Medicare Program; Changes to the Requirement for Annual Physician Acknowledgement of Physician Attestation Responsibilities

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 412

[BPD-769-FC]

RIN 0938-AG34

Medicare Program; Changes to the Requirement for Annual Physician

Acknowledgement of Physician Attestation Responsibilities

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

ACTION: Final rule with comment period.

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SUMMARY: Existing Medicare regulations require a hospital to obtain, on

an annual basis, from each attending physician, a signed

acknowledgement that the physician understands the penalty for

misrepresenting the information on an attestation statement relating to

principal and secondary diagnoses and major procedures performed on

patients. This final rule with comment period eliminates the

requirement for an annual acknowledgement statement and instead

requires that a physician sign an acknowledgement statement only upon

being granted admitting privileges at a hospital. The purpose of this

change is to reduce the paperwork burden associated with processing

claims under Medicare.

DATES: Effective Date: This final rule is effective on April 18, 1994.

Comment Date: Comments will be considered if we receive them at the

appropriate address, as provided below, no later than 5 p.m. on May 9,

1994.

ADDRESSES: Mail written comments (an original and three copies) to the

following Administration, Department of Health and Human Services,

Attention: BPD-769-FC, P.O. Box 7517, Baltimore, MD 21207-0517.

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

and three copies) to one of the following addresses:

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

SW., Washington, DC 20201, or

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

Baltimore, MD 21207.

Because of staffing and resource limitations, we cannot accept

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

to file code BPD-769-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 Avenue, SW., Washington,

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

(phone: (202) 690-7890).

For comments that relate to information collection requirements

mail a copy of comments to:

Allison Herron Eydt, HCFA Desk Officer, Office of Information and

Regulatory Affairs, room 3002, New Executive Office Building,

Washington, DC 20503.

Copies: To order copies of the Federal Register containing this

document, send your request to: New Orders, Superintendent of

Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date

of the issue requested and enclose a check or money order payable to

the Superintendent of Documents, or enclose your Visa or Master Card

number and expiration date. Credit card orders can also be placed by

calling the order desk at (202) 783-3238 or by faxing to (202) 275-

6802. The cost for each copy is $4.50. As an alternative, you can view

and photocopy the Federal Register document at most libraries

designated as Federal Depository Libraries and at many other public and

academic libraries throughout the country that receive the Federal

Register.

FOR FURTHER INFORMATION CONTACT:Beverly Christian, (410) 966-4616.

SUPPLEMENTARY INFORMATION:

I. Background

Sections 1886 (d) and (g) of the Social Security Act (the Act)

establish prospective payment systems for payment of the operating and

capital-related costs of acute hospital inpatient stays under Medicare

part A (Hospital Insurance). Under these prospective payment systems,

payment for the operating and capital-related costs of inpatient

hospital services furnished by hospitals subject to the systems

(generally, short-term, acute-care hospitals) is made on the basis of

prospectively determined rates and applied on a per discharge basis.

All discharges are classified according to a list of diagnosis-related

groups (DRGs). The regulations governing the inpatient hospital

prospective payment systems are located in 42 CFR part 412. Subpart C

of part 412 sets forth certain conditions that must be met for a

hospital to receive payment under the prospective payment systems.

Under section 1866(a)(1)(F) of the Act, in order to receive payment

under the Medicare program, a hospital must enter into an agreement

with the Utilization and Quality Control Peer Review Organization (PRO)

in the hospital's area, for the peer review of Medicare services

furnished by the hospital. PROs are independent Statewide physician

organizations that are required under section 1153 of the Act, among

other contractual responsibilities, to review services provided, or

proposed to be provided, to Medicare beneficiaries. The purpose of the

review is to ensure that Medicare payment is made only for services

that are medically necessary, are provided in the most appropriate

setting, and meet professionally accepted standards of quality. Section

1866(a)(1)(F)(i) of the Act requires PROs to validate the diagnostic

information provided by hospitals.

The regulations concerning the review of the validity of diagnostic

information are set forth at 42 CFR 412.46. Section 412.46(a) requires

that the patient's attending physician must attest in writing to the

diagnostic and procedural information to be reviewed by the PROs before

a claim is submitted. The physician's attestation is part of the

medical record and includes a signed and dated statement in which the

physician certifies that the narrative descriptions of the principal

and secondary diagnoses made, and procedures performed, are accurate

and complete. This requirement is designed to ensure that the

diagnostic and treatment information used for claims payment is

correct.

Section 412.46(c) requires physician acknowledgement of the

attestation responsibilities. Specifically, Sec. 412.46(c) now requires

that, when a claim is submitted, the hospital has on file a current

signed and dated acknowledgement statement from the attending physician

that the physician has received a notice from the hospital stating the

consequences of misrepresenting, falsifying, or concealing essential

information required for payment. This acknowledgement must have been

completed within the year prior to the submission of the claim. The

physician acknowledgement requirement is designed to ensure that, if a

physician is prosecuted for attesting to false information, the

government can prove that the physician had notice that false

attestation is a criminal action. If the hospital does not have such a

document on file, Medicare payment may be denied. Section 412.46(d)

requires that, at least every 3 months, the PRO review a random sample

of discharges during the period since the last review to verify that

the diagnostic and procedural coding, used by the hospital for DRG

assignment, is substantiated by the corresponding medical records.

As part of the validation of DRG assignments, PROs are responsible

for reviewing attestation and acknowledgement statements. The review of

attestation statements is administratively simple. As described above,

hospitals submit attestation statements with each medical record.

Therefore, PROs generally review the statement at the same time that

they validate diagnostic and procedural information. Under 42 CFR

466.85, PROs have final and binding authority to issue determinations

or changes as a result of DRG validation.

The present method for maintaining and validating acknowledgement

statements is much more complicated administratively. Under current

HCFA enforcement procedures, which are listed in an attachment to the

PRO Scope of Work (SOW), PROs verify if a hospital has on file a

current signed physician acknowledgement statement for each physician

who has privileges at that hospital. The instructure we have developed

for this PRO review are an attempt to strike a balance between our

desire to pay for medical care provided by hospitals and our need to

ensure compliance by physicians and hospitals with regulations that

serve as the basis for payment of Medicare trust fund dollars under the

prospective payment systems.

Annually, each PRO examines a sample of acknowledgement statements

from each hospital under its review to determine whether a current

signed and dated acknowledgement is on file for each physician sampled.

Depending on the percentage of errors (that is, acknowledgement

statements that are missing, incomplete, incorrect or noncurrent) that

the PRO finds, it may take a variety of actions. These actions include:

Reviewing the hospital's complete file of acknowledgement

statements.

Giving the hospital a limited period of time in which to

obtain an appropriate acknowledgement statement.

Issuing denials but reopening cases for which the hospital

has a reasonable explanation.

Denying claims associated with acknowledgement statements

that are missing or unacceptable.

The PRO considers the hospital's past history when determining

which action is appropriate to take.

II. Provisions of the Final Rule With Comment Period

Under the current regulations, physicians and hospitals have

experienced difficulties in meeting the physician acknowledgement

requirements. Physicians have expressed concern that the requirement

produces unnecessary paperwork, increases costs, and is time consuming.

Hospitals have found that the maintenance of acknowledgement

statements for annual inspection by the PRO presents an administrative

problem of great complexity. Only the smallest facilities are able to

have all of their physicians sign the statement on the same day each

year. For all others, a window of opportunity must be afforded. This

means that gaps in the signing of the statement are almost certain to

occur. For example, if a hospital informs its physicians that they must

sign the statement between November 15 and December 31 (a reasonable

period of time for a large facility), and the physicians comply, there

would be 47 days on which the statements could actually be signed. For

the hospital, that would mean up to 47 different dates on which those

statements would expire. Tracking these dates, and ensuring compliance

for the next year, becomes a problem of extensive complexity and

expense, especially given the limited resources of most hospital

medical records departments.

Hospitals have objected to this administrative responsibility of

ensuring that the annual acknowledgements are signed prior to the

expiration of the previous year's statements. Also, hospitals are

concerned about the possibility of the loss of revenues for cases in

which they have provided appropriate care to patients, but have failed

to get new statements signed on a timely basis, a process they view as

a technicality. In addition, smaller hospitals have faced possible

closure because of the fiscal impact of failing to comply with the

requirement for annual signatures.

PRO have had two major problems with the validation of

acknowledgement statements. First, the review process itself is

burdensome in terms of the time and resources it consumes, particularly

when a PRO must examine a hospital's complete file. In addition, the

process has the potential of causing the denial of seemingly inordinate

sums of money. The funds denied have the potential to close the doors

of some smaller hospitals, thus denying needed access to care for

Medicare beneficiaries.

The review of acknowledgement statements is, particularly in larger

hospitals, a detailed, lengthy activity. Moreover, since PRO reviewers

are professionally trained health care personnel, requiring them to

perform acknowledgement review (a clerical task) is a misuse of

resources.

The PROs are extremely reluctant to deny significant funds to a

hospital for failure to meet a paperwork requirement. Lack of correct

acknowledgement statements does not, in and of itself, mean that a

hospital gives poor care or that it has utilization or DRG problems.

Specifically, it does not imply that improper diagnostic and procedural

coding to achieve incorrect DRG assignment and payment has occurred

during the periods of missing, incorrect, or incomplete acknowledgement

statements.

Our objective in making a change to the regulations is to reduce

the ``hassle factor'' relating to the paperwork burden associated with

processing claims under Medicare. We believe that the regulations

should be revised to assure the validity of diagnostic information in a

manner that is less burdensome to hospitals, physicians, and PROs, and

that avoids the necessity of imposing sometimes substantial fiscal

penalties in cases where diagnostic information is accurate, and the

medical record has the necessary physician attestation, but the

acknowledgement statement is out of date.

In 1992, the DHHS Advisory Committee on Medicare-Physician

Relationships (Gary Committee) recommended that the annual physician

acknowledgement requirement be discontinued and that we modify the

requirement to provide that: (1) A one-time acknowledgement signature

be submitted when a physician is granted admitting privileges at a

hospital; (2) the signature be kept on file by the hospital; and (3)

existing acknowledgements signed by physicians already on staff would

be considered to be in effect permanently.

We have considered both the Gary Committee's recommendation and

several other options to ameliorate the present problems with

acknowledgement statements. These include:

Eliminating the statement altogether. This would eliminate

all problems with compliance, but would not provide evidence that the

physician was made aware of the penalties involved in misrepresenting,

falsifying, or concealing the required information.

Lengthening the period of time between statement updates.

This would solve some of the procedural problems but could exacerbate

the problem of inordinate penalties by greatly increasing the number of

claims liable to denial.

Placing the acknowledgement statement with the attestation

statement. This is an administratively simple approach, and in fact was

our policy for a short period of time a the outset of the

implementation of the prospective payment system. However, it proved to

be extremely unpopular with the physician community and was replaced

with the current requirement in our August 31, 1984, final rule (49 FR

34759.)

Shifting the monitoring requirement to the fiscal

intermediaries. This would place a claims processing requirement with

the entity that processes the claims and would prevent the accumulation

of large numbers of claims liable to denial. It would not alleviate the

hospitals' problems in acquiring signatures, but would alert the

hospital immediately if a signature had expired.

After considering all of these options, we have decided to remove

the requirement that the acknowledgement be completed within the year

prior to the submission of the claim and replace it with the

requirement that the acknowledgement be completed by the physician at

the time he or she is granted admitting privileges at that particular

hospital or before or at the time the physician admits his or her first

patient. The hospital must continue to keep these signatures on file.

Acknowledgements currently on file are considered to be in effect as

long as the physician has admitting privileges in the hospital.

Accordingly, the PRO review of acknowledgement statements will be

reduced to physicians granted new admitting privileges.

We are recommending this change because our years of experience

with this provision have revealed continuing physician discontent with

the procedures, a time-consuming annual burden on hospitals in

obtaining timely statements, and a significant administrative burden on

PROs that validate them. There is evidence that this essentially

``paper'' requirement is sometimes enforced inconsistently, and we know

from experience that inadvertent administrative lapses could cause

significant financial burdens for hospitals that have provided

medically necessary and appropriate care to the patients whose claims

are subject to denial based on lack of an appropriately executed

acknowledgement statement. We believe that this requirement's current

level of burden to physicians, hospitals, and PROs can be substantially

reduced without significantly impairing the effectiveness of the

warning or its usefulness in cases where prosecution is necessary.

Although we are requiring that the statements be completed by a

physician only once for each hospital at which the physician has

admitting privileges, we intend to remind physicians annually of the

penalties attached to misrepresentation, falsification, and concealment

of information required for the payment of Federal funds. The vehicle

for this reminder is under consideration.

III. Impact Statement

Unless the Secretary certifies that a final rule will not have a

significant economic impact on a substantial number of small entities,

we generally prepare a regulatory flexibility analysis that is

consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601

through 612).

The changes we are making to the regulations will reduce both

hospital and PRO administrative costs. Hospitals will be relieved of a

time-consuming annual burden in obtaining timely statements, and the

possibility of significant financial burdens caused by inadvertent

administrative lapses due to claims subject to denial based on lack of

an appropriately executed acknowledgement statement. Under the present

system, we estimate that a typical hospital spends several hundred

hours a year tracking and chasing down missing physician signatures,

and that PROs spend many hours in each hospital checking for signatures

and dealing with gaps and missing signatures. Currently, there are over

6,000 hospitals participating in the Medicare prospective payment

system, and some 300,000 physicians whose signatures must be tracked

and updated each year, so total costs to the economy may well be in the

range of $10 million to $20 million a year for the annual

acknowledgment requirement. Under the revised system, PRO review will

be significantly reduced to only those physicians granted new staff

privileges. Also, since we anticipate fewer instances of hospital

noncompliance under the revised requirements, we anticipate that PROs

rarely, if ever, will need to intensify review of 100 percent of

acknowledgements in hospitals, or take actions to deny payment, based

on violations of the physician attestation requirement.

While the effects of this rule are a small fraction of

administrative costs in each hospital, the elimination of the

requirement for annual physician acknowledgements represents a

significant reduction in governmental ``red tape'' for hospitals,

physicians, and PROs. We have determined, and the Secretary certifies,

that this final rule will not have a significant economic effect on a

substantial number of small entities; thus, we are not preparing an

analysis for the RFA.

Also, section 1102(b) of the Act requires the Secretary to prepare

a regulatory impact statement if a final rule will have a significant

economic impact on the operations of a substantial number of small

rural hospitals. Such an analysis must conform to the provisions of

section 603 of the FRA. 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.

We have not prepared a rural impact statement since we have

determined, and the Secretary certifies, that this final rule will not

have a significant economic effect on the operations of a substantial

number of small rural hospitals.

In accordance with the provisions of Executive Order 12866 this

regulation was reviewed by the Office of Management and Budget.

IV. Other Required Information

A. Waiver of Proposed Rulemaking

We ordinarily publish a notice of proposed rulemaking in the

Federal Register and invite prior public comment on proposed rules. The

notice of proposed rulemaking includes a reference to the legal

authority under which the rule is proposed, and the terms and

substances of the proposed rule or a description of the subjects and

issues involved. This procedure can be waived, however, if an agency

finds good cause that a notice-and-comment procedure is impracticable,

unnecessary, or contrary to the public interest and incorporates a

statement of the finding and its reasons in the rule issued. We believe

that this final rule with comment period will alleviate the time-

consuming annual burden on hospitals to obtain updated physician

acknowledgement statements, the administrative burden on PROs to

validate them, and the physician discontent with the procedures.

Moreover, we believe that this requirement's current level of burden to

physicians, hospitals, and PROs can be substantially reduced without

significantly impairing the effectiveness of the warning or its

usefulness in cases where prosecution is necessary. This rule reduces

rather than imposes burdens, and we believe that the individuals and

organizations being affected by these changes are best served by

immediate action. We believe that notice and comment is both

unnecessary and contrary to the public interest.

Therefore, we find good cause to waive the notice of proposed

rulemaking and to issue a final rule in this instance. We are providing

a 60-day period for public comment on this rule.

B. Information Collection Requirements

Regulations at Sec. 412.46(c) contain information collection or

recordkeeping requirements that are subject to review by the Office of

Management and Budget under the Paperwork Reduction Act of 1980 (44

U.S.C. 3501 et seq.). Current Sec. 412.46(c) requires that, when a

claim is submitted, hospitals have on file a current signed and dated

acknowledgment from each attending physician that the physician has

received a notice from the hospital that explains the physician

attestation requirement and the penalties applicable for

misrepresenting, falsifying, or concealing essential information

required for payment. Hospitals must ensure that physician

acknowledgements are completed within 1 year prior to the submission of

the claim. This requirement has imposed substantial annual paperwork

costs on hospitals, which must repeatedly check signature dates and

secure timely physician signatures on acknowledgement statements to

ensure that, for payment purposes, no part of a year is unaccounted for

by each physician's acknowledgment statement.

Under this final rule, we are requiring under revised

Sec. 412.46(c) that the acknowledgment statements be signed only at the

time that the physician is granted admitting privileges at a particular

hospital, or before or at the time the physician admits his or her

first patient, rather than on an annual basis. Unlike the current

requirement, we estimate that the residual system will impose on

physicians and hospitals a shared one-time burden of only 5 minutes per

acknowledgement for each physician that gains admitting privileges. The

hospital must continue to keep these signatures on file. Since

acknowledgements currently on file are considered to be in effect as

long as the physician has admitting privileges in the hospital, the

burden on PROs to review acknowledgement statements also will be

reduced substantially to cover only physicians that are newly granted

admitting privileges.

Organizations and individuals desiring to submit comments on the

information collection and recordkeeping requirements should direct

them to the OMB official whose name appears in the ``ADDRESSES''

section of this preamble.

C. Public Comments

Because of the large number of items of correspondence we normally

receive, 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 subsequent document, we will respond to the

comments in the preamble to that document.

List of Subjects in 42 CFR Part 412

Administrative practice and procedure, Health facilities, Medicare,

Puerto Rico, Reporting and recordkeeping requirements.

42 CFR chapter IV, part 412, is amended as follows:

PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL

SERVICES

A. The authority citation for part 412 continues to read as

follows:

Authority: Secs. 1102, 1815(e), 1871, and 1886 of the Social

Security Act (42 U.S.C. 1302, 1395g(e), 1395hh, and 1395ww).

Subpart C--[Amended]

B. In Sec. 412.46, paragraph (c) is revised to read as follows:

Sec. 412.46 Medical review requirements; DRG validation.

* * * * *

(c) Physician acknowledgement. (1) In addition, when the claim is

submitted, the hospital must have on file a signed and dated

acknowledgement from the attending physician that the physician has

received the following notice:

Notice to Physicians: Medicare payment to hospitals is based in

part on each patient's principal and secondary diagnoses and the

major procedures performed on the patient, as attested to by the

patient's attending physician by virtue of his or her signature in

the medical record. Anyone who misrepresents, falsifies, or conceals

essential information required for payment of Federal funds, may be

subject to fine, imprisonment, or civil penalty under applicable

Federal laws.

(2) The acknowledgement must be completed by the physician at the

time that the physician is granted admitting privileges at the

hospital, or before or at the time the physician admits his or her

first patient. Existing acknowledgements signed by physicians already

on staff remain in effect as long as the physician has admitting

privileges at the hospital.

* * * * *

(Catalog of Federal Domestic Assistance Program No. 93.773,

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

Supplementary Medical Insurance Program)

Dated: June 16, 1993.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Approved: December 3, 1993.

Donna E. Shalala,

Secretary.

[FR Doc. 94-5315 Filed 3-7-94; 8:45 am]

BILLING CODE 4120-01-P