteria for hearts and livers. They

noted that data are not available at this time to permit calculation of

specific extrarenal organ criteria. Further, they said that such

criteria would not credit OPOs for efforts to procure other extrarenal

organs, such as lungs, heart-lung, and pancreas. If extrarenal criteria

are necessary, most commenters recommended that the criteria not be

specific to organ type.

Response: We acknowledge the concern of these commenters; relying

on specific heart and liver performance criteria alone would not

evaluate appropriately an OPO's full extrarenal experience in that some

extrarenal organs would not be recognized. In addition, we believe that

current data is insufficient to establish numerical thresholds for

heart and liver procurement. Consequently, we are not proceeding with

the proposal to establish specific heart and liver performance criteria

at this time.

Nonetheless, we continue to believe that some performance criteria

should be established to evaluate an OPO's extrarenal activities. Some

commenters proposed an alternative to our proposal. Several commenters

suggested evaluating the number of organs procured per donor; three

organs per donor was a recommended number. They noted that this measure

would provide an OPO with flexibility to focus procurement efforts at

harvesting multiple organs without being penalized for donors with

unusable hearts or livers.

We believe the alternative proposed by the commenters of

establishing performance criteria based on average number of organs

procured per donor is adequate to meet our intent. This is especially

true given the fact that data available for 1992 indicate that the

national average is 3.3 organs per donor. Therefore, beginning in 1996,

we are requiring that OPOs meet performance criteria of procuring an

average of 3 viable (with the intent to transplant) solid organs per

cadaveric donor. Tissue harvesting, such as eyes or bone, is not

included for purposes of this standard because they are not included in

the definition of an organ at Sec. 485.302 (``Definitions.''). In

calculating the organ per donor average, kidneys, as well as extrarenal

organs will be counted. However, in the rare case when organs are

removed en bloc and transplanted en bloc, such as a pair of kidneys or

lungs, the pair will be counted as only a single organ. This method of

counting organs is standard procedure for OPOs. We do invite public

comment on this criterion. We are particularly interested in comments

with respect to whether variance in age plays a significant role in

determining the number of organs procured from a single donor and its

impact on OPO's meeting the criterion of three donors per organ.

Comment: Several commenters expressed concern with the proposal to

develop a cost per organ performance standard. They had numerous

concerns with this alternative, including wide variation in costs among

OPOs, lack of standardization in cost reporting, and differences

between hospital-based and independent OPOs.

Response: We are convinced that additional research is necessary

before we proceed with development of a cost effectiveness performance

standard.

Comment: Some commenters supported a cost effectiveness standard,

expressing concern with the widely varying cost of organ acquisition

and noting that in some cases it appears to be excessive. One commenter

recommended standardization of acquisition fees and, ultimately,

payment based on diagnosis related group (DRG). Another commenter

recommended that payment be made directly to the OPO for kidney

acquisition.

Response: We agree that there is wide variation in organ

acquisition costs for a number of reasons, including geographical

differences, different accounting systems, and varying degrees of

efficiency. We do not believe, however, there is sufficient information

available at this time to establish a cost effectiveness standard for

OPOs. Payment for organ procurement costs, such as inclusion in the

DRG, is not germane to this proposed regulation. We will, however, take

the suggestion under consideration.

Comment: Generally, the commenters favored the performance criteria

proposal set forth by AOPO, as mentioned in the discussion of a

previous comment. To reiterate this proposal, for redesignations made

in 1996 and thereafter, an OPO would be required to demonstrate that it

achieved at least 75 percent of the national mean for per capita organ

recovery in four of the following performance categories averaged over

the 2-calendar-year period preceding the year of designation:

Actual donors per million population.

Number of kidneys recovered per million population.

Number of kidneys transplanted per million population.

Extrarenal organs recovered per million population.

Actual number of extrarenal organs transplanted per

million population.

Some commenters noted that this proposal would keep pace with

changes in the industry in future years, as it is based on national

averages. Thus, as the national average procurement rate increases, the

standards would rise accordingly and would be equally rigorous for the

OPOs. It is generally accepted in the industry that organs recovered

for research purposes should not be counted when compiling these data.

Response: We are adopting the AOPO proposal in this interim final

rule as the ``primary performance standard'' which must be met by OPOs.

We believe that a threshold set at 75 percent of the mean provides

ample opportunity for variation in OPO performance and recognizes

individual structural and size differences while ensuring that some

objective measure of effectiveness is met.

For combined calendar years 1991 and 1992, we have national data,

which are provided below, for the five categories of the primary

performance standard:

------------------------------------------------------------------------

Average 75% of

Standard average

------------------------------------------------------------------------

Actual donors per million............................. 19.1 14.3

Kidneys recovered per million......................... 35.5 26.6

Kidneys transplanted per million...................... 32.5 24.4

Extrarenal organs recovered per million............... 27.6 20.7

Extrarenal organs transplanted per million............ 25.9 19.4

------------------------------------------------------------------------

These data are provided as an illustration of how the primary

performance standard is applied. These particular figures are not

necessarily used to measure OPO performance.

As we explained in detail in our earlier response dealing with

setting reasonable objective measurements, our long-standing concern

has been to increase and maximize the level of organ procurement. At

the same time, we reiterate the competing concern to avoid discouraging

or impeding OPOs that are making an important contribution to organ

procurement. Therefore, the primary performance standard requires that

each OPO achieve at least 75 percent of the national mean for four of

the five performance categories averaged over the 2 full calendar years

preceding the year of designation.

The Congress recognized that some OPOs were not operating in an

efficient and effective manner. It expressed an intent that we

establish challenging, definite standards to ensure that designated

OPOs would be capable of helping to invigorate organ procurement and

distribution in this country. (See Sen. Rep. No. 530, 101st Cong., 2nd

Sess. 19-22 (1990).) It charged the Department with the difficult task

of articulating standards that would produce such results, while, at

the same time, taking into account diverse, sometimes competing,

factors. We believe that the threshold of 75 percent of the national

mean provides a reasonably liberal criterion that reflects the state-

of-the-art on an ongoing basis, is based on the experience of peers for

a comparable population base, and best implements the statute.

We are especially concerned about the few OPOs that operate in a

United States (U.S.) commonwealth or U.S. territory or in a State that

is not part of the contiguous continental U.S. For example, most OPOs

arrange for the transplant surgeons or members of the transplant team

to retrieve an organ that is to be used in a transplant they will

perform. Generally, air transportation among the continental States is

adequate for organ retrieval and transportation to a viable recipient.

But, in a noncontiguous State, territory, or commonwealth, this can

present a preservation problem. Notifying and assembling a team to fly

long distances to the site, retrieve the organ or organs and return to

the transplant center is very time consuming and, especially in the

case of hearts and livers, may not be practical. We believe the

criteria to be met in the primary performance standard could create a

potential hardship for these noncontiguous, geographically limited

areas because organ preservation technology currently is not adequate

to maintain organ viability for the time required to transport the

organ to a recipient. Therefore, we have established a different

performance standard for these areas, which is discussed later in this

preamble. At the present time, we are aware that Hawaii and Puerto

Rico, for example, would meet this exception.

In summary, any OPO (except one located in a noncontiguous U.S.

State, a U.S. territory, or the Commonwealth of Puerto Rico) that does

not meet the primary performance standard will lose its designation

without an opportunity to submit a corrective action plan. We will,

however, notify the OPO of its failure to meet the primary performance

standard and provide a 30-day period for the OPO to correct any

erroneous information that it may have submitted that is relevant to

the determination. If loss of designation were to occur, however, an

OPO can appeal the decision under the appeal provision at paragraph (c)

of Sec. 485.311 (``Terminations.''). We will advise all OPOs of the

performance numbers applicable to 1994 and succeeding years as soon as

the data are available. Also, we will reevaluate this rule within 2

years after it becomes effective to determine whether the standard

should be adjusted.

Comment: One commenter stated that we should use two standard

deviations from the mean as the statistical basis for adopting the AOPO

performance threshold instead of 75 percent of the national mean for

per capita organ recovery in four of the five AOPO performance

categories. He suggested that his alternative is a better approach to

accounting for variation.

Response: We believe that the proposal to set the threshold at 75

percent of the mean is superior to the two standard deviations

alternative. We note that statistically, thresholds set at two standard

deviations would capture 95 percent of a normal distribution. Thus,

setting the performance standard at this level would result in 95

percent of the OPOs making the criteria and 5 percent not making the

criteria regardless of how poorly or how well these OPOs were

performing. In other words, the lowest producing OPO would be

automatically subject to termination each rating period, even if it

were operating productively and effectively.

By setting the performance threshold at 75 percent of the mean, we

will identify all those OPOs that are performing significantly below

the national average. It may be that all OPOs will perform at or above

the standard in any given period. On the other hand, if any OPOs are

not performing at least the 75 percent level, these will be identified

and we can try to determine whether the standard needs revision or the

OPOs' operations need scrutiny.

Comment: One commenter recommended adding a sixth standard to the

AOPO list. The additional standard suggested is the mean number of

organs per donor.

Response: We recognize that the mean number of organs per donor is

a valuable performance standard, and we have established a measurement

of organs per donor as a separate standard as discussed above.

Comment: Several commenters noted that, in theory, there may be

some merit to the proposal of basing performance criteria on the ratio

of hospital deaths, as proposed. However, most noted that additional

study is necessary before implementing such a standard.

Response: We agree that additional study is necessary before

proceeding with this idea. We do not have sufficient data to determine

appropriate ratios. Moreover, none of the commenters offered

information that would identify the current ratio. Consequently, we are

not proceeding with this proposal at this time.

Comment: Two commenters recommended that we develop a performance

criterion based on the volume of referrals brought to fruition. They

believe this would be a true measure of an OPO's effectiveness without

depending on measures such as service area size and population served.

Response: There are currently no data from which to determine the

appropriate threshold for such a criterion. Therefore, we have not

adopted this suggestion.

Comment: Some commenters noted that a hospital is not required to

enter into an agreement with the OPO designated for its area. They said

that failure of hospitals to participate with the OPOs designated for

their respective areas creates difficulties for OPOs in meeting

performance criteria, especially those proposals based on population

serviced. The commenters suggested that each hospital be required to

participate with the OPO designated for its area. Alternatively, they

suggested that performance criteria be adjusted to consider only the

hospitals and the population actually being serviced by the OPO rather

than the entire service area.

Response: The purpose of the proposed rule was to seek public

comment on the Department's proposals to implement various legislative

amendments concerning OPO issues, primarily those regarding the

definition of ``service area.'' We did not intend to open for comment

areas of longstanding policy, such as the policy that permits a

hospital to have an agreement with any designated OPO, not just the one

designated for its area.

We received several comments on this issue, however, in which

commenters expressed strong sentiment that a hospital be required to

have an agreement only with the designated OPO in its particular

service area. Similarly, we received letters expressing strong support

for the current policy. Possible policies with regard to hospital

affiliation with a designated OPO include the following:

A hospital must affiliate with the OPO in its service

area.

A hospital must affiliate with some OPO.

A hospital may affiliate only with the OPO in its service

area, but is not required to affiliate.

A hospital may affiliate with any OPO, but is not required

to affiliate.

In a system in which success is based largely on goodwill between

hospital and OPO personnel, the most flexible policy is likely to

produce the most donors. Therefore, it seems, the Federal policy should

be the one which allows hospitals to affiliate with the OPOs of their

choice without requiring affiliation. That policy is currently in

effect. Commenters are requested to provide any evidence that shows

that the continuation of this policy would have a detrimental effect on

organ donation.

As noted above, an OPO may provide documentation to us that may

justify use of an adjustment to compensate for a lower population base

caused by hospital affiliation with another OPO for purposes of

determining its compliance with the performance standards.

Comment: One commenter expressed concern that performance criteria

could result in potential donor families being subject to undue

pressure to donate merely for the OPO to make the grade, resulting in a

negative impact on organ procurement nationally.

Response: We do not believe that the families of potential donors

should be subject to undue pressure from OPOs. We believe that OPO

staff are sensitive to the seriousness of the donor question in their

behavior with potential donors. Therefore, we do not expect to find

that OPOs will respond inappropriately to the performance standards.

Should we encounter such a problem, we will take necessary action to

correct the situation, such as the development of additional standards

that measure the appropriateness of an OPO's practices in initiating a

request for organ donation.

Comment: Two commenters noted that, because of the special

transportation circumstances inherent in their isolation from the

mainland U.S., population limitations, and the availability of special

surgical skills, an OPO in Hawaii would not be able to meet the

qualification or performance requirements. They requested that an

exception to the criteria be granted for the OPO in Hawaii.

Response: We acknowledge that special circumstances prevent OPOs

such as those in Hawaii and Puerto Rico from meeting many of the

proposed qualification and performance criteria. As mentioned earlier,

most transplant teams send in their own surgeons to retrieve organs.

Therefore, we have established an exception to the standards for OPOs

operating in certain geographically limited areas to take into account

their unique circumstances. The service area and performance standards

that those OPOs that are not part of the contiguous U.S., such as

Hawaii and Puerto Rico, must meet to be designated are as follows:

They must enter into a working relationship with any

hospital or transplant center in their respective service areas that

requests a working relationship.

Beginning January 1, 1996, they must meet a standard of 50

percent of the national average of all OPOs for kidney procurement per

million population and for kidney transplantation per million

population. (NOTE: They must meet all statutory requirements for OPOs

except that we may give them a different service area and performance

standard.)

In developing this standard, we believe there is no reason to

exempt these OPOs from requirements related to operating an efficient

and effective OPO. It should be noted, however, that while this

standard was selected arbitrarily, we believe it to be reasonable for

these OPOs to perform at least half as well as the national mean in

recovering and transplanting kidneys. There may be other areas besides

Hawaii and Puerto Rico with similar limitations. Public comments are

invited on whether other areas should be exempted or provided lower

numerical standards as well.

Comment: One commenter, an OPO that was formed through the

consolidation of six former hospital-based OPOs, said that established

and new OPOs should be subject to the same performance criteria.

Response: In part, we agree with this commenter. If an OPO is the

result of a merger of two or more previously designated OPOs, the

performance standards in Sec. 485.306 will be applied, but the entity

can satisfy it by combining the figures for the merged entities. We

will not, however, apply such performance standards to a totally new

organization that has no previous record until its first redesignation

cycle, since it will have developed no track record and will have had

no start-up period. Rather, we will apply the qualifying criteria in

Sec. 485.304 to the organization.

Comment: Some commenters expressed concern with the effective date

of the performance standards. They said that application of these rules

at the next redesignation period would constitute ``retrospective

rulemaking,'' since OPOs would not have had an opportunity to alter

their practices to meet the standards. Some commenters recommended

delaying application for at least 12 months after publication; others

believed OPOs should not be held accountable for the revised standards

until at least 2 years after publication, that is, until their second

redesignation period.

Response: In discussing the qualifying and performance standards at

various points elsewhere in the preamble, we have set forth the

criteria and rationale for establishing such policies. In doing so, we

are cognizant of the concerns expressed by the commenters regarding

having an adequate opportunity to become compliant with the new rules.

To that end, in both the qualifying criteria and performance standards,

we have established implementation dates to remove concerns about

``retrospective rulemaking.'' That is, the new standards will not apply

until the 1996 redesignation cycle. We believe this addresses

adequately the commenters' concerns about an OPO's ability to be in

compliance with the new standards at the time of redesignation.

Section 485.307 (``Failure To Meet Requirements.'')

Comment: One commenter said that we should not terminate an OPO

regardless of performance standards. The commenter believed that this

would leave an area without a functioning OPO and that an inefficient

OPO is better than no OPO at all.

Response: We believe that an OPO that does not meet the primary

performance standard should not be redesignated. This action would not

result in no OPO service in the area; rather, we think that it is

likely that at least one qualified entity would file for the area

during an open area announcement. Even if no competing qualified OPO

applies for the area, hospitals could receive OPO services by entering

into an agreement with any designated OPO.

Comment: Several commenters expressed concern with the proposed

changes that would delete the current provision that provides for a

reasonable opportunity for an OPO that does not meet the requirements

to correct the deficiency. The commenters stated that they believe that

an opportunity for correction and/or explanation of the variation

rather than not redesignating an OPO would result in more efficient

operation.

Response: The regulations (Sec. 485.307) state that, if the OPO

does not meet the requirements in Secs. 485.304 and 485.305 and the

primary performance standard at the time of recertification, we may

terminate the OPO. We are not required to terminate the agreement of an

OPO not meeting the standards. As we stated above, we intend to

consider only our primary performance standard and the statutory

criteria as a mandatory prerequisite for designation or redesignation.

An OPO not meeting other performance standards will be given an

opportunity to present an explanation for the situation and to submit a

corrective action plan for meeting the standards in the future. In

addition, OPOs not meeting the primary performance standard will have

30 days in which to correct any information that may be erroneous.

Open area notification would be made at each OPO's recertification

time. We envision that, in those cases where an OPO has not met the

standards, its explanation and corrective action plan would be

considered along with the qualifications of any other OPO interested in

the open area. Failure to redesignate the current OPO would result in

those cases in which we determine that the current OPO does not meet

the applicable requirements.

Section 485.309 (``Changes in Ownership or Service Area.'')

Comment: One commenter did not understand the addition of

Sec. 485.309, because he was under the impression that, by law, an OPO

must be a nonprofit organization, and we mentioned partnerships and

sole proprietorships.

Response: Section 371(b)(1)(A) of the Public Health Service Act

requires an OPO to be a ``nonprofit entity.'' Current regulations at

Sec. 485.304(a) define that to mean ``a nonprofit entity that is exempt

from Federal income taxation under section 501 of the Internal Revenue

Code of 1986''. Section 501(a) of the tax law addresses primarily

corporations, although other forms of organizations are included. Since

the problems intended to be addressed by proposed Sec. 485.309(a) have

resulted principally from corporate mergers and consolidations, we

believe the language in the proposed rule on proprietorships and

partnerships is unnecessary. Therefore, this interim final rule

addresses only mergers and consolidations.

Comment: One commenter felt that mergers should be given priority

over other proposals for a service area.

Response: We do not believe we should categorically prefer one type

of application over another, depending upon whether the applicant has

merged or consolidated. The determination as to which OPO is designated

depends upon a demonstration that the OPO meets the applicable

requirements set forth in regulations. At Sec. 485.308 (``Designation

of one OPO for each service area.''), we have described the criteria we

will use when more than one OPO applies for a service area.

Section 485.311 (``Terminations.'')

Comment: We specifically invited comment on the proposal to

designate an OPO whose agreement was terminated if we find that the

cause for the termination has been removed, if we are satisfied that it

is not likely to recur, and if no other OPO has been designated for the

service area. One commenter said that we should avoid termination, but

that, if it is necessary, ``reinstatement'' should not be an option.

The commenter believes that the area should revert to ``open area''

status.

Response: When an OPO's agreement with us is terminated, the

service area does revert to an ``open area.'' If the area is an open

area (that is, no other qualified OPO has been designated for it), the

terminated OPO can present evidence that the cause for the termination

has been removed, and if the OPO meets all requirements for

designation, we believe that the OPO could be designated.

Comment: One commenter said that in the case of termination, public

notice should not be made until the OPO has been through the appeal

process and the determination to terminate has been upheld.

Response: As we pointed out above, we intend to apply the existing

appeal process at part 498 to termination of the OPO's agreement with

us. It is our policy that a termination is treated as final despite any

appeal filing. Therefore, we will issue notice of the termination

effective with the date of the termination.

Appeal proceedings can take several years to complete. We believe

that it is necessary to expeditiously issue a notice of open area and

begin the process of securing a qualified OPO for the service area as

soon as possible.

Comment: Several commenters objected to the deletion of the current

Sec. 485.307(b), which provides for an appeal under part 498 (``Appeals

Procedures for Determinations that Affect Participation in the Medicare

Program'') of this chapter when an OPO's agreement with us is

terminated. They believe that an appeal proceeding must be included not

only for termination based on failure to meet requirements, but also on

service area determinations.

Response: Although we proposed deleting the appeal language at

Sec. 485.307(b), we also proposed placing identical language at

Sec. 485.311(c) on termination. These appeal proceedings are similar

for all disputes involving entities participating in Medicare and

Medicaid, not just OPOs. Generally, they provide for an independent

determination based on a written and oral presentation of evidence.

Appeals on service area determinations will be included in such appeal

proceedings.

Comment: One commenter suggested that the period in which to appeal

a determination should be 90 days.

Response: As noted above, we believe that the existing procedures

for termination of participation in Medicare and Medicaid should be

applicable to OPOs as well. These procedures provide for 60 days in

which to file an appeal.

IV. Provisions of this Interim Final Rule with Comment

We are adopting as final the proposed regulations which we

published on June 21, 1991, in the Federal Register (56 FR 28513), with

the following changes.

We clarify the language at Sec. 482.12(c)(5)(ii), which

sets forth participation in the OPTN as one of the Medicare conditions

of participation for hospitals, to be consistent with the language at

Sec. 485.305, which sets forth participation in the OPTN as one of the

Medicare conditions for coverage of OPOs.

In Sec. 485.302, we have shortened the definitions of

certification or recertification and open area. We have moved some of

the provisions that had appeared in these definitions in the proposed

rule to other appropriate sections of the subpart. We shortened the

definition of interim designation period and moved it to

Sec. 485.303(e)(3)(ii) of the interim final rule. We also have

clarified the definition of designation or redesignation by citing the

statutory basis for payment of organ procurement costs under Medicare

and Medicaid. We clarify the use of these terms, by adding that

designation and redesignation are used interchangeably except when

otherwise specifically indicated.

We have revised Sec. 485.303 to add clarity, improve its

readability, and to specify that, to be initially designated as an OPO,

an organization must be certified as a qualified OPO. This addition

reflects section 1138(b)(1)(A) of the Act, which establishes

certification or recertification as one of several prerequisites for

designation. In addition, we have included in Sec. 485.303 provisions

that had been included under Sec. 485.302 (``Definitions'') in the

proposed rule. That is, we specify that redesignation must occur at

least every 2 years and be completed before the end of an existing

designation period. With regard to interim designations, we specify

that the interim period does not exceed 60 days after the normal

designation period has expired. We have also made the following

changes:

--Proposed paragraph (e) of Sec. 485.303 specified that an OPO must

obtain HCFA approval before entering into any change of ownership,

assignment, merger, consolidation, or change in its service area. In

this interim final rule, we have removed the reference to assignment

because we believe assignment does not occur in the OPO context.

--We have added the clarifying phrase ``for organ procurement services

attributable to that OPO'' in the sentence at proposed Sec. 485.303(f)

in which we state that, if an OPO's agreement is terminated, payment

will not be made for services furnished on or after the effective date

of termination. (In this interim final rule that provision is

designated as Sec. 485.303(c).)

--We have clarified proposed Sec. 485.303(f)(5) (Sec. 485.303(c)(5) in

the interim final rule) by adding the phrase ``as Medicare payment for

organ recovery fees''. Section 485.303(c)(5) requires OPOs to agree to

pay to us amounts that have been paid by us to transplant hospitals as

Medicare payment for organ recovery fees and that are determined to be

in excess of the reasonable cost of the services provided by the OPO.

We have made the following changes to Sec. 485.304:

--We have revised proposed Sec. 485.304(d) to improve its readability

and to provide that, for designations in 1996 and thereafter, an OPO's

service area must include an entire State or the OPO must procure

organs from an average of at least 24 donors per calendar year in the 2

years before the year of designation. We provide for the phasing in of

this requirement and specify that before January 1, 1996, an entity

must demonstrate that the service area has the potential to produce 50

donors per calendar year. We provide an OPO operating in a

noncontiguous U.S. State, a U.S. territory, or a U.S. commonwealth,

such as Hawaii or Puerto Rico, with a specified alternative standard

beginning January 1, 1996. We also provide that if an entity has not

previously operated as a Medicare-certified OPO, it must demonstrate

that it can procure organs from at least 50 potential donors per

calendar year. These changes have been discussed in section III of this

preamble.

--In Sec. 485.304(i), we changed the requirement that OPOs have a

system ``to allocate organs equitably among transplant centers and

patients'' by eliminating the words ``centers and''. This is consistent

with section 371(b)(3)(E) of the Public Health Service Act.

--In the proposed rule, Sec. 485.304(r) reads that an OPO must:

``Assure appropriate tests consistent with OPTN standards and CDC

guidelines are performed to prevent the acquisition of organs that are

infected with the etiologic agent for acquired immune deficiency

syndrome.'' We have revised it (and designated it as Sec. 485.304(s))

to refer specifically to OPTN rules and to the CDC guidelines on solid

organ donations. This amendment to the proposed rule does not change

its substance.

--In order to enable us to verify an OPO's compliance with the

performance standards, we have added paragraph (t) to Sec. 485.304. It

requires OPOs to submit accurate data to us within 15 days following

the end of a calendar year (unless otherwise notified), giving

information on the--

+Population of designated service areas based on the most recent U.S.

Bureau of the Census data;

+ Number of actual organ donors;

+ Number of kidneys procured;

+ Number of kidneys transplanted;

+ Number of extrarenal organs by type procured; and

+ Number of extrarenal organs transplanted.

We are making the following changes to proposed

Sec. 485.305:

--As discussed in section III of this preamble, we are defining ``rules

of the OPTN'' rather than ``rules and requirements of the OPTN.''

--We are removing the sentence that reads ``In order to be binding on

hospitals participating in Medicare or Medicaid, the Secretary must

have given formal approval to the rule or requirement.'' That statement

is unnecessary, given our definition of ``rules of the OPTN.''

As discussed in section III of this preamble, we are

revising proposed Sec. 485.306 to do the following:

--Specify the performance standards that OPOs must meet before January

1, 1996. The standards are those currently set forth at Sec. 485.306

(a)(1) and (a)(2).

--Set forth performance standards (described in section III of this

preamble) that OPOs must meet beginning January 1, 1996.

--Add that, for the purpose of measuring adherence to the performance

standards, organs removed en bloc and transplanted en bloc, are counted

as a single organ.

--Permit submission by the OPO of documentation to justify the use of

an adjustment to compensate for a reduced population base.

--Grant an exception from some of the performance standards to OPOs

operating outside the contiguous U.S.

Section 485.306 continues to require that each OPO enter into a

working relationship with any hospital or transplant center in the

OPO's service area that requests a working relationship.

At Sec. 485.308(a), we are inserting, with a minor

revision, the language that, in the proposed rule, appeared in the

definition for ``open area'' at Sec. 485.302. In the third sentence, we

replaced ``terminate an OPO immediately'' with ``terminate an OPO's

agreement with HCFA immediately''. This reflects that it is the

agreement that is terminated.

We are restructuring Sec. 485.309 for ease of reference.

In addition to the above changes, minor editorial changes

(that do not change the substance) have been made for clarification.

V. Regulatory Impact Statement

Consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601

through 612), we prepare a regulatory flexibility analysis, unless the

Secretary certifies that an interim final rule with comment will not

have a significant economic impact on a substantial number of small

entities. For purposes of the RFA, all organ procurement organizations

are considered to be small entities.

Also, section 1102(b) of the Act requires the Secretary to prepare

a regulatory impact analysis if an interim final rule with comment may

have a significant impact on the operations of a substantial number of

small rural hospitals. Such an analysis must conform to the provisions

of section 604 of the RFA. For purposes of section 1102(b) of the Act,

we define a small rural hospital as a hospital that is located outside

of a Metropolitan Statistical Area and has fewer than 50 beds.

This interim final rule with comment sets forth changes required by

Public Law 100-607 and Public Law 101-616. Originally, section 402 of

Public Law 101-607 revised section 371 of the Public Health Service Act

(42 U.S.C. 273) to require the service area encompassed by an entity to

be large enough that the OPO could reasonably expect to procure organs

from not less than 50 donors each year. This change would have resulted

in a substantial number of existing OPOs failing to meet this

requirement. Public Law 101-616 amended the Public Health Service Act

to require an OPO to have a defined service area that is of sufficient

size to ensure maximum effectiveness in the procurement and equitable

distribution of organs.

We expect that the implementation of the other provisions of this

interim final rule with comment may cause some OPOs to accrue some

additional costs. For example, new Sec. 485.304(r) of the regulation

will require an OPO to ensure that tests are performed on sera from

prospective organ donors to prevent the acquisition of organs that are

infected with the etiologic agent for AIDS. We believe, however, that

any additional costs are minimal compared to the improvement these

provisions will have on the quality of health care for organ

recipients.

We have determined, and the Secretary certifies, that this interim

final rule with comment will not have a significant effect on a

substantial number of small entities. Also, OPOs (independent and

hospital-based) are not considered small rural hospitals since OPOs

generally service large geographical areas. Therefore, a regulatory

flexibility analysis under the RFA and a rural impact analysis under

section 1102(b) of the Act are not required.

In accordance with the provisions of Executive Order 12866, this

regulation was reviewed by the Office of Management and Budget.

VI. Information Collection Requirements

Regulations at Secs. 485.303 (c)(2), (c)(4), (c)(7), and (c)(8), at

Secs. 485.304 (d), (o), (p), and (t), at Secs. 485.305, 485.306,

485.309(a), and at Secs. 485.311 (a)(1) and (e) contain information

collection and recordkeeping requirements that are subject to review by

the Office of Management and Budget (OMB) under the Paperwork Reduction

Act of 1980 (44 U.S.C. 3501 et seq.). The information collection

requirements concern quantifiable data for submission to us that

document an OPO's statement that its service area is of sufficient size

to ensure maximum effectiveness in the procurement and equitable

distribution of organs, and that either includes an entire metropolitan

statistical area or does not include any part of such an area. Public

reporting burden for this collection of information is estimated to be

4,206 hours per submission. A notice will be published in the Federal

Register after approval is obtained.

VII. Response to Comments

Because of the large number of items of correspondence we normally

receive on a rule, we are not able to acknowledge or respond to them

individually. However, we will consider all comments that we receive by

the date and time specified in the ``DATES'' section of this preamble,

and, if we proceed with a final rule, we will respond to the comments

in the preamble of that rule.

List of Subjects

42 CFR Part 405

Administrative practice and procedure, Health facilities, Health

maintenance organizations (HMO), Health professions, Kidney diseases,

Laboratories, Medicare, Reporting and recordkeeping requirements, Rural

areas, X-rays.

42 CFR Part 482

Hospitals, Medicaid, Medicare, Reporting and recordkeeping

requirements.

42 CFR Part 485

Health facilities, Medicare, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 42 CFR chapter IV is

amended as follows:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

Subpart U--Conditions for Coverage of Suppliers of End-Stage Renal

Disease (ESRD) Services

A. Part 405, subpart U, is amended as set forth below:

1. The authority citation for subpart U, part 405 is revised to

read as follows:

Authority: Secs. 1102, 1138, 1861, 1862(a), 1871, 1874, and 1881

of the Social Security Act (42 U.S.C. 1302, 1320b-8, 1395x,

1395y(a), 1395hh, 1395kk, and 1395rr), unless otherwise noted.

2. In Sec. 405.2163, the introductory text is republished and

paragraph (f) is revised to read as follows:

Sec. 405.2163 Condition: Minimal service requirements for a renal

dialysis facility or renal dialysis center.

The facility must provide dialysis services, as well as adequate

laboratory, social, and dietetic services to meet the needs of the ESRD

patient.

* * * * *

(f) Standard: Participation in recipient registry. The dialysis

facility or center participates in a patient registry program with an

OPO designated or redesignated under part 485, subpart D of this

chapter, for patients who are awaiting cadaveric donor transplantation.

* * * * *

3. In Sec. 405.2170 introductory text, ``Renal Transplantation

Center'' is revised to ``renal transplantation center''.

4. In Sec. 405.2171, the following changes are made:

a. In paragraphs (a) and (d)(1), ``Renal Transplantation Center''

is revised to ``renal transplantation center''.

b. The section heading, the introductory text, and paragraph (e)

are revised to read as follows:

Sec. 405.2171 Condition: Minimal service requirements for a renal

transplantation center.

Kidney transplantation is furnished directly by a hospital that is

participating as a provider of services in the Medicare program and is

approved by HCFA as a renal transplantation center. The renal

transplantation center is under the overall direction of a hospital

administrator and medical staff; if operated by an organizational

subsidiary, it is under the direction of an administrator and medical

staff member (or committee) who are directly responsible to the

hospital administrator and medical staff, respectively. Patients are

accepted for transplantation only on the order of a physician and their

care continues under the supervision of a physician.

* * * * *

(e) Standard: Organ procurement. A renal transplantation center

using the services of an organ procurement organization designated or

redesignated under part 485, subpart D of this chapter to obtain donor

organs has a written agreement covering these services. The renal

transplantation center agrees to notify HCFA in writing within 30 days

of the termination of the agreement.

PART 482--CONDITIONS OF PARTICIPATION FOR HOSPITALS

B. Part 482 is amended as set forth below:

1. The authority citation for part 482 is revised to read as

follows:

Authority: Secs. 1102, 1138, 1814(a)(6), 1861 (e), (f), (k),

(r), (v)(1)(G), (z), and (ee), 1864, 1871, 1883, 1886, 1902(a)(30),

and 1905(a) of the Social Security Act (42 U.S.C. 1302, 1320b-8,

1395f(a)(6), 1395x (e), (f), (k), (r), (v)(1)(G), (z), and (ee),

1395aa, 1395hh, 1395tt, 1395ww, 1396a(a)(30), and 1396(a)).

2. In Sec. 482.12, the introductory text for the section is

revised; paragraph (c) introductory text is republished; and paragraph

(c)(5)(ii) is revised, to read as follows:

Sec. 482.12 Condition of participation: Governing body.

The hospital must have an effective governing body legally

responsible for the conduct of the hospital as an institution. If a

hospital does not have an organized governing body, the persons legally

responsible for the conduct of the hospital must carry out the

functions specified in this part that pertain to the governing body.

* * * * *

(c) Standard: Care of patients. In accordance with hospital policy,

the governing body must ensure that the following requirements are met:

* * * * *

(5) * * *

(ii) In the case of a hospital in which organ transplants are

performed, the hospital must be a member of the Organ Procurement and

Transplantation Network (OPTN) established and operated in accordance

with section 372 of the Public Health Service (PHS) Act (42 U.S.C. 274)

and abide by its rules. The term ``rules of the OPTN'' means those

rules provided for in regulations issued by the Secretary in accordance

with section 372 of the PHS Act. No hospital is considered to be out of

compliance with section 1138(a)(1)(B) of the Act or with the

requirements in this paragraph, unless the Secretary has given the OPTN

formal notice that he or she approves the decision to exclude the

hospital from the OPTN and has notified the hospital in writing.

* * * * *

PART 485--CONDITIONS OF PARTICIPATION AND CONDITIONS FOR COVERAGE:

SPECIALIZED PROVIDERS AND SUPPLIERS

C. Part 485 is amended as set forth below.

1. The authority citation for part 485 continues to read as

follows:

Authority: Secs. 1102, 1138, 1861 (aa), and (cc) and 1871 of the

Social Security Act (42 U.S.C. 1302, 1320b-8, 1395x (aa) and (cc),

and 1395hh).

2. The heading of part 485 is revised to read as above.

3. Section 485.301 is revised to read as follows:

Sec. 485.301 Basis and scope.

This subpart sets forth the qualifications and requirements an

organ procurement organization (OPO) must meet in order for the costs

of its services in procuring organs for hospitals to be payable under

Medicare and Medicaid. Its statutory basis is section 1138(b) of the

Act.

4. In Sec. 485.302, the introductory text for this section is

republished, the definition of service area is revised, and three new

definitions are added in alphabetical order as follows:

Sec. 485.302 Definitions.

As used in this subpart, the following definitions apply:

Certification or recertification means a HCFA determination that an

entity meets the standards for a qualified OPO at Sec. 485.303 of this

subpart and is eligible for designation if it meets the additional

conditions for designation at Secs. 485.304 and 485.305. No payment

ensues from certification alone.

Designation or redesignation means HCFA approval of an OPO for

Medicare and Medicaid payment purposes under section 1138(b)(1)(F) of

the Act. The terms are used interchangeably except when otherwise

specifically indicated.

* * * * *

Open area means a service area for which HCFA has notified the

public that it is accepting applications for designation.

* * * * *

Service area means a geographical area of sufficient size to assure

maximum effectiveness in the procurement and equitable distribution of

organs and that either includes an entire standard metropolitan

statistical area or does not include any part of such an area and that

meets the standards of this subpart.

* * * * *

5. In Sec. 485.303, a heading is added to paragraph (a), paragraphs

(b) and (c) are revised, and new paragraphs (d) and (e) are added, to

read as follows:

Sec. 485.303 Condition: Organ procurement organization designations--

general.

(a) Designation--a condition for payment. * * *

(b) Requirements for designated status. To be the designated OPO

for a service area, an entity must do the following:

(1) Submit to HCFA a written application for designation, using the

application form prescribed by HCFA.

(2) Be certified as a qualified OPO.

(3) Participate in the Organ Procurement and Transplantation

Network as specified in Sec. 485.305.

(4) Enter into an agreement with HCFA that meets the requirements

set forth in paragraph (c) of this section.

(5) Upon its initial designation, meet the requirements at

Sec. 485.306(a)(3) or Sec. 485.306(b)(4), as appropriate, concerning

working relationships with hospitals or transplant centers. During the

initial designation period, the OPO is not required to demonstrate

compliance with Secs. 485.306(a)(1) and (a)(2) or Sec. 485.306(b)(1),

which set forth performance standards for OPOs.

(6) To be redesignated after an initial designation period, comply

with all the requirements of this subpart, including those at

Sec. 485.306, which set forth performance standards for OPOs.

(7) Obtain HCFA approval before entering into any change of

ownership, merger, consolidation, or change in its service area (see

Sec. 485.309, which sets forth requirements concerning approval for

changes in ownership and service area). Failure to do so could result

in termination.

(c) Agreement with HCFA. An OPO must enter into an agreement with

HCFA. The agreement is effective upon submission by the OPO and

acceptance by HCFA, but may be terminated by either party. If an OPO

agreement is terminated, payment for organ procurement services

attributable to that OPO will not be made for services furnished on or

after the effective date of termination. In the agreement, the OPO must

agree to do the following:

(1) Maintain compliance with the requirements of titles XVIII and

XIX of the Act, section 1138 of the Act, and applicable regulations,

including the conditions set forth in subpart D, part 485, and the

regulations of the OPTN approved and issued by the Secretary, and to

report promptly to the Secretary any failure to do so.

(2) File a cost report in accordance with Sec. 413.24(f) of this

chapter within 3 months after the end of each fiscal year.

(3) Permit HCFA to designate an intermediary to determine the

interim payment rate payable to the transplant hospitals for services

provided by the OPO and to make a determination of reasonable cost

based on the cost report it files.

(4) Provide budget or cost projection information as may be

required to establish an initial interim payment rate.

(5) Pay to HCFA amounts that have been paid by HCFA to transplant

hospitals as Medicare payment for organ recovery fees and that are

determined to be in excess of the reasonable cost of the services

provided by the OPO.

(6) Not charge an individual for items or services for which that

individual is entitled to have payment made under the Medicare program.

(7) Maintain and make available to HCFA, the Comptroller General,

or their designees data that show the number of organs procured and

transplanted.

(8) Maintain data in a format that can be readily continued by a

successor OPO and turn over to HCFA copies of all records, data, and

software necessary to ensure uninterrupted service by a successor OPO

that may be designated for all or part of its service area. Records and

data subject to this requirement include records on individual donors

(including identifying data and data on organs retrieved), records on

transplant candidates (including identifying data and data on immune

system and other medical indications), and procedural manuals and other

materials used in conducting OPO operations. Donor records must include

at least information identifying the donor (for example, name, address,

date of birth, social security number), the organs and tissues (when

applicable) retrieved, date of the organ retrieval, and test results.

(d) When OPOs may apply for designation. Entities may apply for

designation whenever a service area becomes an open area.

(e) Designation periods--(1) General. An OPO is normally designated

for 2 years. A designation period may not exceed 2 years but may be

shorter.

(2) Redesignation. Redesignation must occur at least every 2 years

and be completed before the end of an existing designation period.

(3) Interim designation. HCFA may designate an organization for an

interim designation period if the period is needed in order for HCFA to

make a final designation determination.

(i) The interim designee may be either the OPO previously

designated for the service area or another organization.

(ii) The interim designation period does not exceed 60 days after

the normal designation period has expired.

(iii) The interim designee must meet all requirements of section

371(b) of the Public Health Service Act (42 U.S.C. 273(b)) regarding

qualified OPOs and must not be out of compliance with the requirements

of section 1138(b)(1) (B) through (E) of the Act regarding requirements

for payment of organ procurement costs under title XVIII or title XIX

of the Act.

6. In Sec. 485.304, the following changes are made:

a. The semicolon at the end of the following paragraphs is removed

and a period added in its place: paragraphs (a) through (c), (d)(1),

(d)(2), (d)(4), (e), (f)(1) through (f)(3), (f)(5), (g)(2), (h), (j)

through (n).

The semicolon and the word ``and'' at the end of the following

paragraphs are removed and a period added in their place: paragraphs

(d)(3), (f)(4), and (o).

b. The introductory text of the section and paragraph (d)

introductory text are revised; paragraphs (d)(1) through (d)(4) are

redesignated as paragraphs (d)(3)(i) through (d)(3)(iv), respectively;

new paragraphs (d)(1), (d)(2), and (d)(3) introductory text are added;

paragraph (f) introductory text and paragraphs (f)(3) and (i) are

revised; and new paragraphs (r) through (t) are added, to read as

follows:

Sec. 485.304 Condition: Qualifications required of an organization for

it to be a designated organ procurement organization.

To be designated as the OPO for a service area, an organization

must, at the time of application and throughout the period of its

designation, meet the following requirements:

* * * * *

(d) Make available to HCFA documentation of its service area, as

specified in paragraph (d)(3) of this section, that shows it meets the

requirements of paragraphs (d)(1) and (d)(2) of this section.

(1) The area is of sufficient size to ensure maximum effectiveness

in the procurement and equitable distribution of organs.

(i) Before January 1, 1996, an entity must demonstrate that it can

procure organs from at least 50 potential donors per calendar year or

that its service area comprises an entire State.

(ii) Beginning January 1, 1996, an OPO must meet at least one of

the following requirements:

(A) Its service area must include an entire State.

(B) It must procure organs from an average of at least 24 donors

per calendar year in the 2 years before the year of designation.

(C) In the case of an OPO operating in a noncontiguous U.S. State,

a U.S. territory, or a U.S. commonwealth, such as Hawaii and Puerto

Rico, it must procure organs at the rate of 50 percent of the national

average of all OPOs for kidney procurement per million population and

for kidney transplantation per million population.

(D) If it is an entity that has not been previously designated as

an OPO, it must demonstrate that it can procure organs from at least 50

potential donors per calendar year.

(2) The area either includes an entire metropolitan statistical

area or does not include any part of such an area.

(3) Documentation that precisely defines the proposed service area

includes the following:

* * * * *

(f) Have a board of directors or an advisory board that has the

authority to recommend policies relating to the donation, procurement,

and distribution of organs. While an OPO may have more than one board,

the members specified in paragraphs (f)(1) through (f)(5) of this

section must be members of a single board. The board of directors or

advisory board must include the following:

* * * * *

(3) A physician with knowledge, experience, or skill in the field

of human histocompatibility, or an individual with a doctorate degree

in a biological science and with knowledge, experience, or skills in

the field of human histocompatibility.

* * * * *

(i) Have a system to equitably allocate donated organs among

transplant patients that is consistent with Centers for Disease Control

and Prevention (CDC) standards and with OPTN rules.

* * * * *

(r) Assist hospitals in establishing and implementing protocols for

making routine inquiries about organ donations by potential donors.

(s) Ensure donors are tested for human immunodeficiency virus

reactivity consistent with OPTN rules and CDC guidelines for solid

organ donation.

(t) Submit accurate data to HCFA within 15 days following the end

of a calendar year (unless otherwise notified) giving information on

the following:

(1) Population of designated service area based on the most recent

U.S. Bureau of the Census data.

(2) Number of actual donors.

(3) Number of kidneys procured.

(4) Number of kidneys transplanted.

(5) Number of extrarenal organs by type procured.

(6) Number of extrarenal organs by type transplanted.

7. Section 485.305 is revised to read as follows:

Sec. 485.305 Condition: Organ Procurement and Transplantation Network

participation.

In order to be designated as the OPO for its service area, and to

continue to be the designated OPO once designated, an OPO must be a

member of, have a written agreement with, and abide by the rules of the

OPTN established and operated in accordance with section 372 of the

Public Health Service (PHS) Act (42 U.S.C. 274). The term ``rules of

the OPTN'' means those rules provided for in regulations issued by the

Secretary in accordance with section 372 of the PHS Act. No OPO is

considered to be out of compliance with section 1138(b)(1)(D) of the

Act or this section unless the Secretary has given the OPTN formal

notice that he or she approves the decision to exclude the entity from

the OPTN and also has notified the entity in writing.

8. Section 485.306 is revised to read as follows:

Sec. 485.306 Condition: Performance standards for organ procurement

organizations.

For the purpose of measuring OPOs' adherence to the performance

standards in this section, organs removed en bloc and transplanted en

bloc, such as a pair of kidneys or lungs, are counted as a single

organ.

(a) Before January 1, 1996, OPOs must meet the following

performance standards:

(1) Each OPO must procure within its service area a minimum ratio

of 23 cadaveric kidneys per million population of its service area for

each 12-month period surveyed.

(2) Each OPO must provide a minimum ratio of cadaveric kidneys

procured in its service area and transplanted (either locally or

exported and transplanted) of 19 cadaveric kidneys per million

population of its service area for each 12-month period surveyed.

(3) Each OPO must enter into a working relationship with any

hospital or transplant center in the OPO's service area that requests a

working relationship.

(b) Beginning January 1, 1996, OPOs must meet the following

performance standards:

(1) Each OPO must achieve at least 75 percent of the national mean

for four of the five performance categories specified in paragraphs

(b)(1)(i) through (b)(1)(v) of this section averaged over 2 calendar

years before the year of redesignation. The performance categories

follow:

(i) Actual donors per million population.

(ii) Number of kidneys recovered per million population.

(iii) Extrarenal organs recovered per million population.

(iv) Number of kidneys transplanted per million population.

(v) Number of extrarenal organs transplanted per million

population.

(2) Each OPO must procure organs from an average of at least 24

donors per calendar year in the 2 calendar years before the year of

redesignation.

(3) Each OPO must maintain an average procurement ratio of three

organs per donor.

(4) Each OPO must enter into a working relationship with any

hospital or transplant center in the OPO's service area that requests a

working relationship.

(c)(1) If, after designation, an OPO does not meet the performance

standards listed in paragraph (a), paragraph (b)(2), or paragraph

(b)(3) of this section, it may submit a corrective action plan

explaining why the standard or standards were not met and setting forth

actions it will take to ensure it meets those standards in the future.

Corrective action plans must be submitted to the appropriate HCFA

regional office. A corrective action plan will not be accepted for

failure to meet the primary performance standard, that is, the standard

set forth at Sec. 485.306(b)(1).

(2) An OPO may submit corrected information, within 30 days from

the date it was notified that it failed to meet the performance

standards (such as an adjustment to its population base to account for

hospitals that may affiliate with an OPO outside the service area).

(3) If an OPO does not meet the performance standards listed in

paragraph (a), paragraph (b)(2), or paragraph (b)(3) of this section,

or, if it believes its population base has been affected by another

OPO's having an agreement with one or more hospitals in its service

area, the OPO may provide documentation to HCFA that may justify use of

an adjustment to compensate for the reduced population base.

(d) OPOs operating in a noncontiguous U.S. State, a U.S. territory,

or a U.S. commonwealth, such as Hawaii and Puerto Rico, may be granted

an exception from the performance standards listed in paragraphs

(a)(1), (a)(2), and (b)(1) through (b)(3) of this section because of

special geographically-related characteristics, such as difficulty in

transporting organs to the mainland, that impede satisfaction of the

national rate of organ procurement. Nonetheless, they must meet the

performance standard in paragraph (a)(3) or paragraph (b)(4) of this

section. Beginning January 1, 1996, they must meet a standard of 50

percent of the national average of all OPOs for kidneys recovered and

transplanted per million population.

(e) An OPO that has not previously been designated by HCFA for a

particular service area is exempt from meeting the performance

standards in paragraphs (b)(1) and (b)(2) of this section for its first

2 years of designation as the OPO for that area. The performance

standards are used to measure the OPO's qualifications to be designated

or redesignated beginning 2 years after the OPO has been first

designated for any portion of a service area.

9. Section 485.307 is revised to read as follows:

Sec. 485.307 Failure to meet requirements.

Failure to continue to meet any of the requirements in

Secs. 485.304 and 485.305 or to meet the performance standards in

Sec. 485.306(a) and (b) may result in termination of the OPO's

agreement with HCFA.

10. In Sec. 485.308, paragraph (a) introductory text is revised to

read as follows:

Sec. 485.308 Designation of one OPO for each service area.

(a) HCFA designates only one OPO per service area. Applications for

designation are accepted only during a period when the service area is

an open area. A service area is open for competition once the existing

designation period has expired, when the existing designated status of

the OPO for that service area has been terminated, or when no OPO has

been designated for the area. HCFA may also declare the service area

open in the event an OPO ceases to operate or HCFA has reasonable

ground for anticipating it will cease to operate. In cases of urgent

need (such as evidence of medically or ethically unsound practices),

HCFA may terminate its agreement with an OPO immediately. The service

area remains open until an OPO is designated for it. If more than one

organization applies and substantially meets the requirements of

Sec. 485.304 in a given service area, HCFA considers other factors in

reaching a decision concerning which organization to designate. These

factors follow:

* * * * *

11. A new Sec. 485.309 is added to read as follows:

Sec. 485.309 Changes in ownership or service area.

(a) OPO requirements. (1) A designated OPO considering a change in

ownership or in its service area must notify HCFA before putting it

into effect. This notification is required to ensure that the entity,

as changed, will continue to satisfy Medicare and Medicaid

requirements. A change in ownership takes place if there is the merger

of one entity into another or the consolidation of one entity with

another.

(2) A designated OPO considering a change in its service area must

obtain prior HCFA approval. In the case of a service area change that

results from a change of ownership due to merger or consolidation, the

entities must submit anew the information required in an application

for designation, or other written documentation HCFA determines to be

necessary for designation.

(b) HCFA requirements. (1) If HCFA finds that the entity has

changed to such an extent that it no longer satisfies the prerequisites

for OPO designation, HCFA may terminate the OPO's agreement and declare

the OPO's service area to be an open area.

(2) If HCFA finds that the changed entity continues to satisfy the

prerequisites for OPO designation, the period of designation of the

changed entity is the remaining designation term of the OPO that was

reorganized. If more than one designated OPO is involved in the

reorganization, the remaining designation term is ordinarily the

longest of the remaining periods. HCFA may determine, however, that a

shorter period applies if it decides that a shorter period is in the

best interest of the Medicare and Medicaid programs. The performance

standards of Sec. 485.306 apply at the end of this remaining period.

12. A new Sec. 485.311 is added to read as follows:

Sec. 485.311 Terminations.

(a) Types--(1) Voluntary termination. If an OPO wishes to terminate

its agreement, it must send written notice of its intention with the

proposed effective date to HCFA. HCFA may approve the proposed date,

set a different date no later than 6 months after the proposed

effective date, or set a date less than 6 months after the proposed

date if it determines that it would not disrupt services to the service

area or otherwise interfere with the effective and efficient

administration of the Medicare and Medicaid programs. If HCFA

determines that a designated OPO has ceased to furnish organ

procurement services to its service area, the cessation of services is

deemed to constitute a voluntary termination by the OPO, effective on a

date determined by HCFA.

(2) Involuntary termination. HCFA may terminate an agreement if it

finds that an OPO no longer meets the conditions for coverage in this

subpart, or is not in substantial compliance with any other applicable

Federal regulations or provisions of titles XI, XVIII, or title XIX of

the Act. HCFA may also terminate an agreement immediately in cases of

urgent need, such as the discovery of unsound medical practices.

(b) Notice to OPO. HCFA gives notice of termination to an OPO at

least 15 days before the effective date stated in the notice.

(c) Appeal right. The OPO may appeal the termination in accordance

with the provisions set forth in part 498, which sets forth appeals

procedures for determinations that affect participation in the Medicare

and Medicaid programs.

(d) Effects of termination. When an OPO agreement is terminated--

(1) Medicare and Medicaid payments may not be made for organ

procurement services the OPO furnishes on or after the effective date

of termination; and

(2) HCFA will accept applications from any entity to be the

designated OPO for that area.

(e) Public notice. In the case of voluntary termination, the OPO

must give prompt public notice of the date of termination, and such

information regarding the effect of that termination as HCFA may

require, through publication in local newspapers in the service area.

In the case of involuntary termination, HCFA gives notice of the date

of termination.

(f) Reinstatement. HCFA may, at its discretion, designate an OPO

whose agreement was previously terminated if HCFA finds that the cause

for termination has been removed, is satisfied that it is not likely to

recur, has not designated another OPO for the service area, and finds

that the OPO meets all the necessary requirements for designation.

(Catalog of Federal Domestic Assistance Programs No 93.774, Medicare

Supplementary Medical Insurance, and No. 13.714, Medical Assistance

Program)

Dated: November 2, 1993.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Dated: May 16, 1994

Donna E. Shalala,

Secretary.

[FR Doc. 94-21993 Filed 9-7-94; 8:45 am]

BILLING CODE 4120-01-P