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-FN]

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: Final notice.

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SUMMARY: This notice grants deemed status to two organizations, the

Joint Commission on the Accreditation of Healthcare Organizations

(JCAHO) and the Accreditation Association for Ambulatory Health Care

(AAAHC), for their accredited ambulatory surgical centers (ASCs) that

request Medicare certification. We believe that accreditation of ASCs

by either organization demonstrates that all Medicare ASC conditions

are met or exceeded, and, thus, we grant deemed status to each

organization.

EFFECTIVE DATE: The provisions of this notice are effective beginning

on December 19, 1996 through December 19, 2002.

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) 512-1800 or by faxing to (202) 512-

2250. The cost for each copy is $8. 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.

This Federal Register document is also available from the Federal

Register online database through GPO Access, a service of the U.S.

Government Printing Office. Free public access is available on

[[Page 67042]]

a Wide Area Information Server (WAIS) through the Internet and via

asynchronous dial-in. Internet users can access the database by using

the World Wide Web; the Superintendent of Documents home page address

is http://www.access.gpo.gov/su__docs/, by using local WAIS client

software, or by telnet to swais.access.gpo.gov, then login as guest (no

password required). Dial-in users should use communications software

and modem to call (202) 512-1661; type swais, then login as guest (no

password required).

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. Specifically,

section 1865(b) of the Act provides that if we find that accreditation

of a provider entity by a national accrediting 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. 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.

In making our finding as to whether the accreditation body

demonstrates all Medicare conditions or requirements, we consider

factors such as the 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.

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

accreditation 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 that we grant deemed status for ASCs.

It has been brought to our attention that some ASCs are under the

mistaken impression that once deemed authority is granted by HCFA to an

accreditation body, then ASCs must be accredited by that body to

receive Medicare certification. accreditation by an organization is

voluntary and not required by HCFA for Medicare certification.

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 accreditation 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

accreditation organizations provide reasonable assurance that entities

accredited by them would meet Medicare conditions or requirements. In

revised section 1865(b)(1) of the Act, organizations are now required

to demonstrate that their accredited entities would meet or exceed all

of the applicable Medicare conditions. Section 1865(b)(4) includes

suppliers (e.g., ASCs) under the provider entities that we may consider

for deemed status. We are required to publish an initial notice in the

Federal Register 60 days after the receipt of a written request for

deemed status by a national accreditation body. After review of the

national accreditation body's application we are required to publish a

notice of our findings within 210 days after we receive an

organization's deeming application.

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. We view this letter as triggering the schedule set forth in

the new law, and we published the initial notice within 60 days of the

May 23, 1996 letter from AAAHC. 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.

C. Ambulatory Surgical Center Conditions for Coverage and Requirements

The regulations specifying the Medicare conditions for 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. Provisions of the Proposed Notice

The initial notice proposed to recognize the accreditation programs

of JCAHO and AAAHC, two national accrediting organizations, but only to

the extent that they accredited ASCs.

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 was

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

following factors:

The equivalency of an accreditation organization's

requirements for an entity

[[Page 67043]]

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.)

We met separately with representatives from each organization. In

evaluating the accreditation standards and survey processes of JCAHO

and AAAHC to determine if they demonstrated that their accredited

facilities met 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. 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.

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. In seven areas, JCAHO has made the following revisions:

Exclusivity requirement--JCAHO has included a statement on

ASC surgical exclusivity as an integral part of its application

package.

Use of Medicare approved laboratory and radiological

facilities--An accredited 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

a certification under part 493 (``Laboratory Requirements''). The 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 Joint Commission determination that the ASC

qualifies for deemed status recognition.

Separate recovery and waiting areas--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 accredited ASCs seeking Medicare

certification based on their accreditation.

Emergency Equipment--In its 1996 manual revision, JCAHO

has amended its environmental care standard scoring guideline (EC.4.2)

and enumerated the emergency equipment required by 42 CFR

Sec. 416.44(c).

Patient care responsibilities for all nursing services

personnel--JCAHO has included, in 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 based on their

accreditation.

Administration of drugs, drug prescriptions, and the

administration of blood products--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.

Unannounced surveys and frequency of surveys--JCAHO has

agreed that it will conduct unannounced surveys of ASCs requesting to

use their JCAHO accreditation for Medicare certification purposes.

JCAHO resurveys its ASC every 3 years. Our original requirement was

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

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

cycle as comparable to ours.

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. In nine areas, AAAHC has made the

following changes:

Exclusivity requirement--AAAHC has supplemented its

surgical services standard to include the Medicare exclusivity

requirement for its accredited ASCs that want to apply AAAHC

accreditation for Medicare certification purposes.

Separate recordkeeping and staffing requirement--AAAHC 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).

Separate recovery and waiting areas--AAAHC has included

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

Environment,'' separate recovery and waiting areas for ASCs interested

in Medicare certification based on AAAHC accreditation.

Life Safety Code of the National Fire Protection

Association--AAAHC supplementary standard to Chapter 8, ``Facilities

and Environment,'' requires an ASC requesting Medicare certification,

based on accreditation, 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.

Requirements relating to pharmaceutical services--AAAHC

states in its supplement to Chapter 15, ``Pharmaceutical Services,''

that adverse

[[Page 67044]]

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.

Requirement relating to laboratory services--AAAHC did not

have this requirement but has included it in the supplement to Chapter

16, ``Pathology and Medical Laboratory Services.'' Specifically, as 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.

Radiologic services--AAAHC states in its supplement to

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

Medicare certification based on their accreditation must have

arrangements with a Medicare approved providers/suppliers of radiology

services to meet the needs of patients.

Hospitalization--AAAHC has included the Medicare

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

ASCs seeking Medicare certification based on AAAHC accreditation to

transfer to a hospital a patient requiring emergency medical care

beyond the ASC's capabilities. If further requires that the hospital be

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

hospital that meets the requirements for payment for emergency services

under Federal regulations.

Unannounced surveys and resurvey frequency--AAAHC handbook

section, ``Accreditation Policies and Procedures,'' has stated that it

will conduct unannounced surveys for ASCs seeking Medicare

certification based on AAAHC accreditation.

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. Therefore AAAHC's 3-year resurvey cycle meets Medicare

requirements.

C. Proposed Stipulations Relating to Accreditation by the Joint

Commission on the Accreditation of Health Care 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 grant 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 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(d):

We 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 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(d), JCAHO or AAAHC standards or accreditation policies would

not demonstrate that the revised Medicare ASC conditions are met.

We reserve the right to withdraw deemed status from all

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

complaint review or a public complaint 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 cease to

demonstrate that they meet Medicare conditions.

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 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. The provisions of this notice are

effective beginning on December 19, 1996 through December 19, 2002.

D. Analysis and Responses to Public Comments

We receive 86 comments to our July 23, 1996 notice. Of these, 63

were from ASCs or medical centers, 11 from M.D.s, 1 from a dentist, 10

from professional medical associations an 1 from a State government.

Seventy-eight (78) commenters favored deeming for JCAHO and AAAHC, 6

approved deeming with reservations and 1 opposed it. A summary of these

comments and our responses are discussed as follows:

Comment: Seventy-eight (78) commenters, most of whom are

ASCs, expressed strong support for our approval of the JCAHO's and

AAAHC's applications for deemed status. Commenters stated that the two

organizations are leaders in the development of outpatient oriented

health care delivery and have developed standards of care and survey

process that accrue the highest possible quality health care in the

ambulatory setting.

Response: We acknowledge the support shown and have

developed an approval notice consistent with the provisions contained

in our initial notice.

Comment: One commenter suggested that since AAAHC's

application for deeming was filed prior to the enactment of the new

deeming legislation (Public Law 104-134), AAAHC's application should be

considered filed the date Public Law 104-134 was enacted (April 26,

1996).

Response: As we stated in the initial notice, we do not believe the

timeframe set forth in the new deeming legislation is applicable to

deeming applications filed prior to its enactment. We viewed the letter

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

application under the new timeframes, as triggering the new timeframes.

In order to comply with the requirements 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 the request, we placed our initial

notice on public display July 19, 1996, and it appeared in the July 23,

1996 issue of the Federal Register. Likewise, in order to comply with

the requirement that we publish an approval notice of our findings

within 210 days after we received an approved notice by December 19,

1996.

Comment: One commenter stated that AAAHC's ASC ``accreditees'' are

not ``members'' of AAAHC.

Response: We accept this comment and will refrain from referring to

AAAHC accredited ASCs as members of AAAHC.

Comment: Five commenters stated that if a national accreditation

organization has its deeming authority

[[Page 67045]]

withdrawn by HCFA, this change should not affect ASCs already granted

deemed status based on the organization's accreditation. In the same

vein, three other commenters expressed concern about possible

consequences to an ASC if the ASC's accreditation organization lost its

deeming authority. One commenter argued that HCFA would not revoke

Medicare certification of an ASC certified by a State surveyor if HCFA

changed the conditions for coverage, or if the State surveying agency

changed its survey procedures. The commenter stated that HCFA should

conduct a facility by facility review to determine which facilities

continue to satisfy Medicare conditions.

Response: Our procedures have been well established in regulations

and we must follow them in this notice. In accordance with 42 CFR 488.8

(f)(7), should we rescind an accreditation organization's deeming

authority, we will publish a notice in the Federal Register detailing

the reasons for such action. Accreditation organizations are required

to notify all accredited ASCs within 10 days of our withdrawal of their

deeming authority.

Under 42 CFR 488.8(f)(8) an affected ASC retains its deemed status

for 60 days after notification and it can be extended an additional 60

days if we determine that the ASC submitted an application within the

initial 60-days timeframe to another approved accreditation

organization or to us so that compliance with Medicare conditions can

be determined. An ASC's failure to do so will jeopardize its

participation in the Medicare program.

Comment: One commenter requested that HCFA address the issue of an

ASC applying to a deemed accreditation organization for Medicare

certification based on its accreditation when the ASC is exempted by

its State from licensure requirements. The commenter gave the example

of an entity qualifying as a physician's office which is exempt from

licensure under State law. In this case, the commenter concluded the

accreditation organization would request that the ASC procedure either

a license or evidence of exemption from licensure.

Response: Section 416.26(a)(2) requires that facilities seeking

Medicare certification as ASCs based on their accreditation by either

JCAHO or AAAHC comply with State licensure requirements where

applicable. Therefore, in the example cited, the commenter is correct

in stating that the accreditation organization would request a license

or evidence of exemption if the State permits a physician's office to

operate as an ASC.

Comment: One commenter questioned if deemed status will apply to

physicians' offices that meet the standards set by AAAHC for ASCs but

do not otherwise qualify as ASCs as defined by State laws.

Response: As previously stated, if State law requires a license for

a facility to operate in that State as an ASC, such requirement must be

met before an entity such as a physician's office accredited by the

JCAHO or AAAHC under its ASC accreditation program can be granted

deemed status for Medicare certification as an ASC.

Comment: Two commenters asked how deemed status affects ASCs that

were Medicare certified through State survey and accredited by either

JCAHO or AAAHC prior to HCFA's approval of deemed status for these

accreditation organizations. One of the commenters also asked if there

is a deadline by which a currently certified ASC should notify HCFA

that it is accredited by a deemed organization.

Response: After this approval notice is published in the Federal

Register, ASCs accredited by either JCAHO or AAAHC, and already

Medicare certified, are considered deemed for Medicare certification.

When this status change is executed 42 CFR 488.7(a) discharges the

State agencies from ongoing responsibility for conducting periodic

surveys in deemed ASCs unless the ASC is selected for a sample

validation survey or there is a substantial allegation of

noncompliance. If the ASC is selected for a sample validation survey,

the ASC will be notified by the State agency before the survey is

conducted. In accordance with 42 CFR 488.7, State surveyors will

determine if the ASC is out of compliance with a condition of coverage.

If the ASC is found to be out of compliance, the ASC will no longer be

deemed to meet the Medicare conditions and will be subject to full

review by the State agency. Likewise, if there is a substantial

allegation of noncompliance and the State agency conducts a compliance

survey and finds a condition for coverage out of compliance, the ASC

will be subject to full review by the State agency.

Comment: Another commenter asked that we explain the procedure that

new ASCs would follow to become Medicare certified after we grant deem

status to JCAHO and AAAHC.

Response: First, Medicare certification based on accreditation is

strictly voluntary. ASCs seeking Medicare certification, have the

option of determining whether they would prefer certification based on

(1) a State agency survey or (2) accreditation by one of the deemed

organizations. If the ASC chooses the first option, it would apply

directly to the State survey agency in its area with which we have a

survey agreement. After the survey is completed the State agency would

forward its recommendation for Medicare certification to the

appropriate regional office for processing. Our regional office would

notify both the ASC and the State agency of the ASC's eligibility to

participate in the Medicare program.

If the ASC elects the second option, the accreditation organization

would send a notice to our applicable regional office indicating the

ASC's accreditation status and whether the ASC is deemed or not deemed

for Medicare certification. The accrediting organization should also

send a courtesy copy of such notification to the appropriate State

agency. One receipt of such notification, the regional office will

advise both the ASC and appropriate State agency of the ASC's Medicare

certification status.

Comment: One commenter believed it should remain the sole entity

within the State responsible for determining facilities' Medicare

certification for outpatient surgery since it believed surgical

procedures could eventually be attempted in settings inappropriate for

surgery. The commenter stated that all such facilities should be

licensed by the State department of public health.

Response: We have no reason to believe that granting deeming

authority to either JCAHO or AAAHC will result in outpatient surgery

being performed in inappropriate settings. Based on our review of each

accreditation organization's standards and survey policies and

procedures, we have determined that they both demonstrate the ASCs

accredited by them would meet or exceed HCFA conditions. Furthermore,

in this notice we reserve the right to revoke deemed status for all

JCAHO-accredited or AAAHC-accredited ASCs should either organization

revise its standards or accreditation policies and procedures in a

manner which fails to demonstrate that its ASCs continue to meet

Medicare conditions; or if a validation review or a public complaint

review reveals widespread, systematic, and unresolved problems with

either organization's accreditation process for ASCs; or if we

determine that either organization has failed to sufficiently revise

its standards to the extend necessary to demonstrate that revised

Medicare conditions are met and enforced. Moreover, each State has the

option to establish more stringent licensure requirements or

[[Page 67046]]

monitoring procedures to safeguard the quality of surgery performed in

an ASC.

Comment: One commenter believes that both JCAHO's and AAAHC's

anesthesia requirements are not equivalent to Medicare's anesthesia

conditions since neither organization currently requires physician

supervision of non-physician administration of anesthesia and since

JCAHO's standards contain no provision as to the identity or

supervision of the actual anesthesia provider.

Response: We believe that the commenter may be referring to these

organizations' anesthesia standards as stated prior to each

organization's most recent handbook editions. JCAHO's 1996

Comprehensive Accreditation Manual for Ambulatory Care Section 2

Leadership (LD), standard LD 1.9-2.6 and AAAHC's 1996-1997

Accreditation Handbook for Ambulatory Health Care (Chapter 9)

supplement their previous requirements in order to meet Medicare's

anesthesia conditions. We have examined both organizations'

supplemental anesthesia standards and are satisfied that both

organizations demonstrate they meet our requirements for physician

supervision of non-physician administration of anesthesia and

identification of the anesthesia provider under 42 CFR 416.42(b)

Standard: Administration of Anesthesia.

Comment: One commenter advocated eliminating HCFA's requirement

that physicians supervise certified registered nurse anesthetists. The

commenter stated that HCFA seemed receptive to this recommendation when

considering revisions of its hospital conditions of participation.

Response: We cannot accept this comment. The issue raised is not

the subject of this notice, which is limited to the approval of ASC

deeming authority for JCAHO and AAAHC.

Comment: One commenter expressed concern about the dominating

presence of physicians on each of the governing bodies for JCAHO and

AAAHC. The commenter believed that these organizations should have

representatives on their governing bodies that reflect broad community

interest.

Response: Revised section 1865(b)(1) of the Act requires us to

determine whether accreditation by a national accreditation

organization demonstrates that Medicare conditions are met. We have

determined that accreditation by JCAHO and AAAHC demonstrate that

Medicare conditions for ASCs are met. Because there are no statutory or

regulatory requirements for broad community representation on the

governing or advisory boards or committees of private accreditation

organizations, we are not in a position to require either JCAHO or

AAAHC to include any specific groups on its boards or committees. Our

primary concern is the content and application of the accreditation

standards and procedures.

Comment: One commenter stated that HCFA should be aware that the

private creation of patient care standards is fraught with peril by

virtue of the thrust of the federal antitrust laws. The comment read:

``Simply stated, it cannot be routinely expected that private standard-

setting bodies will make legitimate patient safety considerations

paramount when confronted with the threat of antitrust legislation, a

threat which HCFA does not face.''

Response: HCFA, in its process of granting deemed authority, is not

fostering the creation of private patient care standards. We have our

own conditions for coverage and the organizations requesting deemed

authority must have their standards meet these conditions. Therefore,

since outside groups are not acting together to create private care

standards, we do not anticipate antitrust implications.

Comment: One commenter proposes that we modify our regulations to

allow AAAHC to perform ``unannounced inspections'' rather than

``unannounced surveys'' to assess an ASC's compliance with Medicare

conditions. The commenter suggests that unannounced inspections for

compliance be conducted in conjunction with regularly scheduled tri-

annual full surveys. The commenter contends that ``the time and cost

(disruption) associated with a full survey is quite high.'' The

commenter argues that inspections would be less disruptive and require

fewer staff resources.

Response: We believe the commenter has assumed that mandated use of

unannounced surveys for ASCs seeking Medicare certification based on

their AAAHC accreditation would necessitate two separate survey

processes for such ASCs, i.e., an announced survey to accredit an ASC

plus an unannounced survey to determine if the ASC meets our Medicare

conditions. We have no intention of imposing such survey requirements

on either AAAHC or ASCs. Instead, the required use of unannounced

surveys simply means that AAAHC would conduct full triennial surveys on

ASCS seeking deemed status without advising them in advance that such a

survey is forthcoming on a specific date.

Comment: One commenter asked for a definition of an ``unannounced''

survey. Specifically, the commenter wanted to know if JCAHO would still

send a notice of intent to survey prior to conducting the survey.

Response: As a matter of policy, we interpret unannounced surveys

to mean the accreditation organization will not send a notice of intent

to survey an ASC prior to conducting the survey for those ASCs that

want their accreditation to count for Medicare certification. We

understand that unannounced surveys may result in some minor survey

problems; therefore, under section 2700 (``The Survey Process'') of our

State Operations Manual, facilities may be given advanced notice (no

more than two working days) if the following two criteria are met:

The facility is inaccessible via conventional travel means

and making special or extraordinary travel arrangements are necessary;

and

There is a high probability that the staff essential to

the survey process will be absent or the facility will be closed unless

the survey is announced.

Both accrediting organizations have agreed to the unannounced

survey process for those ASCs that wish to be deemed to meet Medicare

conditions for coverage based on their accreditation. Hence, the ASCs

that are deemed to meet Medicare conditions for coverage based on

accreditation will not be sent a notice of intent to survey, unless

both of the above criteria are met.

Comment: One commenter said it is unclear from our initial notice

whether we have made an attempt to assess the ability of JCAHO and

AAAHC to monitor Life Safety Code application. The commenter was not

aware of any ongoing capability to survey and assess the compliance

with Life Safety Code requirements.

Response: In our initial notice, we discussed specific areas in

which our Medicare conditions for ASCs exceeded accreditation standards

for both JCAHO and AAAHC as they existed prior to discussions with both

organizations and before their submittal of amendments or supplements

to their standards, survey procedures are scoring guidelines were

submitted to comply with Medicare ASC conditions. On examination, we

found no disparity between our Life Safety Code condition and JCAHO's

standard. However, as stated in our initial notice, examination

revealed that AAHC had not previously mandated compliance with the

provisions of the National Fire Protection Association Life Safety Code

as we require for ASCs. Instead, AAAHC had heretofore required

compliance with applicable local or State safety codes to ensure

patient and facility safety in the event of fire. We advised in our

initial notice

[[Page 67047]]

that AAAHC had developed a supplementary standard to Chapter 8,

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

Medicare certification to comply with the provisions of the National

Fire Protection Association Life Safety Code. Furthermore, AAAHC has

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

Therefore, we have no reason to believe these two organizations lack

the ability to monitor Life Safety Code application.

Comment: One commenter asked how State agencies would monitor plans

of corrections for deficiencies or violations cited by JCAHO or AAAHC

as proposed on page 61 FR 38209 of our initial notice. The commenter

also asked how State agencies would obtain such violations in a timely

manner; how State surveys would be trained to survey against the deemed

organization's standards; and how this monitoring activity would be

funded.

Response: Thank you for indicating a discrepancy in our discussion

on page 61 FR 38209 about monitoring an ASC's plan of correction. The

discussion pertains to the use of an accreditation organization's

scoring guidelines to assess an ASC's level of compliance with its

standards. In that discussion, we incorrectly stated that the State

agency would monitor an ASC's plan of correction if the ASC received

from the organization a score of 3, 4, or 5, which corresponds to our

determination of noncompliance. We should have instead stated that in

such cases the accreditation organization, not the State agency, would

monitor the ASC's correction plan.

Comment: One commenter expressed concern about the ability of JCAHO

and AAAHC to investigate individual complaints about a specific

provider it accredits.

Response: Our evaluation of the accreditation programs for both

JCAHO and AAAHC did not detect any indications that either of these

organizations would be incapable of investigating individual complaints

about any ASC either organization accredits.

III. Paperwork Reduction Act

The public reporting and recordkeeping 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 HSQ-159-F is currently approved by the Office of

Management and Budget (OMB), under OMB approval number 0938-0690, with

an expiration date of 8/31/99.

IV. Regulatory Impact 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.

In fiscal year 1996, there were 2,219 ASCs. This was an increase of 114

Medicare/Medicaid certified ASCs. We conducted 180 initial, 115

recertification (both at a cost of $848,125) and one complaint survey.

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 during

fiscal year 1996 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.

While the fiscal year 1997 appropriation for survey activities has

been substantially increased (by seven percent) for the first time in

four years, the increase is insufficient to meet the survey demand. The

numbers of participating providers and suppliers continue to increase.

As indicated above, there was a 25 percent increase in ASCs within 4

years (fiscal years 1993 through 1996). 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 approving deeming for 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 provision 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: December 6, 1996.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Dated: December 13, 1996.

Donna E. Shalala,

Secretary.

[FR Doc. 96-32194 Filed 12-18-96; 8:45 am]

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