Medicare Program; Recognition of the Ambulatory Surgical Center Standards of the Joint Commission on the Accreditation of Healthcare Organizations and the Accreditation Association for Ambulatory Health Care

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

[BPD-849-PN]

Medicare Program; Recognition of the Ambulatory Surgical Center

Standards of the Joint Commission on the Accreditation of Healthcare

Organizations and the Accreditation Association for Ambulatory Health

Care

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

ACTION: Proposed notice.

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SUMMARY: This notice proposes to grant deeming authority to two

organizations, the Joint Commission on the Accreditation of Healthcare

Organizations (JCAHO) and the Accreditation Association for Ambulatory

Health Care (AAAHC), for their member ambulatory surgical centers

(ASCs) that request Medicare certification. We believe that

accreditation of ASCs by both organizations would demonstrate that all

Medicare ASC conditions are met or exceeded, and, thus, we would grant

deeming authority to each organization.

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

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

22, 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: BPD-849-PN, P.O. Box 7519,

Baltimore, MD 21207-0519.

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

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

Humphrey Building, 200 Independence Avenue, SW., Washington, D.C.

20201, or Room 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 BPD-849-PN. 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,

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(phone (202) 690-7890).

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FOR FURTHER INFORMATION CONTACT: Bob Cereghino, (410) 786-4645.

SUPPLEMENTARY INFORMATION:

I. Background

A. Determining Compliance of Ambulatory Surgical Centers--Surveys and

Deeming

In order to participate in the Medicare program, ambulatory

surgical centers (ASCs) must meet conditions for coverage specified in

regulations that implement title XVIII of the Social Security Act (the

Act). ASCs enter into a Medicare participation agreement but generally

only after they are certified by a State survey agency as complying

with the ASC conditions for coverage set forth in the Act and

regulations. ASCs are subject to regular surveys by State agencies to

determine whether they continue to meet these requirements; an ASC that

does not meet these requirements is considered out of compliance and

risks having its participation in the Medicare program terminated.

Section 1865 of the Act includes a provision that permits ASCs to

be exempt from routine surveys by the State survey agencies to

determine compliance with the Medicare conditions for coverage. (Under

our regulations at 42 CFR 416.40 (``Condition for coverage--Compliance

with State licensure law''), an ASC must still meet the State's

licensure requirements, however.) Specifically, section 1865(b) of the

Act provides that if we find that accreditation of a provider entity by

a national accreditation body demonstrates that all Medicare conditions

or requirements are met or exceeded, we would (for certain providers,

including ASCs) ``deem'' these entities as meeting the applicable

Medicare conditions.

In making our finding as to whether the accreditation body makes

this demonstration, we consider factors such as the accrediting body's

accreditation requirements, its survey procedures, its ability to

provide adequate resources for conducting required surveys and

supplying information for use in enforcement activities, its monitoring

procedures for provider entities found to be out of compliance with the

conditions or requirements, and its ability to provide us with

necessary data for validation. If we find that the accreditation of an

ASC by the national accreditation body demonstrates that the Medicare

conditions imposed on ASCs are met, we would treat the accredited ASCs

as meeting those conditions. ASCs as suppliers are included by

definition of provider entity in section 1865(b)(4) of the Act. Thus,

if we were to recognize an ASC

[[Page 38208]]

accrediting organization's program as demonstrating that all the

Medicare ASC conditions are met, the ASCs it accredits would be

considered, or ``deemed,'' to meet the same conditions for which the

accreditation standards have been recognized. The Joint Commission on

the Accreditation of Healthcare Organizations (JCAHO) and the

Accreditation Association for Ambulatory Health Care (AAAHC) are the

first two organizations to which we have considered granting deemed

status.

B. Deeming Authority Process

On November 23, 1993, we published a final rule (58 FR 61816) that

set forth the procedure that we would use to review and approve

national accrediting organizations that wish to be recognized as

providing reasonable assurance that Medicare conditions are met

(Sec. 488.4, ``Application and reapplication procedures for

accreditation organizations''). A national accreditation organization

applying for approval of deeming authority must furnish to us

information and materials listed in our regulations at Sec. 488.4. Our

regulations at Sec. 488.8 (``Federal review of accreditation

organizations'') detail the Federal review and approval process of

applications for deeming authority. On April 26, 1996, however, new

legislation entitled Making Appropriations for Fiscal Year 1996 To Make

a Further Downpayment Toward a Balanced Budget and for Other Purposes

(Public Law 104-134) was enacted. Section 516 of Public Law 104-134

amended section 1865 of the Act in a number of ways. The legislation

removed the requirement that accrediting organizations provide

reasonable assurance that entities accredited by them would meet

Medicare conditions or requirements. It now, in revised section

1865(b)(1) of the Act, requires organizations to demonstrate that their

accredited entities would meet or exceed all of the applicable Medicare

conditions. The legislation now also defines, in section 1865(b)(4) of

the Act, the provider entities that we may consider for deemed status

to include ASCs as suppliers. We are now required to publish an initial

notice in the Federal Register 60 days after the receipt of a written

request for a finding that accreditation by a national accreditation

body demonstrates that the Medicare conditions or requirements are met.

This particular notice, however, is unique in that an expanded

proposed draft had been developed along the lines of our requirements

in the statute and regulations that were in effect before the enactment

of section 516 of Public Law 104-134. We had received and accepted

applications from JCAHO and AAAHC, two national accrediting bodies,

long before the enactment of section 516 of Public Law 104-134.

Therefore, this initial notice, unlike future deeming notices, contains

material beyond the scope of the new legislative deeming requirements.

In this notice, we identify the national accreditation bodies

making the deeming request, describe the nature of the request, and

allow at least a 30-day public comment period. We received applications

from JCAHO and AAAHC before the April 26, 1996 enactment of Public Law

104-134. Therefore, the timeframes imposed by the new legislation are

not applicable to the processing of these two organizations'

applications. However, AAAHC wrote to us on May 23, 1996 requesting

that we process its application under the new timeframes. In order to

comply with the requirement in revised section 1865(b)(3)(A) of the Act

that we publish an initial notice identifying the national

accreditation body making the request not later than 60 days after the

date of receipt of that request, we must publish the notice by July 22,

1996. Likewise, in order to comply with the requirement that we publish

an approval notice of our findings within 210 days after we receive an

organization's deeming application, we must publish the approval notice

by December 19, 1996. Since both applications had been submitted and

considered before the enactment of Public Law 104-134, despite these

timeframes, we will make every effort to publish the approval notice by

November 22, 1996, which is 210 days after the date of the enactment of

the new legislation.

Under revised section 1865(b)(2) of the Act and our regulations at

Sec. 488.8 (``Federal review of accreditation organizations''), our

review and evaluation of a national accreditation organization is

conducted in accordance with, but is not necessarily limited to, the

following factors:

The equivalency of an accreditation organization's

requirements for an entity to our comparable requirements for the

entity.

The organization's survey process to determine the

following:

+ The composition of the survey team, surveyor qualifications, and

the ability of the organization to provide continuing surveyor

training.

The comparability of its process to that of State agencies,

including survey frequency, and the ability to investigate and respond

appropriately to complaints against accredited facilities.

The organization's procedures for monitoring providers or suppliers

found by the organization to be out of compliance with program

requirements. These monitoring procedures are used only when the

organization identifies noncompliance. If noncompliance is identified

through validation reviews, the survey agency monitors corrections as

specified at Sec. 488.7(b)(2).

The ability of the organization to report deficiencies to the

surveyed facilities and respond to the facility's plan of correction in

a timely manner.

The ability of the organization to provide us with electronic data

in ASCII comparable code and reports necessary for effective validation

and assessment of the organization's survey process.

The adequacy of staff and other resources.

The organization's ability to provide adequate funding for

performing required surveys.

The organization's policies with respect to whether surveys are

announced or unannounced.

The accreditation organization's agreement to provide us

with a copy of the most current accreditation survey together with any

other information related to the survey as we may require (including

corrective action plans).

C. Ambulatory Surgical Center Conditions of Coverage and Requirements

The regulations specifying the Medicare conditions of coverage for

ASCs are located in 42 CFR part 416. These conditions implement section

1832(a)(2)(F)(i) of the Act, which provides for Medicare Part B

coverage of facility services furnished in connection with surgical

procedures specified by us under section 1833(i)(1) of the Act.

II. Proposed Approval of the Ambulatory Surgical Center Accreditation

Standards of the Joint Commission of the Accreditation of Healthcare

Organizations and the Accreditation Association for Ambulatory Health

Care

The purpose of this notice is to propose that we recognize the

accreditation programs of JCAHO and AAAHC, two national accrediting

organizations, but only to the extent that they accredit ASCs. Based on

a thorough examination of the standards, accrediting programs, and

survey processes of both organizations, we believe that both JCAHO and

AAAHC demonstrate that ASCs accredited by them meet Medicare

conditions, and we, therefore, invite comments on our proposal to grant

ASC deeming

[[Page 38209]]

authority to these two national organizations.

Section 1865(b)(3)(A) of the Act, as amended by section 516 of

Public Law 104-134, states that a Federal Register approval notice

granting deeming to accreditation organizations will follow no later

than 210 days after the date of receipt of a written request or

documentation necessary to make a determination on the request for

deeming authority. We received applications from JCAHO and AAAHC before

the April 26, 1996 enactment of Public Law 104-134. Therefore, the

timeframes imposed by the new legislation are not applicable to the

processing of these two organizations' applications. However, AAAHC

wrote to us on May 23, 1996 requesting that we process its application

under the new timeframes. In order to comply with the requirement in

revised section 1865(b)(3)(A) of the Act that we publish an initial

notice identifying the national accreditation body making the request

not later than 60 days after the date of receipt of that request, we

must publish the notice by July 22, 1996. Likewise, in order to comply

with the requirement that we publish an approval notice of our findings

within 210 days after we receive an organization's deeming application,

we must publish the approval notice by December 19, 1996. Since both

applications had been submitted and considered before the enactment of

Public Law 104-134, despite these timeframes, we will make every effort

to publish the approval notice by November 22, 1996, which is 210 days

after the date of the enactment of the new legislation. The approval

notice will specify the effective date of the deeming authority and the

term of approval, which will not exceed 6 years.

Based on our initial review of each organization's standards and

survey procedures contained in their individual applications and after

our comparison of both organizations' standards to the Medicare ASC

conditions and survey procedures, we contacted both JCAHO and AAAHC to

discuss the differences between Medicare conditions and their

standards.

We met separately with representatives from both organizations. The

representatives responded to our concerns by proposing to change their

standards for their member ASCs seeking Medicare certification. We

subsequently received, from each organization, revised scoring

guidelines with amended standards for their member ASCs requesting

Medicare certification.

In evaluating the accreditation standards and survey processes of

JCAHO and AAAHC to determine if they demonstrated that their accredited

facilities meet Medicare conditions, we did a standard by standard

comparison of the applicable conditions or requirements to determine

which of them met or exceeded Medicare requirements. We outline below

the differences between the Medicare requirements and the standards of

the JCAHO and AAAHC and why we have concluded that they demonstrated

that our requirements are met by their respective accreditation

processes.

Before doing so, however, it is important to address the methods

accreditation organizations and Medicare use to determine compliance.

Information gathered during on-site surveys is the basis of an

organization's accreditation decision. A surveyor or team of surveyors

evaluates the ASC's level of compliance with applicable standards.

Surveyors assess compliance in a variety of ways, including interviews,

observations, and documentation reviews.

We refer frequently to the scoring guidelines that accompany each

organization's standards. The scoring guidelines express parameters or

common situations that the organizations' surveyors use to make

judgments and assign scores to key requirements. Although scoring

guidelines are not standards, they set forth the intent of the standard

and describe the organizations' expectations as to how a particular

standard must be met. These guidelines are consistently used by both

organizations' surveyors in determining the score that will be applied

to assess compliance with each standard.

When a surveyor evaluates a standard as having partial, minimal, or

noncompliance, that is, when the scoring guideline has not been met or

has been only partially met, a written recommendation results.

For example, an organization may use a 5-point scale to indicate an

ASC's level of compliance with a standard. An ASC score of 1 or 2 for a

particular accreditation standard corresponds to our determination of

substantial compliance. A score of 3, 4, or 5 corresponds to our

determination of noncompliance, which requires the ASC to submit an

acceptable plan of correction. The facility's improvement will be

monitored through a focused survey and/or written progress report. A

written progress report assigned to address these deficiencies is

normally due within either 1, 4, or 6 months from the date the

accreditation is final. The plan of correction is monitored by the

State Agency.

A. Differences Between the Joint Commission of the Accreditation of

Healthcare Organizations and Medicare Conditions and Survey

Requirements

We compared the standards contained in the JCAHO 1994 (and

subsequent 1996) Accreditation Manual for Ambulatory Health Care and

its survey procedures to the Medicare ASC conditions and survey

procedures. We note that JCAHO standards exceed our conditions for

coverage in some areas such as patient rights, education of patients

and family, and continuity of care. In the following seven areas,

however, Medicare conditions exceeded JCAHO standards as they existed

before our discussions with JCAHO. As explained below, however, JCAHO

now demonstrates that it meets our conditions in these areas.

Standards

Medicare ASC exclusivity requirement--Under our regulations at

Sec. 416.2 (``Definitions''), a Medicare ASC operates exclusively for

the purpose of furnishing surgical services to patients not requiring

hospitalization. JCAHO has no comparable surgical exclusivity

requirement; however, for its member ASCs seeking Medicare

certification, JCAHO has included a statement on ASC surgical

exclusivity as an integral part of its application package. This

statement by the ASC attests that the facility meets our requirements

as to exclusivity and JCAHO would verify this attestation. Thus, JCAHO

has taken adequate steps to match our exclusivity requirement.

Medicare requirement of ASC use of Medicare approved laboratory and

radiological facilities--Section 416.49 (``Condition for coverage--

Laboratory and radiologic services'') requires the use of Medicare-

approved laboratory and radiologic facilities for ASCs while JCAHO

requires only that laboratory and radiologic services be

``appropriate.'' JCAHO, however, has stated in its April 8, 1994

correspondence that an ASC seeking to use its accreditation for

Medicare certification will be required, as an integral part of its

application, to attest that, if it is not certified to perform its own

laboratory services, it will obtain the services from a laboratory with

certification under part 493 (``Laboratory Requirements''). The

applicant ASC must also attest that it has procedures for obtaining

radiologic services from a Medicare-approved facility to meet the needs

of its patients. The ASC agrees to undergo JCAHO verification of these

attestations before a

[[Page 38210]]

Joint Commission determination that the ASC qualifies for deemed status

recognition. With this standard also, JCAHO has raised its requirements

to an equivalency with our conditions.

Medicare requirement of separate recovery and waiting areas--Our

regulations at paragraph (a)(2) of Sec. 416.44 (``Condition for

coverage--Environment'') require that Medicare ASCs have separate

recovery and waiting areas. JCAHO has no requirement comparable to this

Medicare condition for coverage. JCAHO in its revised 1996

Accreditation Manual for Ambulatory Health Care under the environmental

care standard scoring guideline (EC.4.2) has included the Medicare

requirement of separate recovery and waiting areas and will require

compliance from its member ASCs seeking Medicare certification.

Medicare requirement relating to emergency equipment--Paragraph (c)

of Sec. 416.44 (``Condition for coverage--Environment'') requires that

Medicare ASCs have specific equipment available to operating rooms.

This equipment must include at least the following: emergency call

systems, oxygen, mechanical ventilatory assistance equipment, cardiac

defibrillator, cardiac monitoring equipment, tracheostomy set,

laryngoscopes, endotracheal tubes, suction equipment, and emergency

medical equipment and supplies specified by the medical staff. In its

1996 manual revision, JCAHO has amended its environmental care standard

scoring guideline (EC.4.2) and enumerated the emergency equipment

required by Sec. 416.44(c). JCAHO's member ASCs requesting Medicare

certification will comply with this requirement.

Patient care responsibilities for all nursing services personnel--

Our regulations at Sec. 416.46 (``Condition for coverage--Nursing

services'') require that ASC nursing services be directed and staffed

to assure that the nursing needs of all patients are met. Patient care

responsibilities must be delineated for all nursing service personnel.

Nursing services must be furnished in accordance with recognized

standards of practice. Further, a registered nurse must be available

for emergency treatment whenever there is a patient in the ASC. There

was no comparable JCAHO requirement that patient care responsibilities

be delineated for all nursing personnel. However, JCAHO has included,

among its 1996 leadership standard scoring guidelines (LD.2.1 through

LD.2.6), patient care responsibilities for nursing service personnel

and requires compliance with this Medicare requirement for ASCs

requesting Medicare certification.

Administration of drugs, drug prescriptions, and the administration

of blood products--Our regulations at Sec. 416.48 (``Condition for

coverage--Pharmaceutical services'') are specific in their requirements

regarding the administration of drugs, written drug administration, and

follow-ups on oral prescriptions. JCAHO had no explicit standards

comparable to these Medicare requirements.

JCAHO has included in its ``Management of Information'' standard

scoring guidelines (IM.7 through IM.7.2) and ``Care of Patients''

standard scoring guideline (TX.5.3) revised procedures for obtaining

blood and blood components to satisfy Medicare requirements. For

example, in IM.7 through IM.7.2, orders given orally for drugs and

biologicals must be followed by a written order signed by the

prescribing physician and in TX.5.3, only physicians or registered

nurses may administer blood and blood products.

Procedural Issue

Medicare requirement of unannounced surveys and frequency of

surveys--JCAHO surveys of ASCs are announced, in contrast to the

Medicare practice of conducting unannounced surveys. We believe that

the findings on an announced survey are not comparable to those an

unannounced survey may find when the facility is in its normal routine.

JCAHO has agreed that it will conduct unannounced surveys of ASCs

requesting to use their JCAHO accreditation for Medicare certification

purposes.

JCAHO resurveys its ASCs every 3 years. Our original requirement

was to survey ASCs every year. In practice, our resurveys have been

averaging almost 3 years. Therefore, we accept JCAHO's 3-year resurvey

cycle as comparable to ours.

We propose to make approval of JCAHO's accreditation program

contingent on its continued agreement to implement the above seven

changes in its standards and survey requirements. We believe that these

changes bring JCAHO's accreditation program to a level at least

equivalent to ours. JCAHO has thus demonstrated to our satisfaction

that all of our applicable conditions or requirements are met or

exceeded.

B. Differences Between the Accreditation Association for Ambulatory

Health Care and Medicare Conditions and Survey Requirements

We compared the standards contained in the 1994 through 1995 (and

subsequent 1996 through 1997) AAAHC Accreditation Handbook for

Ambulatory Health Care and its survey procedures to the Medicare ASC

conditions and survey procedures. We note that AAAHC standards exceed

our conditions for coverage in some areas such as patient rights,

radiation oncology treatment services, and occupational health

services. In the following nine areas, however, Medicare conditions

exceeded AAAHC standards, as they existed before our discussions with

AAAHC. As explained below, however, AAAHC now demonstrates that it

meets our conditions in these areas.

Standards

Medicare exclusivity requirement--Our regulations at Sec. 416.2

(``Definitions'') define an ASC as a distinct entity operating

exclusively for the purpose of furnishing surgical services to patients

not requiring hospitalization. AAAHC had no comparable requirement.

AAAHC has supplemented its surgical services standard to include

the Medicare exclusivity requirement for its ASCs that want to apply

their AAAHC accreditation for Medicare certification purposes.

Medicare separate recordkeeping and staffing requirement--An ASC

must be a separately identifiable entity, physically, administratively,

and financially independent and distinct from other operations. Thus,

an ASC maintains separate staff and keeps exclusive records. AAAHC had

no comparable requirement but has supplemented its Chapter 10,

``Surgical Services'' section, to include requirements on exclusivity

(that is, separate space, the nonmixing of functions, and separate

recordkeeping and staffing).

Medicare requirement of separate recovery and waiting areas--

Paragraph (a)(2) of Sec. 416.44 (``Condition for coverage--

Environment'') requires that Medicare ASCs have separate recovery and

waiting areas. AAAHC does not require accredited facilities to have

separate recovery room and waiting areas. AAAHC has included this

requirement in its supplement to Chapter 8, ``Facilities and

Environment,'' for ASCs interested in Medicare certification.

Adherence to the Life Safety Code of the National Fire Protection

[[Page 38211]]

Association--Under our regulations at paragraph (b) of Sec. 416.44

(``Condition for coverage--Environment''), ASCs are generally required

to comply with the provisions of the 1985 edition of the Life Safety

Code of the National Fire Protection Association. While AAAHC standards

contain a number of provisions related to ensuring patient and facility

safety in the event of fire, AAAHC had not previously mandated

compliance with the provisions of the National Fire Protection

Association Life Safety Code but required compliance with applicable

local or State safety codes.

Nevertheless, in its supplementary standard to Chapter 8,

``Facilities and Environment,'' AAAHC requires an ASC requesting

Medicare certification to comply with the provisions of the National

Fire Protection Association Life Safety Code. More specifically, the

Life Safety Code is incorporated by reference into the AAAHC standard.

Specific Medicare requirements relating to pharmaceutical

services--Medicare has specific requirements regarding adverse patient

reaction to drugs, the administration of blood products and written/

oral orders for drugs and biologicals (Sec. 416.48, ``Condition for

coverage--Pharmaceutical services''). AAAHC requirements did not

address these concerns.

AAAHC has stated in its supplement to Chapter 15, ``Pharmaceutical

Services,'' that adverse drug reactions will be reported to the

responsible physician and will be documented in the written record.

Blood and blood products will only be administered by physicians and

registered nurses. Further, orders given orally for drugs and

biologicals will be followed by a written order, signed by the

prescribing physician. We believe AAAHC's adoption of these practices

ensures compliance with our requirement.

Medicare requirement relating to laboratory services--Medicare

requires that physicians and other suppliers performing laboratory

services meet the requirements of part 493 of our regulations

(``Laboratory Requirements'').

AAAHC did not have this requirement but has included it in the

supplement to Chapter 16, ``Pathology and Medical Laboratory

Services.'' Specifically, an ASC that performs laboratory services must

meet the requirements of part 493 of our regulations; if an ASC does

not provide its own laboratory services, it must have procedures for

obtaining routine and emergency laboratory services from a certified

laboratory in accordance with part 493 of our regulations. AAAHC

further adds that this revised standard will be applicable to all

organizations surveyed by AAAHC regardless of Medicare ASC status.

Medicare requirement on radiologic services--Medicare ASCs are

required to obtain radiologic services from Medicare-approved

facilities as outlined in our regulations at Sec. 416.49 (``Condition

for coverage--Laboratory and radiologic services''). The ASC must have

procedures for obtaining radiologic services from a Medicare-approved

facility to meet the needs of patients. AAAHC states in its supplement

to Chapter 17, ``Diagnostic Imaging Services,'' that ASCs desiring

Medicare certification must have arrangements with providers/suppliers

of radiology services meeting Medicare conditions. This action, we

believe, ensures that AAAHC's member ASCs seeking Medicare

certification will comply with this requirement.

Hospitalization--Medicare requires ASCs to have procedures for

transfer to a hospital of patients requiring emergency medical care

beyond the ASC's capabilities. Medicare requires the hospital to be a

local, Medicare-participating hospital, or a local, nonparticipating

hospital that meets the requirements for payment for emergency services

under Federal regulations. AAAHC required procedures for transfer to a

nearby hospital but did not specify that it must be a Medicare

participating hospital or a nonparticipating hospital meeting Federal

emergency payment requirements. AAAHC has included this Medicare

requirement in its supplement to Chapter 10, ``Surgical Services,'' for

ASCs seeking Medicare certification.

Procedural Issue

Medicare requirement of unannounced surveys and resurvey

frequency--AAAHC surveys of ASCs are announced in contrast to the

Medicare practice of conducting unannounced surveys. In its handbook

section, ``Accreditation Policies and Procedures,'' AAAHC has altered

its original position and has stated that it will conduct unannounced

surveys for ASCs seeking Medicare certification. AAAHC resurveys ASCS

every 3 years. Our original requirement was to survey ASCs every year.

In practice, our resurveys have been averaging almost 3 years. We

therefore believe AAAHC's 3-year resurvey cycle meets Medicare

requirements.

We propose to make our approval of AAAHC's accreditation program

contingent on its continued agreement to implement the above nine

changes to its standards and requirements. We believe that these

changes bring AAAHC's accreditation program to a level at least

equivalent to ours. AAAHC has thus demonstrated to our satisfaction

that it meets or exceeds all Medicare applicable conditions or

requirements.

After we evaluate public comments on this initial notice, we will

issue an approval notice in accordance with section 516 of Public Law

104-134 and our regulations at Sec. 488.12 (``Effect of survey agency

certification''). Once this approval notice is approved and published

in the Federal Register, ASCs would inform their respective State

Agencies of their accreditation status with either the JCAHO or AAAHC.

The State Agencies in turn, would inform their respective HCFA Regional

Offices. The Regional Offices collect this information and put the

information into the HCFA Online Survey and Certification Automated

system.

C. Proposed Stipulations Relating to Accreditation by the Joint

Commission on the Accreditation of Healthcare Organizations and the

Accreditation Association for Ambulatory Health Care

According to our regulations at Sec. 488.8 (``Federal review of

accreditation organizations''), to ensure continuing comparability, an

accreditation organization granted deeming authority is subject to

continuing Federal oversight, which includes comparability reviews and

validation reviews. Section 488.8 lists reapplication procedures, which

may be no later than every 6 years. We propose to recognize as meeting

Medicare's ASC conditions those ASCs accredited under JCAHO's and

AAAHC's accreditation programs with the following restrictions included

in Sec. 488.8(e):

We would reserve the right to withdraw deemed status from

all JCAHO-accredited or AAAHC-accredited ASCs should either

organization revise its standards or accreditation policies and

procedures in a manner in which it fails to demonstrate that its ASCs

continue to meet Medicare conditions.

We also would reserve the right to withdraw deemed status

from all JCAHO-accredited or AAAHC-accredited ASCs if we should change

ASC conditions in a manner in which, after a time allowance specified

in Sec. 488.8(e), JCAHO or AAAHC standards or accreditation policies

would not demonstrate that the revised Medicare ASC conditions are met.

We would reserve the right to withdraw deemed status from

all JCAHO or AAAHC accredited ASCs if a validation review or a public

complaint

[[Page 38212]]

review reveals widespread, systematic, and unresolvable problems with

the JCAHO or AAAHC accreditation process with respect to these ASC

programs. These problems would provide evidence that JCAHO or AAAHC

ASCs cease to demonstrate that they meet Medicare conditions.

D. Conclusion

For the reasons stated above, we believe that the JCAHO and AAAHC

accreditation standards and survey processes, subject to the

stipulations described, demonstrate that Medicare conditions or

requirements have been met or exceeded. We therefore propose to deem

ASCs accredited by JCAHO and AAAHC to be in compliance with the

Medicare conditions for ASCs in accordance with the authority provided

in section 1865 of the Act.

III. Paperwork Reduction Act

The burden reflected in this notice is referenced in the currently

approved regulation entitled ``Granting and Withdrawal of Deeming

Authority to National Accreditation Organizations (HSQ-159-F).'' The

paperwork burden referenced in this regulation has been submitted to

the Office of Management and Budget for review and approval under HCFA

form number ``HCFA-R-191.'' Persons can reference the supporting

statement for this paperwork collection (HCFA-R-191) on the INTERNET at

http://www.hcfa.gov until the Office of Management and Budget's

approval has been obtained.

IV. 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.

V. Impact Regulatory Statement

In fiscal year 1993, there were 1,657 certified ASCs participating

in the Medicare/Medicaid programs. We conducted 141 initial, 549

recertification (both at a cost of $537,312), and 18 complaint surveys.

In fiscal year 1994, there were 1,855 certified ASCs. This was an

increase of 198 facilities. We conducted 213 initial, 492

recertification (both at a cost of $555,068), and 24 complaint surveys.

In fiscal year 1995, there were 2,105 ASCs. This was an increase of 250

Medicare/Medicaid certified ASCs. We conducted 211 initial, 288

recertification (both at a cost of $714,069), and 24 complaint surveys.

As the data above indicate, the number of ASCs and the cost for

conducting ASC surveys are increasing; however, the number of surveys

conducted is decreasing. We contacted several Regional Offices to

determine the number of pending ASC initial surveys, which number

approximately 200 to 300. These pending initial surveys are not

uniformly dispersed among the Regional Offices, so there would be a

significant impact on some Regional Offices.

For the current fiscal year, the appropriation for survey

activities has not increased over the levels granted for fiscal years

1994 and 1995. Yet, the numbers of participating providers and

suppliers continue to increase. As indicated above, there was a 22

percent increase in ASCs within 3 years (fiscal years 1993 through

1995). In an effort to guarantee the continued health, safety, and

services of beneficiaries in facilities already certified, as well as

provide relief in this time of tight fiscal restraints, we are

proposing to deem ASCs accredited by the JCAHO and AAAHC as meeting

Medicare requirements. Thus we continue our focus on assuring the

health and safety of services by providers and suppliers already

certified for participation in a cost effective manner.

In accordance with the provisions of Executive Order 12866, this

notice was not reviewed by the Office of Management and Budget.

Authority: Section 1865 of the Social Security Act (42 U.S.C.

1395bb).

(Catalog of Federal Domestic Assistance Program No. 93.774,

Medicare--Supplementary Medical Insurance Program)

Dated: June 28, 1996.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Dated: July 18, 1996.

Donna E. Shalala,

Secretary.

[FR Doc. 96-18709 Filed 7-22-96; 8:45 am]

BILLING CODE 4120-01-P