Medicare and Medicaid Program; Appeal of the Loss of Nurse Aide Training Programs

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 431 and 498

[HCFA-2054-IFC]

RIN 0938-AJ59

Medicare and Medicaid Program; Appeal of the Loss of Nurse Aide

Training Programs

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

ACTION: Interim final rule with comment period.

-----------------------------------------------------------------------

SUMMARY: This interim final rule revises current Medicare and Medicaid

regulations to provide participating nursing facilities, skilled

nursing facilities, and dually participating nursing facilities an

opportunity for an evidentiary hearing before an administrative law

judge to challenge a facility's loss of its approved nurse aide

training program. This rule also amends Medicaid regulations to permit

States to provide evidentiary hearings for facilities that participate

only in the Medicaid program and that face a loss of their nurse aide

training programs. Previous regulations have provided only for an

informal hearing when facilities lose training programs and do not

otherwise face enforcement remedies under the Medicare and Medicaid

programs.

DATES: Effective date: These regulations are effective July 23, 1999.

Comment date: Comments will be considered if we receive them at the

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

September 21, 1999.

ADDRESSES: Mail an original and 3 copies of written comments to the

following address:

Health Care Financing Administration, Department of Health and Human

Services, Attention: HCFA-2054-IFC, P.O. Box 9010, Baltimore, MD 21244-

9010

Room 443-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,

Washington, DC 20201, or

Room C5-16-03, 7500 Security Boulevard, Baltimore, Maryland 21244-1850.

Comments may be submitted electronically to the following e-mail

address: (filecode 2054ifc)@hcfa.gov. For e-mail procedures and

information on ordering copies of the Federal Register containing this

document and electronic access, see the beginning of

SUPPLEMENTARY INFORMATION.

FOR FURTHER INFORMATION CONTACT: Jeffrey Golland, (202) 619-3377.

SUPPLEMENTARY INFORMATION:

E-Mail, Comments, Procedures, Availability of Copies, and

Electronic Access

E-mail comments must include the full name and address of the

sender, and must be submitted to the referenced address to be

considered. All comments must be incorporated in the e-mail message

because we may not be able to access attachments. Electronically

submitted comments will be available for public inspection at the

Independence Avenue address, below. Because of staffing and resource

limitations, we cannot accept comments by facsimile (FAX) transmission.

In commenting, please refer to file code HCFA-2054-IFC. Comments

received timely will be available for public inspection as they are

received, generally beginning approximately 3 weeks after publication

of a document, in Room 443-G of the Department's offices at 200

Independence Avenue, SW., Washington, DC, on Monday through Friday of

each week from 8:30 a.m. to 5 p.m. (phone: (202) 690-7890).

I. Background

To participate in the Medicare and Medicaid programs, facilities

furnishing nursing services must satisfy certain requirements as a

prerequisite to their receiving a provider agreement. Specifically,

they must comply with the requirements set forth at section 1819(b),

(c), and (d) of the Social Security Act (the Act) for the Medicare

program, and section 1919(b), (c), and (d) of the Act for the Medicaid

program. Implementing regulations further clarifying these statutory

requirements are set forth at 42 CFR Part 483 (Requirements for States

and Long Term Care Facilities). Facilities wishing to

[[Page 39935]]

participate in these programs may do so only after they have been

surveyed, or inspected, by a survey team and found to be in substantial

compliance with program requirements. While we administer these

programs at the Federal level, typically these surveys are performed by

State agencies acting under an agreement with us pursuant to section

1864 of the Act. States conduct routine surveys on the average of once

annually for each facility. When States perform these surveys, they

make recommendations to us if Medicare determinations are involved,

whereas determinations for facilities wishing to participate only in

the Medicaid program are made predominately by the States. Facilities

found to be furnishing services in substantial compliance with Federal

requirements are issued a provider agreement and are thereby entitled

to furnish reimbursable nursing services to Medicare beneficiaries and

Medicaid recipients.

Among the requirements that nursing facilities must meet is an

obligation to employ only those nurse aides who are qualified to fill

those positions. Sections 1819(b)(5)(A) and 1919(b)(5)(A) of the Act

specifically prohibit nursing facilities from employing individuals as

nurse aides for more than 4 months unless these individuals have

completed a training and competency evaluation program and are

competent to furnish nursing or nursing related services. These

requirements are reflected in the regulations at Sec. 483.75(g) (Staff

qualifications). According to sections 1819(f)(2)(B) and 1919(f)(2)(B)

of the Act, States approve these training programs and have discretion

to approve nurse aide training programs that are offered by or in

facilities.

Under sections 1819(g)(2)(B) and 1919(g)(2)(B) of the Act, if a

facility is found to have furnished substandard quality of care during

a standard survey, it is subject to an extended survey that is designed

to probe in more depth the facility's policies and procedures that

produced substandard quality of care. If a facility is subjected to an

extended survey and has been operating an approved nurse aide training

program, it loses its ability to provide the program for 2 years as

required by sections 1819(f)(2)(B)(iii)(I) and 1919(f)(2)(B)(iii)(I) of

the Act.

When we published the nursing home survey and enforcement

regulations in the November 10, 1994 final rule (59 FR 56116), we

addressed issues raised by a facility's loss of its nurse aide training

program. In that final rule (59 FR 56228), we concluded that facilities

facing this loss should have access to the informal dispute resolution

process offered under Sec. 488.331, but that they should not have an

opportunity for an administrative law judge (ALJ) hearing since we

perceived a facility's loss in this context as not rising to the level

of deprivation marked by sanctions described elsewhere in the statute

such as facility agreement terminations or civil money penalties. It is

only if a facility suffers an adverse and direct legal consequence

under the Medicare program that it is entitled to administrative and

judicial review. Accordingly, the regulations at Sec. 498.3(d)(10)(iii)

(Scope and applicability), precluded the opportunity for an ALJ hearing

when a facility loses its approval to train nurse aides. Similarly,

Medicaid regulations, at Sec. 431.153(f)(2) (Evidentiary hearing), also

precluded the opportunity for Medicaid-only certified facilities to

receive a full evidentiary hearing for losses of their approved nurse

aide training programs. Facilities have had the ability to challenge

the loss of their nurse aide training programs only if they also were

challenging the imposition of a remedy that was appealable.

II. Provisions of the Interim Final Rule

We are amending the Medicare and Medicaid regulations to permit a

facility an opportunity for an evidentiary hearing if it loses its

approved nurse aide training program. In the context of the appeals

system available to long term care facilities that are either Medicare

or Medicaid certified or dually certified for both the Medicare and

Medicaid programs, this means the opportunity for a hearing before an

ALJ of the Departmental Appeals Board and to request review by the

Board of an ALJ decision. As has always been the case, the nurse aide

training program ceases to operate pending an appeal. While we are

deleting the Medicaid regulation that foreclosed the possibility of an

evidentiary hearing in these cases, we are leaving to States the

details of whether or how they may provide hearings to those facilities

participating only in the Medicaid program. However, nurse aid training

programs provided by Medicaid-only facilities in States that elect to

provide these hearings must cease to operate pending an appeal just has

been the case for Medicare certified facilities.

When we published the survey and enforcement final rule in November

1994, we did not have the benefit of the experience we have had since

that time. We could continue to advance the same arguments we made in

the preamble to the November 1994 final rule as to the relative merits

of losing a nurse aide training program compared with the impact of one

or more of the remedies set out in the statute. We believe, however,

that we should acknowledge the arguments that have been advanced by

individual facilities on the magnitude of the loss to them when they

are unable to train nurse aides themselves. Facilities have alerted us

to the difficulty they sometimes have in finding qualified nurse aides

once they are unable to train their own. Those employed as nurse aides

are not highly paid and are not always available in abundance to

facilities whenever they need to hire additional staff or replace those

who leave. Turnover in these positions is high, thereby placing

increased pressures on facilities to maintain the staff they need to

furnish essential services to facility residents. Thus, the loss of an

ability to train nurse aides can have significant consequences for a

facility.

Although the waiver provision in the statute, at sections

1819(f)(2)(C) and 1919(f)(2)(C) of the Act, provides relief to some

facilities in these situations, it is not universal in scope and,

therefore, may not reach all facilities that have difficulty employing

qualified individuals as nurse aides. The waiver provision authorizes a

State to permit a facility that has lost its approval to train its

nurse aides to continue that training in the facility (although not

under the direction of the facility) if it determines that there is no

other training program within a reasonable distance of the facility and

the State can assure that there is an adequate environment to operate

the program in the facility.

Because the reason for the loss of nurse aide training is a fact-

driven conclusion that the facility has provided substandard quality of

care, we recognize the desirability of furnishing a facility the

opportunity to challenge these factual findings in a forum that is

designed to hear identical disputes that arise when remedies are

imposed on noncompliant facilities. Thus, there is sufficient reason to

have a regulation that furnishes the same appeal process that has been

available for the imposition of remedies on a facility.

We view the provision of administrative hearings in cases involving

the loss of nurse aide training, along with those that have been

furnished up to now for most of the remedies imposed under Sec. 488.406

(Available remedies), as being derived from sections 1866(b)(2) and

1866(h) of the Act. These sections provide for the review of certain

determinations we have made such as those in which we conclude that a

facility is not complying substantially with the requirements of

[[Page 39936]]

the Act. We believe these sections of the statute are triggered when

affected facilities sustain genuinely adverse legal consequences under

the Medicare program as a result of action we have taken. As a matter

governed by sections 1866(b)(2) and 1866(h) of the Act, these hearings

are funneled through the administrative process described in section

205(b) of the Act and to judicial review of our final decision

according to section 205(g) of the Act. Both sections 205(b) and 205(h)

are incorporated in the Medicare statute at section 1866(h) of the Act.

Therefore, we are revising the Medicare and the Medicaid sections

of the regulations. We are revising the Medicaid hearing regulations by

deleting the reference at Sec. 431.153(b)(3) (Limit on grounds for

appeal) that preclude States from granting evidentiary hearings to

Medicaid facilities losing their nurse aide training programs. We are

not affirmatively requiring States to provide a hearing in these cases

because that is a decision we believe States should determine in light

of circumstances that are apt to differ among the States.

We are revising the Medicare hearing regulations that have

precluded facilities from challenging the level of noncompliance we

have found since findings of substandard quality of care are uniquely

sensitive to specific findings of noncompliance. Specifically, a

finding of substandard quality of care is premised upon a determination

that there are discrete levels of noncompliance found under three

regulations (Secs. 483.13 (Resident behavior and facility practices),

483.15 (Quality of life), and 483.25 (Quality of care)). Thus, to

adequately challenge a finding of substandard quality of care, a

facility may need to be in a position to challenge the specific levels

of noncompliance that gave rise to the finding. Accordingly, we are

revising Sec. 498.3(b)(13) to permit this kind of challenge.

We are also revising Sec. 498.3(b) (Initial determinations by HCFA)

by adding a new paragraph (15) that will make a finding of substandard

quality of care that results in the loss of the approval of a

facility's nurse aide training program an initial determination for

purposes of receiving an evidentiary hearing.

Additionally, we are revising the regulations at

Sec. 498.3(d)(10)(iii) (Administrative actions that are not initial

determinations) by deleting the reference to the loss of nurse aide

training as an administrative action that is not an initial

determination. These revisions will affect the hearing rights of

facilities that are participating in the Medicare or Medicaid program

or are dually participating in the Medicare and Medicaid programs.

We intend that these changes to the regulations be effective upon

publication. Thus, we will apply the new rules to determinations made

after the effective date of this interim final rule in which we or the

States find substandard quality of care (communicated to the facility

in a statement of deficiencies on HCFA Form 2567) that leads to the

facility's loss of its ability to train nurse aides.

III. Response to Comments

Because of the large number of items of correspondence we normally

receive on Federal Register documents published for comment, we are not

able to acknowledge or respond to them individually. We will consider

all comments we receive by the date and time specified in the DATES

section of this preamble, and, when we proceed with a subsequent

document, we will respond to the comments in the preamble to that

document.

IV. Waiver of Proposed Rulemaking

We ordinarily publish a notice of proposed rulemaking in the

Federal Register and invite public comment on the proposed rule. The

notice of proposed rulemaking includes a reference to the legal

authority under which the rule is proposed, and the terms and

substances of the proposed rule or a description of the subjects and

issues involved. This procedure can be waived, however, if an agency

finds good cause that a notice-and-comment procedure is impracticable,

unnecessary, or contrary to the public interest and incorporates a

statement of the finding and its reasons in the rule issued.

We believe that engaging in proposed rulemaking in the context of

this rule is unnecessary. We are not making substantive changes in the

standards that nursing facilities must meet to participate in the

Medicare and Medicaid programs. Facilities will continue to be

obligated to meet the requirements of 42 C.F.R. Part 483 to retain

program certification including the requirement that only trained nurse

aides be employed by the facility. Nor are we changing in any way the

basis for the imposition of remedies on long term care facilities when

they are found to be out of compliance with Federal certification

requirements. Facilities will still face the imposition of remedies, as

they have before, when they fail to comply. They will continue to be

subject to the consequences of a finding of substandard quality of care

including the loss of nurse aide training programs and the required

notifications to attending physicians and a State's Administrator

Licensing Board. Thus, these rule changes will not affect the well

being of residents by releasing facilities from any obligation they

already owe under these programs. Indeed, under this rule, facilities

that have lost their ability to train nurse aides will face that

consequence unless our determination that the facility has provided

substandard quality of care is reversed by an ALJ or by the

Departmental Appeals Board upon its review of the hearing decision.

This final rule only affects the type of review that nursing facilities

may receive when they face the loss of their training programs.

In addition, we do not believe that this rule will adversely impact

States. While those States that choose to provide hearings in nurse

aide training cases may experience some added burdens, we believe they

will be minimal. Specifically, we expect that there will be very few

cases involving the loss of nurse aide training in facilities certified

only in the Medicaid program.

Moreover, we are providing facilities with appeal rights that were

not previously granted. In doing so, we are recognizing the industries'

interest in having additional appeal rights.

For the same reasons, we believe that we have good cause to

dispense with the usual 30 day delay in the effective date of a rule,

and believe that this rule should become effective immediately upon

publication. Because we are not revising either a substantive standard

that governs nursing home conduct or the consequences facilities may

face because of their failure to comply with these requirements, we

are, therefore, not affecting any provision that governs the manner in

which nursing facilities must furnish safe and healthful conditions for

the delivery of nursing services they furnish to their residents.

Nursing home residents will continue to have all the protections they

have always had under the nursing home requirements of participation

and the survey and enforcement rules. Accordingly, we believe that we

have good cause to make this procedural change effective immediately.

Therefore, we find good cause to waive the notice of proposed

rulemaking and to issue this final rule on an interim basis. We are

providing a 60-day comment period for public comment.

[[Page 39937]]

V. Information Collection Requirements

Ordinarily, we would be required to estimate the public reporting

burden for information collection requirements for these regulations in

accordance with Chapter 35 of Title 44 of the United State Code.

However, sections 4204(b) and 4214(d) of the Omnibus Budget

Reconciliation Act of 1987 provide for a waiver of Paperwork Reduction

Act requirements for these regulations.

VI. Regulatory Impact Statement

We have examined the impacts of this interim final rule 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 of small businesses.

For purposes of the RFA, small entities include small businesses, non-

profit organizations, and government agencies. Most hospitals and most

other providers and suppliers are small entities, either by non-profit

status or by having revenues of $5 million or less annually. For

purposes of the RFA, all participating nursing facilities, skilled

nursing facilities, and dually participating nursing facilities are

considered to be small entities. Individuals and States are not

included in the definition of a small entity.

Section 1102(b) of the Social Security Act, (the Act) requires us

to prepare a regulatory impact analysis if a rule 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

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

a Metropolitan Statistical Area and has fewer than 50 beds.

Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L.

104-4 also requires that agencies assess anticipated costs and benefits

before issuing any rule that may result in an annual expenditure by

State, local, and tribal governments, in the aggregate, or by the

private sector, of $100 million. We believe that this interim final

rule is not an economically significant rule as described in the

Executive order, nor a significant action as defined in the Unfunded

Mandates Reform Act. Aggregate impacts of the rule, and aggregate

expenditures caused by the rule, would not approach $100 million for

either the public or the private sector. Also, we believe that nursing

facilities will not object to any additional costs they might incur in

pursuing challenges to a loss of their nurse aide training programs

because they have been advocating this type of hearing since we

published our nursing facility enforcement final rule in November 1994.

In addition, national provider organizations, as well as individual

providers, have requested that we permit an appeal through our

administrative process. Furthermore, this interim final rule would not

affect a facility's decision to continue to serve beneficiaries.

According to our survey estimates, approximately 400 of the 17,000

long term care facilities participating in Medicare and Medicaid

programs would be affected by this interim final rule. The facilities

affected are those that have had an extended survey conducted as a

result of an inspection finding substandard quality of care, with no

remedies imposed. Whenever substandard quality of care is found, the

facility may not conduct nurse aide training in its facility.

Although there would be no economic impact on Medicare contractors

or beneficiaries, some providers would incur the cost of preparing an

appeal when an inspection triggers an extended survey (and subsequent

loss of the ability to provide nurse aide training). This would be in

addition to appealing the finding through the already available

informal dispute resolution process. Also, States may incur additional

costs if their surveyors need to testify in cases that previously would

not have been permitted to be heard by an ALJ and would incur

additional costs if they choose to provide hearings themselves for

Medicaid-only facilities. These costs, however, would be minimal since

we anticipate very few of these cases to arise in any State.

As stated earlier, we believe that this interim final rule will not

have a significant economic impact on providers, Medicare contractors,

or beneficiaries. In addition, long term care facilities that lose the

ability to conduct nurse aide training with no other remedies involved,

will be supportive of their ability to appeal the findings that gave

rise to the loss of their training programs since they have been

seeking just this solution since the publication of the final nursing

home enforcement rule in 1994.

For these reasons, we are not preparing analyses for either the RFA

or section 1102(b) of the Act because we have determined, and we

certify, that this rule will not have a significant economic impact on

a substantial number of small entities or a significant impact on the

operations of a substantial number of small rural hospitals.

In accordance with the provisions of Executive Order 12866, this

regulation was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 431

Grant programs-health, Health facilities, Medicaid, Privacy,

Reporting and recordkeeping requirements.

42 CFR Part 498

Administrative practice and procedure, Health facilities, Health

professions, Medicare, Reporting and recordkeeping requirements.

For the reasons set forth in the preamble, 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: Sec. 1102 of the Social Security Act (42 U.S.C.

1302).

Sec. 431.153 [Amdended]

2. In Sec. 431.153, paragraph (b)(3) is removed and reserved.

PART 498--APPEALS PROCEDURES FOR DETERMINATIONS THAT AFFECT

PARTICIPATION IN THE MEDICARE PROGRAM AND FOR DETERMINATIONS THAT

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

PROGRAM

B. 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. In Sec. 498.3, paragraph (b)(13) is revised, a new paragraph

(b)(15) is added, and paragraph (d)(10)(iii) is revised to read as

follows:

Sec. 498.3 Scope and applicability.

* * * * *

(b) Initial determinations by HCFA. * * *

(13) The level of noncompliance found by HCFA in a SNF or NF but

only

[[Page 39938]]

if a successful challenge on this issue would affect--

(i) The range of civil money penalty amounts that HCFA could

collect (The scope of review during a hearing on imposition of a civil

money penalty is set forth in Sec. 488.438(e) of this chapter); or

(ii) A finding of substandard quality of care that results in the

loss of approval for a SNF or NF of its nurse aide training program.

* * * * *

(15) The finding of substandard quality of care that leads to the

loss by a SNF or NF of the approval of its nurse aide training program.

* * * * *

(d) Administrative actions that are not initial determinations. * *

*

(10) * * *

(iii) The imposition of State monitoring.

* * * * *

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical

Assistance Program)

(Catalog of Federal Domestic Assistance Program No. 93.773,

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

Supplementary Medical Insurance Program)

Dated: July 14, 1999.

Michael M. Hash,

Deputy Administrator, Health Care Financing Administration.

Approved: July 16, 1999.

Donna E. Shalala,

Secretary.

[FR Doc. 99-18802 Filed 7-20-99; 12:04 pm]

BILLING CODE 4120-01-P