Medicare Program; Revised Criteria and Standards for Evaluating Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Regional Carriers' Performance Beginning February 1, 1996

DEPARTMENT OF HEALTH AND HUMAN SERVICES

[BPO-134-NC]

Medicare Program; Revised Criteria and Standards for Evaluating

Durable Medical Equipment, Prosthetics, Orthotics, and Supplies

Regional Carriers' Performance Beginning February 1, 1996

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

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ACTION: Notice with comment period.

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SUMMARY: This notice revises the criteria and standards we use to

evaluate the performance of Durable Medical Equipment, Prosthetics,

Orthotics, and Supplies regional carriers in administering the Medicare

program under their contracts with us.

These revisions are necessary to make the performance standards

consistent with HCFA's current expectations and to improve service to

Medicare beneficiaries.

DATES: Effective Date: This notice is effective on February 1, 1996.

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

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

February 26, 1996.

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

following address: Health Care Financing Administration, Department of

Health and Human Services, Attention: BPO-134-NC, P.O. Box 26676,

Baltimore, MD 21207.

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

and 3 copies) to one of the following addresses: Room 309-G, Hubert H.

Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201,

Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-1850.

Because of staffing and resource limitations, we cannot accept

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

to file code BPO-134-NC. 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 FURTHER INFORMATION CONTACT: Sue Lathroum, (410) 786-7409 or Rich

Morrison, (410) 786-7142.

SUPPLEMENTARY INFORMATION:

I. Background

Section 1842(a) of the Social Security Act (the Act) authorizes

contracts with carriers for the payment of Part B claims for Medicare-

covered services and items. Section 1842(b) of the Act requires us to

publish in the Federal Register criteria and standards for the

effective and efficient performance of contract obligations before

implementing them. On June 18, 1992, we published in the Federal

Register (57 FR 27302) the criteria and standards to be used for

evaluating the performance of regional carriers for durable medical

equipment, prosthetics, orthotics, and supplies (DMEPOS) under their

contracts with us. The criteria and standards measure the effectiveness

and efficiency of the DMEPOS regional carriers in carrying out the

requirements of their contracts. The initial evaluation period for the

DMEPOS regional carriers was from October 1, 1993 through September 30,

1994. We announced that we will consider the results of these

evaluations in entering into, renewing/extending, or terminating

contracts or contract amendments with the DMEPOS regional carriers. We

also announced that we may revise the criteria and standards if changes

are needed because of administrative mandate, congressional action, or

performance expectations.

The criteria and standards were included in the current contracts

with the DMEPOS regional carriers, which were effective beginning

January 1, 1993, with option periods extending to September 30, 1996.

The criteria and standards are subject to possible revision if the

contracts or contract amendments are renegotiated, new contracts are

awarded, or different carrier contracts are amended to provide for the

performance of the DMEPOS functions. In accordance with section 1842(b)

of the Act, we must publish in the Federal Register any revisions to

these criteria and standards before their implementation.

The criteria and standards published in the June 1992 final rule

(57 FR 27302) are structured into six criteria to evaluate the overall

performance of the DMEPOS regional carriers. They include: (1) Quality;

(2) efficiency; (3) service; (4) fraud and abuse; (5) National Supplier

Clearinghouse; and (6) Statistical Analysis DMEPOS regional carrier.

The six criteria contain a total of 12 standards. There are two for

quality, four for efficiency, three for service, one for fraud and

abuse, one for the National Supplier Clearinghouse, and one for the

Statistical Analysis DMEPOS regional carrier.

II. Provisions of this Notice

A. Changes to the June 1992 Criteria and Standards

We used the June 1992 criteria and standards to evaluate the

performance of the DMEPOS regional carriers for the period October 1,

1993 through September 30, 1994. We have determined through our

experience that revisions to the ``Efficiency'' and ``Service''

criteria are necessary to reflect current needs. We also believe that

some minor clarifications to the ``Quality'' and ``National Supplier

Clearinghouse'' criteria are appropriate. Therefore, as described

below, we will revise the criteria and standards we use to evaluate the

performance of our DMEPOS regional carriers. The revised criteria and

standards will be effective February 1, 1996. These criteria will

replace those listed in the June 1992 final rule (57 FR 27302).

Efficiency Criterion

We will retain Standard 1 under the ``Efficiency'' criterion. We

will no longer use Standards 2 through 4. Standard 2 for Electronic

Media Claims (EMC) is no longer included since DMEPOS regional carriers

are no longer assigned specific EMC goals previously measured under

this standard. Now that specific goals are no longer being assigned,

more focus can be placed on standardization of file formats. Standards

3 and 4 relating to expenditures and costs under these contracts no

longer apply because contracts are awarded or contract amendments are

entered into on the basis of proposed costs related to the entire

DMEPOS regional carrier workload. Consequently, under the

``Efficiency'' criterion, beginning February 1, 1996, the DMEPOS

regional carrier is required to: (1) Process 95.0 percent of clean

claims within mandated timeframes, and (2) process 97.0 percent of all

claims within 60 days.

Service Criterion

We will retain Standard 1 under the Service criterion. Under

Standard 2, we will retain the requirement for DMEPOS regional carriers

to ensure that 95 percent of written inquiries are responded to timely

and accurately. We will revise the standard to require DMEPOS regional

carriers to respond to 97.5 percent of telephone inquiries timely and

accurately to increase our ongoing efforts to improve services to

Medicare beneficiaries.

We will revise Standard 3 regarding responses to beneficiaries and

supplier education and training needs. When this standard was

established, it was necessary for carriers to publish, as well as

update, a supplier manual that explains the program requirements. Now

that carriers have a supplier manual in place, they only need to update

the manual. Therefore, we will remove the requirement for publishing

the manual and retain only the requirement to update the supplier

manual.

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Quality Criterion

In Standard 2, concerning measures to improve program

effectiveness, we will clarify that the DMEPOS regional carrier is not

limited to performing only the listed activities.

National Supplier Clearinghouse Criterion

We will also clarify under the National Supplier Clearinghouse

criterion that the National Supplier Clearinghouse DMEPOS regional

carrier function is assigned to one of the DMEPOS regional carriers.

B. Complete List of Revised Criteria and Standards

The complete list of the criteria and standards for evaluating the

performance of DMEPOS regional carriers beginning February 1, 1996

follows:

We will use six criteria to evaluate the overall performance of

DMEPOS regional carriers. They are: (1) Quality; (2) efficiency; (3)

service; (4) fraud and abuse; (5) National Supplier Clearinghouse; and

(6) Statistical Analysis DMEPOS regional carrier.

The six criteria contain a total of 9 standards. There are two for

quality, one for efficiency, three for service, one for fraud and

abuse, one for the National Supplier Clearinghouse, and one for the

Statistical Analysis DMEPOS regional carrier.

1. Quality Criterion

A DMEPOS regional carrier must pay claims accurately and in

accordance with program instructions. The DMEPOS regional carrier is

required to:

Standard 1. Process claims at an accuracy rate of 98.5 percent.

Claims are processed accurately with respect to coverage

determinations, secondary payer consideration, supplier enrollment, and

the correct payment amount.

Standard 2. Implement measures to improve program effectiveness.

The DMEPOS regional carriers must undertake actions to promote

effective program administration with respect to DMEPOS claims. These

activities include, but are not limited to the following: overpayment

recovery and offsetting of claim payment; assuring the proper

submission of certificates of medical necessity; review of the

implementation of fee schedules and reasonable charge updates; medical

review activities; and implementation of coverage policy.

2. Efficiency Criterion

Standard 1. The DMEPOS regional carrier is required to process 95.0

percent of clean claims within mandated timeframes and 97.0 percent of

all claims within 60 days.

3. Service Criterion

Beneficiaries and suppliers are served by prompt and accurate

administration of the program in accordance with all applicable laws,

regulations, and general instructions. The DMEPOS regional carrier is

required to:

Standard 1. Ensure that 95.0 percent of reviews and hearings are

accurate and timely.

We evaluate the reviews and hearings to determine that decisions

are accurate and communicated to the appropriate party within 45 days

for reviews and 120 days for hearings.

Standard 2. Ensure that 97.5 percent of telephone inquiries and 95

percent of written inquires are responded to accurately and timely.

The DMEPOS regional carriers must answer calls within 120 seconds,

callers do not get a busy signal more than 20 percent of the time, and

responses are accurate. Written responses must be accurate and prepared

within 30 calendar days of date of receipt.

Standard 3. Respond to beneficiary and supplier education and

training needs.

The DMEPOS regional carriers must undertake actions that serve the

beneficiary and supplier communities by explaining program requirements

through up-to-date information, periodic educational training and

bulletins, updating the supplier manual, meeting with trade

associations, and coordinating with local contractors on DMEPOS issues.

4. Fraud and Abuse Criterion

Standard 1. The DMEPOS regional carrier is required to conduct an

effective program integrity program.

We evaluate the DMEPOS regional carriers on a number of activities

including: effectiveness in identifying and developing cases of fraud

and abuse, bringing the cases to conclusion and collecting

inappropriate payments, promoting beneficiary education in referring

questionable suppliers or practices, and searching out supplier

practices that are inappropriate.

5. National Supplier Clearinghouse Criterion

(The National Supplier Clearinghouse DMEPOS regional carrier

function is assigned to one of the DMEPOS regional carriers. It

performs the functions measured under this criterion.)

Standard 1. The National Supplier Clearinghouse DMEPOS regional

carrier is required to properly administer the National Supplier

Clearinghouse.

We review the National Supplier Clearinghouse activities to ensure

the National Supplier Clearinghouse DMEPOS regional carrier meets

various requirements such as: processing new and renewal applications

for billing numbers, maintaining supplier files, matching Office of the

Inspector General sanctioned suppliers, and enforcing supplier

standards. In addition, we evaluate the National Supplier Clearinghouse

DMEPOS regional carrier's performance in conducting statistical

analysis of data to identify potential areas of overutilization,

overpayments, fraudulent or abusive claims practices, and other areas

of concern we identify.

6. Statistical Analysis DMEPOS Regional Carrier Criterion

(The Statistical Analysis DMEPOS regional carrier function is

assigned to one of the DMEPOS regional carriers. It performs the

functions measured under this criterion.)

Standard 1. The Statistical Analysis DMEPOS regional carrier is

required to properly administer the Statistical Analysis DMEPOS

regional carrier program.

We review the activities of the Statistical Analysis DMEPOS

regional carrier to ensure it meets various requirements such as:

Analyzing national reports to identify trends, aberrancies, and

utilization patterns; generating reports according to our

specifications; serving as the HCFA Common Procedure Coding System

definition resource center; and developing national parental and

enteral nutrition pricing and national floors and ceiling for DME

prices.

III. Response To Comments

Because of the large number of items of correspondence we normally

receive on Federal Register documents published for comment, we are not

able to acknowledge or respond to them individually. We will consider

all comments we receive by the date and time specified in the DATES

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

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

document.

IV. Waiver of Prior Notice and 30-Day Delay in the Effective Date

We are publishing this notice as a final notice without prior

publication of a proposed notice for public comment. For the reasons

discussed below, we believe that publishing a proposed notice is

unnecessary.

This notice only makes minor revisions to the criteria for

evaluating

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DMEPOS regional carriers' performance and has no major impact on public

interest. Therefore, we believe that publication of a proposal is

unnecessary, and we find good cause to waive the procedure.

We also normally provide a delay of 30 days in the effective date.

However, if adherence to this procedure would be impractical,

unnecessary, or contrary to public interest, we may waive the delay in

the effective date. As a practical matter, if we allowed a 30-day delay

in the effective date of this notice, those DMEPOS regional carriers

would not be in compliance with the performance standards for fiscal

year 1996. This would be contrary to public interest. Therefore, we

find good cause to waive the usual 30-day delay in the effective date.

In accordance with the provisions of Executive Order 12866, this

notice was reviewed by the Office of Management and Budget.

Authority: Section 1842(b) of the Social Security Act (42 U.S.C.

1395u).

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

Assistance Program; No. 93.773, Medicare--Hospital Insurance

Program; and No. 93.774, Medicare--Supplementary Medical Insurance

Program)

Dated: August 14, 1995.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Note: This document was received at the Office of the Federal

Register on January 22, 1996.

[FR Doc. 96-1262 Filed 1-25-96; 8:45 am]

BILLING CODE 4120-01-P