Medicare and Medicaid Programs; Civil Money Penalties for Nursing Homes (SNF/NF), Change in Notice Requirements, and Expansion of Discretionary Remedy Delegation
Federal RegisterMar 18, 1999
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Part 488
[HCFA-2035-FC]
RIN 0938-AJ35
Medicare and Medicaid Programs; Civil Money Penalties for Nursing
Homes (SNF/NF), Change in Notice Requirements, and Expansion of
Discretionary Remedy Delegation
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule with comment period.
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SUMMARY: This final rule with comment period expands current Medicare
and Medicaid regulations regarding the imposition of civil money
penalties imposed on nursing homes that are not in compliance with
program requirements. The existing regulations provide for the
imposition of a civil money penalty in a specific amount for each day
of noncompliance and provide further that the civil money penalty stays
in place until the facility comes into substantial compliance with all
participation requirements or the facility is terminated from
participation in the program. This new rule adds the ability for HCFA
or the State to impose a single civil money penalty amount for an
instance of a nursing home's noncompliance. We are also deleting
language to remove the requirement of a maximum notification period for
imposition of a remedy.
DATES: Effective date: These regulations are effective on May 17, 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 May 17,
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-2035-FC, P.O. Box 26585,
Baltimore, MD 21207-0385.
If you prefer, you may deliver an original and 3 copies of your
written comments to one of the following addresses: Room 309-G, Hubert
H. Humphrey Building, 200 Independence Avenue, SW., Washington, D.C.
20201, or Room C5-09-26, 7500 Security Boulevard, Baltimore, Maryland
21244-1850.
Comments may also be submitted electronically to the following e-
mail address: [email protected] For e-mail comment procedures, see
the beginning of SUPPLEMENTARY INFORMATION. For further information on
ordering copies of the Federal Register contained in this document, see
the beginning of Supplementary Information.
FOR FURTHER INFORMATION CONTACT: Cynthia Graunke, 410-786-6782
SUPPLEMENTARY INFORMATION:
E-mail, Comments, Procedures, and Availability of Copies
E-mail comments must include the full name and address of the
sender, and must be submitted to the referenced address in order 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-2035-FC. 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 309-G of the Department's offices at 200
Independence Avenue, SW., Washington, D.C., on Monday through Friday of
each week from 8:30 a.m. to 5 p.m. (phone: (202) 690-7890).
Copies: To order copies of the Federal Register containing this
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password required).
I. Background
To participate in the Medicare and or Medicaid programs, long-term
care facilities must be certified as meeting Federal participation
requirements. Long-term care facilities include skilled nursing
facilities for Medicare and nursing facilities for Medicaid. The
Federal participation requirements for these facilities are specified
in the statute at sections 1819 and 1919 of the Social Security Act
(the Act) and in implementing regulations at 42 CFR Part 483, Subpart
B.
Section 1864(a) of the Act authorizes the Secretary to enter into
agreements with State survey agencies to determine whether skilled
nursing facilities meet the Federal participation requirements for
Medicare. Section 1902(a)(33)(B) of the Act provides for State survey
agencies to perform the same survey tasks for facilities participating
or seeking to participate in the Medicaid program. The results of these
Medicare and Medicaid surveys are used by HCFA and the State Medicaid
agency, respectively, as the basis for a decision
[[Page 13355]]
to enter into, deny, or terminate a provider agreement with the
facility. They are also used to determine whether one or more remedies
should be imposed where noncompliance is identified.
To assess compliance with Federal participation requirements,
surveyors conduct onsite inspections (surveys) of facilities. In the
survey process, surveyors directly observe the actual provision of care
and services to residents and the effect or possible effects of that
care to assess whether the care provided meets the assessed needs of
individual residents.
Among the remedies available to the Secretary and the States under
the statute to address facility noncompliance is a civil money penalty.
Authorized by sections 1819(h) and 1919(h) of the Act, civil money
penalties may be imposed to remedy noncompliance at amounts not to
exceed $10,000 per day. The statute additionally permits the Secretary
and the States to impose a civil money penalty for past instances of
noncompliance even if a facility is in compliance at the time of a
current survey. The Secretary is obliged to follow the procedures set
out at section 1128A of the Act in processing these remedies.
The implementing regulations that govern the imposition of civil
money penalties, as well as the other remedies authorized by the
statute, were published on November 10, 1994 (59 FR 56116). The
enforcement rules are set forth at 42 CFR Part 488, Subpart F, and the
provisions directly affecting civil money penalties are set forth at 42
CFR 488.430 to 488.444. The final enforcement rule was indicative of
more fundamental changes in the principles upon which the enforcement
system is based. We implemented the Congress' mandate, as originally
embodied in the Omnibus Budget Reconciliation Act of 1987, to abandon
our hierarchical system of requirements and to develop instead a system
capable of detecting and responding to noncompliance with any
requirement. The new system is built on the assumption that all
requirements must be met and enforced and that requirements take on
greater or lesser significance as a function of the circumstances and
resident outcomes in the facility at the time of the survey. Thus, in
the case of civil money penalties, facilities can expect to receive
increased penalties as the nature and extent of their noncompliance
increases. Current procedures allow for penalties to be assessed for
$3,050 per day up to $10,000 per day for noncompliance that constitutes
immediate jeopardy to patient health and safety, while penalties of $50
to $3,000 per day may be imposed where immediate jeopardy does not
exist.
In addition, the regulations currently require multiple notices
prior to imposition of remedies. One of the notification requirements
contained at 42 CFR 488.402(f)(5) establishes a maximum number of days
that may pass before a remedy must be imposed.
II. Provisions of the Final Rule with Comment
A. Latest date of enforcement action.
Regulations at 42 CFR 488.402(f)(5) establish a maximum time frame
of 20 calendar days for HCFA or the State, as appropriate, to both
notify a provider that remedies will be imposed and actually impose the
remedy(ies). Establishment of a maximum time frame to accomplish both
notice and imposition of remedies has proven to be problematic as well
as unnecessarily restrictive for HCFA and the State. Briefly stated,
this regulation requires that remedies must be imposed within 20 days
of their notice to the provider and when they are not, HCFA or the
State, as appropriate, must issue another notice. The purpose of
providing notice is to assure an entity that it will be reasonably
informed in advance of an adverse action of the factual and legal basis
for that action. Such due process concerns have been satisfied for many
years by providing nursing homes with at least 2 days' notice in
immediate jeopardy cases and 15 days in all other cases. Since a
provider is initially notified of the remedies to be imposed following
the survey, establishing a maximum time of twenty days for a remedy to
be imposed unnecessarily requires an additional notice.
By eliminating the maximum notice period, providers will receive no
less prior notice than has traditionally been the case and, as
importantly, would receive no less information than were the maximum
notice period requirement to stay in effect. Thus, the only impact of
the current rule has been to artificially delay enforcement actions
when providers have already been well apprised of the grounds for the
action in previous correspondence from either HCFA or the State, but
HCFA or the State is unable to administratively impose the remedy (ies)
within 20 days of that notice. That is not a sufficient reason to
retain the requirement.
Therefore, Sec. 488.402(f)(5) will merely state that the 2-and 15-
day notice periods begin when the facility receives the initial notice
that a remedy is being imposed.
B. Per instance civil money penalties
When the civil money penalty provisions of the enforcement
regulations were published four years ago, they reflected an
interpretation of the statute that required HCFA and the States to make
a determination of not only the beginning date of identified
deficiencies, but an ending date as well. Where the beginning date of a
deficiency could be determined, that date would signify the beginning
of the provider's liability even if that date preceded the time of the
survey that first surfaced the issue. When the beginning date of the
deficiency could not be determined, the liability, for purposes of a
civil money penalty, would be the date of the survey. Determining the
ending date of the noncompliance, however, has at times proved to be
more troublesome because it has required, most often, a revisit to the
facility to document that the noncompliance has, in fact, been
corrected. It has been an issue of some consequence between the
provider industry and HCFA and States that survey teams have not
returned to facilities as quickly as facilities might like in order to
establish that noncompliance no longer exists. It has also been an
issue to providers that civil money penalty liability has continued in
many cases even where the originally identified deficiencies have been
corrected, but new ones have arisen. This has occurred because
providers must establish substantial compliance with all requirements
to avoid civil money penalty liability, not just compliance with the
deficiencies that triggered the decision to impose the penalty in the
first place. At the same time, current utilization of our civil money
penalty authority has been an issue with the consumer community because
of what it perceives to be a less than fully effective enforcement
tool. As relevant here, some consumers have expressed their belief that
whatever the features are to the regulatory scheme that arguably slow
the pace of enforcement, these features should be revised quickly to
maximize the benefits conferred by the enforcement provisions of the
statute.
Beyond this, under the enforcement scheme that HCFA and the States
have followed, it has largely been the case that, except where
immediate jeopardy has been involved or the provider has been found to
be a poor performing facility, civil money penalties have not been
imposed where facilities have been able to correct deficiencies before
a predetermined date for the completion of corrections. As a result, we
believe that many facilities have avoided the
[[Page 13356]]
imposition of penalties although subsequent to achieving compliance
these same facilities have failed to maintain substantial compliance.
This phenomenon has, to some degree, perpetuated the problem posed by
the so-called ``yo-yo'' facilities that were of concern to the Congress
when it enacted nursing home reform as well as to the Institute of
Medicine whose recommendations formed the basis for many of the changes
now appearing in the statute. When the per instance civil money penalty
is selected we do not envision a period to correct prior to imposition.
As we have noted previously, many facilities have avoided the
imposition of penalties because a period to correct has been provided
and they have initially come into compliance but failed to maintain
substantial compliance. Since the per instance civil money penalty will
be used when noncompliance is documented, and the penalty does not
accrue until substantial compliance is achieved, permitting a period to
correct before imposing the penalty defeats the purpose of this remedy.
While we believe that the basic approach we have taken to the
imposition of civil money penalties is still merited since we believe
it has provided both a sentinel effect in discouraging facility
noncompliance and has provided an effective response to facility
noncompliance where it has been identified, we have concluded that the
statute offers greater flexibility than we have exercised up to now.
Specifically, we believe the statute permits the Secretary and the
States to focus on individual instances of noncompliance without having
to track the duration of time that the facility remains out of
compliance with those requirements (or with other program
requirements). Thus, where sections 1819(h)(2)(B)(ii) and 1919(h)(2) of
the Act provide that a civil money penalty may be imposed for up to
$10,000 for each day of noncompliance, it is entirely consistent with
the statute that HCFA or a State impose a penalty for the noncompliance
it identifies without regard to additional days of noncompliance that
might yet be identified. Indeed, there is nothing in the statute that
compels either us or the States to await a determination of the total
number of days of noncompliance before having the authority to react to
the noncompliance that has been identified. By statute, HCFA or the
State may increase a civil money penalty to reflect additional days of
noncompliance beyond those identified during the survey. However, this
neither reflects an exclusive route to a civil money penalty liability
nor establishes a necessary precondition to the triggering of this
particular remedy. Not only do we derive this interpretation directly
from the civil money penalty provisions of the statute, but we find
support as well in the statute's broader mandate (at sections
1819(h)(2)(A) and 1919(h)(1) of the Act) that nothing in the
enforcement provisions ``shall be construed as restricting the remedies
available to the Secretary [or the State] to remedy a skilled nursing
facility's [or nursing facility's] deficiencies.''
Thus, should a survey team identify a particular instance of
noncompliance during a survey, such as the presence of an avoidable
pressure sore in a facility resident, we believe the statute authorizes
us or a State to impose an immediate civil money penalty for that one
instance of noncompliance. The only limitation that the statute would
provide is that the civil money penalty liability for that instance of
noncompliance could not be more than $10,000 for the day during which
the noncompliance was identified.
On the other hand, HCFA or a State could identify several instances
of noncompliance, perhaps relating to different aspects of facility
obligations (as, for example, could be the case when deficiencies have
been identified in areas of hydration, diet, resident assessment, and
resident rights) and find itself imposing several different civil money
penalties for each instance of noncompliance as long as the total
facility liability did not exceed $10,000 per day.
What we mean by an ``instance'' in this regulation is a single
deficiency identified by the tag number used as a reference on the
statement of deficiencies. While we consider an instance as a singular
event of noncompliance, there can be more than one instance of
noncompliance identified during a survey. For example, during the
course of a survey, HCFA or a State may identify several instances of
noncompliance, each in distinct regulatory areas such as resident
rights (42 CFR 483.10) and quality of care (Sec. 483.25). If the
noncompliance in the former area involves a violation of a resident's
right to privacy, that instance of noncompliance might trigger a civil
money penalty of $1,000. If noncompliance with the latter requirement
relates to an avoidable pressure sore, that instance of noncompliance
might trigger a civil money penalty of $4,000. The sum of these
penalties, $5,000, would be within the statutory limitation of $10,000
specified by the statute for a facility's liability for any given day
of noncompliance.
When considering whether a civil money penalty will be used as a
remedy, the survey agency must also decide whether to establish the
penalty on the basis of per day or per instance. This regulation does
not authorize the use of both. When compliance with Federal
requirements is evaluated by the survey agency and a decision is
reached to impose a civil money penalty, a concomitant decision must be
made whether the civil money penalty will be based on a determination
of per instance or per day.
Accordingly, we are adopting in this regulation the option of
permitting the imposition of civil money penalties for each instance of
noncompliance in addition to the option already set out in existing
regulations to assess a civil money penalty for each day of
noncompliance as long as the facility fails to achieve substantial
compliance with all requirements.
Therefore, we are revising Sec. 488.408, Selection of remedies;
Sec. 488.430, Civil money penalties: Basis for imposing penalty;
Sec. 488.432, Civil money penalties: When penalty is collected;
Sec. 488.434, Civil money penalties: Notice of penalty; Sec. 488.438,
Civil money penalties: Amount of penalty; Sec. 488.440, Civil money
penalties: Effective date and duration of penalty; Sec. 488.442, Civil
money penalties: Due date for payment of penalty; and Sec. 488.454,
Duration of remedies, to incorporate per instance civil money penalties
to our procedures.
Since a per instance civil money penalty is not cumulative, we
believe that a different calculus needs to be applied to better
formulate amounts that may be imposed as penalties under this
regulation. First, we are establishing a minimum of $1,000 for a per
instance civil money penalty. Because this penalty will not lap over to
a second or successive days of noncompliance, we believe it is
important that this penalty have a significant impact on noncompliant
providers to encourage their compliance at the earliest possible date
and to discourage similar conduct in the future. Were we to impose
penalties in lower amounts, we do not believe the necessary incentive
would be present. Additionally, we are not limiting penalty amounts (as
we did in the already existing rule) depending on whether immediate
jeopardy is present. First, the statute does not distinguish between
these two types of noncompliance in terms of determining an appropriate
penalty amount. Second, because here, too, a per instance penalty would
be a response to a specifically identified example of noncompliance
[[Page 13357]]
that would provide for no penalty aggregation beyond the first day, we
believe there needs to be an ability for HCFA and States to respond to
egregious instances of noncompliance in a way that is commensurate with
the seriousness that this type of violation represents.
Determination of the actual amount per instance will be governed by
the following:
Use of scope and severity (as that matrix has been applied
under the existing enforcement rule) to assist in determining the
magnitude of the noncompliance, including whether actual harm has
occurred.
The facility's degree of culpability.
The facility's history of prior offenses, including repeat
deficiencies.
These criteria are the same as those applied to determining penalty
amounts under the current regulation.
The seriousness of the infraction should be apparent in the
decision; e.g., an unnecessary death of a resident as a result of no
active supervision presents a far different problem than does the
infraction of finding that a confused person has been inappropriately
attired or that a resident has not been given the proper privacy while
receiving personal care from a caregiver. A determination of the scope
and severity of the infraction should occur before any determination of
the amount of the per instance civil money penalty is made. Ultimately,
the amount of money assigned to a per instance issue of noncompliance
when compared to the problem, and whether the civil money penalty
proves sufficient to provide a long term remedy, will have to withstand
the test of reasonableness.
We do not expect these penalty determinations to be made with
mathematical precision. As we have learned from our experience over the
past few years, the determination of deficiencies (and decisions
concerning an appropriate enforcement response) involve some degree of
judgment. This is not only inevitable but desirable because patient
care failings, for the most part, do not represent arithmetic
deviations from a norm. Rather, they represent varying degrees of the
many forms of harm that facility residents may experience. Our
expectation is that, as a whole, what we will see in the implementation
of this regulation is a pattern that generally associates more severe
penalties as deficiencies pose greater harm or risks to residents'
well-being. We expect to provide additional guidance and training to
surveyors and others who will be asked to apply this regulation, and
this guidance and training will reflect the approach taken in this
regulation.
The Department is considering as well another CMP methodology on
which we seek public comment. If comment is favorable, we would
implement this option when we finalize this interim regulation.
Under this additional option, a survey agency could recommend a per
day penalty of not more than $3,000 for non-immediate jeopardy
violations (or not more than $10,000 in cases of immediate jeopardy)
for any documented period of noncompliance without having an obligation
to determine the entire period of time that the noncompliance may be
present. For example, a survey team enters a facility on June 1 and
observes that a facility is not in substantial compliance. The team
returns July 1 and determines that the noncompliance it initially
identified has continued unabated. The survey agency could at that time
recommend a penalty of up to $3,000 per day (or $10,000 in the case of
immediate jeopardy ) for each of the 30 days of noncompliance between
June 1 and July 1. This would be the case even if the noncompliance
might yet extend for additional days or weeks. Thus, the CMP in such a
case would be based on the number of days of noncompliance actually
identified without an affirmative obligation on HCFA's or the State's
part to ascertain when, in fact, the noncompliance ceases to exist in
order to calculate the penalty amount. Or, in another hypothetical
situation, a survey team that enters a facility on June 1 may determine
from facility records or other evidence that the facility has been out
of compliance since May 15. The survey agency could then determine that
there have been 15 days of noncompliance for this past period and
recommend a penalty up to the regulatory maximum amounts for each of
those days of noncompliance without regard to how much longer after
June 1 the noncompliance may be present.
The new option would be intended to complement, not supplant, the
current CMP authority and the new per instance CMP described above. Our
goal in considering the adoption of this third option is to improve
nursing home compliance in a way that does not require multiple
revisits to impose but which also could have significant financial
impact. The potential advantage of this new option over the current CMP
authority is that a penalty can be imposed for documented violations
without the requirement of multiple revisits by the survey team, in
order to determine the amount of the CMP. Under current CMP authority,
no penalty may be collected until an ending date for the noncompliance
is determined. We believe this policy would serve to motivate a
facility to provide care to its residents in a fully compliant manner
that would enable it to avoid these potentially significant CMP's in
the first place. If a facility were not to undertake its
responsibilities in this fashion, it would know in advance that there
would be swift action taken to remedy noncompliant behavior.
The Department is especially interested in hearing from states,
consumer groups, and providers as to whether they regard this
additional type of penalty authority to be useful, and likely to
enhance the objective of seeing nursing homes achieve substantial
compliance on a sustained basis. We would also want to receive comments
on whether this proposal would be administratively practical. Lastly,
we encourage comments on whether there should be a maximum daily
penalty amount established for this option other than what the statute
already provides.
III. State Authorization to Initiate Notice-Notice of Policy Change
Regulations at Sec. 488.402(f)(1) currently permit States, as
authorized by HCFA, to send notice of adverse actions to facilities
which would otherwise be notified directly by HCFA. In the preamble of
the Federal Register document that set forth this specific regulation
(60 FR 50115, September 28, 1995), we discussed our intent to permit
States to give notice of remedies, on behalf of HCFA, only in cases of
minimal noncompliance. Limiting the State notification to situations of
minimal noncompliance was based on our belief at the time that HCFA
should be more directly involved in providing notice of remedies in
cases of serious noncompliance.
Our experience has shown us that the current interpretation impedes
our ability to respond as quickly as we would like to in instances of
facility noncompliance because of the extra time that HCFA's direct
involvement requires. Just as we retain responsibility for making
decisions about the imposition of remedies for lesser degrees of
noncompliance, so too we want to provide the same review, and retain
the same responsibility, of cases that pose more serious examples of
noncompliance before authorizing a State to impose remedies on our
behalf. Thus, under the interpretation we are adopting here for
Sec. 488.402(f)(1), States are authorized to impose any remedy which we
have the authority to impose, but only as directed by HCFA. We
[[Page 13358]]
expect that this adjustment to our process will result in the
imposition of remedies in a more expeditious and efficient manner than
has previously been the case.
IV. 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 major comments in the preamble to that
document.
V. 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 dispensing with proposed rulemaking is in the public interest and,
accordingly, are proceeding here directly with a final rule.
Residents of the nation's nursing homes are among the most
vulnerable members of our society. Their well-being is entrusted
completely to the care givers with whom they come into contact at these
facilities, and, in no small measure, they rely significantly on the
machinery of Federal and State government to protect their interests
through the enforcement mechanisms authorized by the Medicare and
Medicaid statutes. We believe that the more diligent we are in our
enforcement efforts, the greater the likelihood that facilities will be
encouraged to comply with our requirements, and the greater the
likelihood that facility residents will receive the kind of quality
care that the statute envisions.
While we believe that we have made material progress in advancing
the well-being of facility residents since the advent of nursing home
reform, we know that there are opportunities to improve on our record.
A report recently issued by the United States General Accounting Office
(GAO), in which there was a focus on nursing home conditions, spoke of
the continuing presence of unacceptable care in many facilities. Citing
continuing problems with meeting some of the most basic needs of
residents, such as hydration, nutrition, weight maintenance, and the
avoidance of pressure sores, the GAO concluded that there was still
important work to be done to make the enforcement scheme of the nursing
home reform legislation as effective as it might be. The GAO made
strong recommendations for HCFA to bolster its enforcement scheme in an
effort to minimize, if not eliminate, the kinds of care problems it
identified.
We are most troubled by these reports of poor care. We recognize
the importance of making whatever adjustments we have the authority to
make as swiftly as we reasonably can if we are to best protect resident
well-being. Were we to subject these rules on the imposition of civil
money penalties to the full course of proposed rulemaking before
finalizing them, we believe we would lose valuable opportunities to
respond to cases of noncompliance where the more rapid imposition of
penalties would likely reduce the exposure of larger numbers of the
nation's nursing home residents to substandard, and sometimes
dangerous, levels of care. Because these rules would focus on specific
instances of noncompliance, and would permit HCFA and the States to
thereby focus swiftly on pinpointed unacceptable care practices, we
believe it is in the public interest to make these rules effective at
the earliest possible time. We believe additionally that where this
rule is so reflective of what it is that the statute is aimed at, there
is particular urgency to make these rules available quickly.
For similar reasons, we believe we have good cause to eliminate the
requirement establishing a maximum time frame of 20 days to notify a
provider of the imposition of remedies contained at Sec. 488.402(f)(5).
Elimination of this maximum time frame does not eliminate the
providers' right to notice in advance of an adverse action. Such due
process continues to be satisfied with at least 2 days' notice in
immediate jeopardy cases and 15 days in all other cases. The only
impact of the current rule is to artificially delay enforcement actions
when providers have already been well apprised of the grounds for the
action in previous correspondence from either HCFA or the State. Again,
we believe it is in the public interest to make this rule change
effective at the earliest possible time and dispense with the full
course of proposed rulemaking.
In the case of the change to our interpretation of 42 CFR
488.402(f)(1), in addition to the reasons already cited, we believe
that engaging in proposed rulemaking would be unnecessary. In the case
of this modification of our enforcement process, no change in the
regulation text is needed since it is only an interpretation of the
current rule that is being affected. Beyond this, providers will
receive no less notice of impending adverse actions than they have in
the past. The only difference will be that the letter they receive will
arrive under the signature of a State official rather than one from a
HCFA regional office. We believe this change will permit HCFA and the
States to focus more swiftly on specific instances of noncompliance
and, therefore, it is in the public interest for this change to be
accomplished as quickly as possible.
Therefore, we find good cause to waive the notice of proposed
rulemaking and to issue this rule as a final rule with comment. We are,
however, providing a 60-day comment period and will respond to comments
we receive in any subsequent Federal Register document.
VI. Collection of Information Requirements
Sections 4204(b) and 4214(d) of the Omnibus Budget Reconciliation
Act of 1987 (Public Law 100-203) provide a waiver of Office of
Management and Budget review of information collection requirements for
the purpose of implementing the nursing home reform amendments and
these enforcement provisions as referred to in section 4203 of that
act.
VII. Regulatory Impact Statement
We have examined the impacts of this final rule with comment as
required by Executive Order 12866 and the Regulatory Flexibility Act
(RFA) (Public Law 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. For
purposes of the RFA, most long term care facilities are considered to
be small entities.
Section 1102(b) of the Social Security Act requires us to prepare a
regulatory impact analysis if a rule may have a
[[Page 13359]]
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.
The intent of the ``per instance'' penalty in this final rule and
the ``limited per day'' option discussed earlier in this preamble is to
offer greater administrative ease to the survey agency in applying
penalties and offer a more flexible approach to ensuring compliance.
The current per day penalty is administratively difficult to apply,
consuming increased surveyor time. The ``per instance'' and ``limited
per day'' would allow the imposition of financial penalties that on a
per case basis may be less onerous. In developing these two options
HCFA is recognizing the range of severity of violations and providing
survey agencies increased enforcement flexibility, in the form of
additional civil money penalty options.
We view the anticipated results of this rule as beneficial to
nursing home residents. Specifically, we believe that a per instance
civil money penalty will allow us to more specifically tailor the
response to facility noncompliance in a way that assures that
appropriate resident care occurs. Nevertheless, we recognize that this
rule could be controversial and may be responded to unfavorably by some
interested parties. We also recognize that not all of the potential
effects of this rule can be definitely anticipated, especially in view
of their interaction with other Federal, State, and local activities
regarding health and safety assurance. In particular, considering the
effects of our simultaneous efforts to improve the survey and
enforcement activities, through both new and existing instruments and
the nursing home provider's responsibility to maintain continuous
compliance with the participation requirements, it is impossible to
quantify meaningfully the future effect of this rule on facilities'
compliance activities or costs. We also are unable to project the
frequency with, or increase or decrease in, which facilities will be
found to be out of compliance and subject to the imposition of a civil
money penalty. While it is not possible to anticipate frequency HCFA
must consider the facility's financial condition in determining the
amount of penalty if a civil money penalty is selected.
Affected Entities
As of August 24, 1998, there are a total of 17,346 nursing homes
participating in the Medicare and Medicaid programs; there are 1,488
skilled nursing facilities certified for Medicare, 2,343 nursing
facilities certified for Medicaid, and 13,515 dually participating
facilities certified for both Medicare and Medicaid. The majority (65
percent) of these facilities are proprietary. Approximately 28 percent
are not-for-profit and 7 percent are government operated.
In order to determine what is a small entity, we use $5 million as
a threshold. In estimating the number of nursing facilities with annual
revenues in excess of $5 million, bed size was used as a proxy. We
assumed facilities with 120 beds or more would have annual gross
revenues of $5 million or more. Information on average revenue per day
was obtained from the HCFA Office of the Actuary, National Health
Statistics Group. In determining the facility bed size, the national
1997 average facility occupancy was considered. The occupancy rate was
taken from a January 1999 report ``Nursing Facilities, Staffing,
Residents, and Facility Deficiencies, 1991 Through 1997.'' The Online
Survey Certification and Report (OSCAR) was used in preparing the
report as well as our using the data to gather information regarding
facility size. Approximately 61 percent of the proprietary facilities
have 119 beds or fewer. Government-owned facilities are not considered
small entities because they are not independently owned and operated
even though they are not-for-profit.
There should be no additional cost to the provider. This is based
upon the fact the regulations and operating directions against which
compliance is evaluated have been readily available and widely
distributed to the provider community for a number of years and the
requirements have not changed. The requirements against which
compliance is evaluated are known and the provider has both the ability
and expectation to maintain compliance. The provider should be in
compliance. This would mean no civil money penalty would be imposed.
However, should the provider be determined out of compliance and a
decision reached to impose a per instance civil money penalty, it is
difficult to project the number of times that may occur. While it may
not be fully instructive to evaluate the impact of the current process
for imposing a civil money penalty, the only experience the HCFA has to
draw upon is our experience since the regulation became effective in
July 1995. Historical information spanning the three fiscal years since
July 1995 indicates the average number of facilities per year that have
had civil money penalties imposed is between one and 1.5 and 3 percent.
The yearly average amount of the civil money penalty per facility has
been $15,672 to $21,280. The facility's management has the ability to
control operation of the business. The facility's management also has
the ability and legal responsibility to maintain compliance with
requirements. Since the majority of the businesses have annual
operating budgets in excess of $1 million dollars, the impact of the
per instance civil money penalty, when compliance is not maintained,
does not appear particularly onerous.
We do not know the impact of this rule on nursing homes. As has
previously been stated, if the facility is in substantial compliance
with Federal regulations, there is no basis to utilize any enforcement
remedy. However, should a remedy be indicated, a number of alternative
remedies may be considered in addition to a civil money penalty. It
would not be accurate to assume that a civil money penalty would be the
remedy of choice or the one most frequently used. Selection of
enforcement remedies appropriate to the noncompliance requires careful
consideration on the part of the regulatory agency and does not
automatically imply a civil money penalty will be imposed. While it may
be argued the per instance civil money penalty will be more heavily
utilized than the per day civil money penalty, we have no data to
support that perspective.
We have also considered the potential impact of the ``limited per
day'' methodology of imposing a civil money penalty on nursing homes.
The same difficulty is present in attempting to assess the impact of
this approach as is present with the per instance provision. It is not
possible to project the frequency of noncompliance or increases or
decreases in the number of facilities that will be found to be out of
compliance and subject to imposition of a civil money penalty. This is
especially true when considering that selection of a civil money
penalty is not a requirement and but one of an array of remedies that
may be selected.
A nursing home certified to participate in the Medicare and
Medicaid programs is expected to be in compliance with Federal
requirements as a condition of receiving payment for services provided
to beneficiaries. If the provider is in compliance, no action to impose
a remedy, which could include a civil money penalty, would be
justified. However, should the provider be determined out of compliance
and a decision reached to impose a civil money penalty, it is difficult
to project the number of times that may occur. As we have indicated, if
a civil money
[[Page 13360]]
penalty is selected as an enforcement option, the facility's financial
condition must be considered in determining the amount of the penalty.
There are currently a number of activities occurring that we
believe will sharpen public and provider awareness of problems in
nursing homes. These activities include the President's ``Initiatives
to Improve the Quality of care In Nursing Homes'' and activities of the
Senate Committee on Aging. We believe that the increased awareness of
nursing homes problems may influence greater facility compliance and
mitigate against increased use of remedies to achieve compliance with
Federal requirements.
Because this rule affects no rural hospitals, we are not preparing
an analysis for section 1102(b) of the Act because we have determined,
and we certify, that this rule will not have a significant impact on
the operations of a substantial number of small rural hospitals.
This rule has been reviewed in accordance with the Unfunded
Mandates Reform Act of 1995 (2 U.S.C. 1501 et seq.), which requires
that agencies assess anticipated costs and benefits before issuing any
rule that may result in an annual expenditure by State, local, or
tribal governments, in the aggregate, or by the private sector, of $100
million. Although this interim final rule will affect nursing
facilities, we anticipate this effect to be less than $100 million in
the aggregate.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 488
Health facilities, Medicare, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, 42 CFR part 488, subpart
F, is amended as set forth below:
PART 488--SURVEY, CERTIFICATION, AND ENFORCEMENT PROCEDURES
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).
Subpart F--Enforcement of Compliance for Long-Term Care Facilities
with Deficiencies
2. In Sec. 488.402, paragraph (f)(5) is revised to read as follows:
Sec. 488.402 General provisions.
* * * * *
(f) Notification requirements--* * *
(5) Date of enforcement action. The 2-and 15-day notice periods
begin when the facility receives the notice.
* * * * *
3. In Sec. 488.408, the introductory text of paragraphs (d)(1),
(e)(1), and (e)(2) are republished, paragraphs (d)(1)(iv) and
(e)(1)(iv) are added, and paragraph (e)(2)(ii) is revised to read as
follows:
Sec. 488.408 Selection of remedies.
* * * * *
(d) Category 2. (1) Category 2 remedies include the following:
* * * * *
(iv) Civil money penalty of $1,000-$10,000 per instance of
noncompliance.
* * * * *
(e) Category 3. (1) Category 3 remedies include the following:
* * * * *
(iv) Civil money penalty of $1,000-$10,000 per instance of
noncompliance.
(2) When there are one or more deficiencies that constitute
immediate jeopardy to resident health or safety--
* * * * *
(ii) HCFA and the State may impose a civil money penalty of $3,050-
$10,000 per day or $1,000-$10,000 per instance of noncompliance, in
addition to imposing the remedies specified in paragraph (e)(2)(i) of
this section.
* * * * *
4. Section 488.430(a) is revised to read as follows:
Sec. 488.430 Civil money penalties: Basis for imposing penalty.
(a) HCFA or the State may impose a civil money penalty for either
the number of days a facility is not in substantial compliance with one
or more participation requirements or for each instance that a facility
is not in substantial compliance, regardless of whether or not the
deficiencies constitute immediate jeopardy.
* * * * *
5. In Sec. 488.432, the section heading and paragraphs (a)(2), (b),
and (c) are revised to read as follows:
Sec. 488.432 Civil money penalties: When a penalty is collected.
(a) When a facility requests a hearing. * * *
(2) (i) If a facility requests a hearing within the time specified
in paragraph (a)(1) of this section, for a civil money penalty imposed
per day, HCFA or the State initiates collection of the penalty when
there is a final administrative decision that upholds HCFA's or the
State's determination of noncompliance after the facility achieves
substantial compliance or is terminated.
(ii) If a facility requests a hearing for a civil money penalty
imposed per instance of noncompliance within the time specified in
paragraph (a)(1) of this section, HCFA or the State initiates
collection of the penalty when there is a final administrative decision
that upholds HCFA's or the State's determination of noncompliance.
(b) When a facility does not request a hearing for a civil money
penalty imposed per day. (1) If a facility does not request a hearing
in accordance with paragraph (a) of this section, HCFA or the State
initiates collection of the penalty when the facility--
(i)Achieves substantial compliance; or
(ii) Is terminated.
(2) When a facility does not request a hearing for a civil money
penalty imposed per instance of noncompliance. If a facility does not
request a hearing in accordance with paragraph (a) of this section,
HCFA or the State initiates collection of the penalty when the time
frame for requesting a hearing expires.
(c) When a facility waives a hearing. (1) If a facility waives, in
writing, its right to a hearing as specified in Sec. 488.436, for a
civil money penalty imposed per day, HCFA or the State initiates
collection of the penalty when the facility--
(i) Achieves substantial compliance; or (ii) Is terminated.
(2) If a facility waives, in writing, its right to a hearing as
specified in Sec. 488.436, for a civil money penalty imposed per
instance of noncompliance, HCFA or the State initiates collection of
the penalty upon receipt of the facility's notification.
* * * * *
6. In Sec. 488.434, the introductory text of paragraph (a)(2) is
republished and paragraphs (a)(2)(iii), (a)(2)(v), and (a)(2)(vi) are
revised to read as follows:
Sec. 488.434 Civil money penalties: Notice of penalty.
(a) HCFA notice of penalty. * * *
(2) Content of notice. The notice that HCFA sends includes--
* * * * *
(iii) The amount of penalty per day of noncompliance or the amount
of the penalty per instance of noncompliance;
* * * * *
(v) The date of the instance of noncompliance or the date on which
the penalty begins to accrue;
(vi) When the penalty stops accruing, if applicable;
* * * * *
7. In Sec. 488.438, the introductory text of paragraph (a) is
redesignated as (a)(1) and republished; paragraphs (a)(1) and (a)(2)
are redesignated as paragraphs (a)(1)(i) and (a)(1)(ii), respectively;
a new paragraph (a)(2) is added; and
[[Page 13361]]
paragraphs (c) and (d) are revised to read as follows:
Sec. 488.438 Civil money penalties: Amount of penalty.
(a) Amount of penalty--(1) Per day penalties. The per day penalties
are within the following ranges, set at $50 increments:
(i) Upper range. * * *
(ii) Lower range. * * *
(2) Per instance penalty. When penalties are imposed for an
instance of noncompliance, the penalties will be in the range of
$1,000-$10,000 per instance.
* * * * *
(c) Decreased penalty amounts. Except as specified in paragraph
(d)(2) of this section, if immediate jeopardy is removed, but the
noncompliance continues, HCFA or the State will shift the penalty
amount imposed per day to the lower range.
(d) Increased penalty amounts. (1) Before a hearing requested in
accordance with Sec. 488.432(a), HCFA or the State may propose to
increase the per day penalty amount for facility noncompliance which,
after imposition of a lower level penalty amount, becomes sufficiently
serious to pose immediate jeopardy.
(2) HCFA does and the State must increase the per day penalty
amount for any repeated deficiencies for which a lower level penalty
amount was previously imposed, regardless of whether the increased
penalty amount would exceed the range otherwise reserved for
nonimmediate jeopardy deficiencies.
* * * * *
8. In Sec. 488.440, paragraphs (a), (c), (d), (g), and (h); the
introductory text of paragraphs (b) and (e); and paragraph (f)(1) are
revised to read as follows:
Sec. 488.440 Civil money penalties: Effective date and duration of
penalty.
(a)(1) The per day civil money penalty may start accruing as early
as the date that the facility was first out of compliance, as
determined by HCFA or the State.
(2) A civil money penalty for each instance of noncompliance is
imposed in a specific amount for that particular deficiency .
(b) The per day civil money penalty is computed and collectible, as
specified in Secs. 488.432 and 488.442, for the number of days of
noncompliance until the date the facility achieves substantial
compliance, or, if applicable, the date of termination when--
* * * * *
(c) The entire penalty, whether imposed on a per day or per
instance basis, is due and collectible as specified in the notice sent
to the provider under paragraphs (d) and (e) of this section.
(d) (1) When a civil money penalty is imposed on a per day basis
and the facility achieves substantial compliance, HCFA does or the
State must send a separate notice to the facility containing the
following information:
(i) The amount of penalty per day.
(ii) The number of days involved.
(iii) The total amount due.
(iv) The due date of the penalty.
(v) The rate of interest assessed on the unpaid balance beginning
on the due date, as provided in Sec. 488.442.
(2) When a civil money penalty is imposed for an instance of
noncompliance, HCFA does or the State must send a separate notice to
the facility containing the following information:
(i) The amount of the penalty.
(ii) The total amount due.
(iii) The due date of the penalty.
(iv) The rate of interest assessed on the unpaid balance beginning
on the due date, as provided in Sec. 488.442.
(e) In the case of a facility for which the provider agreement has
been terminated and on which a civil money penalty was imposed on a per
day basis, HCFA does or the State must send this penalty information
after the--
* * * * *
(f)(1) In the case of noncompliance that does not pose immediate
jeopardy, the daily accrual of per day civil money penalties is imposed
for the days of noncompliance prior to the notice specified in
Sec. 488.434 and an additional period of no longer than 6 months
following the last day of the survey.
* * * * *
(g)(1) In a case when per day civil money penalties are imposed,
when a facility has deficiencies that pose immediate jeopardy, HCFA
does or the State must terminate the provider agreement within 23
calendar days after the last day of the survey if the immediate
jeopardy remains.
(2) The accrual of the civil money penalty imposed on a per day
basis stops on the day the provider agreement is terminated.
(h)(1) If an on-site revisit is necessary to confirm substantial
compliance and the provider can supply documentation acceptable to HCFA
or the State agency that substantial compliance was achieved on a date
preceding the revisit, penalties imposed on a per day basis only accrue
until that date of correction for which there is written credible
evidence.
(2) If an on-site revisit is not necessary to confirm substantial
compliance, penalties imposed on a per day basis only accrue until the
date of correction for which HCFA or the State receives and accepts
written credible evidence.
9. In Sec. 488.442, the heading of paragraph (a) is revised,
paragraphs (b) through (f) are redesignated as paragraphs (c) through
(g), respectively, and new paragraph (b) is added to read as follows:
Sec. 488.442 Civil money penalties: Due date for payment of penalty.
(a) When payments are due for a civil money penalty imposed on a
per day basis--
* * * * *
(b) When payments are due for a civil money penalty imposed for an
instance of noncompliance. Payment of a civil money penalty is due 15
days after one of the following dates:
(1) The final administrative decision is made;
(2) The time for requesting a hearing has expired and the facility
did not request a hearing; or
(3) The facility waived its right to a hearing.
* * * * *
10. In Sec. 488.454, the introductory text of paragraph (a) is
revised, paragraph (d) is redesignated as paragraph (e) and revised,
and new paragraph (d) is added to read as follows:
Sec. 488.454 Duration of remedies.
(a) Except as specified in paragraphs (b) and (d) of this section,
alternative remedies continue until--
* * * * *
(d) In the case of a civil money penalty imposed for an instance of
noncompliance, the remedy is the specific amount of the civil money
penalty imposed for the particular deficiency.
(e) If the facility can supply documentation acceptable to HCFA or
the State survey agency that it was in substantial compliance and was
capable of remaining in substantial compliance, if necessary, on a date
preceding that of the revisit, the remedies terminate on the date that
HCFA or the State can verify as the date that substantial compliance
was achieved and the facility demonstrated that it could maintain
substantial compliance, if necessary.
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program; Program No. 93.773, Medicare--Hospital
Insurance; and Program No. 93.774, Medicare--Supplementary Medical
Insurance Program)
[[Page 13362]]
Dated: February 12, 1999.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.
Dated: March 3, 1999.
Donna E. Shalala,
Secretary.
[FR Doc. 99-6618 Filed 3-16-99; 9:20 am]
BILLING CODE 4120-01-P
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.