Medical Devices; Mammography Quality Standards Act of 1992; Inspection Fees

[[Page 14584]]

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. 94N-0335]

Medical Devices; Mammography Quality Standards Act of 1992;

Inspection Fees

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is announcing the fees

it will assess for inspections of mammography facilities during fiscal

year 1995 (FY 95). The Mammography Quality Standards Act of 1992 (MQSA)

requires FDA to assess and collect fees from mammography facilities to

cover the costs of annual inspections required by the MQSA. This notice

explains which facilities are subject to payment of inspection fees,

provides information on the costs included in developing inspection

fees, and provides information on the inspection, billing, and

collection processes.

DATES: Effective October 1, 1994, for all inspections conducted under

42 U.S.C. 263b(g). Written comments by June 15, 1995.

ADDRESSES: Submit written comments to the Dockets Management Branch

(HFA-305), Food and Drug Administration, rm.1-23, 12420 Parklawn Dr.,

Rockville, MD 20857.

FOR FURTHER INFORMATION CONTACT: John L. McCrohan, Center for Devices

and Radiological Health (HFZ-240), Food and Drug Administration, 1350

Piccard Dr., Rockville, MD 20850, 301-594-3332, fax 301-594-3306.

SUPPLEMENTARY INFORMATION:

I. Background

The MQSA amended Title III of the Public Health Services Act (the

PHS Act) (42 U.S.C. 262 et seq.) by adding a new section 354 (42 U.S.C.

263b) to require uniform national quality standards for mammography

facilities. The MQSA requires all mammography facilities, other than

facilities of the Department of Veterans Affairs, to be accredited by

an approved accreditation body and certified by the Secretary of Health

and Human Services as meeting quality standards. Facilities must obtain

a certificate by October 1, 1994, in order to continue to legally

provide mammography services. See 58 FR 67558, December 21, 1993,

``Mammography Facilities--Requirements for Accrediting Bodies and

Quality Standards and Certification Requirements,'' interim rules and

59 FR 49808, September 30, 1994, ``Quality Standards and Certification

Requirements for Mammography Facilities,'' amending the interim rules.

The MQSA requires FDA to establish a Federal certification and

inspection program for mammography facilities; regulations and

standards for accreditation bodies; and standards for equipment,

personnel, quality assurance, and recordkeeping and reporting by

mammography facilities.

The MQSA requires annual facility inspections to determine

compliance with the quality standards. Section 354(r) of the PHS Act

requires FDA to assess and collect fees for inspections of all

mammography facilities, other than Governmental entities as determined

by FDA, to cover the costs of inspections. FDA is providing notice of

the fees to be assessed during FY 95 and additional information

relating to those fees. Although the MQSA does not require FDA to

solicit comments on fee assessment and collection, FDA is inviting

comments from interested persons in order to have the benefit of

additional views and information.

II. Inspections under the Mammography Quality Standards Act of 1992

Section 354(g)(1) of the PHS Act requires FDA, or a State operating

under a delegation of authority from FDA, to conduct an annual

inspection of each mammography facility. The purpose of the annual

inspection is to determine facility compliance with quality standards

established under the MQSA. The quality standards to be enforced during

FY 95 were established by an interim rule published at 58 FR 67565,

December 21, 1993, ``Quality Standards and Certification Requirements

for Mammography Facilities,'' amended by an interim rule published at

59 FR 49808, September 30, 1994, ``Quality Standards and Certification

Requirements for Mammography Facilities.'' Inspections will be

conducted by inspectors who have met Federal training requirements and

who are certified by FDA.

Under ordinary circumstances, inspections will be conducted during

the regular business hours of the facility or at a mutually agreed

time. FDA normally will provide 5 working days advance notice of each

annual inspection. If a significant deficiency is identified during an

inspection, FDA will provide information on necessary corrective action

and in appropriate cases, will schedule a followup inspection after the

facility has had a reasonable time to correct the deficiency. FDA

normally will provide 5 working days advance notice of each followup

inspection. FDA may make unannounced inspections or may provide shorter

notice if prompt action is necessary to protect the public health (see

42 U.S.C. 263b(g)(4)).

III. Costs Included in FY 1995 Inspection Fees

Section 354(r) of the PHS Act requires FDA to assess and collect

fees from persons who own or lease mammography facilities, or their

agents, to cover the cost of annual and followup inspections conducted

by FDA or a State acting under a delegation from FDA. Section 354(r)

limits FDA's discretion in setting inspection fees in three ways: (1)

Fees must be set so that, for a given fiscal year, the aggregate amount

of fees collected will equal the aggregate costs of inspections

conducted; (2) a facility's liability for fees must be reasonably based

on the proportion of the inspection costs which relate to the facility;

and (3) Governmental entities, as determined by FDA, are exempt from

payment of fees.

FDA has determined that the following categories of costs are

recoverable under section 354(r) of the PHS Act and has included them

in the fees to be assessed in FY 95:

Personnel costs of annual and followup inspections of

mammography facilities, including administration and support.

Purchase of equipment, development of instrument

calibration procedures, calibration of instruments used in the

inspections, and modification of training facilities and laboratories

to support MQSA operations.

Design, programming, and maintenance of data systems

necessary to schedule and track inspections and to collect data during

inspections.

Training and certification of inspectors (both FDA and

State inspectors).

Costs of billing facilities for fees due for annual and

followup inspections and collecting facility payments.

Tracking, coordination, and direction of inspections.

Overhead and support attributable to facility inspections.

FDA has calculated the fixed and variable amounts of these costs.

Because facilities and most scientific equipment are durable and can be

used for a period of years, it is not appropriate to recover the full

costs of such expenditures in the year of purchase. To do so would

result in the MQSA inspection fee varying widely from one year to the

next. Instead, these costs will be [[Page 14585]] recovered over the

useful life of the asset. FDA has used these data on fixed and variable

costs to determine fees for two categories of inspection:

Annual inspection of each mammography facility. The

recoverable portions of all fixed costs of the inspection program and

appropriate variable costs are recovered in the annual inspection fee.

This fee will vary depending on how many mammography units are used by

a facility. All mammography facilities, except Governmental entities,

will be subject to this fee.

Followup inspections. If the annual inspection of a

facility identifies a deficiency that necessitates a followup

inspection, that facility will be assessed an additional fee to recover

the costs of that additional inspection. Only variable costs directly

related to followup inspections are recovered. Governmental entities

and all facilities that do not require a followup inspection are not

subject to this fee.

IV. Inspection Fees to be Assessed During FY 95

After consulting with the National Mammography Quality Advisory

Committee, FDA has determined that, for FY 95 (October 1, 1994 to

September 30, 1995), a facility's inspection fees will be based on the

number of mammography units used by the facility. Based on information

submitted by States during contract negotiations and a 1993 survey by

the National Cancer Institute, FDA estimates that there are 13,252

mammography units and 10,666 facilities subject to inspection in FY

1995. Most facilities (83 percent) have only a single mammography unit

and fewer than 5 percent of facilities have more than two units.

FDA has determined that the following fees will be assessed for

facility inspections conducted in fiscal year 1995:

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Type of Inspection Fee

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Annual............................. $1,178 for the first unit, plus

$152 for each additional unit.

Followup........................... $670 for each followup inspection.

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The fee schedule is subject to change each fiscal year to ensure that

the aggregate amount of fees collected during any fiscal year equals

the aggregate amount of costs for such fiscal year for inspection of

facilities

FDA reviewed and considered several methodologies for setting

annual inspection fees for FY 95, including fee structures that would

do one or more of the following: (1) Account for differences in

facility size (the adopted methodology); (2) establish a flat fee that

would not vary by facility size; (3) account for regional variations in

inspection costs; (4) eliminate separate followup inspection fees by

increasing the annual inspection fee. FDA decided to charge separately

for annual and followup inspections because FDA believes it is more

appropriate and equitable for the costs of followup inspections to be

borne entirely by the facilities that require such inspections. In

addition, this approach eliminated the need for FDA to attempt to

estimate the number of followup inspections that will be conducted. FDA

chose to use a uniform, national fee structure because, at this time,

the agency lacks sufficient information to adopt any other approach.

For followup inspections, FDA considered a flat fee (the adopted

methodology) and an hourly rate that would vary the fee by the length

of the inspection. FDA has chosen to adopt a flat fee for followup

inspections because this approach eliminates concerns about variations

among inspectors and differential treatment of facilities.

The methodology adopted by FDA to determine inspection fees does

not pass on the costs of inspecting Governmental entities to other

facilities. The entire cost of inspecting Governmental entities will be

borne by FDA and paid out of appropriated funds.

The agency invites comments on alternative methods of determining

inspection fees under the MQSA and may consider altering its

methodology in the future, after actual inspection experience provides

more accurate data about differences among facilities and variations in

costs by State, region, or other factors.

V. Facilities Subject to Payment of Inspection Fees

Under the MQSA, all certified mammography facilities except

Governmental entities, as determined by FDA, are subject to payment of

inspection fees (see 42 U.S.C. 263b(r)).

FDA has developed a definition that will be used to determine

whether a facility qualifies as a ``Governmental entity'' for the

purpose of determining whether a facility is exempt from payment of

inspection fees under 42 U.S.C. 263b(r). A Governmental entity is a

mammography facility subject to inspection under section 354(g)(1) of

the Public Health Service Act (42 U.S.C. 263b(g)(1), that meets either

of the following criteria: (1) Is operated by any Federal department,

State, district, territory, possession, Federally-recognized Indian

tribe, city, county, town, village, municipal corporation or similar

political organization or subpart thereof, or (2) provides services

under the Breast and Cervical Cancer Mortality Prevention Act of 1990,

42 U.S.C. 300k et seq., and at least 50 percent of the mammography

screening examinations provided during the preceding 12 months were

funded under that statute.

In making these determinations, FDA reviewed the legislative

history of the Mammography Quality Standards Act of 1992. There is

nothing in the legislative history to indicate that Congress intended

the exemption for Governmental entities to be read expansively. Nor is

there anything in the legislative history to suggest that Congress

intended FDA to distinguish among mammography facilities with respect

to this exemption for any particular policy reason, such as the type of

organization operating the facility (e.g., facilities that qualify as a

charitable organization under section 501(c)(3) of the Internal Revenue

Code), location (e.g., rural facilities), or size (e.g., facilities

that handle relatively few patients). Accordingly, FDA has interpreted

the exemption provision in a manner that will recoup the costs of

inspections from as many facilities as possible. This approach will

reduce the likelihood that fiscal constraints will undermine the

agency's ability to perform adequate inspections required by the law.

FDA determined that the definition of Governmental entity under the

MQSA should include facilities that are highly dependent on funding

provided under the Breast and Cervical Cancer Mortality Prevention Act

of 1990 (BCCMPA) (see 42 U.S.C. 300k et seq.). That statute authorizes

grants to States for programs to screen women for breast and cervical

cancer as a preventive health measure (see 42 U.S.C. 300k). Low income

women are given priority for screening services, including free

services to any woman with income below the official poverty line (see

42 U.S.C. 300n). Advisory committee discussions raised concern that

assessing an inspection fee on certain facilities receiving these

grants would be at variance with, and could undermine, the initiative

that Congress legislated through BCCMPA, and that the Department of

Health and Human Services implemented, to provide mammography screening

to under-served populations. In response to this concern, FDA decided

to include in its definition of Governmental entity, those facilities

with BCCMPA grants that provide at least 50 percent of their

mammography screening services to the [[Page 14586]] population

targeted by BCCMPA. FDA believes relatively few (less than 100)

facilities will qualify as Governmental entities because of their

dependence on BCCMPA grants. These facilities pursue the same public

health objectives as the MQSA and are largely dependent on Federal

payments. Assessing an inspection fee would do little more than shift

the costs of one Federal program to another Federal program while

subjecting the Federal government to the transaction costs involved

with such transfers.

The agency invites comments on alternative ways to define

Governmental entities under the MQSA and may consider altering its

determination in the future, after actual inspection experience

provides more accurate data about other types of facilities that might

be included in the category which is exempt from inspection fees under

42 U.S.C. 263b(r).

Prior to the first annual inspection of a facility, FDA will

contact the facility and provide an opportunity for the facility to

attest that it qualifies as a Governmental entity. Facilities that FDA

finds to be Governmental entities will not be billed for inspections.

VI. Billing and Collection Procedures

Within 30 days following inspection, FDA will mail a bill to the

inspected facility (Governmental entities will not receive bills). The

bill will set forth the type of inspection conducted (annual or

followup), the fee to be paid, and the date payment is due (30 days

after billing date). Inspection fees will be billed to and collected

from the party that operates the facility. If the facility is owned or

controlled by an entity other than the operator, it is up to the

parties to establish, through contract or otherwise, how the costs of

facility inspections will be allocated.

If full payment is not received by the due date, a second bill will

be sent. At that time, interest will begin to accrue at the prevailing

rate set by the Department of the Treasury (currently, the prevailing

rate is 13 percent), a 6 percent late payment penalty will be assessed

in accordance with 45 CFR 30.13, and a $20 administrative fee will be

assessed for each 30-day period that a balance remains due. If payment

is not received within 30 days of a third and final bill, FDA may

initiate action to collect unpaid balances (with interest and

penalties), including the use of collection agencies and reporting of

delinquencies to commercial credit reporting agencies.

VII. Review and Appeals Procedures

FDA will review each declaration that a facility qualifies as a

Governmental entity. If FDA disallows a facility's claim that it is a

Governmental entity, a bill will be sent to the facility with payment

due within 30 days.

If FDA determines that a facility is not a Governmental entity, but

the facility believes it qualifies for exemption under the definition

of Governmental entity set forth above, the facility may appeal FDA's

determination by explaining and certifying the basis for its belief in

a letter directed to the FDA Ombudsman, c/o Mammography Quality

Assurance Program, Food and Drug Administration, P.O. Box 6057,

Columbia, MD 21045-6057, postmarked within 30 days of FDA's notice to

the facility that the facility does not qualify as a Governmental

entity. The FDA Ombudsman will review a facility's claim that it is a

Governmental entity and will normally reach a decision within 60 days.

If the Ombudsman determines that a facility does not qualify as a

Governmental entity, the Ombudsman shall provide a statement of the

grounds for that determination. The Ombudsman's decision will

constitute the agency's final decision on the matter. During the time

required for the Ombudsman's review, FDA's efforts to collect the fee

will be suspended.

VIII. Request for Comments

Although MQSA does not require FDA to solicit comments on fee

exemption, assessment and collection, FDA is inviting comments from

interested persons in order to have the benefit of additional views and

information. FDA may consider altering its methodology of defining

Governmental entities, and assessing and collecting fees under MQSA in

future years, after actual inspection experience provides more accurate

data about differences among facilities and variations in costs by

State, region, or other factors.

Interested persons may on or before June 15, 1995 submit to the

Dockets Management Branch (address above) written comments regarding

this notice. Two copies of any comments are to be submitted, except

that individuals may submit one copy. Comments are to be identified

with the docket number found in brackets in the heading of this

document. Received comments and a full explanation of the costs

included and the methodology employed in determining these fees are on

file with the Dockets Management Branch (address above) and may be seen

in that office between 9:00 a.m. and 4:00 p.m., Monday through Friday.

Dated: March 13, 1995.

William B. Schultz,

Deputy Commissoner for Policy.

[FR Doc. 95-6614 Filed 3-16-95; 8:45 am]

BILLING CODE 4160-01-F