Medicare Program; Recognition of the Joint Commission for Accreditation of Healthcare Organizations (JCAHO) for Hospices

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

[HCFA-2039-FN]

RIN 0938-AJ41

Medicare Program; Recognition of the Joint Commission for

Accreditation of Healthcare Organizations (JCAHO) for Hospices

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

ACTION: Final notice.

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SUMMARY: This notice recognizes the Joint Commission for Accreditation

of Healthcare Organizations (JCAHO) as a national accreditation

organization for hospices that request participation in the Medicare

program. We believe that accreditation of hospices by JCAHO

demonstrates that all Medicare hospice conditions of participation are

met or exceeded. Thus, we grant deemed status to those hospices

accredited by JCAHO. The proposed notice included the application from

the Community Health Accreditation Program, Inc. (CHAP). The final

notice recognizing CHAP as a national accreditation organization for

hospices was published on April 20, 1999 at 64 FR 19376.

EFFECTIVE DATE: This final notice is effective June 18, 1999, through

June 18, 2003.

FOR FURTHER INFORMATION CONTACT: Joan C. Berry, (410) 786-7233.

SUPPLEMENTARY INFORMATION:

I. Background

A. Laws and Regulations

Under the Medicare program, eligible beneficiaries may receive

covered palliative services in a hospice provided certain requirements

are met. The regulations specifying the Medicare conditions of

participation for hospice care are located in 42 CFR part 418. These

conditions implement section 1861(dd) of the Social Security Act (the

Act), which specifies services covered as hospice care and the

conditions that a hospice program must meet in order to participate in

the Medicare program.

Generally, in order to enter into an agreement with Medicare, a

hospice must first be certified by a State survey

[[Page 32882]]

agency as complying with the conditions or standards set forth in part

418 of the regulations. Then, the hospice is subject to routine surveys

by a State survey agency to determine whether it continues to meet

Medicare requirements. There is an alternative, however, to surveys by

State agencies.

Section 1865(b)(1) of the Act permits ``accredited'' hospices to be

exempt from routine surveys by State survey agencies to determine

compliance with Medicare conditions of participation. Accreditation by

an accreditation organization is voluntary and is not required for

Medicare certification. Section 1865(b)(1) of the Act provides that, if

a provider is accredited by a national accreditation body that has

standards that meet or exceed the Medicare conditions, the Secretary

can ``deem'' that hospice as having met the Medicare requirements.

We have rules at 42 CFR part 488 that set forth the procedures we

use to review applications submitted by national accreditation

organizations requesting our approval. A national accreditation

organization applying for approval must furnish to us information and

materials listed in the regulations at Sec. 488.4. The regulations at

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

the Federal review and approval process of applications for recognition

as an accrediting organization. On April 26, 1996, however, new

legislation entitled ``Omnibus Consolidated Rescissions and

Appropriations Act of 1996'' (Pub. L. 104-134) was enacted.

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

Public Law 104-134, requires us to publish a notice in the Federal

Register within 60 days after receiving an accreditation organization's

written request that we make a determination regarding whether its

accreditation requirements meet or exceed Medicare requirements.

Section 1865(b)(3)(A) of the Act also requires that we identify in the

notice the organization and the nature of the request and allow a 30-

day comment period. This section further requires that we publish a

notice of our approval or disapproval within 210 days after we receive

a complete package of information and the organization's application.

B. Proposed Notice

On September 11, 1998, we published a proposed notice (63 FR 48735)

announcing the requests of CHAP and JCAHO for our approval as national

accreditation organizations for hospices. In the notice, we detailed

the factors on which we would base our evaluation. (We inadvertently

gave the citation for the regulations governing our evaluation as

Sec. 488.8, ``Federal review of accreditation organizations,'' rather

than as Sec. 488.4, ``Application and reapplication procedures for

accreditation organizations.'') Under section 1865(b)(2) of the Act and

our regulations at Sec. 488.4, our review and evaluation of the JCAHO

application were conducted in accordance with the following factors:

A determination that JCAHO is a national accreditation

body, as required by the Act.

A determination of the equivalency of JCAHO's requirements

for a hospice to our comparable hospice requirements.

A review of JCAHO's survey processes to determine the

following:

--The comparability of JCAHO's processes to those of State agencies,

including survey frequency; its ability to investigate and respond

appropriately to complaints against accredited facilities; whether

surveys are announced or unannounced; and the survey review and

decision-making process for accreditation.

--The adequacy of the guidance and instructions and survey forms JCAHO

provides to surveyors.

--JCAHO's procedures for monitoring providers or suppliers found to be

out of compliance with program requirements. (These procedures are used

only when JCAHO identifies noncompliance.)

The composition of JCAHO's survey team, surveyor

qualifications, the content and frequency of the in-service training

provided, the evaluation systems used to assess the performance of

surveyors, and potential conflict-of-interest policies and procedures.

JCAHO's data management system and reports used to assess

its surveys and accreditation decisions, and its ability to provide us

with electronic data.

JCAHO's procedures for responding to complaints and for

coordinating these activities with appropriate licensing bodies and

ombudsmen programs.

JCAHO's policies and procedures for withholding or

removing accreditation from a facility that fails to meet its standards

or requirements.

A review of all types of accreditation status that JCAHO

requests HCFA accept for deeming of hospices.

A review of the pattern of JCAHO's deemed facilities (that

is, types and duration of accreditation and its schedule of all planned

full and partial surveys).

The adequacy of JCAHO's staff and other resources to

perform the surveys, and its financial viability.

JCAHO's written agreement to--

--Meet our requirements to provide to all relevant parties timely

notifications of changes to accreditation status or ownership, to

report to all relevant parties remedial actions or immediate jeopardy,

and to conform the organization's requirements to changes in Medicare

requirements; and

--Permit the organization's surveyors to serve as witnesses for us in

adverse actions against its accredited facilities.

We received no comments on our proposed notice.

II. Review and Evaluation

Our review and evaluation of the JCAHO application, which were

conducted as detailed above, yielded the following information.

Differences between the Joint Commission on the Accreditation of

Healthcare Organizations (JCAHO) and Medicare Conditions and Survey

Requirements

We compared Medicare requirements with (1) the standards contained

in the JCAHO 1997-98 ``Comprehensive Accreditation Manual for Home

Care'' (CAMHC); (2) the survey process outlined in JCAHO's guide

entitled ``The Complete Guide to the 1997-98 Home Care Survey Process:

Home Health, Personal Care, Support and Hospice'; and (3) JCAHO's

training materials. We also evaluated the accuracy of JCAHO's cross

walk [relational table] between JCAHO standards and Medicare standards.

In 16 areas JCAHO has made the following revisions or clarifications:

Unannounced surveys. Our policy requires that all deemed

status surveys in Medicare-certified hospices be unannounced (that is,

conducted with no advance notice). This policy includes initial

accreditation surveys, re-surveys of any kind (regardless of the

accreditation category for the deemed hospice service), focused

surveys, and complaint surveys. The JCAHO policy for a routine

announced, triennial survey of a home care company, including its

hospice service, does not meet our requirement; a concurrent survey of

the hospice service conducted at the same time as an announced

triennial home care survey does not meet our requirement; and any

survey with 24-hours advance notice, or any advance notice, does not

meet our requirement. Thus, we requested written revision and

acceptance of an

[[Page 32883]]

unannounced survey process. JCAHO, in response, has agreed that all

deemed status hospice surveys will be unannounced:

No advanced notice of any survey will be provided to any hospice

electing to use the Joint Commission's accreditation survey to meet

Medicare provider requirements as a hospice. This includes all

follow-up surveys and surveys to evaluate complaints. If a hospice

seeking deemed status is part of a hospital, the hospice survey will

be conducted unannounced and not in conjunction with the hospital

survey. Specifically, the hospital survey will be announced, but the

hospice survey unannounced and definitely not conducted on the dates

of the hospital survey.

If a hospice seeking deemed status has other home care services

within the hospice organization that are not seeking deemed status,

the hospice survey will be unannounced and conducted first. The

other home care services will be surveyed for Joint Commission

accreditation following the completion of the survey.

Core services. Medicare requires that substantially all

core services (nursing care, medical social services, and counseling)

be provided directly by hospice employees. Regulations allow for

exceptions during times of peak patient loads or under extreme

circumstances, and the Balanced Budget Act of 1997 provides exceptions

for physicians' services. JCAHO clarified that CAMHC standards LD 2.2

and CC2 include this Medicare standard through cross reference and

evaluation against Sec. 418.202, which contains those provisions.

Notification issues. JCAHO failed to clearly indicate in

three instances when it would provide us with information regarding the

failure of a hospice to meet or maintain Medicare conditions of

participation:

--Violations of the Medicare conditions of participation, including

routine core services (nursing care, medical social services, and

counseling), as required by section 1861(dd)(1) of the Act.

--Changes in accreditation status, such as a decision to preliminarily

non-accredit a facility, or any other accreditation status not

recognized under this agreement.

--Changes in sites, corporate status, or services not in violation of

the Medicare conditions of participation; withdrawal of a provider

either voluntarily or involuntarily; and changes of ownership, hospice

mergers, or hospice site expansions.

JCAHO clarified its required notification in these three instances,

as well as its subsequent notification of us, as follows:

--Accredited organizations must notify JCAHO in writing within 30 days

of any changes involving a violation of Medicare conditions of

participation, including core services. JCAHO will forward this

information in writing to us and to the relevant State agency within 10

days of receiving it.

--We will be notified within 30 days of a decision regarding changes in

any accreditation status not accepted under this agreement.

--Accredited organizations must notify JCAHO in writing within 30 days

of any changes to sites, corporate status, or services not in violation

of the conditions of participation. JCAHO will immediately forward this

information to us and to the State agency. JCAHO also stipulates that

``the Joint Commission would survey the organization for the changes

reported within 30 days. HCFA would be notified within 10 days, and

also receive the report of the surveyed changes within 30 days of the

completion of the survey.''

No surveys prior to enrollment form verification. State

survey agencies do not conduct health and safety inspections until a

hospice has submitted a ``Medicare and Other Federal Health Care

Program General Enrollment Health Care Provider/Supplier Application''

(HCFA 855) that the servicing fiscal intermediary has reviewed and

approved. JCAHO has specified that it will not conduct a deemed status

survey for a hospice until it has received from the applicant either

the Medicare provider number or written verification from the fiscal

intermediary of submission and approval of HCFA 855.

Change of ownership. Because of our recent experience with

changes of ownership and the difficulty in recovering overpayments from

facilities not transferring a provider ID from previous owners, we

questioned when (that is, before or after making an accreditation award

to the new owner of a home care company) JCAHO would survey a Medicare-

certified hospice that is undergoing a change of ownership and that has

not accepted assignment of the former owner's provider agreement

(including Medicare-certified hospices that are part of an accredited

home care company). Medicare providers that change ownership and do not

accept assignment of the former owner's provider agreement are treated

by us as new applicants to the Medicare program. JCAHO has stipulated

in writing that ``when a new provider number is being issued, the Joint

Commission would not transfer its accreditation of the old organization

to the new. A complete new survey would have to be conducted.''

Survey process. JCAHO's hospice program standards are a

subset of the CAMHC, containing requirements for both home health

agencies and hospices. These two facility types are often part of the

same organization. It is possible that one facility would be under a

deeming program and the other would not, resulting in one announced and

one unannounced survey. Because of this combined presentation, we

initially had some difficulty in understanding how JCAHO would conduct

a hospice survey separate from a related home care organization.

Therefore, we recommended that JCAHO develop a deemed status survey

protocol for Medicare-certified hospices in the near future and

indicate if and when this process would be completed. In the meantime,

we held discussions with JCAHO to ensure that our expectations of

hospice programs were verified by JCAHO's interpretation of its

standards and procedures.

JCAHO provided us with written verification that its hospice survey

process encompasses all sites of care, including inpatient and respite

care, where hospice services are provided. JCAHO specified that it

evaluates contracted organizations, including those providing

pharmaceutical and home medical equipment services, during the hospice

survey. If the contracted organization is already accredited by JCAHO,

some standards that have already been evaluated during the facility's

own JCAHO survey, such as performance improvement activities or

environmental safety plan, may not be assessed during the on-site

survey of the facility. The survey of the non-accredited organizations,

as well as those accredited by another accreditor, consists of on-site

evaluation of all applicable JCAHO standards and corresponding Medicare

conditions of participation, including the Life Safety Codes.

JCAHO would conduct the deemed status survey of a Medicare-

certified hospice separately and provide a separate report. If home

care services other than hospice are part of the JCAHO survey, JCAHO

would survey those other services for its purposes on separate days and

would not conduct the survey concurrently with the hospice deemed

status survey. JCAHO would conduct the hospice deemed status survey

first, followed by a survey of the other home care services. The deemed

status survey would remain unannounced. This is the current method used

to conduct the JCAHO

[[Page 32884]]

deemed status process for home health agencies when the same

organization also provides services that are not Medicare-certified.

For example, if a Medicare-certified hospice also had within its

business a licensed home health organization that is not Medicare-

certified, JCAHO would survey both for accreditation. According to

JCAHO procedures, the survey provided might total 5 days, and the

survey would be conducted as follows. The survey conducted for the

entire organization would be unannounced. JCAHO would survey the

hospice first, at the end of which time (in this scenario, let us

assume 3 days), JCAHO would issue a report for only the hospice

Medicare deemed status compliance. On the subsequent days, JCAHO would

survey the licensed home health agency, and on the final survey day,

JCAHO would present its report, comprising both the hospice and

licensed agency, to the organization. JCAHO's detailed survey process

can be found in its application under tab 3ii, and in Exhibit 5, ``The

Complete Guide to the 1997-98 Home Care Survey Process: Home Health,

Personal Care, Support and Hospice.''

Data systems. We recommended that JCAHO provide assurance

that it can and will produce a plan indicating when and how they will

be able to produce validation data such as outcome trends, especially

deficiency types for regions and States; resolution time frames for

deficiencies; and complaints for comparative Medicare purposes. JCAHO

provided the detail for all the data described in our recommendation,

including outcome trends (deficiency types for regions and States) and

time frames. These reports, tables, and other displays indicate that

JCAHO has the capability of producing resolution time frames for

deficiencies and complaints.

Conditional accreditation. We were concerned about the

JCAHO request to consider the category called Conditional Accreditation

as acceptable for deemed status and certification of facilities under

Medicare. To clarify how conditional accreditation might be applied to

a Medicare-certified hospice, we asked the following questions:

--What is the meaning (with examples, if necessary) of the first part

of the category's definition, which states that ``an organization is

not in substantial compliance with Joint Commission standards?''

--What criteria would JCAHO use to determine that a Medicare-certified

hospice would not be in ``substantial compliance'' with JCAHO standards

and would be placed in this category called Conditional Accreditation?

--What is the meaning (with examples, if necessary) of the rest of the

definition, which states that ``one or more adverse clinical events

that potentially reflect underlying systems issues?''

--What are some ``worst case'' scenarios in which a Medicare-certified

hospice could have had ``one or more adverse clinical events that

potentially affect underlying systems issues,'' and would be placed in

this category?

In response to these questions, JCAHO has indicated that it will

not accept, for deeming purposes, hospices with a decision of

conditional accreditation, with one exception: those cases in which the

hospice was not found to be the cause of the conditional decision.

JCAHO awards the lowest score given when an organization bridges more

than one facility type. Thus, a provider-based hospice may receive a

conditional accreditation based on a deficiency outside the scope of

its survey. A specific example would be a hospice organization that

also includes a home health agency that is not Medicare-certified. In

this case, if the home health agency's compliance with the JCAHO

standards creates the conditional decision, but the hospice is found in

compliance with all Medicare conditions of participation, HCFA would

determine that the hospice is eligible for deemed status. JCAHO has

agreed to provide us with a letter explaining any conditional

accreditation decision, in addition to a copy of the deemed status

hospice report, so that ``HCFA may validate the status of compliance.''

JCAHO has also agreed to supply us with quarterly lists of all its home

care customers and companies that include a deemed hospice service for

validation to assure that all non-deemed hospices in these settings are

subject to State agency survey.

Information sharing. It is important that we be able to

differentiate between JCAHO's regular home care customers and those

that include a deemed hospice service, since regular home care

customers with hospice services that have not elected the deemed status

option still require the State agency survey. JCAHO has agreed that we

should receive complete and timely lists of all deemed hospice services

in an unambiguous format.

Electronic data exchange.

--We requested a single contact who would have the authority to comply

with requests for any new data and format revisions for validation

submissions. JCAHO has supplied the names of contacts with the

authority to make decisions regarding the release of validation

information.

--Additionally, we requested JCAHO's plan to ensure that electronic

exchanges and internal data collection can proceed uninterrupted into

the Year 2000 (Y2K). JCAHO has appointed a corporate-wide task force of

key staff and has assigned this task force the responsibility for

monitoring the implementation of JCAHO's plans for Y2K compliance. A

major national consulting firm is assisting the task force in this

effort. To date, JCAHO's implementation plans are proceeding as

scheduled.

--We required assurances from JCAHO that it has the ability to provide

us with timely electronic survey data and requested validation of

survey findings for all Medicare-certified hospices that have elected

the deemed status option. JCAHO has provided a description of its data

systems and has stipulated that it has the ability to provide us

electronically with survey findings for validation.

Millennium updates. We requested that JCAHO indicate how

it plans to assure that deemed hospices maintain equipment and systems

to sustain the quality of patient care through the millennium updates.

JCAHO stipulates that in 1998 and 1999, initial and resurveys conducted

for HCFA's hospice applicants include in the ``Management of

Information'' chapter of the 1997-98 CAMHC several standards that are

used to address Y2K issues: CAMHC IM 1, ``The organization plans and

designs information-management processes to meet its internal and

external information needs''; IM 2, ``Confidentiality, security and

integrity of data and information are maintained''; and IM 3.1, ``The

organization takes steps to ensure that the data are complete,

reliable, valid, and accurate on an ongoing basis.'' Surveyors request

information from the hospice to determine the organization's awareness

of the Y2K issue and the steps being taken to assure compliance. In the

year 2000, the compliance with these standards will be validated during

the on-site survey process. Non-compliance that affects the quality of

patient care would be addressed in other standards and could

potentially lead to loss of accreditation.

JCAHO scoring of its standards. We were concerned that

JCAHO puts limits or ``caps'' on scores given to new requirements or

standards for providers; that is, according to JCAHO policy, new

requirements cannot be cited from level 3 (partial compliance) to level

5

[[Page 32885]]

(noncompliance). This practice often prevents new standards from being

cited as deficiencies within JCAHO's system, which is computer-driven

and aggregates scores within an area of performance. Scores from 3 to

5, as explained in the following table, are likely to result in the

citing of a deficiency or type I recommendation, defined by JCAHO as

``a recommendation or group of recommendations that addresses

insufficient or unsatisfactory standards compliance in a specific

performance area.''

JCAHO Scoring Scale/Levels of Compliance

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Score Level of compliance Definition

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1................ Substantial compliance.... The organization

consistently meets all

major provisions of the

standard and its intent.

2................ Significant compliance.... The organization meets

most provisions of the

standard and its intent.

3................ Partial compliance........ The organization meets

some provisions of the

standard and its intent.

4................ Minimal compliance........ The organization meets

few provisions of the

standard and its intent.

5................ Noncompliance............. The organization fails to

meet the provisions of

the standard and its

intent.

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HCFA requires that scoring of all standards for hospices wishing to

participate in Medicare, including any new standards that may be added

to meet Medicare conditions of participation in this notice, be allowed

through level 5. JCAHO has agreed that ``No hospice standards will be

`capped' and therefore all may be cited through all levels.'' JCAHO has

also agreed to notify all currently accredited hospices through

individual letters, and to notify the public through JCAHO's

periodicals, website, and the next issuance of its manual, that the

scoring of hospice standards will not be limited or capped.

Hospice medical director. Medicare's conditions of

participation require that the hospice medical director be a doctor of

medicine or osteopathy. As written, the JCAHO standard reads only that

qualified individuals be responsible for directing patient care and

services. It was not clear to us that this standard met Medicare

conditions of participation for hospices. JCAHO has assured us,

however, that its deemed hospice standard cross references the Medicare

requirement and that ``the Medicare condition would be evaluated as

acceptable only if the medical director were a director of medicine or

osteopathy.''

Interdisciplinary Group.

--Medicare's standards require that the Interdisciplinary Group (IDG)

provide or supervise the provision of care and participate in the

establishment and periodic review of the patient's plan of care.

JCAHO's standards include the appropriate composition of the IDG and

the appropriate process for care planning, but do not appear to link

the IDG with the care planning processes. JCAHO standards simply

require the ``organization'' to be responsible for care planning. JCAHO

clarified that its CAMHC standard TX 1 includes the requirement

consistent with the Medicare standard that the IDG establishes and is

responsible for the plan of care. TX-1.3 specifically requires the IDG

to participate in the review and updating of this plan.

--We questioned whether JCAHO standards clearly indicate that the IDG

is responsible for designating a registered nurse to coordinate the

implementation of the plan of care, and thus meet Medicare standards.

JCAHO demonstrated that CAMHC standard CC 4, which assigns

``appropriately qualified staff member(s) to coordinate patient care

services,'' addresses and repeats this Medicare standard verbatim.

Volunteer staff. The Medicare standard requires that

hospices maintain a volunteer staff sufficient to provide

administrative or direct patient care in an amount that, at a minimum,

equals 5 percent of the total patient care hours of all paid hospice

employees and contract staff. JCAHO stipulates that the intent of its

standard at CAMHC HR 3.1 is that Medicare-certified providers must

maintain and document that volunteer staff hours are equal to at least

5 percent of patient care hours.

Inpatient care.

--The Medicare standard requires, at Sec. 418.98(c), that inpatient

care days may not exceed 20 percent of the total number of hospice days

for this group of beneficiaries in any 12-month period preceding a

certification survey. JCAHO clarified that this standard is met through

CAMHC standard LD 5, which discusses patient care and services

appropriate to the care plan, and standard LD 8, which, under 8.2,

discusses the organization's compliance with the applicable law and

regulation. JCAHO has specified that they--

have specifically listed 418.98(c) as a cross walked standard for

deemed purposes. Instructions in the application indicate that in all

circumstances for deemed surveys, the cross walked standards and

conditions are utilized as an adjunct to the Joint Commission standard

and intents. In other words, the Joint Commission surveyor evaluates

compliance with all listed cross walked Medicare conditions of

participation and standards when evaluating the referenced Joint

Commission standard. Therefore, the requirement that any 12 month

period preceding a certification survey for hospices may not exceed 20%

of the total number of hospice days would be evaluated as the surveyor

was surveying compliance with LD 5 and LD 8.

--Another Medicare standard requires at Sec. 418.100(a) that hospices

providing inpatient care directly provide 24-hour nursing services that

are sufficient to meet total nursing needs and that are in accordance

with the patient's plan of skilled care. JCAHO provided evidence that

this standard was included in its requirements at CAMHC TX 1.2, which

implements interventions identified in the care plan; at CC2, which

provides for 24-hours-a-day, 7-days-a week registered nursing; and at

LD 2.2, which discusses the use of systematic planning consistent with

the patient's needs.

III. Results of Evaluation

We completed a standard-by-standard comparison of JCAHO's

conditions or requirements for hospices to determine whether they met

or exceeded Medicare requirements. We found that, after requested

revisions were made, JCAHO's requirements for hospices did meet or

exceed our requirements. In addition, we visited the corporate

headquarters of JCAHO to validate the information it submitted and to

verify that its administrative systems could adequately monitor

compliance with its standards and survey processes and that its

decision-making documentation and processes met our standards. We also

observed a survey in real time to see that it met or exceeded our

standards. As a result of our review of the documents and observations,

we requested certain clarifications to JCAHO's survey and

communications processes. These clarifications were provided as

indicated above, and changes were made to the documentation in the

applications. Therefore, we recognize JCAHO as a

[[Page 32886]]

national accreditation organization for hospices that request

participation in the Medicare program, effective June 18, 1999, through

June 18, 2003.

IV. Paperwork Reduction Act

This document does not impose any information collection and record

keeping requirements subject to the Paperwork Reduction Act (PRA).

Consequently, it does not need to be reviewed by the Office of

Management and Budget (OMB) under the authority of the PRA. The

requirements associated with granting and withdrawal of deeming

authority to national accreditation, codified in part 488, ``Survey,

Certification, and Enforcement Procedures,'' are currently approved by

OMB under OMB approval number 0938-0690, with an expiration date of

August 31, 1999.

V. Regulatory Impact Statement

We have examined the impacts of this notice as required by

Executive Order 12866 and the Regulatory Flexibility Act (RFA) (Pub. L.

96-354). Executive Order 12866 directs agencies to assess all costs and

benefits of available regulatory alternatives and, when regulation is

necessary, to select regulatory approaches that maximize net benefits

(including potential economic, environmental, public health and safety

effects; distributive impacts; and equity). The RFA requires agencies

to analyze options for regulatory relief for small businesses. For

purposes of the RFA, States and individuals are not considered small

entities.

Also, section 1102(b) of the Act requires the Secretary to prepare

a regulatory impact analysis for any notice that may have a significant

impact on the operations of a substantial number of small rural

hospitals. Such an analysis must conform to the provisions of section

604 of the RFA. For purposes of section 1102(b) of the Act, we consider

a small rural hospital as a hospital that is located outside of a

Metropolitan Statistical Area and has fewer than 50 beds.

This notice merely recognizes JCAHO as a national accreditation

organization for hospices that request participation in the Medicare

program. As evidenced by the following data for the cost of surveys,

there are neither significant costs nor savings for the program and

administrative budgets of Medicare. Therefore, this notice is not a

major rule as defined in Title 5, United States Code, section 804(2)

and is not an economically significant rule under Executive Order

12866.

Therefore, we have determined, and the Secretary certifies, that

this notice will not result in a significant impact on a substantial

number of small entities and will not have a significant effect on the

operations of a substantial number of small rural hospitals. Therefore,

we are not preparing analyses for either the RFA or section 1102(b) of

the Act.

In fiscal year 1996, there were 2,148 certified hospices

participating in the Medicare program. We conducted 258 initial

surveys, 322 recertification surveys (both at a cost of $634,904), and

145 complaint surveys.

In fiscal year 1997, there were 2,270 certified hospices. This was

an increase of 122 facilities. We conducted 180 initial surveys, 354

recertification surveys (both at a cost of $330,686), and 237 complaint

surveys. The increase in the number of facilities is less than the

number of initial surveys because of mergers, withdrawals, and closures

during the year.

In fiscal year 1998, there were 2,290 certified hospices. This was

an increase of 20 facilities. We conducted 126 initial surveys, 196

recertification surveys (both at a cost of $360,783), and 201 complaint

surveys. The increase in the number of facilities is less than the

number of initial surveys because of mergers, withdrawals, and closures

during the year.

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

conducting hospice surveys by State agencies are increasing. There was

a 6.6 percent increase in hospices within 3 years (fiscal years 1996

through 1998). Hospices accredited by JCAHO would be surveyed every 3

years. The numbers of participating providers continue to increase. In

an effort to better assure the health, safety, and services of

beneficiaries in hospices already certified, as well as to provide

relief to State budgets in this time of tight fiscal constraints, we

deem hospices accredited by JCAHO as meeting our Medicare requirements.

Thus, we continue our focus on assuring the health and safety of

services by providers and suppliers already certified for participation

in a cost-effective manner.

In accordance with the provisions of Executive Order 12866, this

notice was reviewed by OMB.

Authority: Sec. 1865(b)(3)(A) of the Social Security Act (42

U.S.C. 1395bb(b)(3)(A)).

(Catalog of Federal Domestic Assistance Program No. 93.773,

Medicare--Hospital Insurance)

Dated: May 3, 1999.

Nancy-Ann Min DeParle,

Administrator, Health Care Financing Administration.

[FR Doc. 99-15500 Filed 6-17-99; 8:45 am]

BILLING CODE 4120-01-P