Medicare and Medicaid Programs: Effective Dates of Provider Agreements and Supplier Approvals

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 431, 442, 488, 489, and 498

[HSQ-139-F]

RIN 0938-AC88

Medicare and Medicaid Programs: Effective Dates of Provider

Agreements and Supplier Approvals

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

ACTION: Final rule.

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SUMMARY: This rule establishes uniform criteria for determining the

effective dates of Medicare and Medicaid provider agreements and of the

approval of Medicare suppliers when the provider or supplier is subject

to survey and certification as a basis for determining participation in

those programs. It also establishes appeal

[[Page 43932]]

rights and procedures for entities that are dissatisfied with effective

date determinations.

DATES: Effective date: This rule is effective September 17, 1997.

FOR FURTHER INFORMATION CONTACT: Diane Bavaria, (410) 786-6773 or

Sandra Farragut, (410) 786-3503.

SUPPLEMENTARY INFORMATION:

A. Background

Under sections 1866 and 1902 of the Social Security Act (the Act),

providers of services seeking to participate in Medicare or Medicaid

must enter into an agreement with the Secretary or the State Medicaid

agency, as appropriate. Under HCFA rules, suppliers of Medicare

services must be approved for coverage of the services they furnish to

Medicare beneficiaries.

Generally, in order to enter into a provider agreement or obtain

approval as a supplier, an entity must first be surveyed by HCFA or the

State survey agency to ascertain whether it complies with the

conditions of participation, conditions for coverage, or long-term care

requirements. However, under section 1865 of the Act, HCFA may ``deem''

that an entity meets the Federal requirements if that entity is

accredited by a national accrediting organization whose program is

approved by HCFA.

Medicare or Medicaid payment may not be made for services furnished

before the effective date of the provider agreement or supplier

approval.

B. Notice of Proposed Rulemaking

On October 8, 1992, we published a Notice of Proposed Rulemaking

(at 57 FR 46362) to establish uniform criteria for determining the

effective date of provider agreements and supplier approvals. We

received 6 letters of comment from two States, one health care

association, the Small Business Administration, one lawyer, and one

citizen. Those comments and our responses to them are detailed below.

C. Discussion of Comments

1. Level of Compliance

Comment: One commenter noted that the proposed rule was not

consistent with Federal statutes that require full compliance for

skilled nursing facilities (SNFs) and nursing facilities (NFs) or

automatic termination within 6 months after survey. The commenter

disagreed with our references to level A and level B requirements, and

the provision that would permit initial certification of SNFs and NFs

that have lower level deficiencies.

Response: As noted by the commenter, under the Omnibus Budget

Reconciliation Act of 1987 (OBRA '87), we must, for SNFs and NFs,

replace our hierarchical requirement scheme (condition level or level

A, and standard level or level B) with a scheme built on the premise

that all requirements must be met and enforced. However, because the

final rule for implementing the OBRA '87 amendments had not been

published, we had to continue using the hierarchical ``level A and

Level B'' scheme in the proposed rule.

A final rule identified as HSQ-156-F, published on November 10,

1994 (at 59 FR 56116) implemented the OBRA '87 amendments. That rule--

Establishes a revised enforcement system that detects and

responds to noncompliance with any of the requirements, as opposed to

the previous system which provided for adverse action only when the

noncompliance was with level A requirements;

Establishes the concept of ``substantial compliance'' as

the criterion that SNFs and NFs must meet in order to participate in

Medicare and Medicaid, and defines the term;

Provides for termination of any SNF or NF that does not

achieve substantial compliance within 6 months from the date of survey;

and

Removes references to ``level A and level B''

requirements.

Regarding the issue of allowing participation by an SNF or NF that

has minor deficiencies, we believe that it is impractical and

unrealistic to require perfect compliance. In fact, in 1992, only 7.3

percent of all SNFs and NFs surveyed were deficiency-free. Under the

previous enforcement system defined by ``level A'' and ``level B''

requirements, most of the facilities that were experiencing only minor

problems could continue to participate because the system allowed for

some noncompliance at the lower or ``B'' level. That is no longer the

case. By vastly increasing the number of statutory requirements that

SNFs and NFs must meet, and by requiring us to do away with the

hierarchy of requirements, Congress made it far more difficult for the

facilities to qualify for program participation. We do not believe that

Congress intended to write into law a set of requirements that would

preclude almost all SNFs and NFs from participating in Medicare and

Medicaid. Therefore, we have defined ``substantial compliance'' as a

degree of compliance such that any existing deficiencies have not

caused actual harm and do not create the potential for more than

minimal harm to a resident. This definition is consistent with the

statutory focus on resident outcomes as opposed to procedural

requirements that do not always accurately measure whether quality care

is being furnished. Although an SNF or NF that falls short of total

compliance may escape imposition of a remedy, it still has a duty to

provide, to each resident, care that enhances the chances of positive

outcomes and avoids negative outcomes. If a single resident experiences

any harm, the facility has not satisfied its statutory obligations.

Given the statute's focus on each resident's right to receive quality

care, and the facility's obligation to provide it, we could not adopt a

less rigorous standard of compliance. (The preamble to HSQ-156-F

contained a more detailed discussion of the background and rationale

for the ``substantial compliance'' concept.)

However, precisely because the new standard is more stringent than

its predecessor, it follows that once an SNF or NF achieves

``substantial compliance'', it has demonstrated its capacity for

participation in the programs. Thus, if the survey finds that the

facility is in ``substantial compliance'', the provider agreement is

effective on the date the survey is completed. If we require the SNF or

NF to submit a plan of correction for whatever requirements it does not

fully meet, that does not delay the effective date of the agreement. If

the facility needs a waiver, current practice remains unchanged, and

the effective date is delayed until we receive an approvable waiver

request.

2. Appeals and Payment

Comment: One commenter expressed the opinion that the proposed rule

would not change the basic procedures for determining effective date,

but merely add an appeal mechanism. The commenter understood the

appeals provisions to mean that--

Payment to a new provider would continue during the

pendency of an appeal; and

If the hearing decision changed the effective date,

payments would be effective as of the new date.

Response: We agree that the procedures for determining effective

date remain essentially unchanged except for the new ``substantial

compliance'' concept for SNFs and NFs. For other providers, the rule

continues to be that the effective date is the earlier of the date on

which the provider meets all requirements or the date on which it meets

all condition level requirements (or conditions for coverage in the

case of suppliers) and has an acceptable plan of correction for

standard level

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deficiencies or an approvable waiver request, or both.

To preclude any confusion concerning the determination of effective

date when it is related to a plan of correction or waiver request, we

revised the rule to state that the effective date of the agreement or

approval is the date that the State or HCFA receives (as opposed to the

date the facility submits) the acceptable plan or approvable waiver

request.

The commenter is correct in interpreting that payment would be

made, during pendency of the appeal, for services furnished on or after

the effective date of the agreement or approval; and would be adjusted

to the new effective date determined by the hearing decision.

3. Effective Date When Facility Is Accredited Before It Seeks

Participation

Comment: Two commenters were concerned about how the proposed rule

would be applied when a facility had already been accredited by an

accrediting organization. The proposed rule would not allow the

provider to enter into a retroactive agreement so that it could receive

payment for services furnished after accreditation but before it sought

participation in Medicare or Medicaid. The commenters stated that this

situation commonly arises when a provider that has been surveyed and

found to be in compliance with Federal requirements--

Is participating in its own State's Medicaid program and

provides services to a Medicaid recipient from another State; or

Is not participating in Medicaid but provides services to

a Medicaid recipient before learning of the individual's Medicaid

status.

Response: We consider the concerns to be justified. Accordingly, we

have revised Sec. 431.108 (content previously contained in Sec. 442.13)

and Sec. 489.13 to provide that an agreement or approval may be made

retroactive for a provider or supplier that--

Has been deemed to meet all applicable Federal

requirements on the basis of accreditation by an accrediting

organization whose program had HCFA approval at the time the

organization surveyed and accredited the provider or supplier; and

Meets all applicable State licensure and Life Safety Code

requirements.

Specifically, the final rule provides that the effective date of an

agreement or approval can be made retroactive for up to one year to

encompass dates on which the provider or supplier furnished covered

services to a beneficiary or recipient. However, the retroactive

effective date may not be before the earlier of--

The date on which HCFA approves the accrediting

organization's program; and

The date of accreditation.

We already have several regulations that provide for payment in

special situations:

Sec. 431.52--for Medicaid services furnished out of State.

Part 424 and Secs. 440.170(e) and 482.2--for emergency care

furnished by nonparticipating hospitals.

We believe that additional flexibility in determining effective

dates of agreements and approvals will further ensure that all eligible

providers and suppliers receive payment. The one-year period for

retroactivity is consistent with Medicare and Medicaid regulations

which generally require that claims be submitted for payment within one

year from the date of service.

4. Applicability of the Rule

Comment: Two commenters questioned whether physicians in private

practice and other non-institutional providers of Medicaid services

would be subject to the regulation since, according to Sec. 440.3, the

effective date provisions apply to all types of Medicaid providers. One

of the commenters disagreed with the provisions governing deemed status

if they are to be applied to Medicaid private non-institutional

providers.

Response: In response to these comments, Sec. 431.108(a)(2) (for

Medicaid) and Sec. 489.13(a) (for Medicare) specify that the rules for

determining effective date apply only to providers and suppliers that

are subject to survey and certification by HCFA or the State survey

agency, or have deemed status on the basis of accreditation by an

accrediting organization whose program has HCFA approval. (Section

440.3 of the proposed rule cited Sec. 442.13 for the effective date

rules. In this final regulation, we have moved those rules to the new

Sec. 431.108 of subpart C because that is the subpart that pertains to

Medicaid provider agreements.)

5. Regulatory Impact Statement

Comment: One commenter noted that the impact statement in the

proposed rule did not explain why the Secretary certified that the rule

would not have a significant impact on a substantial number of small

entities. The commenter requested that the final rule include a

comprehensive regulatory impact analysis.

Response: A regulatory impact analysis is required when a rule

would have a significant impact. It has been determined that the effect

of this rule on small entities is negligible because, in practice, we

have for the most part determined effective dates of provider

agreements and supplier approvals using the policies and procedures

that were not until now incorporated in the regulations. Therefore,

since the procedures for determining effective dates generally do not

change, the impact on providers and suppliers is inconsequential and

thus forms the basis for certifying that this rule will not have a

significant economic impact. Since there is no significant impact, a

regulatory impact analysis is not required.

Although this rule makes only minimal changes in the way effective

dates are determined, it does add an appeals mechanism. We do not

anticipate a significant increase in the number of requests for

hearings for two reasons:

First, the current Federal regulations provide appeal rights for a

prospective provider or supplier who is denied participation in the

Medicare program. (State regulations may provide a similar appeals

mechanism for Medicaid denials.) A determination to deny a prospective

provider's or prospective supplier's request for participation in

Medicare is usually based on the entity's lack of compliance with our

requirements for participation. Effective date hearings would, for the

most part, focus on the same noncompliance issues. Appeals from

effective date determinations will probably arise when an entity

disagrees with the date that HCFA or the State determines that

noncompliance was corrected. We do not anticipate that entities will

appeal both an initial denial and a subsequent effective date

determination.

Second, the right to appeal an effective date determination, while

not previously codified, had already been confirmed by court decisions.

Since the effective date of participation is usually determined only

once, at the time of the initial survey (the exception being ICFs/MR

which have time-limited agreements), and since entities are already

appealing these decisions, we do not anticipate that codification of

the appeal rights will cause any great increase in the number of

hearing requests.

Further, we have no reason to anticipate that publication of this

rule will cause an increase in the number of small entities that

request agreements or approvals for participation in Medicare, or

Medicaid, or both. Neither do we have any basis for estimating how many

prospective providers or suppliers will

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make such requests after this rule is published.

6. Part Title

Comment: One commenter suggested that we change the title of part

442 from ``Standards for Payment to Nursing Facilities and Intermediate

Care Facilities for the Mentally Retarded'' to ``Standards for Payment

to Nursing Facilities and Intermediate Care Facilities for Persons with

Mental Retardation''.

Response: We agree that it would be preferable to have a title that

recognizes the person first and the disability second, as opposed to

referring directly to the disability. However, section 1905(d) of the

statute identifies these institutions as ``intermediate care facilities

for the mentally retarded''. We believe that retention of that language

is the best way to preclude any possible misunderstanding.

7. Miscellaneous Comments

Comment: We received favorable comments on two provisions of the

proposed rule--

Having the State survey agency recommend the effective

date when it has conducted the survey.

Precluding appeals based on the contention that a survey

should have been conducted earlier than it was.

Response: We appreciate the commenter's support and believe that

these two provisions will contribute to smooth implementation of the

rules.

D. Provisions of the Final Rule

In summary, this final rule--

Makes clear that the rules for determination of the

effective date of a provider agreement or supplier approval apply to

all providers and suppliers that are subject to survey and

certification by HCFA, or the State survey agency, or have deemed

status on the basis of accreditation;

Provides that the State agency that conducts the survey

makes recommendations concerning the effective date;

Reflects statutory changes under which the basis for

determining effective date for SNFs and NFs is different from the basis

used in connection with other providers and with suppliers;

Sets forth the circumstances under which effective dates

may be made retroactive;

Makes existing Medicare appeals procedures available, and

requires Medicaid agencies to make their existing appeals procedures

available, for effective date determinations.

Specifies that, for laboratories, Medicaid agreements and

Medicare approvals are effective only while the laboratory has in

effect a valid CLIA certificate issued under part 493 of the HCFA

rules, and only for the specialty and subspecialty tests it is

authorized to perform; and

Sets forth the effective date rules that apply to Medicare

provider agreements with community mental health centers (CMHCs) and

Federally qualified health centers (FQHCs). The effective date rule for

Medicaid agreements with FQHCs will be issued as part of a separate

regulation. (CMHCs do not participate in the Medicaid program.)

We are also taking advantage of this opportunity to clarify policy

on termination of provider agreements, as set forth in Sec. 489.53.

Specifically, this final rule amends that section to revise the

paragraph (b) heading and restore language that was inadvertently

changed by HSQ-156-F, Survey, Certification, and Enforcement for

Skilled Nursing Facilities and Nursing Facilities (59 FR 56116 of

November 10, 1994).

The 1994 final rule, in revising Sec. 489.53, inadvertently

expanded an exception by making the 2-day notice applicable to ``a

provider or supplier'', instead of only to a skilled nursing facility

(SNF). This rule revises Sec. 489.53(c)(2) to restore the previous

language: ``For an SNF with deficiencies that pose immediate jeopardy

to the health or safety of its residents, HCFA gives notice at least 2

days before the effective date of termination of the provider

agreement.'' (The correctly limited rule for nursing facilities is set

forth in Sec. 488.402(f)(3) of the HCFA rules.)

We would also correct a technical error--the retention of ``; and''

at the end of Sec. 489.11(c)(2) when paragraph (c)(3) of that section

was removed.

Collection of Information Requirements

This rule contains no new information collection requirements

subject to review by the Office of Management and Budget under the

Paperwork Reduction Act.

Regulatory Impact Statement

Consistent with the Regulatory Flexibility Act (RFA) and section

1102(b) of the Social Security Act, we prepare a regulatory impact

analysis for each rule, unless we can certify that the rule will not

have a significant economic impact on a substantial number of small

entities, or a significant impact on the operation of a substantial

number of small rural hospitals.

The RFA defines small entity as a small business, a nonprofit

enterprise, or a governmental jurisdiction (such as a county, city, or

township) with a population of less than 50,000. We also consider all

providers and suppliers of services to be small entities. For purposes

of section 1102(b) of the Act, we define small rural hospital as a

hospital that has fewer than 50 beds, and is not located in a

metropolitan statistical area.

This rule makes minimal changes in the procedures for determining

the effective date of a provider agreement or a supplier approval, and

makes existing appeals procedures available to entities that are

dissatisfied with any effective date determination. It has been

determined that the effect of these changes on small entities is

negligible because, in practice, we have for the most part determined

effective dates of agreements and approvals using the policies and

procedures that had not until now been incorporated in our regulations.

The important aspect of this rule is that it is essentially a matter of

codification, of inclusion of those practices in the CFR.

In addition, we do not anticipate that codification of the right to

appeal effective date determinations will lead to a significant

increase in the number of hearing requests for several reasons.

First, current Federal regulations provide appeal rights for a

prospective provider or supplier who is denied participation in the

Medicare program. (State regulations may provide a similar appeals

mechanism for Medicaid denials). Denial of participation is usually

based on the prospective provider's or prospective supplier's lack of

compliance with our requirements. Effective date hearings would, for

the most part, focus on the same noncompliance issues. Appeals from

effective date determinations will probably arise when the entity

disagrees with the date that HCFA or the State determines that the

noncompliance was corrected. We do not believe that entities will

appeal both an initial denial and a subsequent effective date

determination.

Second, the right to appeal an effective date determination, while

not previously codified, had been confirmed by court decisions. Since

entities are currently appealing these decisions, and since the

effective date of participation is usually determined only once, at the

time of the initial survey (the exception being ICFs/MR which have

time-limited agreements) we do not anticipate a large increase in the

number of hearing requests.

It is clear that, since the procedures for determining and

appealing effective date determinations generally will not

[[Page 43935]]

change as a result of publishing this rule, the criteria for requiring

a regulatory impact analysis are not met. Accordingly, we have not

prepared a regulatory impact analysis because we have determined and

the Secretary certifies that this rule will not have a significant

economic impact on a substantial number of small entities or a

significant impact on the operation of a substantial number of small

rural hospitals.

We have no reason to anticipate that this rule will cause an

increase in the number of small entities that request agreements or

approvals for participation in Medicare or Medicaid or both. Neither do

we have any basis for estimating how many will make such requests after

the effective date of this rule.

We have reviewed this rule and determined that, under the

provisions of Public Law 104-121, it is not a major rule.

In accordance with the provisions of Executive Order 12866, this

final rule was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 431

Grant programs--health, Health facilities, Reporting and

recordkeeping requirements.

42 CFR Part 442

Grant programs--health, Health facilities, Health professions,

Health records, Medicaid, Nursing homes, Nutrition, Reporting and

recordkeeping requirements, Safety.

42 CFR Part 488

Health facilities, Survey and certification, Forms and guidelines.

42 CFR Part 489

Health facilities, Medicare.

42 CFR Part 498

Administrative practice and procedure, Appeals, Medicare,

Practitioners, providers, and suppliers.

42 CFR Chapter IV is amended as set forth below.

PART 431--STATE ORGANIZATION AND GENERAL ADMINISTRATION

A. Part 431 is amended as set forth below.

1. The authority citation for part 431 continues to read as

follows:

Authority: Section 1102 of the Social Security Act (42 U.S.C.

1302).

2. Subpart C is amended to add new Sec. 431.108 to read as follows:

Sec. 431.108 Effective date of provider agreements.

(a) Applicability--(1) General rule. Except as provided in

paragraph (a)(2) of this section, this section applies to Medicaid

provider agreements with entities that, as a basis for participation in

Medicaid--

(i) Are subject to survey and certification by HCFA or the State

survey agency; or

(ii) Are deemed to meet Federal requirements on the basis of

accreditation by an accrediting organization whose program has HCFA

approval at the time of accreditation survey and accreditation

decision.

(2) Exception. A Medicaid provider agreement with a laboratory is

effective only while the laboratory has in effect a valid CLIA

certificate issued under part 493 of this chapter, and only for the

specialty and subspecialty tests it is authorized to perform.

(b) All requirements are met on the date of survey. The agreement

is effective on the date the onsite survey (including the Life Safety

Code survey if applicable) is completed, if on that date the provider

meets--

(1) All applicable Federal requirements as set forth in this

chapter; and

(2) Any other requirements imposed by the State for participation

in the Medicaid program. (If the provider has a time-limited agreement,

the new agreement is effective on the day following expiration of the

current agreement.)

(c) All requirements are not met on the date of survey. If on the

date the survey is completed the provider fails to meet any of the

requirements specified in paragraph (b) of this section, the following

rules apply:

(1) An NF provider agreement is effective on the date on which--

(i) The NF is found to be in substantial compliance as defined in

Sec. 488.301 of this chapter; and

(ii) HCFA or the State survey agency receives from the NF, if

applicable, an approvable waiver request.

(2) For an agreement with any other provider, the effective date is

the earlier of the following:

(i) The date on which the provider meets all requirements.

(ii) The date on which a provider is found to meet all conditions

of participation but has lower level deficiencies, and HCFA or the

State survey agency receives from the provider an acceptable plan of

correction for the lower level deficiencies, or an approvable waiver

request, or both. (The date of receipt is the effective date of the

agreement, regardless of when HCFA approves the plan of correction or

waiver request, or both.)

(d) Accredited provider requests participation in the Medicaid

program.--(1) General rule. If a provider is currently accredited by a

national accrediting organization whose program had HCFA approval at

the time of accreditation survey and accreditation decision, and on the

basis of accreditation, HCFA has deemed the provider to meet Federal

requirements, the effective date depends on whether the provider is

subject to requirements in addition to those included in the

accrediting organization's approved program.

(i) Provider subject to additional requirements. For a provider

that is subject to additional requirements, Federal or State, or both,

the effective date is the date on which the provider meets all

requirements, including the additional requirements.

(ii) Provider not subject to additional requirements. For a

provider that is not subject to additional requirements, the effective

date is the date of the provider's initial request for participation if

on that date the provider met all Federal requirements.

(2) Special rule: Retroactive effective date. If the provider meets

the requirements of paragraphs (d)(1) and (d)(1)(i) or (d)(1)(ii) of

this section, the effective date may be retroactive for up to one year,

to encompass dates on which the provider furnished, to a Medicaid

recipient, covered services for which it has not been paid.

3. Section 431.151(a) is amended to republish the introductory text

and add a paragraph (a)(3), to read as follows:

Sec. 431.151 Scope and applicability.

(a) General rules. This subpart sets forth the appeals procedures

that a State must make available as follows:

* * * * *

(3) To an NF or ICF/MR that is dissatisfied with a determination as

to the effective date of its provider agreement.

* * * * *

4. Section 431.153 is amended to republish the introductory text of

paragraph (b) and add a paragraph (b)(5), to read as follows:

Sec. 431.153 Evidentiary hearing.

* * * * *

(b) Limit on grounds for appeal. The following are not subject to

appeal:

* * * * *

(5) A State survey agency's decision as to when to conduct an

initial survey of a prospective provider.

* * * * *

[[Page 43936]]

Sec. 431.610 [Amended]

5. In Sec. 431.610, the following changes are made:

a. In paragraph (e)(1), ``if'' is removed and ``whether'' is

inserted in its place.

b. In paragraph (e)(2), the period is removed and ``; and'' is

added in its place.

c. A new paragraph (e)(3) is added, to read as set forth below:

Sec. 431.610 Relations with standard-setting and survey agencies.

* * * * *

(e) Designation of survey agency. * * *

(3) The agency designated in paragraph (e)(1) of this section makes

recommendations regarding the effective dates of provider agreements,

as determined under Sec. 431.108.

* * * * *

PART 442--STANDARDS FOR PAYMENT TO NURSING FACILITIES AND

INTERMEDIATE CARE FACILITIES FOR THE MENTALLY RETARDED

B. Part 442 is amended as set forth below.

1. The heading for part 442 is revised to read as set forth above.

2. The authority citation for part 442 continues to read as

follows:

Authority: Section 1102 of the Social Security Act (42 U.S.C.

1302).

3. Section 442.13 is revised to read as follows:

Sec. 442.13 Effective date of provider agreement.

The effective date of a provider agreement with an NF or ICF/MR is

determined in accordance with the rules set forth in Sec. 431.108.

PART 488--SURVEY, CERTIFICATION, AND ENFORCEMENT PROCEDURES

C. Part 488 is amended as set forth below.

1. The authority citation for part 488 continues to read as

follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42

U.S.C. 1302 and 1395hh).

2. Section 488.11 is revised to read as follows:

Sec. 488.11 State survey agency functions.

State and local agencies that have agreements under section 1864(a)

of the Act perform the following functions:

(a) Survey and make recommendations regarding the issues listed in

Sec. 488.10.

(b) Conduct validation surveys of accredited facilities as provided

in Sec. 488.7.

(c) Perform other surveys and carry out other appropriate

activities and certify their findings to HCFA.

(d) Make recommendations regarding the effective dates of provider

agreements and supplier approvals in accordance with Sec. 489.13 of

this chapter.

PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL

D. Part 489 is amended as set forth below.

1. The authority citation for part 489 continues to read as

follows:

Authority: Secs. 1102, and 1871 of the Social Security Act (42

U.S.C. 1302 and 1395hh).

2. In Sec. 489.1, a new paragraph (d) is added, to read as follows:

Sec. 489.1 Statutory basis.

* * * * *

(d) Although section 1866 of the Act speaks only to providers and

provider agreements, the effective date rules in this part are made

applicable also to the approval of suppliers that meet the requirements

specified in Sec. 489.13.

3. Sec. 489.13 is revised to read as follows:

Sec. 489.13 Effective date of agreement or approval.

(a) Applicability--(1) General rule. Except as provided in

paragraph (a)(2) of this section, this section applies to Medicare

provider agreements with, and supplier approval of, entities that, as a

basis for participation in Medicare--

(i) Are subject to survey and certification by HCFA or the State

survey agency; or

(ii) Are deemed to meet Federal requirements on the basis of

accreditation by an accrediting organization whose program has HCFA

approval at the time of accreditation survey and accreditation

decision.

(2) Exceptions. (i) For an agreement with a community mental health

center (CMHC) or a Federally qualified health center (FQHC), the

effective date is the date on which HCFA accepts a signed agreement

which assures that the CMHC or FQHC meets all Federal requirements.

(ii) A Medicare supplier approval of a laboratory is effective only

while the laboratory has in effect a valid CLIA certificate issued

under part 493 of this chapter, and only for the specialty and

subspecialty tests it is authorized to perform.

(b) All Federal requirements are met on the date of survey. The

agreement or approval is effective on the date the survey (including

the Life Safety Code survey, if applicable) is completed, if on that

date the provider or supplier meets all applicable Federal requirements

as set forth in this chapter. (If the agreement or approval is time-

limited, the new agreement or approval is effective on the day

following expiration of the current agreement or approval.)

(c) All Federal requirements are not met on the date of survey. If

on the date the survey is completed the provider or supplier fails to

meet any of the requirements specified in paragraph (b) of this

section, the following rules apply:

(1) For an agreement with an SNF, the effective date is the date on

which--

(i) The SNF is in substantial compliance (as defined in

Sec. 488.301 of this chapter) with the requirements for participation;

and

(ii) HCFA or the State survey agency receives from the SNF, if

applicable, an approvable waiver request.

(2) For an agreement with, or an approval of, any other provider or

supplier, (except those specified in paragraph (a)(2) of this section),

the effective date is the earlier of the following:

(i) The date on which the provider or supplier meets all

requirements.

(ii) The date on which a provider or supplier is found to meet all

conditions of participation or coverage, but has lower level

deficiencies, and HCFA or the State survey agency receives an

acceptable plan of correction for the lower level deficiencies, or an

approvable waiver request, or both. (The date of receipt is the

effective date regardless of when HCFA approves the plan of correction

or the waiver request, or both.)

(d) Accredited provider or supplier requests participation in the

Medicare program--(1) General rule. If the provider or supplier is

currently accredited by a national accrediting organization whose

program had HCFA approval at the time of accreditation survey and

accreditation decision, and on the basis of accreditation, HCFA has

deemed the provider or supplier to meet Federal requirements, the

effective date depends on whether the provider or supplier is subject

to requirements in addition to those included in the accrediting

organization's approved program.

(i) Provider or supplier subject to additional requirements. If the

provider or supplier is subject to additional requirements, the

effective date of the agreement or approval is the date on which the

provider or supplier meets all requirements, including the additional

requirements.

[[Page 43937]]

(ii) Provider or supplier not subject to additional requirements.

For a provider or supplier that is not subject to additional

requirements, the effective date is the date of the provider's or

supplier's initial request for participation if on that date the

provider or supplier met all Federal requirements.

(2) Special rule: Retroactive effective date. If a provider or

supplier meets the requirements of paragraphs (d)(1) and (d)(1)(i) or

(d)(1)(ii) of this section, the effective date may be retroactive for

up to one year to encompass dates on which the provider or supplier

furnished, to a Medicare beneficiary, covered services for which it has

not been paid.

4. Section 489.53 is amended to revise the heading of paragraph (b)

and paragraphs (c)(1) and (c)(2) to read as follows:

Sec. 489.53 Termination by HCFA.

* * * * *

(b) Termination of agreements with certain hospitals. * * *

(c) Notice of termination--(1) Timing: Basic rule. Except as

provided in paragraph (c)(2) of this section, HCFA gives the provider

notice of termination at least 15 days before the effective date of

termination of the provider agreement.

(2) Timing exceptions: Immediate jeopardy situations--(i) Hospital

with emergency department. If HCFA finds that a hospital with an

emergency department is in violation of Sec. 489.24, paragraphs (a)

through (e), and HCFA determines that the violation poses immediate

jeopardy to the health or safety of individuals who present themselves

to the hospital for emergency services, HCFA--

(A) Gives the hospital a preliminary notice indicating that its

provider agreement will be terminated in 23 days if it does not correct

the identified deficiencies or refute the finding; and

(B) Gives a final notice of termination, and concurrent notice to

the public, at least 2 , but not more than 4, days before the effective

date of termination of the provider agreement.

(ii) Skilled nursing facilities (SNFs). For an SNF with

deficiencies that pose immediate jeopardy to the health or safety of

residents, HCFA gives notice at least 2 days before the effective date

of termination of the provider agreement.

* * * * *

PART 498--APPEALS PROCEDURES FOR DETERMINATIONS THAT AFFECT

PARTICIPATION IN THE MEDICARE PROGRAM AND FOR DETERMINATIONS THAT

AFFECT THE PARTICIPATION OF CERTAIN ICFs/MR AND CERTAIN NFs IN THE

MEDICAID PROGRAM

E. Part 498 is amended as set forth below.

1. The authority citation for part 498 continues to read as

follows:

Authority: Secs. 1102, and 1871 of the Social Security Act (42

U.S.C. 1302 and 1395hh).

2. Section 498.3 is amended to revise paragraph (a), republish the

introductory text of paragraph (b) and add a paragraph (b)(14), revise

the introductory text of paragraph (d) and add new paragraphs (d)(14)

and (d)(15), to read as follows:

Sec. 498.3 Scope and applicability.

(a) Scope. This part sets forth procedures for reviewing initial

determinations that HCFA makes with respect to the matters specified in

paragraph (b) of this section, and that the OIG makes with respect to

the matters specified in paragraph (c) of this section. It also

specifies, in paragraph (d) of this section, administrative actions

that are not subject to appeal under this part.

(b) Initial determinations by HCFA. HCFA makes initial

determinations with respect to the following matters:

* * * * *

(14) The effective date of a Medicare provider agreement or

supplier approval.

* * * * *

(d) Administrative actions that are not initial determinations.

Administrative actions that are not initial determination (and

therefore not subject to appeal under this part) include but are not

limited to the following:

* * * * *

(14) The choice of alternative sanction or remedy to be imposed on

a provider or supplier.

(15) A decision by the State survey agency as to when to conduct an

initial survey of a prospective provider or supplier.

* * * * *

F. Technical correction.

Sec. 489.1 [Amended]

In Sec. 489.11(c), the following changes are made:

a. At the end of paragraph (c)(1), the word ``and'' is added.

b. At the end of paragraph (c)(2), ``; and'' is removed and a

period is inserted in its place.

(Catalog of Federal Domestic Assistance Program No. 93.773,

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

Supplementary Medical Insurance; and Program No. 93.778, Medical

Assistance.)

Dated: September 20, 1996.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Dated: December 27, 1996.

Donna E. Shalala,

Secretary.

[FR Doc. 97-21731 Filed 8-15-97; 8:45 am]

BILLING CODE 4120-01-P