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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. 94N-0335]

Medical Devices; Mammography Quality Standards Act of 1992;

Inspection Fees

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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

fees the agency will assess for inspections of mammography facilities

starting on February 13, 1998. The Mammography Quality Standards Act of

1992 (the MQSA) requires FDA to assess and collect fees from

mammography facilities to cover the costs of annual inspections

required by the MQSA. Because these costs have increased since

inspections began in 1995, FDA is raising the fees accordingly. This

notice explains which facilities are subject to payment of inspection

fees, provides information on the costs included in developing

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

and collection processes. This is the first increase in inspection fees

under the MQSA since the initial fee was established in 1995.

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DATES: Effective February 13, 1998, for all inspections conducted under

42 U.S.C. 263b(g). Submit written comments by March 16, 1998.

ADDRESSES: Submit written comments to the Dockets Management Branch

(HFA-305), Food and Drug Administration, 12420 Parklawn Dr., rm. 1-123,

Rockville, MD 20857.

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

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

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

SUPPLEMENTARY INFORMATION:

I. Background

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

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

263b) to require uniform national quality standards for mammography

facilities. The MQSA requires all mammography facilities, other than

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

an approved accreditation body and certified by the Secretary of Health

and Human Services as meeting quality standards. The MQSA requires FDA

to establish and operate: (1) A Federal certification and inspection

program for mammography facilities, (2) regulations and standards for

accreditation bodies, and (3) standards for equipment, personnel,

quality assurance, and recordkeeping and reporting by mammography

facilities.

The MQSA requires annual facility inspections to determine

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

requires FDA to assess and collect fees for inspections of all

mammography facilities, other than governmental entities as determined

by FDA, to cover the costs of inspections. The original notice on the

MQSA fees was published in the Federal Register of March 17, 1995 (60

FR 14584), and was effective with the initiation of the inspection

program in January 1995. An updated resource review has demonstrated

that the recoverable costs of the MQSA inspection program have

increased since 1995, and that the annual amount of fees collected

under the current fee schedule has been well below the level authorized

by Congress. Accordingly, the fees have been recalculated so that the

aggregate amount of fees collected will equal the aggregate costs of

the inspections conducted, as mandated by the MQSA.

Therefore, FDA is providing notice of the increased fees to be

assessed starting on February 13, 1998, and additional information

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

solicit comments on fee assessment and collection, FDA is inviting

comments from interested persons in order to have the benefit of

additional views and information, as the agency continues to evaluate

its fee assessment procedures.

II. Inspections Under the Mammography Quality Standards Act of 1992

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

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

annual inspection of each mammography facility. The purpose of the

annual inspection is to determine facility compliance with quality

standards established under the MQSA final quality standards were

recently published in the Federal Register on October 28, 1997 (62 FR

55852). Inspections will be conducted by inspectors who have met

Federal training requirements and who are certified by FDA.

Under ordinary circumstances, inspections will be conducted during

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

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

annual inspection. If a significant deficiency is identified during an

inspection, FDA will provide information on necessary corrective action

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

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

normally will provide 5 working days advance notice of each followup

inspection. FDA may make unannounced inspections or may provide shorter

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

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

III. Costs Included in 1998 Inspection Fee

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

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

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

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

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

Fees must be set so that, for a given fiscal year (FY), the aggregate

amount of fees collected will equal the aggregate costs of inspections

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

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

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

payment of fees.

FDA has determined that the following categories of costs are

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

in the fees to be assessed beginning February 13, 1998. These

categories represent the same costs that have been assessed in fees

since the beginning of the inspection program. Facilities are not being

assessed for any new costs associated with inspections.

Personnel costs of annual and followup inspections of

mammography facilities, including administration and support.

Purchase of equipment, development of instrument

calibration procedures, calibration of instruments used in the

inspections, and modification of training facilities and laboratories

to support the MQSA operations.

Design, programming, and maintenance of data systems

necessary to schedule and track inspections and to collect data during

inspections.

Training and certification of inspectors (both FDA and

State inspectors).

Costs of billing facilities for fees due for annual and

followup inspections and collecting facility payments.

Tracking, coordination, and direction of inspections.

Overhead and support attributable to facility inspections.

Because most scientific equipment is durable and can be used for a

period of years, it is not appropriate to recover the full costs of

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

MQSA inspection fee varying widely from one year to the next. Instead,

these costs will be recovered over the useful life of the asset. FDA

has not and will not recover compliance costs (e.g. taking legal and

administrative enforcement actions) in the fee.

The recoverable portions of all fixed costs of the inspection

program and appropriate variable costs are recovered in the annual

inspection fee. This fee will vary depending on how many mammography

units are used by a facility. All mammography facilities, except

governmental entities, will be subject to this fee.

If the annual inspection of a facility identifies a deficiency that

necessitates a followup inspection, that facility will be assessed an

additional fee to recover the costs of that additional inspection

(unless it is a governmental entity). Facilities that do not require a

followup inspection are not subject to this fee.

[[Page 2247]]

IV. Inspection Fees to be Assessed Starting February 13, 1998

The costs of the MQSA inspection program have grown since its

startup year, while the inspection fee has been held constant since its

inception in FY95. Beyond the inflationary increases that are to be

expected over the course of 3 years, the increased costs in the

inspection program are attributable to two major areas: The actual rate

of inspections and the full-scale implementation costs of the data

systems. These costs account for the major difference between the costs

of the startup phase of the program in FY95 and the full-scale

operation in FY98, and they are largely responsible for the fee

increase.

Although state inspectors, under contract with FDA, technically

began inspections in January 1995, the first round of inspections

actually extended well into FY96, when the bulk of the inspector cadre

was hired and trained. Thus, the FY98 costs of the inspection program

are almost $4 million higher than the FY95 costs, because roughly

10,000 facilities will be inspected in FY98, more than twice as many as

the 4,900 inspections conducted in FY95. In addition, FY98 costs

reflect the full-scale oversight and scientific support necessary to

manage a national inspection program that now utilizes 250 inspectors

to inspect 10,000 facilities annually. Between FY95 and FY98, the State

contracts and associated costs have grown 64 percent and this State

activity accounts for 72 percent of the total FY98 inspection program

budget.

The data systems component of the inspection program has increased

by almost $800,000 over FY95 levels, and it accounts for 8 percent of

the total FY98 inspection program budget. The development,

implementation, and support of this integrated system required

increased investment in data systems over the FY95 levels. In FY95,

only the rudimentary components of the system were operational. The

data system is now in the final stages of development and

implementation. It includes the inspector laptop with customized

inspection software and a communications system that integrates the

field and headquarters components of the inspection program. The

overall system enables electronic communication between the inspector

and headquarters for communicating inspection results, initiating and

tracking inspection followup, and conducting ongoing inspector/

headquarters education regarding the inspection program.

The remaining 20 percent of the FY98 inspection program budget

covers training, equipment calibration, inspection administration,

billing, and the fee assessment.

FDA reviewed the past methodology for calculating the inspection

fee, which accounted for differences in facility size. A similar method

was adopted for calculating the 1998 fee. A facility's inspection fee

will be based on the number of mammography units used by the facility.

FDA data on inspected facilities indicates that there are roughly

10,112 total mammography facilities and approximately 12,720

mammography units. The number of mammography facilities identified as

Government entities is around ten percent.

The total recoverable aggregate costs of the MQSA inspection

program is estimated to be $12.8 million in FY 1998. This is below the

$14 million authorized by Congress for collections in FY 1998. To

recover the costs of the inspection program, the facility portion of

the fee is $1,345 and the unit portion is $204, and these must be added

according to the number of units at each facility. This new fee of

$1,549 for a facility with one unit compares to the current fee of

$1,178 for a facility with one unit.

The following fees will be assessed starting February 13, 1998, for

facility inspections conducted after that date:

Table 1.--Annual Inspection Fee by Number of Units

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Number of Units Fee

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1................................... $1,549

2................................... $1,753

3................................... $1,957

4................................... $2,161

5................................... $2,365

6................................... $2,569

7................................... $2,773

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Followup Inspection Fee...............................................

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Fee................................. $878

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FDA will continue to charge separately for annual and followup

inspections. FDA believes it is more appropriate and equitable for the

costs of followup inspections to be borne entirely by the facilities

that require such inspections. FDA has again chosen to adopt a flat fee

for followup inspections over an hourly rate that would vary the fee by

the length of the inspection. This approach eliminates concerns about

variations among inspectors and differential treatment of facilities.

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

aggregate amount of fees collected during any year equals the aggregate

amount of costs for that year's facility inspections. FDA notes,

however, that the initial fees established in FY 1995 remained constant

for a period of 3 years. The agency expects this new fee schedule to

remain constant through FY 1999. FDA will monitor the adequacy of the

fee on an annual basis.

FDA continues to use a uniform, national fee structure. The

methodology adopted by FDA to determine inspection fees does not pass

on the costs of inspecting governmental entities to other facilities.

The entire cost of inspecting governmental entities has been and will

continue to be borne by appropriated funds.

V. Facilities Subject to Payment of Inspection Fees

Under the MQSA, all certified mammography facilities except

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

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

FDA will continue to use the definition that was previously

developed and applied to determine whether a facility qualifies as a

governmental entity for the purpose of

[[Page 2248]]

determining whether a facility is exempt from payment of inspection

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

facility subject to inspection under section 354(g)(1) of the PHS Act

(42 U.S.C. 263b(g)(1)), that meets either of the following criteria:

(1) Is operated by any Federal department, State, district, territory,

possession, Federally-recognized Indian tribe, city, county, town,

village, municipal corporation or similar political organization or

subpart thereof; or (2) provides services under the Breast and Cervical

Cancer Mortality Prevention Act of 1990, 42 U.S.C. 300k et. eq., and at

least 50 percent of the mammography screening examinations provided

during the preceding 12 months were funded under that statute. The

first notice of fees for facilities provides additional background

relating to this definition (see 52 FR 14585).

VI. Billing and Collection Procedures

Within 30 days following inspection, FDA mails a bill to the

inspected facility (governmental entities do not receive bills). The

bill sets forth the type of inspection conducted (annual or followup),

the fee to be paid, and the date payment is due (30 days after billing

date). Inspection fees are billed to and collected from the party that

operates the facility. If the facility is owned or controlled by an

entity other than the operator, it is up to the parties to establish,

through contract or otherwise, how the costs of facility inspections

will be allocated.

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

sent. At that time, interest begins to accrue at the prevailing rate

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

is 13.75 percent), a 6 percent late payment penalty is assessed in

accordance with 45 CFR 30.13, and a $20 administrative fee is assessed

for each 30-day period that a balance remains due. If payment is not

received within 30 days of a third and final bill, FDA may initiate

action to collect unpaid balances (with interest and penalties),

including the use of collection agencies and reporting of delinquencies

to commercial credit reporting agencies.

Any questions or concerns about the billing and collection

procedures may be addressed to Billing Inquiries c/o Mammography

Quality Assurance Program, FA, P.O. Box 6057, Columbia, MD 21045-6057,

1-800-838-7715.

VII. Review and Appeals Procedures Regarding Qualifications as a

Governmental Entity

FDA will review each declaration that a facility qualifies as a

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

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

due within 30 days.

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

the facility believes it qualifies for exemption under the definition

of governmental entity set forth previously, the facility may appeal

FDA's determination by explaining and certifying the basis for its

belief in a letter directed to the FDA Ombudsman c/o Mammography

Quality Assurance Program, FA, P.O. Box 6057, Columbia, MD 21045-6057,

postmarked within 30 days of FDA's notice to the facility that the

facility does not qualify as a governmental entity. The FDA Ombudsman

will review a facility's claim that it is a governmental entity and

will normally reach a decision within 60 days. If the Ombudsman

determines that a facility does not qualify as a governmental entity,

the Ombudsman shall provide a statement of the grounds for that

determination. The Ombudsman's decision will constitute the agency's

final decision on the matter. During the time required for the

Ombudsman's review, FDA's efforts to collect the fee will be suspended

and all time-related penalties held in abeyance.

VIII. Request for Comments

Although the MQSA does not require FDA to solicit comments on fee

exemption, assessment and collection, FDA is inviting comments from

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

FDA may consider altering its methodology of defining governmental

entities, and assessing and collecting fees under the MQSA in future

years. Each year's inspection experience provides additional data about

differences among facilities and variations in costs by State, region,

or other factors.

Interested persons may, on or before March 16, 1998, submit to the

Dockets Management Branch (address above) written comments regarding

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

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

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

document. Received comments and a full explanation of the costs

included and the methodology employed in determining these fees are on

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

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

Dated: December 23, 1997.

William K. Hubbard,

Associate Commissioner for Policy Coordination.

[FR Doc. 98-881 1-13-98; 8:45 am]

BILLING CODE 4160-01-F