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Medicare and Medicaid Programs; Approval of the American Osteopathic Association for Deeming Authority for Ambulatory Surgical Centers

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Centers for Medicare & Medicaid Services (CMS), HHS.


Final notice.


This final notice announces the approval of the American Osteopathic Association (AOA) for recognition as a national accreditation program for ambulatory surgical centers (ASCs) that request certification to participate in the Medicare or Medicaid programs. We have found that accreditation of ASCs by this organization will demonstrate that all Medicare ASC Conditions for Coverage are met or exceeded, and, thus, ASCs accredited by AOA will be granted deemed status to participate in the Medicare program.


This final notice is effective January 30, 2003.

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Laura A. Weber, (410) 786-0227.

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I. Background

Determining Compliance of Ambulatory Surgical Centers-Surveys and Deeming

Under the Medicare program, eligible beneficiaries may receive covered services in an ambulatory surgical center (ASC) provided that the ASC meets certain requirements. Section 1832(a)(2)(F)(i) of the Social Security Act (the Act) includes requirements that an ASC have an agreement in effect with the Secretary and that it meet health, safety, and other standards specified by the Secretary in regulations. Requirements concerning supplier agreements are located in 42 CFR part 489, and those pertaining to the survey and certification of facilities are set forth in 42 CFR part 488.

In 42 CFR part 416, we specify the conditions that an ASC must meet in order to participate in the Medicare program, the scope of covered services, and the conditions for Medicare payment for facility services.

For an ASC to enter into an agreement, a State survey agency must first certify that the ASC complies with our conditions or requirements. Following that certification, the ASC is subject to routine monitoring by a State survey agency to ensure continuing compliance. As an alternative to surveys by State agencies, section 1865(b)(1) of the Act provides that, if the Secretary finds that, through accreditation by a national accreditation body, a provider entity demonstrates that all of our applicable conditions and requirements are met or exceeded, the Secretary will deem that the provider entity has met the applicable Medicare requirements.

In making our finding as to whether the accreditation organization demonstrates that all Medicare conditions or requirements are met or exceeded, we consider factors such as the organization's accreditation requirements, its survey procedures, its ability to provide adequate resources for conducting required surveys and supplying information for us in enforcement activities, its monitoring procedures for providers entities found to be out of compliance with conditions or requirements, and its ability to provide us with necessary data for validation.

It has been brought to our attention that some ASCs are under the mistaken impression that, once we have granted deeming authority to an accreditation organization, then ASCs must be accredited by such an organization to receive Medicare certification. Accreditation by an accreditation organization is voluntary, and we do not require that accreditation for Medicare certification.

The American Osteopathic Association (AOA) was the fourth accreditation organization to apply for deeming authority for ASCs. The three other accreditation organizations already granted deeming authority are the Joint Commission on the Accreditation of Healthcare Organizations (JCAHO), the Accreditation Association of Ambulatory Health Care (AAAHC), and The American Association for the Accreditation of Ambulatory Surgery Facilities, Inc. (AAAASF).

The AOA is defined as a national accrediting body in section 1865(b)(1) of the Act, and was granted deeming authority by us for hospitals (65 FR 8727, published February 22, 2000). This was taken into consideration in the evaluation of this application for ASC deeming authority.

The AOA previously applied to us for deeming authority, which we announced in the Federal Register on March 14, 2001 (66 FR 14906). However, the organization withdrew its application before a final decision was made. We received a revised complete application from AOA on April 18, 2002 and published notice of that receipt on May 24, 2002 (67 FR 36611).

II. Determining Compliance—Surveys and Deeming

A national accrediting organization may request the Secretary to recognize its program as employing standards that meet or exceed Medicare's standards. The Secretary then examines the national accreditation organization's requirements to determine if they meet or exceed Medicare standards. If the Secretary recognizes an accreditation organization in this manner, any provider accredited by the national accrediting body's program that we have approved for that service will be “deemed” to meet the Medicare Conditions for Coverage.

The regulations specifying the Medicare Conditions for Coverage for ASCs are located in 42 CFR part 416. These conditions implement section 1832(a)(2)(F)(i) of the Act, which provides for Medicare Part B coverage of facility services furnished in connection with surgical procedures specified by the Secretary under section 1833(i)(1)(a) of the Act.

III. Provisions of the Proposed Notice

The proposed notice, published on May 24, 2002 (67 FR 36611), announced the application of AOA for deemed status for its accreditation program for ASCs. Under section 1865(b)(2) of the Act and our regulations in § 488.8 (Federal review of accreditation organizations), our review and evaluation of a national accreditation organization was conducted in accordance with, but not necessarily limited to, the following factors:

  • The equivalency of an accreditation organization's requirements for an entity to our comparable requirements for that entity.
  • The organization's survey process to determine the following:

—The composition of the survey team, surveyor qualifications, and the ability of the organization to provide continuing surveyor training.

—The comparability of its processes to those of State agencies, including survey frequency, and the ability to investigate and respond appropriately to complaints against accredited facilities.

—The organization's procedures for monitoring providers or suppliers found by the organization to be out of compliance with program requirements. These monitoring procedures are used only when the organization identifies noncompliance. If noncompliance is identified through validation reviews, the survey agency monitors corrections as specified in § 488.7(d).

—The ability of the organization to report deficiencies to the surveyed facilities and respond to the facility's plan of correction in a timely manner.

—The ability of the organization to provide us with electronic data in ASCII comparable code, and reports necessary for effective validation and assessment of the organization's survey process.

—The adequacy of staff and other resources, and its financial viability.

—The organization's ability to provide adequate funding for performing required surveys.

—The organization's policies with respect to whether surveys are announced or unannounced.

  • The accreditation organization's agreement to provide us with a copy of the most current accreditation survey together with any other information Start Printed Page 66644related to the survey as we may require (including corrective action plans).

IV. Analysis of and Responses to Public Comments

We did not receive any comments to the proposed notice published in the Federal Register (67 FR 36611) on May 24, 2002.

V. Provisions of the Final Notice

A. Deeming Approval Review and Evaluation

We evaluated the AOA's standards and survey process to determine if facilities accredited by AOA met Medicare Conditions for Coverage. We did a standard-by-standard comparison of the applicable conditions or requirements to determine which of them met or exceeded Medicare requirements.

We compared the standards contained in the AOA's “Ambulatory Surgical Center (ASC) Manual” and its survey process in the “Ambulatory Surgical Center Surveyor Handbook” with the Medicare ASC Conditions for Coverage and our State and Regional Operations Manual. Our review and evaluation of AOA's deeming application, which were conducted as described in this notice, yielded the following clarifications:

  • AOA provided an updated listing of its accredited ASC facilities.
  • AOA adjusted language to refer consistently to the entities as ASCs as opposed to hospitals in its documents.
  • AOA modified its standards to meet fully the requirements of the Medicare Conditions for Coverage.
  • AOA modified its survey policy to ensure that ASC surveys are unannounced.
  • AOA modified its requirements to indicate that any ASC seeking to participate in Medicare by virtue of an AOA accreditation must meet the “Accreditation with Medicare Certification,” which requires that all State licensure requirements are satisfied in addition to meeting all AOA standards.
  • AOA adjusted its standards to require written confirmation of primary source verifications with regard to medical staff credentialing.
  • AOA adjusted its standard to conform with all applicable requirements of each State Nurse Practice Act to specify what duties a registered nurse may be allowed to perform in the area of pharmaceutical services.
  • AOA agrees to notify us of all accreditation decisions made.

Review of AOA's application raised issues concerning the comparability of the AOA's ASC accreditation standards with the Medicare Conditions for Coverage for ASCs. We requested that the AOA demonstrate compliance with the Medicare ASC Conditions for Coverage and submit supplemental information to clarify its policies and procedures. Upon our final review of this information, we have determined that the AOA's ASC accreditation program meets the Medicare Conditions for Coverage for ASCs.

B. Term of Approval

Based on the review and observations described in this final notice, we have determined that AOA's requirements for ASCs meet or exceed our requirements. We reserve the right to observe an AOA ASC survey to determine the compliance of AOA surveyors to the policies and procedures, as there were none scheduled during the review of this application. In addition, the AOA must seek approval of all standards pertaining to the Life Safety Code (LSC) when we move to the LSC 2000 Edition, which we intend to implement in Spring 2003. We therefore recognize the AOA as a national accreditation organization for ASCs that request participation in the Medicare program, effective for a 6-year period beginning January 30, 2003.

VI. Collection of Information Requirements

This final notice 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 organizations, codified in 42 CFR part 488, “Survey, Certification, and Enforcement Procedures,” are currently approved by OMB under OMB approval number 0938-0690.

VII. Regulatory Impact Statement

We have examined the impact of this notice as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if 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, nonprofit organizations, and government agencies. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $6 million to $29 million or less in any 1 year (for details, see the Small Business Administration's publication that set forth size standards for health care industries at 65 FR 69432). Approximately 73 percent of ASCs are considered small businesses with total revenues of $8.5 million or less according to the Small Business Administration's data. 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 100 beds.

This notice merely recognizes AOA as a national accreditation organization that has requested approval for deeming authority for ASCs that are participating in the Medicare program. Since these provider entities must be routinely monitored to determine compliance with Medicare requirements, we believe that this organization's accreditation program has the potential to reduce both the regulatory and administrative burdens associated with the Medicare program requirements.

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 final notice will not result in a significant impact on small entities and will not have an effect on the operations of small rural hospitals. Therefore, we are not preparing analyses for either the RFA or section 1102(b) of the Act.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditure in any 1 year by State, local, or tribal governments, in the aggregate, or by the private sector, of $110 million. This Start Printed Page 66645notice will have no consequential effect on State, local, or tribal governments. We believe the private sector costs of this notice will fall below this threshold as well.

In accordance with Executive Order 13132, this notice will not significantly affect the rights of States and will not significantly affect State authority.

In accordance with the provisions of Executive Order 12866, this notice was reviewed by the Office of Management and Budget.

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Authority: Section 1865(b)(3)(A) of the Social Security Act (42 U.S.C. 1395bb(b)(3)(A)).

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(Catalog of Federal Domestic Assistance Program No. 93.778, Medical Assistance Program; and No. 93.774, Medicare—Supplementary Medical Insurance Program)

Dated: October 7, 2002.

Thomas A. Scully,

Administrator, Centers for Medicare & Medicaid Services.

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[FR Doc. 02-27782 Filed 10-31-02; 8:45 am]