69252 Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 405 and 489

[CMS–4004–FC] 

RIN 0938–AL67

Medicare Program; Expedited 

Determination Procedures for Provider 

Service Terminations

AGENCY: The Centers for Medicare & 

Medicaid Services (CMS), HHS.

ACTION: Final rule with comment period.

SUMMARY: This final rule with comment 

period responds to comments on one 

discrete aspect of the proposed rule 

published in the Federal Register on 

November 15, 2002. The portion of that 

proposed rule addressed here involves 

the expedited determination and 

reconsideration procedures available to 

beneficiaries when a provider informs 

them of a decision that Medicare 

coverage of their provider services is 

about to end.

DATES: Effective date: This final rule 

with comment period is effective on 

July 1, 2005. 

Comment date: We will consider 

comments if we receive them at the 

appropriate address, as provided below, 

no later than 5 p.m. on January 25, 2005.

ADDRESSES: In commenting, please refer 

to file code CMS–4004–FC. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (fax) 

transmission. Submit electronic 

comments to http://www.cms.hhs.gov/

regulations/ecomments or to http://

www.regulations.gov. Mail written 

comments (one original and three 

copies) to the following address only: 

Centers for Medicare & Medicaid 

Services, Attention: CMS–4004–FC, P.O. 

Box 8016, Baltimore, MD 21244–8016. 

Please allow sufficient time for mailed 

comments to be timely received in the 

event of delivery delays. 

If you prefer, you may deliver, by 

hand or courier, your written comments 

(one original and two copies) to one of 

the following addresses:

Room 443–G, Hubert H. Humphrey 

Building, 200 Independence Avenue, 

SW., Washington, DC 20201, or 

Room C5–14–03, 7500 Security 

Boulevard, Baltimore, MD 21244–

1850.

(Because access to the interior building 

is not readily available to persons 

without Federal Government 

identification, commenters are 

encouraged to leave their comments in 

the CMS drop slots located in the main 

lobby of the building. A stamp-in clock 

is available for persons wishing to retain 

a proof of comments being filed.) 

Comments mailed to the addresses used 

for hand or courier delivery may be 

delayed and could be considered late. 

All comments received before the 

close of the comment period are 

available for viewing by the public, 

including any personally identifiable or 

confidential business information that is 

included in a comment. After the close 

of the comment period, CMS posts all 

electronic comments received before the 

close of the comment period on its 

public Web site. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT:

Janet Miller, (410) 786–1588.

SUPPLEMENTARY INFORMATION: 

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this rule to assist us in fully 

considering issues and developing 

policies. You can assist us by 

referencing the file code CMS 4004–FC 

and the specific ‘‘issue identifier’’ that 

precedes the section on which you 

choose to comment. 

Inspection of Public Comments:

Comments received timely will be 

available for public inspection as they 

are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Blvd., 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone (410) 786–7197. 

Copies: To order copies of the Federal 

Register containing this document, send 

your request to: New Orders, 

Superintendent of Documents, P.O. Box 

371954, Pittsburgh, PA 15250–7954. 

Specify the date of the issue requested 

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Documents, or enclose your Visa or 

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The cost for each copy is $10. As an 

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This Federal Register document is 

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online database through GPO Access, a 

service of the U.S. Government Printing 

Office. The Web site address is: http://

www.access.gpo.gov/nara/index.html.

I. Overview of the Statutory Changes to 

the Appeals Process 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Overview—Statutory Changes’’ at the 

beginning of your comments.] 

Section 521 of the Medicare, 

Medicaid and SCHIP Benefits 

Improvement and Protection Act of 

2000 (BIPA), Public Law 106–554, 

amended section 1869 of the Social 

Security Act (the Act) to require 

significant changes to the Medicare 

appeals procedures. Among these 

changes is a new requirement under 

section 1869(b)(1)(F) of the Act that the 

Secretary establish a process by which 

a beneficiary may obtain an expedited 

determination in response to the 

termination of provider services. (Note 

that other aspects of the changes 

required under BIPA 2000 were 

discussed in detail in our November 15, 

2002 proposed rule (67 FR 69312), and 

will be addressed in a forthcoming final 

rule.) Currently this right to an 

expedited review exists only with 

respect to inpatient hospital discharges 

(under sections 1154 and 1155 of the 

Act). Specifically, section 

1869(b)(1)(F)(i) of the Act provides for 

an expedited determination process 

when a beneficiary receives notice from 

a provider of services that the provider 

plans to: (1) Terminate services 

provided to the individual and a 

physician certifies that failure to 

continue services is likely to place the 

beneficiary’s health at significant risk; 

or (2) discharge the beneficiary from the 

provider of services. The statute 

mandates that a beneficiary who 

receives notice may request an 

expedited determination on whether 

these services should end. If a 

beneficiary is dissatisfied with this 

determination, the beneficiary may 

request an expedited reconsideration of 

this determination. The statute does not 

specify what entity must carry out the 

expedited determination process, but 

we intend to contract with the Quality 

Improvement Organizations (QIOs) in 

each State for this purpose. QIOs 

currently conduct similar expedited 

reviews for inpatient hospital 

discharges. 

Section 1869(c)(3)(C)(iii) of the Act 

sets forth the requirements for expedited 

reconsiderations. It specifies that 

Qualified Independent Contractors 

(QICs) conduct expedited

Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 69253

reconsiderations. This section also 

states that the QICs must provide their 

reconsideration decisions no later than 

72 hours after receiving the appeal 

request and related medical records. 

The decisions must be provided by 

telephone and in writing to the provider 

of services, the beneficiary requesting 

the appeal, and the attending physician 

of the beneficiary. Further, the QIC must 

solicit the views of the beneficiary 

requesting the appeal. 

II. Provisions of the Proposed Rule 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Provisions of Proposed Rule’’ at the 

beginning of your comments.] 

On November 15, 2002, we published 

a proposed rule in the Federal Register

(67 FR 69312) that set forth proposed 

regulations for implementing the 

changes to the Medicare appeals process 

required by BIPA, including both new 

claims appeal procedures and 

procedures for expedited 

determinations and reconsiderations 

associated with provider discharges and 

terminations of services. This final rule 

codifies only those portions 

(§§ 405.1200 et seq.) of the proposed 

rule that dealt with expedited 

determinations and reconsiderations. 

Thus, this final rule sets forth the 

provisions addressing the rights of a 

beneficiary who is dissatisfied with a 

provider termination or discharge to an 

expedited determination and 

reconsideration. The proposed rule 

provisions are summarized below, 

followed by a discussion of the 

comments we received on the proposed 

rule and the changes made based on 

those comments.

A. Expedited Determinations (Proposed 

§ 405.1200) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Expedited Determinations’’ at the 

beginning of your comments.] 

Under § 405.1200(a), we proposed 

that the new expedited determination 

procedures be applicable to providers 

listed in section 1861(u) of the Act. We 

proposed under § 405.1200(b) that in 

order for a beneficiary to request an 

expedited review, the beneficiary must 

have received notice that: (1) A provider 

intends to terminate services and a 

physician must certify that termination 

of services is likely to place the 

beneficiary’s health at significant risk; 

or (2) the provider intends to discharge 

the beneficiary from an inpatient 

provider setting. Rather than establish a 

notice specifically for this purpose, we 

explained that we intended to use 

advance beneficiary notices (ABNs) to 

serve as the appropriate triggers for 

expedited determinations under section 

1869 of the Act. We stated that we 

would revisit the content of the existing 

ABNs to ensure that they conformed to 

the requirements of the proposed rule. 

(See section III of this preamble for a 

discussion of this issue.) We proposed 

that if a beneficiary does not file a 

timely request for an expedited 

determination, the beneficiary may not 

later access this expedited review 

process. 

Under § 405.1200(c), we identified 

Quality Improvement Organizations 

(QIOs) as the appropriate entities to 

conduct these expedited determinations 

of provider terminations. We then 

proposed the procedures a beneficiary 

must follow in order to make a valid 

request to a QIO. We specified that 

beneficiaries may make their request 

either in writing or by telephone no 

later than noon of the day following the 

beneficiary’s receipt of the provider’s 

notice. Beneficiaries or their 

representatives must be available to 

answer questions by the QIO, upon 

request. 

Proposed § 405.1200(d) and (e) set 

forth the procedures that the QIO must 

follow when it receives a beneficiary’s 

request for an expedited determination. 

The QIO must: (1) Notify the provider 

of the disputed services that an 

expedited determination request has 

been made; (2) request the medical 

record and if necessary, other pertinent 

records from the provider; (3) examine 

the requested necessary medical 

information; (4) solicit the views of the 

provider and the beneficiary; and (5) 

make a decision within 72 hours after 

receipt of the request for the QIO 

expedited review. We proposed that the 

provider be required to submit the 

information needed for a QIO 

determination no later than close of 

business on the day after the beneficiary 

requested an expedited determination. 

The QIO must immediately notify the 

beneficiary, physician and provider of 

its expedited determination, first by 

telephone and then following up with a 

written notice that would explain the 

decision and inform the beneficiary of 

his or her right to an expedited 

reconsideration. 

We proposed under § 405.1200(f) that 

the QIO’s expedited determination 

would be binding upon the beneficiary 

and the provider of the disputed 

services or stay, absent a beneficiary’s 

request for a QIC reconsideration. 

Proposed § 405.1200(g) discussed the 

financial liability aspects of the QIO 

expedited review process. We proposed 

that a provider cannot bill a beneficiary 

for the disputed stay or services until 

the beneficiary has received either an 

expedited QIO determination or an 

expedited QIC reconsideration 

determination, if requested. In this 

situation, if the QIO determines that the 

services or stay in dispute were 

medically necessary, the beneficiary is 

not responsible for the services or stay, 

as stipulated by the QIO. However, if 

the QIO determines that the services or 

stay in dispute were not medically 

necessary, the beneficiary is responsible 

for services that extend beyond the 

appropriate covered services or stay, or 

as otherwise stated by the QIO.

B. Expedited QIC Reconsiderations 

(Proposed § 405.1202) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Expedited QIC Reconsiderations’’ at 

the beginning of your comments.] 

Consistent with the statute, we 

proposed that upon receipt of an 

expedited determination from a QIO, a 

beneficiary who is dissatisfied with that 

determination may request an expedited 

QIC reconsideration. A beneficiary who 

desires an expedited QIC 

reconsideration must make that request 

no later than noon of the next calendar 

day following receipt of the QIO 

expedited determination. A beneficiary 

or authorized representative must be 

available to talk with the QIC about his 

or her case if the QIC solicits the 

beneficiary’s views. 

Proposed § 405.1202(c) set forth the 

procedures that the QIC must follow in 

conducting its expedited 

reconsideration. These are generally 

identical to those followed by the QIO 

except as noted below. Thus, consistent 

with section 1869(c)(3)(C)(iii) of the Act, 

we proposed that the QIC must make a 

decision within 72 hours from receipt of 

the request for an expedited 

reconsideration and the requested 

information. Unlike for a QIO 

determination, however, if a QIC does 

not render its decision 72 hours from 

receipt of the request and information, 

a beneficiary has the right to have the 

case escalated to an Administrative Law 

Judge (ALJ). Therefore, we proposed 

that a QIC must inform the beneficiary 

of this right, assuming that the amount 

remaining in controversy after the QIO’s 

expedited determination was at least 

$100. 

We proposed under § 405.1202(d) that 

the QIC’s notice of its expedited 

reconsideration determination must be 

issued first by telephone and then 

followed up with a written notice to the 

beneficiary, provider, and physician 

responsible for the beneficiary’s care. 

The written notice would include the 

detailed rationale for the decision, a 

69254 Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 

statement that explains the beneficiary’s 

subsequent appeal rights (an ALJ 

Hearing), and the timeframe for filing 

for the ALJ hearing request. The notice 

should also include a statement 

explaining the Medicare payment 

consequences of the reconsidered 

determination and the beneficiary’s date 

of liability. A QIC reconsideration 

determination is binding on the 

beneficiary, subject to an ALJ hearing if 

the beneficiary is dissatisfied with the 

QIC’s decision. 

We proposed under § 405.1200(f) that 

a beneficiary may not be billed for the 

disputed services or stay until that 

beneficiary receives the expedited 

reconsideration decision from the QIC. 

(As we discuss further below, we expect 

that QICs will be in place at the time the 

expedited reviews are available under 

these regulations. However, in the event 

QICs have not been established at the 

time of implementation, we believe it 

would be in the public’s interest to 

provide for expedited reconsiderations 

through some other means. Therefore, if 

QICs are not in place at time of 

implementation, QIOs will carry out 

this reconsideration function as they do 

now for expedited reviews of disputed 

discharges from inpatient hospitals. As 

discussed below, we believe that we 

have the administrative authority, for a 

short period of time, to allow for a 

reconsideration process that differs 

slightly from that imposed under 

section 1869(c)(3)(C)(iii).) 

C. Special Rules for Inpatient Hospital 

Discharges (Proposed §§ 405.1204 and 

405.1206) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Inpatient Hospital Discharges’’ at the 

beginning of your comments.]

The proposed regulations for these 

sections essentially mirrored the 

longstanding existing procedures under 

which QIOs conduct reviews of 

disputed discharges from inpatient 

hospitals. We believe it is appropriate 

and convenient to consolidate the 

procedures for expedited reviews of all 

provider service terminations and 

discharges in one location in the 

regulations. The proposed provisions 

were drawn from the following sources: 

section 1154(e) of the Act, § 412.42(c) 

and (g), Chapter 414 of the Medicare 

hospital manual and section 7000 et seq.

of the QIO manual. In proposing to 

consolidate these provisions, we made 

no changes to the substance of existing 

rules for expedited initial 

determinations. We did, however, 

propose that when a beneficiary remains 

an inpatient in the hospital, the 

expedited reconsideration process 

would parallel the process for other 

types of provider discharges. See 

proposed 42 CFR 405.1204(g)(1). This 

was in keeping with section 

1869(c)(3)(C)(iii), which would now 

require the QIC to conduct the 

reconsideration of hospital discharge 

determinations. We recognize that 

section 1155 of the Act continues to 

require QIO reconsiderations of QIO 

initial determinations. However, 

Congress’s passage of 1869(c)(3)(C)(iii) 

supersedes that provision, as the 

provisions are inconsistent, and laterenacted provisions are generally viewed 

as taking precedence over earlierenacted provisions. We do not believe it 

would be possible for both QIOs and 

QICs to simultaneously provide 

reconsiderations of hospital discharge 

determinations. Moreover, section 

1869(c)(2) defines a QIC as an 

organization ‘‘independent of any 

organization under contract with the 

Secretary that makes initial 

determinations [under section 

1869(a)(1)].’’ We therefore believe 

Congress intended to provide that 

reconsiderations of hospital discharges 

be performed in a similar manner to 

other provider discharges, that is by the 

QIC. 

III. Analysis of and Responses to Public 

Comments on the November 15, 2002 

Proposed Rule 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Analysis and Response to Public 

Comments’’ at the beginning of your 

comments.] 

We received 39 timely comments on 

the November 15, 2002 proposed rule, 6 

of which addressed the expedited 

determination procedures. These 

commenters included representatives of 

provider organizations and beneficiary 

advocacy groups. These comments and 

our responses are discussed below. 

A. Comments on the Expedited 

Determination Procedures Required by 

Section 1869 of the Act

Comment: Several commenters 

questioned whether ABNs were the 

appropriate vehicle for notifying 

beneficiaries of their statutory right to 

an expedited determination. They stated 

that we would need to carefully review 

the existing ABNs to ensure that they 

provide clear, adequate notice of this 

right. One commenter recommended 

that the regulations include a specific 

requirement for providers to provide a 

written discharge or termination notice 

to beneficiaries before services end. This 

commenter also noted that a beneficiary 

should be entitled to an expedited 

determination even if he or she does not 

receive such a discharge notice. Another 

commenter noted that there are 

significant potential liability 

implications associated with tying the 

expedited determination process to the 

delivery of the ABN; they pointed out 

that shielding beneficiaries from 

liability during the review process 

would require that the ABN be issued 

up to 5 days before the scheduled 

termination of service. 

Response: We have carefully 

reexamined the proposed provisions in 

light of these comments, particularly 

with respect to whether existing ABNs 

are the appropriate vehicle for notifying 

beneficiaries of the right to an expedited 

determination when their services are 

about to end. As commenters suggested, 

we have conducted a thorough review of 

the existing ABNs that are used in the 

provider settings and how they would 

need to be revised to accommodate the 

statutory expedited determination 

requirements. In addition, we have 

taken into account the procedures set 

forth in our April 4, 2003 (67 FR 16652) 

final rule that established a similar 

expedited review process for Medicare 

Advantage (MA) enrollees whose 

provider services are about to end. The 

provisions of the April 4, 2003 final rule 

were the product of extended litigation, 

followed by notice and comment 

rulemaking, and produced a largely 

parallel expedited review process that 

went into effect for MA enrollees on 

January 1, 2004. 

Based on this review, we determined 

that extensive revisions to several 

different ABNs, and to the timing of 

ABN delivery, would be required if 

ABNs were to serve as the notice 

contemplated by the statute for 

initiating the expedited determination 

process. The primary purpose of all 

existing provider ABNs is to enable 

beneficiaries to make informed 

decisions as to whether they wish to 

receive continuing medical services 

when a provider believes that the 

services are unlikely to be covered by 

Medicare. Providers may deliver ABNs 

at any time before the planned 

termination of covered services. A 

beneficiary who chooses to continue 

receiving provider services following 

delivery of an ABN acknowledges that 

he or she may be financially liable for 

the services. If a beneficiary chooses to 

accept this potential liability and 

continue receiving the services in 

question, the provider submits a 

‘‘demand bill’’ to its Medicare claims 

contractor. Contractors then process 

demand bill claims in the same manner 

that they would process other manual 

claims. Also, currently ABNs are not 

required in every termination situation 

Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 69255

where a beneficiary may request an 

expedited determination (for example, a 

service termination that is in accordance 

with an approved plan of care); 

conversely, the existing ABN is 

designed to be delivered in some 

situations where expedited 

determinations are not available (such 

as at the outset of services). Thus, we 

believe that it would not serve the best 

interests of either beneficiaries or 

providers to attempt to adapt the ABN 

to meet both its existing purpose and 

the purposes of the expedited review 

process. 

Instead, we concluded that that using 

ABNs to implement the expedited 

determinations for original Medicare 

beneficiaries is impractical, and that, as 

a result, several changes are needed to 

the proposed regulations. The primary 

change involves the establishment of a 

requirement for a simple, standardized, 

largely generic notice to each 

beneficiary before a discharge or service 

termination. We believe that this 

termination notice will ensure that all 

beneficiaries know that Medicare 

coverage of their provider services is 

about to end and are aware of their 

associated appeal rights. In situations 

where a beneficiary chooses to exercise 

the right to an expedited determination, 

a detailed notice similar to the existing 

ABN will still be furnished before the 

termination of services. The detailed 

notice will explain how Medicare 

coverage rules apply in individual 

situations, address liability issues, and 

facilitate the expedited review process 

by providing the patient-specific 

information needed by both a 

beneficiary and the QIO conducting the 

process. Consistent with the MA 

program requirements, this two-step 

notification process should best meet 

the needs of the large majority of 

beneficiaries who need to know only 

when coverage of their services will end 

and what their appeal rights are, as well 

as the small minority of beneficiaries 

who want more specific information 

about why their services are ending.

We believe that this approach will 

alleviate potential beneficiary and 

provider confusion and ensure that 

providers are not faced with 

unnecessary administrative burdens. All 

beneficiaries will receive a clear, simple 

notice of the impending end of 

Medicare coverage of their provider 

services and their right to an expedited 

review of this decision. Then, as under 

the existing ABN process, any 

beneficiary who objects to the service 

termination will receive a detailed 

notice of the reason for this decision 

before being deprived of the services in 

question. Beneficiaries will receive a 

binding expedited initial determination 

on the coverage of their services no later 

than 1 day after the date the services 

were scheduled to end. This will reduce 

the beneficiary’s potential liability for 

any services that are denied on appeal. 

Section 405.1200(b) establishes the 

requirement for an advance written 

notice of termination of Medicare 

coverage of services in an HHA, SNF, 

CORF, or hospice. This section also 

addresses the timing of the notice, the 

required content, and the financial 

liability implications. Like in the MA 

context, providers will be required 

under § 405.1200(b)(1) to deliver the 

termination notice no later than 2 days 

before the proposed end of covered 

services. If, in a non-residential setting, 

the span of time between services 

exceeds 2 days, the provider must notify 

the beneficiary no later than the next to 

last time services are delivered. Also 

consistent with the parallel MA 

regulations, we are including a crossreference to this notification 

requirement in § 489.27(b), the section 

of the Medicare provider agreement 

regulations that sets forth provider 

notification requirements. 

As a commenter pointed out, the only 

way to fully ameliorate financial 

liability concerns associated with the 

expedited determination would be to 

require a termination notice as much as 

5 days before services were to end, and 

then conduct the review process during 

the time span between the notice and 

the service termination. However, as we 

learned in the process of establishing 

the parallel MA process, requiring 

providers to furnish termination notices 

that far in advance generally is not 

practical from a medical decisionmaking standpoint. On the other hand, 

employing the existing ABN process, 

which permits ABN delivery at any time 

before service termination, would mean 

that the expedited determination 

procedures generally would not even 

begin until after services had ended. 

Thus, as discussed in detail in our April 

4, 2003 final rule on expedited 

determinations under the MA program 

(68 FR 16655), we believe that the 2-day 

advance notice requirement strikes an 

appropriate balance between the 

realities of medical decision-making 

practices and the need to ensure that a 

beneficiary has an opportunity to an 

expedited determination while 

minimizing financial exposure for either 

the individual or the provider.

Section 405.1200(b)(2) describes the 

required content of the notice. Unlike an 

ABN, the initial discharge notice will 

not include detailed information about 

Medicare coverage policies or how they 

relate to the individual’s particular 

health needs or conditions. We 

recognize that in the vast majority of 

cases, beneficiaries are in agreement 

with their care providers’

determinations that Medicare-covered 

services should end and that the service 

termination is consistent with the plan 

of care; thus, a more detailed 

explanation of the underlying reasons 

for the termination would serve no 

purpose and impose an unnecessary 

burden on providers. Instead, the only 

patient-specific elements of the 

termination notice will be the 

beneficiary’s name and the date that 

coverage of services will end. Other 

required elements of the notice, such as 

a description of the beneficiary’s right to 

an expedited determination and how to 

exercise that right, will constitute 

entirely standardized information. 

When a beneficiary does not object to 

the termination decision, no further 

notice is required. Again, however, if a 

beneficiary disputes the discharge or 

termination of services, the subsequent 

detailed notice will provide the critical, 

patient-specific information relevant to 

the individual coverage termination 

decision. We will develop both of these 

pre-termination notices through the 

Office of Management and Budget’s 

Paperwork Reduction Act Process. 

Section 405.1200(c) establishes that 

valid delivery of a termination notice 

requires that a beneficiary sign the 

notice. This requirement codifies 

longstanding policy for valid ABN 

delivery and is consistent with 

§ 422.624(c) of the parallel MA 

regulations. We note that the associated 

provider manual provisions for ABNs 

and the MA program permit exceptions 

to this rule in situations where a 

beneficiary refuses to sign a properly 

delivered notice, and we incorporate a 

similar policy into 405.1200(b)(4). As 

explained in the April 4, 2003 final rule 

with comment period (68 FR 16658), if 

a beneficiary refuses to sign the notice, 

the provider may annotate its notice to 

indicate the refusal, and the date of 

refusal is considered the date of receipt 

of the notice. 

Section 405.1200(d) explains that a 

provider is financially liable for 

continued services until 2 days after 

valid delivery of the termination notice 

or until the service termination date 

specified on the notice, whichever is 

later. This provision serves two 

purposes. First, it ensures that a 

beneficiary has at least 2 days after 

receiving a notice before he or she can 

be liable for additional services, thus 

limiting beneficiary liability as the 

expedited determination process plays 

out. In addition, it accommodates 

situations where a provider is able to 

69256 Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 

identify the service termination date 

and deliver notice more than 2 days in 

advance. Under those circumstances, it 

is possible that the expedited 

determination process (and a 

subsequent discharge, if applicable) 

could take place entirely during the 

period between notification and the 

planned service termination date, 

permitting a beneficiary to incur no 

additional liability despite an 

unfavorable decision from a QIO. 

As noted above, the new process will 

still rely on a detailed notice similar to 

the existing ABN, but only in those 

instances where a beneficiary requests 

an expedited determination. The 

circumstances in which this more 

detailed notice will be required, and the 

contents of that notice, are set forth 

under § 405.1202(f), ‘‘Responsibilities of 

Providers.’’ The content requirements 

are very similar to those of the existing 

ABN, including a specific and detailed 

explanation of why services are no 

longer considered reasonable and 

necessary or otherwise covered by 

Medicare, a description of applicable 

Medicare coverage rules, and any 

applicable beneficiary-specific 

information that is relevant to the 

coverage determination. As under the 

MA expedited review process, this 

notice will be furnished to both the QIO 

and the beneficiary who requested the 

expedited review since the QIO will 

need the information to make its 

determination and the beneficiary will 

need it in order to make an informed 

decision on whether to introduce any 

evidence into the expedited 

proceedings.

Finally, as explained in the November 

15, 2002 proposed rule (67 FR 69337), 

we agree that if a provider fails to 

deliver a notice to a beneficiary, a 

beneficiary retains the right to an 

expedited determination with respect to 

the discharge. We have made minor 

changes to the regulation text that 

addresses the beneficiary’s right to an 

expedited determination, to ensure that 

the right to a determination is not 

premised strictly on the delivery of a 

termination notice, although we 

anticipate that this will be the situation 

in most cases. 

As noted at the beginning of this final 

rule, the effective date for these new 

provisions is July 1, 2005. In the 

interim, we will obtain public comment 

on the new provider notices and work 

closely with the provider community to 

make sure that they are aware of their 

notice delivery obligations. We also 

intend to review CMS beneficiary 

education materials and conduct 

beneficiary outreach to inform Medicare 

beneficiaries of the right to a review. 

Finally, we are reviewing both CMS 

surveying protocols and QIO review 

protocols to identify changes that may 

be needed to facilitate effective 

implementation, monitoring, and 

enforcement of these requirements. 

Comment: Commenters indicated that 

the organization of the proposed 

provisions was confusing and asked for 

further clarification in the provisions 

describing notification to beneficiaries, 

the procedure for requesting a 

determination, and the responsibilities 

of providers under the new process. 

Response: As explained in the 

previous response, we have revised the 

proposed regulations to incorporate a 

requirement that providers routinely 

notify beneficiaries before discharging 

them or terminating covered services. 

This change necessitated several 

structural changes to the proposed 

provisions, and results in a process that 

is in most ways the same as that set 

forth in the April 4, 2003 final rule on 

expedited reviews of provider service 

terminations (68 FR 16652). Given these 

similarities, as well as the comments 

concerning the lack of clarity in the 

proposed rules, we have reorganized the 

proposed regulations to address these 

concerns. We have clarified that the 

rules in 405.1200 through 405.1204 

apply only to non-hospital providers, 

since hospitals have their own special 

set of rules that apply to them through 

the application of section 

1869(c)(3)(C)(iii)(III) of the Act, as well 

as section 1154(e). Wherever possible, 

we have adopted the wording and 

structure of the parallel MA regulations 

that describe the expedited review 

procedures (§§ 422.624 and 422.626), 

unless there is a substantive reason to 

vary from those regulations. 

Thus, § 405.1200 describes how and 

when beneficiaries must be notified of 

impending service terminations. Section 

405.1202 then details a beneficiary’s 

right to an expedited determination 

(paragraph (a)), how to request a 

determination (paragraph (b)), rules on 

when coverage of provider services ends 

(paragraph (c)), and on the ‘‘burden of 

proof’’ for an expedited determination 

(paragraph (d)), the procedures a QIO 

follows (paragraph (e)), a provider’s 

responsibilities during the review 

process (paragraph (f)), and the billing 

limitation during the review process 

(paragraph (g)). We believe that this 

organizational approach, in combination 

with the substantive changes explained 

above, will produce a clear 

understanding of the procedural 

requirements associated with these 

provisions.

We note that § 405.1202(d), 

concerning the ‘‘burden of proof’’

during an expedited determination 

largely consolidates proposed 

requirements regarding the information 

a QIO considers in making its 

determination. For example, this section 

restates the proposed requirement 

(previously under proposed 

§ 405.1200(d)(2)) that a provider must 

supply the information a QIO needs to 

makes its determination, and explicitly 

acknowledges a beneficiary’s potential 

role in the process. It is also intended 

to clarify that it is the responsibility of 

a provider, who has an obligation to be 

familiar with Medicare coverage rules, 

to explain its decision that Medicare 

coverage is no longer warranted. This is 

a necessary procedural rule that reflects 

the reality that a provider who intends 

to discharge a beneficiary or terminate 

a beneficiary’s services must be able to 

establish for the record the reasoning 

behind the discharge or termination 

decision. The QIO will then make its 

determination on the basis of this 

record. This provision is not intended to 

limit the QIO’s discretion in making its 

determination, nor does it materially 

change the provider’s role. The 

provision does not impact the 

substantive standards for QIO review 

and does not imply a working 

assumption by a QIO that coverage of 

care must continue. 

In concert with this clarification of 

the QIO review process, we have also 

specified under § 405.1202(e) that the 

deadline for the QIO’s expedited 

determination is 72 hours from the 

receipt of the request for a review, rather 

than from the ‘‘receipt of the request for 

an expedited determination and the 

requested information.’’ This change 

lends a greater degree of certainty to the 

timing of the process and thus benefits 

both providers and beneficiaries. A QIO 

may delay its decision if it has not yet 

received necessary information, but the 

provider may be held financially liable 

for continued services resulting from the 

delay. Again, these refinements parallel 

the requirements for expedited reviews 

under the MA program. 

Comment: One commenter suggested 

that the ‘‘timely manner’’ requirement 

(that is, the provision at proposed 

§ 405.1200(b)(2) that prohibited use of 

the expedited review process absent a 

timely request for review) for 

beneficiary appeals be more specific. 

The commenter also recommended that 

additional time be available in special 

circumstances. 

Response: We agree that the provision 

in question (under proposed 

§ 405.1200(b)(2)) was unclear. As part of 

the changes in the organization of the 

regulation, we have eliminated the 

proposed ‘‘timely manner’’ reference 

Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 69257

and simply specified under 

§ 405.1202(b)(1) that a beneficiary must 

request an expedited determination by 

noon of the calendar day following 

receipt of the discharge notice. We 

believe that this deadline allows a 

beneficiary adequate time to request an 

expedited determination, given that a 

beneficiary need only make a telephone 

call to initiate the review process, and 

there are no financial or documentation 

obligations on the part of the 

beneficiary. The notice requirements set 

forth at § 405.1200(b)(2) will ensure that 

that each beneficiary will receive a 

simple discharge notice that will 

contain clear, consistent information on 

their rights and how they may contact 

the QIO to request an expedited 

determination. 

We have added a provision to 

§ 405.1202(b)(1) specifying that if for 

some reason a QIO is unavailable to 

receive a beneficiary’s request for an 

expedited determination, he or she has 

until noon of the next day the QIO is 

available to accept the request to submit 

the request for a review. In other 

situations where a beneficiary fails to 

meet the noon deadline for requesting 

an expedited determination, we will 

instruct QIOs, consistent with 

§ 405.1202(b)(4), to accept the request 

and notify the beneficiary and the 

provider of its determination as soon as 

possible following receipt of the request. 

This is similar to the process now in 

effect for untimely requests for a 

hospital review. However, note that the 

financial liability protections of 

§ 405.1202(g) (prohibiting billing during 

the expedited appeal process) would not 

apply. Finally, beneficiaries will retain 

the option of receiving services after 

their scheduled discharge date, and then 

accessing the standard claims appeal 

process for billed services.

Comment: One commenter questioned 

whether providers would still be 

required to submit bills for appealed 

services. The commenter noted the 

example of a demand bill. 

Response: In general, these 

regulations do not affect a provider’s 

responsibility to submit bills for 

beneficiary services, and the usual 

requirements for claim submission 

would continue to apply. However, a 

QIO’s expedited determination 

constitutes a binding Medicare 

determination as to whether an 

individual’s provider services are 

covered. Medicare contractors will be 

informed of the expedited QIO 

determinations in all these situations, 

and contractors’ payment 

determinations will reflect the results of 

the QIO’s review, absent very unusual 

circumstances (such as an eligibility 

error). An individual would retain the 

right to appeal the contractor’s payment 

determination through the claims 

appeal process. 

In addition, the ‘‘demand bill’’

process will continue to be available for 

determinations that are not subject to 

these procedures, such as when a 

provider informs an individual before 

initiating services (through an ABN) that 

the provider does not believe the 

services are covered by Medicare. 

Comment: Commenters questioned 

which discharge situations would 

provide a beneficiary the right to appeal. 

Specifically, the commenter asked if 

beneficiaries could appeal if their 

rehabilitation was discontinued, even as 

their Part A coverage continued. 

Another commenter recommended that 

we clarify whether reductions in service 

are subject to the expedited 

determination process. 

Response: Section 1869(b)(1)(F) of the 

Act specifies that the right to expedited 

proceedings applies to individuals 

whose services are terminated by a 

provider or who are discharged from a 

provider of services. We believe it was 

the intent of Congress to apply these 

rights to the traditional provider service 

settings of SNFs, CORFs, HHAs, and 

hospice, rather than to apply these 

rights more broadly, such as to standalone rehabilitation services furnished 

by an outpatient department of a 

hospital. We note that the proposed rule 

erroneously included hospitals in the 

definition of the providers for which 

these expedited determination 

procedures would apply, although 

inpatient hospitals continue to be 

subject to the existing expedited review 

procedures established under section 

1154(e) of the Act (and incorporated 

into BIPA under the ‘‘Special Rule for 

Hospitals’’ at section 

1869(c)(3)(C)(iii)(III) of the Act), as 

discussed in the next section of this 

preamble. 

To clarify these points, we have 

revised § 405.1200(a) regarding 

applicability of the expedited 

determination procedures to specify that 

the new notice and appeal provision 

apply only to SNFs, HHAs, CORFs, and 

hospices, and that they do not include 

reductions in services, as discussed 

below. If a beneficiary continues to 

receive Part A services in a skilled 

nursing facility provider, but some Part 

B services have been discontinued, we 

will consider this to be a reduction and 

not a termination of services. 

As discussed in the proposed rule, the 

BIPA requirements concerning provider 

notice and expedited determination 

procedures are not applicable to 

reductions in service. The statute 

specifically refers only to service 

termination and discharges, and we do 

not believe the authority exists to 

extend these provisions further. In most 

settings, care reductions are a 

continuing, expected, and generally 

positive part of the care delivery 

continuum. We believe that providing 

an expedited appeal right for service 

reductions would be unwieldy and 

inappropriate. However, in no way does 

this final rule reduce a beneficiary’s 

existing appeal rights for reduction in 

care situations. For example, home 

health agencies will continue to provide 

ABNs for reductions in services that are 

not consistent with the original plan of 

care, and these types of situations will 

still be subject to the existing notice and 

appeal procedures.

Comment: One commenter pointed 

out an inconsistency between the 

summary section of the proposed rule 

and the proposed regulation text. 

Specifically, the commenter noted that 

hospice providers were not included in 

the discussion of those providers 

affected by the expedited appeal 

provisions, but were included in the 

text of the proposed rule. 

Response: In this final rule, we have 

corrected the inconsistency regarding 

hospice providers. Thus, we have 

continued to specify under 

§ 405.1200(a) that hospices are 

considered providers for purposes of the 

expedited proceedings provisions. 

Although we expect situations where 

beneficiaries object to their discharge 

from a hospice to be rare, these 

individuals may exercise the right to an 

expedited determination. We have also 

clarified under § 405.1202(a) that, like 

beneficiaries who request an expedited 

determination for discharges from 

residential providers, beneficiaries who 

request an expedited determination for 

hospice coverage terminations are not 

required to obtain a physician 

certification that failure to continue 

provision of the services will place the 

individual’s health at significant risk. 

We believe that the all-inclusive nature 

of hospice care is generally akin to a 

residential setting. 

Comment: Two commenters raised 

questions regarding what triggers a 

beneficiary’s right to an expedited 

determination in response to a provider 

termination or discharge. They asked for 

additional clarification in situations 

where services are being terminated 

because there are no physician’s orders 

or appropriate certifications to continue 

care. One commenter suggested that 

‘‘technical’’ requirements, such as 

certification of homebound status for 

home health patients, be established 

before the right to an expedited 

69258 Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 

determination can be exercised. The 

commenter noted that although a strict 

reading of the proposed regulations 

would permit an expedited 

determination without these 

requirements being met, allowing an 

expedited review under these 

circumstances raises important 

questions about the provider’s authority 

to continue to deliver care and to be 

reimbursed for that care by the Medicare 

program. Another commenter 

recommended that a beneficiary be able 

to appeal a denied request for an 

expedited review. 

Response: These comments raise two 

key issues with respect to both the 

availability of the statutory right to an 

expedited determination and the 

appropriate remedy available to a 

beneficiary who exercises that right. 

Section 1869(b)(1)(F) of the Act 

provides only limited direction on these 

issues, specifying that the Secretary 

must provide an expedited 

determination at a beneficiary’s written 

or oral request, providing that an 

individual may request an expedited 

determination when he or she has 

received notice that a provider plans: (1) 

To terminate services provided to an 

individual, and a physician certifies that 

failure to continue provision of such 

services is likely to place the 

individual’s health at significant risk; or 

(2) to discharge the individual from the 

provider of services. Given this 

construction, we do not believe it was 

the intent of Congress to prohibit a 

beneficiary from requesting an 

expedited determination in situations 

where Medicare coverage requirements 

are not met. Thus, § 405.1202(a) of this 

final rule essentially establishes that any 

individual whose Medicare-covered 

provider services are being terminated 

may request an expedited 

determination.

We generally do not intend to place 

restrictions on a beneficiary’s right to 

request an expedited review when 

coverage of their provider services is 

about to end. In all termination 

situations where Medicare coverage 

requirements are at issue, beneficiaries 

must receive notice of the provider’s 

decision to terminate Medicare-covered 

services and have an opportunity to 

dispute the decision if they so choose. 

The QIO will then have an obligation to 

deal with these requests in an 

appropriate manner. 

A provider cannot be reimbursed for 

Medicare services unless the customary 

Medicare-required elements are in 

place. These include both technical 

requirements (such as the existence of a 

physician’s order for the services or the 

requirement that an HHA patient be 

homebound), as well as the medical 

necessity requirement that the services 

in question be reasonable and necessary 

for the given beneficiary under the given 

set of circumstances. Even under the 

existing claims appeals process a 

beneficiary typically has the right to 

appeal a determination by a contractor 

that the technical requirements are not 

in place, and the beneficiary may 

prevail in this appeal if he or she can 

demonstrate that these requirements 

were in fact met. 

Similarly, we believe that Congress 

intended that the expedited 

determination process offer 

beneficiaries an opportunity for an 

independent review of the provider’s 

decision on the impending coverage 

termination. The absence of a 

physician’s order for additional 

services, or of a plan of care establishing 

that a patient is confined to the home, 

cannot be used to prove that a patient 

does not need care. Instead, the provider 

must explain to the QIO the reasoning 

behind the lack of the Medicarerequired elements. 

The QIO will consider this and other 

relevant information in making its 

determination, including, where 

applicable, the physician certification 

that failure to continue providing 

services may place the individual’s 

health at significant risk. The QIO will 

be fully aware of the necessary 

‘‘technical’’ requirements for coverage 

and will have the authority to make a 

determination both for these threshold 

coverage requirements and for whether 

continued services are reasonable and 

necessary for the individual. When a 

QIO determines that coverage of care 

should continue, a provider may rely on 

the QIO’s determination as dispositive 

evidence that all needed elements of 

Medicare coverage are met and that the 

care will be reimbursed appropriately 

by Medicare. No matter what a QIO’s 

decision on a case, however, an 

individual will have an opportunity to 

request an expedited reconsideration 

from a QIC. 

Comment: One commenter expressed 

concern about the use of ‘‘calendar 

days’’ in establishing the deadline for a 

beneficiary to request an expedited 

determination. (see proposed 

§ 405.1202(b)(1)). The commenter noted 

that beneficiaries informed of a service 

termination on a Friday or Saturday 

could encounter difficulties and would 

have little access to assistance to make 

their request. They asserted that using a 

next ‘‘working day’’ requirement would 

be more realistic for the use of QIO 

resources. 

Response: Our experience with 

deadlines tied to ‘‘working days’’ is that 

they are often interpreted differently by 

different entities involved in the appeals 

process and consequently tend to add 

ambiguity and uncertainty to the 

process. Our general regulatory 

approach in recent years has been to 

eliminate deadlines based on ‘‘working 

days’’ whenever possible and instead 

rely on a ‘‘calendar day’’ approach. We 

believe this measure provides greater 

clarity and reduces delays and potential 

additional liability risks generally 

associated with extending deadlines to 

accommodate the working day 

approach.

At the same time though, we 

recognize that there are also problems 

associated with the use of calendar 

days. Although QIOs are expected to be 

available to receive requests, notify 

providers of the requests, and conduct 

reviews on a daily basis, providers may 

have difficulty in furnishing the 

necessary records on weekends. Thus, 

we agree that this is a valid concern: 

This is why we have tried to build as 

much flexibility as possible into these 

regulations to help ameliorate potential 

problems. For example, these 

regulations give providers the flexibility 

to notify beneficiaries of a planned 

termination more than 2 days in 

advance, which can serve both to avoid 

the need for weekend notifications and 

to ensure that the ensuing parts of the 

expedited review process (such as 

providing documentation to QIOs) can 

be accomplished during normal working 

hours. We intend to work with provider 

and consumer organization 

representatives and with the QIOs to 

identify ways to reduce the need for a 

beneficiary to be given notice on a 

weekend, as well as to develop uniform 

procedures to deal with those relatively 

infrequent situations where this is 

unavoidable. 

We use ‘‘working days’’ in the context 

of inpatient hospital discharges because 

this standard is required by section 

1154(e) of the Act. This section 

specifically uses the phrase ‘‘working 

days’’ when establishing deadlines for 

parties involved in expedited appeals of 

hospital discharges. 

Comment: One commenter expressed 

concern with the provider requirements 

for submitting medical records during 

an expedited appeal. The commenter 

asked whether the timeframe was 

realistic, and questioned how weekends 

would affect the timeframe. 

Response: Under § 405.1202(f)(2), 

providers are required to submit records 

to the QIO by close of business of the 

day they are informed by the QIO of the 

beneficiary’s request for an expedited 

review. Although we recognize that this 

is a rigorous standard, we believe that 

Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 69259

this deadline for provider submission of 

necessary information is necessary to 

carry out Congressional intent for an 

expedited determination process 

without subjecting beneficiaries to 

unneeded liability. Therefore, in both 

our April 4, 2003 final rule and this 

regulation, we have revised the appeals 

process (by adjusting the time frame for 

records to be sent to the QIO) to ensure 

that the process is completed within 3 

days of the notice of termination. The 

effect of these changes is that a 

Medicare beneficiary should face a 

maximum of 1 day of financial liability 

if a QIO rules that the disputed 

discharge date is appropriate. 

We strongly encourage providers to 

distribute termination notices as early as 

possible (that is, as soon as the service 

termination date is known) to 

ameliorate difficulties associated with 

the need to furnish records promptly. 

Similarly, QIOs need to exercise 

discretion and good judgment in 

obtaining needed documentation from 

providers, and, as made explicit in the 

regulations, we anticipate that in some 

circumstances QIOs will rely on 

telephone evidence that can be followed 

up with written confirmation. Because 

we recognize that weekend discharges 

may cause difficulties in meeting the 

record submission deadlines, we intend 

to issue further guidance on this issue. 

Finally, we note that this 

documentation deadline is the same as 

the one established by section 1154(e) of 

the Act for QIO reviews of hospital 

discharges, and as the deadline 

established by regulation for expedited 

proceedings under the MA program 

(§ 422.626(e)).

Comment: One commenter questioned 

the consequences of a provider not 

submitting requested documentation on 

time. The commenter questioned who 

would be responsible for payment in 

these instances. 

Response: As discussed above, a 

provider is responsible for submitting 

needed documentation to support the 

termination decision by close of 

business of the day following the day it 

is notified by the QIO of the request for 

an expedited determination. If the QIO 

does not receive the information needed 

to sustain a provider’s decision to 

terminate services, it may make its 

determination based on the evidence 

available, or it may defer a decision 

until it receives the necessary 

information. If a provider does not 

fulfill this obligation, it may be liable for 

any excess continued Medicare coverage 

of the individual’s provider services due 

to the provider’s delay, as determined 

by the QIO. To address this issue, we 

have set forth these principles in 

§ 405.1202(e)(7), under the procedures 

the QIO follows in making its 

determination. 

Comment: One commenter raised the 

issue of beneficiaries’ access to their 

own case information. The commenter 

recommended that the QIO and 

provider be required to ensure that all 

necessary medical and social service 

information be available to 

beneficiaries. 

Response: In this final rule, under 

§ 405.1202(f), if a beneficiary requests 

an appeal, a provider must present a 

beneficiary with a detailed notice that 

will include an explanation of why 

services are no longer needed. This 

detailed notice will include the specific 

information from the beneficiary’s 

situation used to make the discharge 

decision. Section 405.1202(f)(3) 

explicitly establishes that a beneficiary 

has the right to request a copy of the 

information sent by the provider to the 

QIO and that the information should be 

made available by no later than close of 

business of the day after the material is 

requested. We do not believe this final 

rule is the appropriate vehicle to 

address the availability of social service 

information to beneficiaries; these 

requirements are traditionally included 

in the discharge planning conditions of 

participation for the appropriate 

provider. 

Comment: Two commenters 

expressed concern about when 

beneficiary liability begins and how 

beneficiaries will be informed of their 

financial liability. They questioned 

whether QIO notification marks the 

beginning of beneficiary liability. They 

also suggested that beneficiaries be 

informed of financial liability through 

the ‘‘initial determination’’. 

Response: Although we are somewhat 

unclear as to the commenter’s reference 

to an ‘‘initial determination’’ in this 

context, we fully agree that a beneficiary 

must be informed of potential liability 

as soon as possible. Therefore, we have 

required under § 405.1200(b) that each 

beneficiary receive a standardized 

termination notice that specifies the 

date on which beneficiary liability 

begins. This notice also will inform 

beneficiaries that financial liability for 

noncovered care will exist in 

unsuccessful expedited review requests. 

Also, under § 405.1202(e)(8), the QIO’s 

notice of its determination decision 

must inform beneficiaries of the 

consequences of the QIO decision, such 

as the potential liability if they continue 

services after their discharge date. We 

believe these provisions will ensure that 

all beneficiaries are fully apprised of 

their potential financial liability before 

and during the expedited determination 

process. 

Comment: One commenter raised 

issue with the reimbursement rates for 

providers whose beneficiaries appeal 

discharges. The commenter was 

concerned that providers were at 

financial risk because they would be 

unable to bill beneficiaries until the 

expedited QIO determination was 

completed. The commenter was also 

concerned about providers incurring 

bad debts from unsuccessful appeals. 

The commenter suggested that payment 

rates to providers with bad debts 

resulting from unfavorable QIO 

decisions be adjusted.

Response: Under § 405.1202(g) and 

§ 405.1204(f), providers are precluded 

from billing beneficiaries for disputed 

services only during the brief expedited 

process. Even for expedited proceedings 

that include an expedited 

reconsideration, the entire decision 

making process will encompass less 

than one week from the originally 

scheduled discharge. Thus, we do not 

believe that this final rule will have a 

significant effect on providers’ financial 

risk. If providers can furnish evidence of 

a pattern of beneficiary failure to pay 

money due after an unsuccessful 

expedited determination request, we 

will assess such evidence and related 

information to determine the 

appropriateness of proposing policy 

changes consistent with existing 

statutory authority or seeking legislative 

changes. 

We note that the preclusion on billing 

pending the expedited determination is 

consistent with current procedures for 

SNFs, under Sarrassat v. Sullivan, 1989 

WL 208444 (N.D. Cal. 1989), aff’d 961 

F.2d 217 (9th Cir. 1992). In Sarrassat,

the plaintiffs asserted that SNF 

beneficiaries were not adequately 

notified that the SNF believed Medicare 

would not cover care, and that 

beneficiaries were not permitted to 

appeal the SNF’s assertion to the fiscal 

intermediary. The court affirmed a 

settlement agreement providing that 

SNFs would be unable to bill 

beneficiaries until their initial 

determination was complete, a process 

that is much longer than the expedited 

proceedings established under this final 

rule. Thus, we believe that building this 

type of temporary protection from 

billing into the new expedited appeals 

process is an appropriate step, 

particularly given the short time periods 

involved. 

Comment: One commenter questioned 

whether QIO appeal rights would be 

included on the Notice of Discharges 

required by Nursing Home Reform Law. 

The commenter also questioned 

69260 Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 

whether QIO review is a mandatory or 

permissive alternative to State review. 

Response: Information about an 

individual’s expedited review rights 

will be part of the standardized portion 

of the provider termination notice 

required under this final rule. Although 

this information may be furnished 

through other vehicles as well, we will 

not deem the inclusion of the appeal 

right information on any other notice to 

satisfy this regulatory requirement. The 

QIO expedited review process 

implements a Medicare statutory 

requirement, and we cannot determine 

whether States will consider this 

process an acceptable alternative to an 

existing State review requirement. 

Comment: One commenter stated that 

the proposed rule was not clear with 

regard to whether particular QIO initial 

determinations are subject to 

redeterminations. They questioned 

whether the new expedited 

determinations were subject to the 

redetermination rights set forth in 

§ 405.940 of the proposed rule of 

November 15, 2002. 

Response: QIO expedited 

determinations are not subject to the 

redetermination rights set forth under 

BIPA and addressed at proposed 

§ 405.940 of our November 15, 2002 

proposed rule. (We note that section 

1869(a)(3)(A) of the Act states that 

redeterminations must exist for fiscal 

intermediary and carrier initial 

determinations, but does not discuss 

QIO initial determinations.) Instead, a 

beneficiary may request an expedited 

reconsideration of that expedited 

determination. A beneficiary who 

misses the deadline for an expedited 

reconsideration would retain access to 

the standard claims appeal procedures. 

Comment: One commenter raised 

concerns with a cost to the Medicare 

program not discussed in the proposed 

rule. The commenter suggested that 

there would be a necessary cost of 

educating beneficiaries and providers 

about their rights and obligations. In 

particular, the commenter stated that 

beneficiaries would need education 

regarding the use of ABNs as a part of 

the appeals system. 

Response: We agree that these 

expedited provisions, as well as all 

other aspects of the implementation of 

BIPA, will require extensive provider 

and beneficiary education. We will 

work to achieve that end. In addition, as 

discussed in detail above, a new notice 

will be used instead of ABNs to inform 

beneficiaries of their expedited appeal 

rights. We believe that the use of a 

distinct and standardized notice will 

simplify the notification process and 

promote understanding by beneficiaries.

Comment: One commenter requested 

clarification regarding beneficiary costs 

for access to medical and other 

information. They wanted copying and 

associated charges to reflect actual 

expenses. 

Response: We agree with the 

commenter that clarification of 

beneficiary charges for documentation is 

needed and have changed the regulation 

text accordingly. Section 405.1202(f)(3) 

states that a provider may charge the 

beneficiary a reasonable amount to 

cover the costs of duplicating such 

documentation or delivering it to the 

beneficiary. We note that this 

requirement is consistent with our 

policy for managed care enrollees as 

contained in our April 4, 2003 final rule 

(68 FR 16660). 

B. Comments on Procedures for 

Expedited Reviews of Inpatient Hospital 

Discharges 

As noted above, the proposed rule did 

not include substantive changes to the 

procedures used by QIOs to conduct 

expedited initial determinations of 

disputed hospital discharges, although 

it did specify that reconsiderations will 

be performed by QICs, rather than QIOs. 

We continue to believe that 

incorporating the relevant procedures 

into the same regulatory subpart that 

will contain the expedited 

determination procedures for other 

providers (as well as the new appeals 

procedures required under BIPA when 

they are made final) will prove 

convenient for all parties. As a result of 

the organizational changes to the 

requirements for other provider services 

terminations, the hospital-related 

requirements are now set forth at 

§§ 405.1206 and 405.1208. Section 

405.1206 sets forth the expedited review 

procedures for beneficiary-initiated 

appeals, and § 405.1208 covers hospitalinitiated appeals. We note that, in 

keeping with our current policies, QIO 

determinations are binding on hospitals, 

without further appeal, but beneficiaries 

may request reconsiderations of 

unfavorable QIO decisions. Under our 

current policies, and consistent with 

section 1155 of the Act, QIOs, rather 

than QICs, conduct reconsiderations of 

expedited determinations concerning 

inpatient hospital discharges. As stated 

above, we recognize that section 

1869(c)(3)(C)(iii)(III) requires QICs to 

now perform expedited reconsiderations 

of expedited determinations, and we 

expect that QICs will be fully 

established by the date of 

implementation. However, in the event 

QICs have not yet been established at 

the implementation date, our plan is to 

have the QIOs continue to perform the 

reconsiderations. Since section 1155 

already authorizes QIOs to perform 

reconsiderations, but does not otherwise 

govern the process for such 

reconsiderations, we believe we will 

have the authority, until QICs are 

operational, to allow QIOs to hear the 

reconsiderations in accordance with the 

QIC procedures. 

In §§ 405.1206 and 405.1208 we 

continue to cross-reference the 

expedited reconsideration process for 

non-hospital providers. We believe that 

Congress’ intent in incorporating section 

1154(e)(2) through (4) into section 

1869(c)(3)(C)(iii)(III) was to ensure that 

statutory time frames and financial 

liability protections applicable to QIO 

reviews of hospital discharges continue 

to apply. Therefore, we have continued 

to apply those financial protections and 

time frames to the QIO initial 

determinations, while creating a 

uniform process at the QIC 

reconsideration stage. 

We also recognize that the new QIC 

reconsideration process for hospital 

discharges may now conflict with some 

of the provisions governing 

reconsiderations under 42 CFR part 478. 

For example, 42 CFR 478.40 requires a 

$200 amount in controversy for an ALJ 

hearing, whereas the QIC 

reconsideration procedures would 

require only a $100 amount in 

controversy. We plan to issue 

conforming amendments to part 478 in 

the future to take into account the 

changes made by BIPA. However, to the 

extent there is a direct inconsistency 

between the part 478 regulations and 

either the statute or the regulations 

announced in this final rule, the statute 

and the regulations announced by the 

final rule would govern. 

Only one commenter addressed these 

provisions. 

Comment: One commenter suggested 

that the hospital discharge review 

provisions at proposed § 405.1204(a) 

define ‘‘inpatient hospital discharge’’, as 

it applies to these reviews. The 

commenter asked for a reference to the 

Code of Federal Regulation (CFR) or 

statutory provision for the definition. 

The commenter also questioned how 

physician concurrence is to be 

documented and included in the patient 

record.

Response: Consistent with § 412.4(a) 

of the regulations concerning the 

inpatient hospital prospective payment 

system, a hospital inpatient is 

considered to be discharged when the 

patient is formally released from the 

hospital. For expedited review 

purposes, a discharge does not include 

a death or a transfer to another hospital. 

Hospitals must continue to comply with 

Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 69261

the relevant Medicare conditions of 

participation under part 482 of the CFR 

concerning documentation 

requirements. We view physician 

concurrence as a routine element of the 

hospital discharge process, and do not 

believe any change to the medical 

records and discharge planning 

procedures are warranted. 

Comment: The commenter requested 

specification of how beneficiaries would 

receive the notice of non-coverage 

required under proposed § 405.1204(a). 

The commenter expressed concern that 

beneficiaries in hospitals may be unable 

to exercise their right to appeal due to 

their health condition. The commenter 

recommended that the regulations 

regarding hospital discharge appeals 

reflect this concern. 

Response: The requirements for 

providing beneficiaries with the 

Hospital Issued Notice of Non-coverage 

(HINN) continue long-standing practice 

under the original Medicare program, as 

discussed in detail in our April 4, 2003 

final rule (68 FR 16660). In brief, 

hospitals must issue the ‘‘Important 

Message from Medicare’’ upon 

admission to all Medicare inpatients. 

Hospitals issue HINNs to any 

beneficiary that expresses 

dissatisfaction with an impending 

discharge, and a hospital may not bill 

the beneficiary or his/her representative 

without issuance of the HINN. We have 

added under § 405.1206(b) the 

requirement that delivery of a notice of 

non-coverage is valid only if a 

beneficiary has signed and dated the 

notice to indicate that he or she both 

received the notice and understood its 

contents. This policy is consistent with 

our other CMS requirements governing 

the delivery of similar notices, such as 

those set forth in CMS program 

memoranda A–99–52 and A–99–54 for 

advanced beneficiary notices under 

original Medicare. We have no 

indication that this standard has proven 

problematic. Note that this requirement 

for successful delivery does not permit 

a beneficiary to extend coverage 

indefinitely by refusing to sign a notice 

of termination. If a beneficiary refuses to 

sign a notice, the provider can annotate 

its copy of the notice to indicate the 

refusal, and the date of the refusal will 

be considered the date of receipt of the 

notice. This standard has already been 

articulated in our hospital manual 

provisions at section 414.5. 

By the time that termination notices 

are issued, providers will have already 

needed to assess a beneficiary’s ability 

to accept delivery of a notice, based on 

typical admission assessments, care 

planning evaluations and discharge 

planning activities that have taken place 

during the course of treatment. In the 

event a provider believes that a 

beneficiary is not capable to receive the 

notice, providers must be well 

acquainted enough with the 

beneficiary’s particular situation to 

make alternative arrangements, if 

necessary, to deliver a valid notice. For 

example, an incapacitated beneficiary is 

not able to act on his or her rights and, 

therefore, cannot validly receive the 

notice. This situation can be remedied 

through the use of an authorized 

representative under Federal or State 

law. This issue is also discussed in 

section 414.5 of the Hospital Manual. 

Comment: The commenter raised 

several issues regarding coverage during 

review. In particular, the commenter 

expressed concern with coverage with 

the use of calendar days as the standard, 

and wanted more specificity for when 

the beneficiary failed to file timely and 

continued their hospital stay.

Response: The provisions at 

§ 405.1206(f), which specify that a 

beneficiary is responsible for services 

furnished after noon of the calendar day 

after the beneficiary receives the QIO 

determination, are consistent with 

section 1154(e)(4) of the Act regarding 

expedited reviews of inpatient hospital 

stays. Although the statute refers to 

‘‘working days’’ for most aspects of this 

process, it does not use that terminology 

in establishing liability; therefore, we 

believe it is reasonable to conclude that 

the calendar days, and not working 

days, should be used. 

We believe that § 405.1206(e)(3) 

clearly explains that if a beneficiary 

does not make a timely request for an 

expedited review, the beneficiary may 

bear financial liability. That is, the 

beneficiary may be responsible for 

charges beyond the date on the hospital 

issued notice of non-coverage (HINN). 

Again, beneficiaries generally receive a 

HINN only when they express 

dissatisfaction with a hospital’s decision 

to discharge them from inpatient care. 

Comment: The commenter asked 

whether beneficiaries could face charges 

from hospitals for providing medical 

record data, and what documentation 

procedures are associated with notice 

requirements. 

Response: We agree, particularly 

where notification takes place by 

telephone. Hospitals may charge 

beneficiaries a reasonable amount for 

providing them with copies of their 

medical records. Hospitals may not, 

however, charge beneficiaries for 

providing the medical records to the 

QIO or QIC. 

IV. Provisions of this Final Rule With 

Comment Period 

A. Summary of Provisions 

For the convenience of the reader, 

listed below are the major elements of 

the regulations concerning the new 

expedited proceedings that are set forth 

in this final rule with comment period. 

This listing is intended solely as a 

reference aid rather than as a 

comprehensive statement of the policies 

set forth in the regulation text. 

Section 405.1200 describes the 

applicability of the expedited 

determination and reconsideration 

provisions and establishes an advance 

notification requirement for all provider 

service terminations and discharges. 

Section 405.1200(a) specifies that for 

purposes of these provisions in 

405.1200 through 405.1204, the term 

provider includes the non-hospital 

providers of SNFs, HHAs, CORFs, and 

hospices. Hospitals have their own 

special rules that apply by virtue of 

section 1154(e) of the Act, which was 

incorporated into section 

1869(c)(3)(C)(iii)(III) of the Act. 

Section 405.1200(b) sets forth the 

notification requirement that applies 

when a beneficiary’s SNF, HHA, CORF, 

or hospice services are being 

terminated. These procedures require 

that the provider deliver, generally no 

later than 2 days before the termination 

of services, a standardized notice that 

informs the beneficiary of the date of 

discharge and how to file an appeal. 

Section 405.1202(a) describes a 

beneficiary’s right to an expedited 

determination of a non-hospital 

provider’s decision to terminate 

services. 

Section 405.1202(b) explains how a 

beneficiary must request an expedited 

determination: A beneficiary must make 

a request to the QIO by no later than 

noon of the next calendar day following 

receipt of the notice of termination. The 

beneficiary must be available to answer 

questions by the QIO and may submit 

evidence to be used in the decisionmaking process. 

Section 405.1202(c) and (d) sets forth 

the coverage rules associated with the 

expedited determination process and 

the procedural burden of proof rules.

Section 405.1202(e) describes the 

procedures a QIO must follow from the 

time it receives a beneficiary’s request 

for an expedited determination through 

the issuance of its decision. These 

include immediately informing a 

provider of a beneficiary’s request for an 

expedited determination, assessing the 

validity of the discharge notice, 

examining pertinent medical records, 

offering the beneficiary, provider, and 

69262 Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 

physician an opportunity to present 

their views, and reaching a decision and 

informing the appropriate parties of its 

decision. All of these activities must be 

carried out within 72 hours of the 

beneficiary’s request for an expedited 

determination. 

Section 405.1202(f) and (g) detail the 

responsibilities of providers. Upon 

learning that a beneficiary has requested 

an expedited determination, the 

provider, by close of business of the day 

of the QIO’s notification, must send a 

detailed notice to the beneficiary 

containing the reasons why the services 

are no longer covered and applicable 

Medicare coverage rules or policy. 

Providers may not bill a beneficiary who 

has requested an expedited 

determination for any disputed services 

until the expedited appeals process is 

complete (including an expedited 

reconsideration, if applicable). 

Section 405.1204 sets forth a 

beneficiary’s right to an expedited 

reconsideration by a QIC regarding a 

QIO expedited determination. This right 

is established under § 405.1204(a), and 

the procedures to be followed by 

beneficiaries, the QIC, the QIO, and the 

provider are described in the following 

sections. We believe that QICs will be 

operational at the time we implement 

the reconsiderations established in this 

final rule. However, in the event the 

QICs are not yet operational at the time 

of implementation, QIOs will perform 

expedited reconsiderations. We believe 

it would be contrary to the public 

interest to delay implementation of 

these expedited review procedures until 

the QICs have been fully established. 

QIOs are well suited to administer 

expedited reconsiderations and 

currently perform this function for 

expedited appeals of inpatient hospital 

discharges. In addition, we believe that 

even had BIPA not been passed, we 

would have had the administrative 

authority to create a procedural rule 

establishing a pretermination review 

process, to be conducted by the QIOs 

under sections 1102 and 1154(a) of the 

Act. If QIOs do perform the expedited 

reconsiderations until QICs are 

established, they will use the same 

procedures to be used by QICs, although 

we would formally view the process as 

a process separate from the process fully 

implementing BIPA expedited reviews 

using QICs to process reconsiderations. 

Section 405.1206 outlines 

longstanding procedures regarding a 

beneficiary’s right to an expedited 

determination in response to an 

inpatient hospital discharge. Consistent 

with § 1154(e)(4) of the Act, if a 

beneficiary files a timely request for 

such a determination, the beneficiary is 

not financially responsible for inpatient 

hospital services before noon of the 

calendar day after receiving the written 

expedited QIO determination. 

Consistent with the statute, we note that 

412.42(c)(3) specifies that a hospital 

cannot charge a beneficiary until and 

unless the hospital provides the 

beneficiary with a notice of 

noncoverage. 

Section 405.1208 outlines 

longstanding rules concerning the right 

of a hospital to request an expedited 

QIO review. In short, a hospital may 

request QIO review if it believes the 

beneficiary does not need further 

inpatient care but is unable to obtain 

physician agreement. 

B. Decision To Issue a Final Rule With 

Comment Period

Section 1869(b)(1)(F) of the Act, as 

revised by section 521 of BIPA, requires 

that the Secretary establish a process by 

which a beneficiary may obtain an 

independent, expedited determination if 

he or she receives a notice from a 

provider of services that the provider 

plans to terminate the services or 

discharge the individual from the 

provider. Currently, this right to an 

expedited review exists only with 

respect to hospital discharges (under 

sections 1154 and 1155 of the Act). In 

the November 15, 2002 proposed rule 

we set forth the procedures needed to 

implement this statutory directive. 

As discussed above, the new 

expedited review process set forth in 

this final rule is closely modeled on the 

process now in effect for MA enrollees 

under our April 4, 2003 final rule. Some 

commenters on the November 15 

proposed rule recognized the close 

relationship between the two processes, 

and thus, they recommended changes to 

the proposed rule notice and appeal 

procedures that would make the 

procedures largely parallel. We strongly 

agree that making the notice and appeal 

procedures available to MA enrollees 

and original Medicare beneficiaries as 

similar as possible is prudent public 

policy, and will minimize confusion 

among beneficiaries and providers as we 

implement the new expedited appeal 

rights for provider service terminations. 

However, although the provisions 

implemented here are clearly a logical 

outgrowth of the proposed provisions 

and the comments on them, some of the 

changes are fairly significant, such as 

the introduction of a standard coverage 

termination notice, rather than use of 

the existing ABN. Moreover, the 

public’s familiarity with the issues 

involved here has now been informed 

both by this final rule and our April 4, 

2003 final rule on the MA process, as 

well as with actual experience with the 

MA process (which began on January 1, 

2004). Thus we believe it would be in 

the public interest to welcome further 

comments on the changes set forth in 

this final rule. If these comments 

warrant changes to these requirements, 

we will carry out further rulemaking. 

V. 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, if we proceed with 

a subsequent document, we will 

respond to the comments in the 

preamble to the document. 

VI. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 30-

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

The PRA exempts the majority of the 

information collection activities 

referenced in this Final Rule with 

Comment, including collections 

associated with SNFs. In addition, 5 

CFR 1320.4 excludes collection 

activities during the conduct of 

redeterminations, reconsiderations, 

appeals, and other administrative 

actions. However, the information 

collection requirement associated with 

the initial request to seek an expedited 

determination, in a non-SNF setting, is 

subject to the PRA.

We are soliciting public comment on 

each of these issues for the following 

sections of this document that contain 

information collection requirements: 

Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 69263

Section 405.1200 Notifying 

Beneficiaries of Provider Service 

Terminations 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Notifying Beneficiaries of Provider 

Service Terminations’’ at the beginning 

of your comments.] 

For any termination of Medicarecovered services, the provider of the 

service must notify the beneficiary in 

writing of its decision to terminate 

services. The provider must use a 

standardized notice, required by the 

Secretary, in accordance with the 

requirements and procedures set forth 

in this section. 

Given that CMS has developed 

standardized formats for these notices, 

and notices will be disseminated during 

the normal course of related business 

activities, we estimate that it will take 

providers (HHAs, CORFs, and Hospices) 

5 minutes to deliver each notice. In 

2002, there were approximately 4.2 

million Medicare HHA discharges. 

(Note that the amount of Medicare 

business with CORFs is so small that 

Medicare statistical summaries do not 

include a separate line item for patient 

encounters with these facilities. 

Similarly, while we do not have precise 

estimates of hospice discharges, the 

number is considered to be an extremely 

small percentage of the 0.5 million 

number of annual hospice patients. 

Thus, our analysis is necessarily limited 

to HHA services.) We estimate that HHA 

providers will be required to give an 

estimated 4.2 million notices to 

beneficiaries. The total annual burden 

associated with this requirement is 

350,000 hours. 

If you wish to view the proposed 

standardized notices and the supporting 

documentation, you can download a 

copy from the CMS Web site at http://

www.cms.hhs.gov/regulations/pra/.

Section 405.1202 Expedited 

Determination Procedures 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Expedited Determination Procedures’’

at the beginning of your comments.] 

A beneficiary who desires an 

expedited determination must submit a 

request for an appeal to the QIO, in 

writing or by telephone, by no later than 

noon of the effective date of the written 

termination notice. If, due to an 

emergency the QIO is closed on the day 

the beneficiary requests an expedited 

determination, the beneficiary must file 

a request by noon of the next day that 

the QIO is open for business.

The right to an expedited review of 

the termination of HHA/CORF/hospice 

services has never been available to 

Medicare beneficiaries. Consistent with 

our estimate of the proportion of MA 

enrollees who are likely to request QIO 

reviews of HHA/CORF/hospice services, 

we are estimating that approximately 1–

2 percent of Medicare fee-for-service 

beneficiaries who receive termination 

notices will request an expedited 

review. We believe this is a reasonable 

estimate of the maximum number of 

HHA/CORF/hospice enrollees who are 

likely to file appeals with the IRE. Thus, 

we estimate the annual number of feefor-service reviews at no more than 2 

percent of the approximately 4.2 million 

HHA/CORF/hospice discharges (FY 

2002 data), meaning that the maximum 

number of beneficiaries that are likely to 

request an expedited determination by 

the QIO is about 84,000 annually. It is 

estimated that it will take 84,000 

beneficiaries 15 minutes to file an 

appeal on an annual basis. The total 

annual burden associated with this 

requirement is 21,000 hours. 

The beneficiary may submit evidence 

to be considered by the QIO in making 

its decision and may be required by the 

QIO to authorize access to his or her 

medical records in order to pursue the 

appeal. It is likely that no more than 10 

percent of the 84,000 beneficiaries who 

file appeals will also submit additional 

evidence. It is estimated that it will take 

8,400 beneficiaries 60 minutes to submit 

evidence on an annual basis. That is, 

since beneficiaries may not be 

functioning at their maximum capacity, 

they may need to contact family 

members, friends, or their personal 

physicians who might provide 

assistance in gathering additional 

evidence. The total annual burden 

associated with this requirement is 

8,400 hours. 

It should be noted that requirements 

are currently captured and accounted 

for in currently approved information 

collection under OMB numbers 0938–

0045 ‘‘Requirements for Reconsideration 

for Part A Health Insurance Benefits’’. 

If you comment on these information 

collection and recordkeeping 

requirements, please mail copies 

directly to the following:

Centers for Medicare & Medicaid 

Services, Office of Strategic 

Operations and Regulatory Affairs, 

Regulations Development and 

Issuances Group, Attn: Dawn 

Willinghan, CMS–4004–FC, Room 

C5–14–03, 7500 Security Boulevard, 

Baltimore, MD 21244–1850 and, 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Room 10235, New Executive 

Office Building, Washington, DC 

20503, Attn.: Christopher Martin, 

CMS Desk Officer.

Comments submitted to OMB may 

also be e-mailed to the following 

address: e-mail: 

Christopher_Martin@omb.eop.gov; or 

faxed to OMB at (202) 395–6974. 

VII. Regulatory Impact Statement 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Regulatory Impact Statement’’ at the 

beginning of your comments.] 

A. Introduction 

We have examined the impact of this 

rule under the criteria of Executive 

Order 12866 (September 1993, 

Regulatory Planning and Review), 

section 1102(b) of the Social Security 

Act, the Regulatory Flexibility Act 

(RFA), Public Law No. 96–354, the 

Unfunded Mandates Reform Act of 

1995, Public Law 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). A regulatory impact analysis 

(RIA) must be prepared for major rules 

with economically significant effects 

($100 million or more annually). This 

rule would not meet the $100 million 

threshold and therefore is not a major 

rule. In accordance with the provisions 

of Executive Order 12866, this 

regulation was reviewed by the Office of 

Management and Budget. 

The RFA requires agencies, in issuing 

certain rules, to analyze options for 

regulatory relief of small businesses. For 

purposes of the RFA, small entities 

include small businesses, nonprofit 

organizations and government agencies. 

Most SNFs and HHAs are small entities, 

either by nonprofit status or by having 

revenues of $25 million or less 

annually. For purposes of the RFA, all 

providers affected by this regulation are 

considered to be small entities. 

Individuals and States are not included 

in the definition of a small entity. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis for a final rule that may 

have a significant impact on the 

operations of a substantial number of 

small rural hospitals. This analysis must 

conform to the provisions of section 603 

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 

69264 Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 

Statistical Area and has fewer than 100 

beds.

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 would 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, since as we explain in C., 

below, we estimate a cost of about $200 

a provider. Although a regulatory 

impact analysis is not mandatory for 

this final rule, we believe it is 

appropriate to discuss the possible 

impacts of the new appeals procedures 

on beneficiaries and providers, 

regardless of the monetary threshold of 

that impact. Therefore, a brief voluntary 

discussion of the anticipated impact of 

this rule is presented below. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule that would include any Federal 

mandate that may result in expenditure 

in any one year by State, local, or tribal 

governments, in the aggregate, or by the 

private sector, of $110 million. This rule 

would not have such an effect on State, 

local, or tribal governments, or on the 

private sector. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a rule 

that would impose substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

This rule does not have a substantial 

effect on State and local governments. 

B. Overview of the Changes 

This final rule implements the 

requirement under section 1869(b)(1)(F) 

of the Act that a beneficiary has a right 

to an expedited determination upon 

notification by a provider of the 

provider’s decision to discharge the 

beneficiary or to terminate services. 

This rule specifies that providers (that 

is, SNFs, HHAs, CORFs and hospices) 

must issue a standardized termination 

notice before all discharges or service 

terminations to inform beneficiaries of 

these new appeal rights. In general, we 

believe that these changes will enhance 

the rights of Medicare beneficiaries, 

without imposing any significant 

financial burden on these individuals. 

Most notably, the new requirements will 

significantly reduce a beneficiary’s 

potential liability in situations where 

disputed provider services are denied 

on appeal. 

C. Expedited Determination and 

Reconsideration Procedures for Provider 

Terminations (§ 405.1200 Through 

§ 405.1204) 

We project that providers will be 

responsible for delivering short 

standardized termination notices to 

approximately 5.3 million beneficiaries 

a year. This includes about 1.1 million 

SNF discharges and 4.2 million HHA 

discharges. The required termination 

notices will be largely standardized, 

requiring only the insertion of the 

beneficiary’s name and discharge date. 

We estimate that it will take no more 

than 5 minutes to deliver a notice, at a 

per-notice cost of no more than $2.50 

(based on a $30 per hour rate if the 

notice is delivered by health care 

personnel). Based on an estimated 5.3 

million notices annually, we estimate 

the aggregate cost of delivering these 

notices to be roughly $13 million. Given 

that there are roughly 24,000 affected 

providers, the average costs associated 

with this provision will be less than 

$600 per provider. 

At most, we believe that 2 percent of 

affected individuals (that is, 106,000 

beneficiaries) will request an expedited 

determination. For these 106,000 cases, 

providers will be required under this 

final rule to deliver a detailed 

termination notice to the beneficiary 

and to make a copy of that notice and 

any necessary supporting 

documentation available to the QIO 

(and to the beneficiary upon request). 

We estimate that it will take providers 

60 to 90 minutes to prepare the detailed 

termination notice and to prepare a case 

file for the QIO. At an estimated cost of 

$30 per hour, we project an aggregate 

cost of $3.2 million to $4.8 million to 

approximately 24,000 providers, or 

about $200 per provider. 

Thus, we believe that the total 

financial impact of the new notice and 

expedited determination requirements 

is less than $20 million annually. We do 

not anticipate that the provisions of this 

final rule will have a significant 

financial impact on individual 

providers. We note that both the 

advance termination notice and the 

detailed termination notice will be 

developed through OMB’s Paperwork 

Reduction Act process and thus will be 

the subject of further opportunity for 

public comment. The only other 

significant costs associated with this 

provision will result from the 

Secretary’s commitment to contract with 

QIOs and QICs to conduct these 

expedited reviews. We are projecting 

first year costs, including training and 

start costs for QIOs, to the Medicare 

Trust Fund of about $32 million to carry 

out this function.

List of Subjects in 42 CFR Parts 405 and 

489

Health facilities, Medicare, Reporting 

and recordkeeping requirements.

■ For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below:

PART 405—FEDERAL HEALTH 

INSURANCE FOR THE AGED AND 

DISABLED

■ 1. The authority citation for part 405 

continues to read as follows:

Authority: Secs. 1102, 1861, 1862(a), 1869, 

1871, 1874, 1881, and 1886(k) of the Social 

Security Act (42 U.S.C. 1302, 1395x, 

1395y(a), 1395ff, 1395hh, 1395kk, 1395rr and 

1395ww(k)), and sec. 353 of the Public 

Health Service Act (42 U.S.C. 263a).

■ 2. Add a new subpart J to read as 

follows:

Subpart J—Expedited Determinations 

and Reconsiderations of Provider 

Service Terminations, and Procedures 

for Inpatient Hospital Discharges

§ 405.1200 Notifying beneficiaries of 

provider service terminations. 

(a) Applicability and scope. (1) For 

purposes of §§ 405.1200 through 

405.1204, the term, provider, is defined 

as a home health agency (HHA), skilled 

nursing facility (SNF), comprehensive 

outpatient rehabilitation facility (CORF), 

or hospice. 

(2) For purposes of §§ 405.1200 

through 405.1204, a termination of 

Medicare-covered service is a discharge 

of a beneficiary from a residential 

provider of services, or a complete 

cessation of coverage at the end of a 

course of treatment prescribed in a 

discrete increment, regardless of 

whether the beneficiary agrees that the 

services should end. A termination does 

not include a reduction in services. A 

termination also does not include the 

termination of one type of service by the 

provider if the beneficiary continues to 

receive other Medicare-covered services 

from the provider. 

(b) Advance written notice of service 

terminations. Before any termination of 

services, the provider of the service 

must deliver valid written notice to the 

beneficiary of the provider’s decision to 

terminate services. The provider must 

use a standardized notice, as specified 

by CMS, in accordance with the 

following procedures: 

(1) Timing of notice. A provider must 

notify the beneficiary of the decision to 

terminate covered services no later than 

Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 69265

2 days before the proposed end of the 

services. If the beneficiary’s services are 

expected to be fewer than 2 days in 

duration, the provider must notify the 

beneficiary at the time of admission to 

the provider. If, in a non-residential 

setting, the span of time between 

services exceeds 2 days, the notice must 

be given no later than the next to last 

time services are furnished. 

(2) Content of the notice. The 

standardized termination notice must 

include the following information: 

(i) The date that coverage of services 

ends; 

(ii) The date that the beneficiary’s 

financial liability for continued services 

begins; 

(iii) A description of the beneficiary’s 

right to an expedited determination 

under § 405.1202, including information 

about how to request an expedited 

determination and about a beneficiary’s 

right to submit evidence showing that 

services must continue; 

(iv) A beneficiary’s right to receive the 

detailed information specified under 

§ 405.1202(f); and 

(v) Any other information required by 

CMS. 

(3) When delivery of the notice is 

valid. Delivery of the termination notice 

is valid if—

(i) The beneficiary (or the 

beneficiary’s authorized representative) 

has signed and dated the notice to 

indicate that he or she has received the 

notice and can comprehend its contents; 

and

(ii) The notice is delivered in 

accordance with paragraph (b)(1) of this 

section and contains all the elements 

described in paragraph (b)(2) of this 

section. 

(4) If a beneficiary refuses to sign the 

notice. The provider may annotate its 

notice to indicate the refusal, and the 

date of refusal is considered the date of 

receipt of the notice. 

(5) Financial liability for failure to 

deliver valid notice. A provider is 

financially liable for continued services 

until 2 days after the beneficiary 

receives valid notice as specified under 

paragraph (b)(3) of this section, or until 

the service termination date specified 

on the notice, whichever is later. A 

beneficiary may waive continuation of 

services if he or she agrees with being 

discharged sooner than the planned 

service termination date.

§ 405.1202 Expedited determination 

procedures. 

(a) Beneficiary’s right to an expedited 

determination by the QIO. A beneficiary 

has a right to an expedited 

determination by a QIO under the 

following circumstances: 

(1) For services furnished by a nonresidential provider, the beneficiary 

disagrees with the provider of those 

services that services should be 

terminated, and a physician certifies 

that failure to continue the provision of 

the service(s) may place the 

beneficiary’s health at significant risk. 

(2) For services furnished by a 

residential provider or a hospice, the 

beneficiary disagrees with the provider’s 

decision to discharge the beneficiary. 

(b) Requesting an expedited 

determination. (1) A beneficiary who 

wishes to exercise the right to an 

expedited determination must submit a 

request for a determination to the QIO 

in the State in which the beneficiary is 

receiving those provider services, in 

writing or by telephone, by no later than 

noon of the calendar day following 

receipt of the provider’s notice of 

termination. If the QIO is unable to 

accept the beneficiary’s request, the 

beneficiary must submit the request by 

noon of the next day the QIO is 

available to accept a request. 

(2) The beneficiary, or his or her 

representative, must be available to 

answer questions or to supply 

information that the QIO may request to 

conduct its review. 

(3) The beneficiary may, but is not 

required to, submit evidence to be 

considered by a QIO in making its 

decision. 

(4) If a beneficiary makes an untimely 

request for an expedited determination 

by a QIO, the QIO will accept the 

request and make a determination as 

soon as possible, but the 72-hour time 

frame under paragraph (e)(6) and the 

financial liability protection under 

paragraph (g) of this section do not 

apply. 

(c) Coverage of provider services.

Coverage of provider services continues 

until the date and time designated on 

the termination notice, unless the QIO 

reverses the provider’s service 

termination decision. If the QIO’s 

decision is delayed because the provider 

did not timely supply necessary 

information or records, the provider 

may be liable for the costs of any 

additional coverage, as determined by 

the QIO in accordance with paragraph 

(e)(7) of this section. If the QIO finds 

that the beneficiary did not receive valid 

notice, coverage of provider services 

continues until at least 2 days after valid 

notice has been received. Continuation 

of coverage is not required if the QIO 

determines that coverage could pose a 

threat to the beneficiary’s health or 

safety. 

(d) Burden of proof. When a 

beneficiary requests an expedited 

determination by a QIO, the burden of 

proof rests with the provider to 

demonstrate that termination of 

coverage is the correct decision, either 

on the basis of medical necessity, or 

based on other Medicare coverage 

policies.

(1) In order for the QIO to determine 

whether the provider has met the 

burden of proof, the provider should 

supply any and all information that a 

QIO requires to sustain the provider’s 

termination decision, consistent with 

paragraph (f) of this section. 

(2) The beneficiary may submit 

evidence to be considered by a QIO in 

making its decision. 

(e) Procedures the QIO must follow.

(1) On the day the QIO receives the 

request for an expedited determination 

under paragraph (b) of this section, it 

must immediately notify the provider of 

those services that a request for an 

expedited determination has been made. 

(2) The QIO determines whether the 

provider delivered valid notice of the 

termination decision consistent with 

§ 405.1200(b) and paragraph (f) of this 

section. 

(3) The QIO examines the medical 

and other records that pertain to the 

services in dispute. If applicable, the 

QIO determines whether a physician 

has certified that failure to continue the 

provision of services may place the 

beneficiary’s health at significant risk. 

(4) The QIO must solicit the views of 

the beneficiary who requested the 

expedited determination. 

(5) The QIO must provide an 

opportunity for the provider/

practitioner to explain why the 

termination or discharge is appropriate. 

(6) No later than 72 hours after receipt 

of the request for an expedited 

determination, the QIO must notify the 

beneficiary, beneficiary’s physician, and 

the provider of services of its 

determination whether termination of 

Medicare coverage is the correct 

decision, either on the basis of medical 

necessity or based on other Medicare 

coverage policies. 

(7) If the QIO does not receive the 

information needed to sustain a 

provider’s decision to terminate 

services, it may make its determination 

based on the evidence at hand, or it may 

defer a decision until it receives the 

necessary information. If this delay 

results in extended Medicare coverage 

of an individual’s provider services, the 

provider may be held financially liable 

for these services, as determined by the 

QIO. 

(8) The QIO’s initial notification may 

be by telephone, followed by a written 

notice including the following 

information: 

69266 Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 

(i) The rationale for the 

determination; 

(ii) An explanation of the Medicare 

payment consequences of the 

determination and the date a beneficiary 

becomes fully liable for the services; 

and 

(iii) Information about the 

beneficiary’s right to a reconsideration 

of the QIO’s determination, including 

how to request a reconsideration and 

the time period for doing so. 

(f) Responsibilities of providers. (1) 

When a QIO notifies a provider that a 

beneficiary has requested an expedited 

determination, the provider must send a 

detailed notice to the beneficiary by 

close of business of the day of the QIO’s 

notification. The detailed termination 

notice must include the following 

information: 

(i) A specific and detailed explanation 

why services are either no longer 

reasonable and necessary or are no 

longer covered; 

(ii) A description of any applicable 

Medicare coverage rule, instruction, or 

other Medicare policy, including 

citations to the applicable Medicare 

policy rules or information about how 

the beneficiary may obtain a copy of the 

Medicare policy; 

(iii) Facts specific to the beneficiary 

and relevant to the coverage 

determination that are sufficient to 

advise the beneficiary of the 

applicability of the coverage rule or 

policy to the beneficiary’s case; and 

(iv) Any other information required 

by CMS. 

(2) Upon notification by the QIO of 

the request for an expedited 

determination, the provider must 

supply all information that the QIO 

needs to make its expedited 

determination, including a copy of the 

notices required under § 405.1200(b) 

and under paragraph (f)(1) of this 

section. The provider must furnish this 

information as soon as possible, but no 

later than by close of business of the day 

the QIO notifies the provider of the 

request for an expedited determination. 

At the discretion of the QIO, the 

provider may make the information 

available by phone or in writing (with 

a written record of any information not 

transmitted initially in writing). 

(3) At a beneficiary’s request, the 

provider must furnish the beneficiary 

with a copy of, or access to, any 

documentation that it sends to the QIO 

including records of any information 

provided by telephone. The provider 

may charge the beneficiary a reasonable 

amount to cover the costs of duplicating 

the documentation and/or delivering it 

to the beneficiary. The provider must 

accommodate such a request by no later 

than close of business of the first day 

after the material is requested.

(g) Coverage during QIO review. When 

a beneficiary requests an expedited 

determination in accordance with the 

procedures required by this section, the 

provider may not bill the beneficiary for 

any disputed services until the 

expedited determination process (and 

reconsideration process, if applicable) 

has been completed.

§ 405.1204 Expedited reconsiderations. 

(a) Beneficiary’s right to an expedited 

reconsideration. A beneficiary who is 

dissatisfied with a QIO’s expedited 

determination may request an expedited 

reconsideration by the appropriate QIC. 

(b) Requesting an expedited 

reconsideration. (1) A beneficiary who 

wishes to obtain an expedited 

reconsideration must submit a request 

for the reconsideration to the 

appropriate QIC, in writing or by 

telephone, by no later than noon of the 

calendar day following initial 

notification (whether by telephone or in 

writing) receipt of the QIO’s 

determination. If the QIC is unable to 

accept the beneficiary’s request, the 

beneficiary must submit the request by 

noon of the next day the QIC is available 

to accept a request. 

(2) The beneficiary, or his or her 

representative, must be available to 

answer questions or supply information 

that the QIC may request to conduct its 

reconsideration. 

(3) The beneficiary may, but is not 

required to, submit evidence to be 

considered by a QIC in making its 

decision. 

(4) A beneficiary who does not file a 

timely request for an expedited QIC 

reconsideration subsequently may 

request a reconsideration under the 

standard claims appeal process, but the 

coverage protections described in 

paragraph (f) of this section would not 

extend through this reconsideration, nor 

would the timeframes or the escalation 

process described in paragraphs (c)(3) 

and (c)(5) of this section, respectively. 

(c) Procedures the QIC must follow.

(1) On the day the QIC receives the 

request for an expedited determination 

under paragraph (b) of this section, the 

QIC must immediately notify the QIO 

that made the expedited determination 

and the provider of services of the 

request for an expedited 

reconsideration. 

(2) The QIC must offer the beneficiary 

and the provider an opportunity to 

provide further information. 

(3) Unless the beneficiary requests an 

extension in accordance with paragraph 

(c)(6) of this section, no later than 72 

hours after receipt of the request for an 

expedited reconsideration, and any 

medical or other records needed for 

such reconsideration, the QIC must 

notify the QIO, the beneficiary, the 

beneficiary’s physician, and the 

provider of services, of its decision on 

the reconsideration request. 

(4) The QIC’s initial notification may 

be done by telephone, followed by a 

written notice including: 

(i) The rationale for the 

reconsideration decision; 

(ii) An explanation of the Medicare 

payment consequences of the 

determination and the beneficiary’s date 

of liability; and 

(iii) Information about the 

beneficiary’s right to appeal the QIC’s 

reconsideration decision to an ALJ, 

including how to request an appeal and 

the time period for doing so. 

(5) Unless the beneficiary requests an 

extension in accordance with paragraph 

(c)(6) of this section, if the QIC does not 

issue a decision within 72 hours of 

receipt of the request, the QIC must 

notify the beneficiary of his or her right 

to have the case escalated to the ALJ 

hearing level if the amount remaining in 

controversy after the QIO determination 

is $100 or more. 

(6) A beneficiary requesting an 

expedited reconsideration under this 

section may request (either in writing or 

orally) that the QIC grant such 

additional time as the beneficiary 

specifies (not to exceed 14 days) for the 

reconsideration. If an extension is 

granted, the deadlines in paragraph 

(c)(3) of this section do not apply. 

(d) Responsibilities of the QIO. (1) 

When a QIC notifies a QIO that a 

beneficiary has requested an expedited 

reconsideration, the QIO must supply 

all information that the QIC needs to 

make its expedited reconsideration as 

soon as possible, but no later than by 

close of business of the day that the QIC 

notifies the QIO of the request for an 

expedited reconsideration. 

(2) At a beneficiary’s request, the QIO 

must furnish the beneficiary with a copy 

of, or access to, any documentation that 

it sends to the QIC. The QIO may charge 

the beneficiary a reasonable amount to 

cover the costs of duplicating the 

documentation and/or delivering it to 

the beneficiary. The QIO must 

accommodate the request by no later 

than close of business of the first day 

after the material is requested. 

(e) Responsibilities of the provider. A 

provider may, but is not required to, 

submit evidence to be considered by a 

QIC in making its decision. If a provider 

fails to comply with a QIC’s request for 

additional information beyond that 

furnished to the QIO for purposes of the 

expedited determination, the QIC makes 

Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 69267

its reconsideration decision based on 

the information available.

(f) Coverage during QIC 

reconsideration process. When a 

beneficiary requests an expedited 

reconsideration in accordance with the 

deadline specified in (b)(1) of this 

section, the provider may not bill the 

beneficiary for any disputed services 

until the QIC makes its determination.

§ 405.1206 Expedited determinations for 

inpatient hospital discharges. 

(a) Beneficiary’s right to an expedited 

determination for an inpatient hospital 

discharge. A beneficiary who has 

received a notice of noncoverage under 

section 1154(e)(1) of the Act and 42 CFR 

412.42(c)(3) may request an expedited 

determination by the QIO when a 

hospital (acting directly or through its 

utilization review committee), with 

physician concurrence, determines that 

inpatient care is no longer necessary. A 

beneficiary who timely requests an 

expedited QIO review in accordance 

with paragraph (d)(1) of this section and 

who meets the conditions of section 

1879(a)(2) of the Social Security Act 

(that is, the individual did not know, 

and could not reasonably have been 

expected to know, that payment would 

not be made for such items or services 

under part A or part B) may remain in 

the hospital with no additional financial 

liability until the QIO makes its 

determination. 

(b) When delivery of the notice is 

valid. (1) Except as provided in 

paragraph (b)(2) of this section, valid 

delivery of the notice of non-coverage 

requires that the beneficiary (or the 

beneficiary’s authorized representative) 

has signed and dated the notice to 

indicate that he or she has received the 

notice and can comprehend its contents. 

(2) If a beneficiary refuses to sign the 

notice, the provider may annotate its 

notice to indicate the refusal, and the 

date of refusal is considered the date of 

receipt of the notice. 

(c) Beneficiary’s right to other review.

(1) A beneficiary who fails to request an 

expedited determination in accordance 

with paragraph (d)(1) of this section, 

and remains in the hospital, may 

request an expedited review at any time 

during the course of his or her inpatient 

hospital stay. The QIO will issue a 

decision in accordance with paragraph 

(e)(5)(ii) of this section. The escalation 

procedures described in § 405.1204(c)(5) 

and the financial liability rules of 

paragraph (f)(2) of this section do not 

apply. 

(2) A beneficiary who fails to request 

an expedited determination in 

accordance with paragraph (d)(1) of this 

section, and who is no longer an 

inpatient in the hospital, may request 

QIO review within 30 calendar days 

after receipt of the notice of 

noncoverage as provided under section 

1154(e)(1) or at any time for good cause. 

The QIO will issue a decision in 

accordance with paragraph (e)(5)(iii) of 

this section. The escalation procedures 

described in § 405.1204(c)(5) and the 

financial liability rules of paragraph 

(f)(2) of this section do not apply. 

(d) Procedures the beneficiary must 

follow. For the expedited appeal 

process, the following rules apply: 

(1) The beneficiary must submit the 

request for an expedited 

determination—

(i) To the QIO that has an agreement 

with the hospital under part 475 of this 

chapter; 

(ii) In writing or by telephone; and 

(iii) By noon of the first working day 

after he or she receives written notice 

that the hospital has determined that the 

hospital stay is no longer necessary. 

(2) The beneficiary (or his or her 

authorized representative), upon request 

by the QIO, must be prepared to discuss 

the case with the QIO. 

(e) Procedures the QIO must follow.

On the date that the QIO receives the 

beneficiary’s request: 

(1) The QIO must notify the hospital 

that the beneficiary has filed a request 

for immediate review.

(2) The hospital must supply any 

information, including medical records, 

that the QIO requires to conduct its 

review and must make it available, by 

phone or in writing, by the close of 

business of the first full working day 

after the day the beneficiary receives 

notice of the planned discharge. 

(3) The QIO must examine the 

pertinent records pertaining to the 

services. 

(4) The QIO must solicit the views of 

the beneficiary (or the beneficiary’s 

authorized representative) who 

requested the expedited determination. 

(5)(i) When the beneficiary requests 

an expedited determination in 

accordance with paragraph (d)(1) of this 

section, the QIO must make a 

determination and notify the 

beneficiary, the hospital, and physician 

of its determination by close of business 

of the first working day after it receives 

all requested pertinent information. 

(ii) When the beneficiary does not 

request an expedited determination in 

accordance with paragraph (d)(1) of this 

section, and remains an inpatient in the 

hospital, the QIO will make a 

determination and notify the 

beneficiary, the hospital, and physician 

of its determination within 2 working 

days following receipt of the request 

and pertinent information. 

(iii) When the beneficiary does not 

request an expedited initial 

determination in accordance with 

paragraph (d)(1) of this section, and is 

no longer an inpatient in the hospital, 

the QIO will make a determination and 

notify the beneficiary, the hospital, and 

physician of its determination within 30 

calendar days after receipt of the request 

and pertinent information. 

(f) Coverage during QIO expedited 

review. (1) In general, if the beneficiary 

remains in the hospital after receiving 

the hospital issued notice of 

noncoverage, and the hospital, the 

physician who concurred in the 

hospital’s determination on which the 

advanced written notice of termination 

was based, or the QIO subsequently 

finds that the beneficiary requires an 

acute level of inpatient hospital care, 

the beneficiary is not financially 

responsible for continued care until the 

hospital once again determines that the 

beneficiary no longer requires inpatient 

care, secures concurrence from the 

physician responsible for the 

beneficiary’s care or the QIO and 

notifies the beneficiary. 

(2) Timely filing and limitation on 

liability. If a beneficiary both files a 

request for an expedited determination 

by the QIO in accordance with 

paragraph (d)(1) of this section, and 

meets the conditions of section 

1879(a)(2) of the Social Security Act 

(that is, the individual did not know, 

and could not reasonably have been 

expected to know, that payment would 

not be made for such items or services 

under part A or part B), the beneficiary 

is not financially responsible for 

inpatient hospital services furnished 

before noon of the calendar day after the 

date the beneficiary (or his or her 

representative) receives notification 

(either orally or in writing) of the 

expedited determination by the QIO. 

(3) Untimely filing. When a 

beneficiary does not file a request for an 

expedited determination by the QIO in 

accordance with paragraph (d)(1) of this 

section, that beneficiary may be 

responsible for charges that extend 

beyond the date specified on the 

hospital’s advance written notice of 

termination or as otherwise stated by 

the QIO. 

(4) Hospital requests expedited 

review. When the hospital requests 

review in accordance with §405.1208, 

and the QIO concurs with the hospital’s 

decision, a hospital may not charge a 

beneficiary until the date specified by 

the QIO. 

(g) Notice of an expedited 

determination. (1) When a QIO issues an 

expedited determination in accordance 

with paragraph (e)(5) of this section, the 

69268 Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Rules and Regulations 

QIO must notify the beneficiary, 

physician, and hospital of its decision, 

by telephone and subsequently in 

writing. 

(2) A written notice of the expedited 

determination must contain the 

following: 

(i) The basis for the determination; 

(ii) A detailed rationale for the 

determination;. 

(iii) A statement explaining the 

Medicare payment consequences of the 

expedited determination and date of 

liability, if any; 

(iv) A statement informing the 

beneficiary of his or her subsequent 

appeal rights, and the timeframe for 

requesting a reconsideration by the QIC. 

(h) Effect of an expedited QIO 

determination. The QIO determination 

is binding upon the beneficiary, 

physician, and hospital, except in the 

following circumstances: 

(1) When beneficiary remains in the 

hospital. If the beneficiary is still an 

inpatient in the hospital and is 

dissatisfied with the determination, he 

or she may request a reconsideration 

according to the procedures described 

in § 405.1204. If the beneficiary does not 

make a request in accordance with 

paragraph (d)(1) of this section, the 

timeframes described in 

§ 405.1204(c)(3), the escalation 

procedures described in 

§ 405.1204(c)(5), and the coverage rule 

described in § 405.1204(f) will not 

apply.

(2) When beneficiary is no longer an 

inpatient in the hospital. If the 

beneficiary is no longer an inpatient in 

the hospital and is dissatisfied with this 

determination, the determination is 

subject to the general claims appeal 

process.

§ 405.1208 Hospital requests expedited 

QIO review. 

(a) General rule. If the hospital (acting 

directly or through its utilization review 

committee) believes that the beneficiary 

does not require further inpatient 

hospital care but is unable to obtain the 

agreement of the physician, it may 

request an expedited determination by 

the QIO. 

(b) Procedures hospital must follow.

(1) The hospital must (acting directly or 

through its utilization review 

committee) notify the beneficiary (or his 

or her representative) that it has 

requested that review. 

(2) The hospital must supply any 

pertinent information the QIO requires 

to conduct its review and must make it 

available by phone or in writing, by 

close of business of the first full working 

day immediately following the day the 

hospital submits the request for review. 

(c) Procedures the QIO must follow.

(1) The QIO must notify the hospital 

that it has received the request for 

review and must notify the hospital if it 

has not received all pertinent records. 

(2) The QIO must examine the 

pertinent records pertaining to the 

services. 

(3) The QIO must solicit the views of 

the beneficiary in question. 

(4) The QIO must make a 

determination and notify the 

beneficiary, the hospital, and physician 

within 2 working days of the hospital’s 

request and receipt of any pertinent 

information submitted by the hospital. 

(d) Notice of an expedited 

determination. (1) When a QIO issues an 

expedited determination as stated in 

paragraph (c)(4) of this section, it must 

notify the beneficiary, physician, and 

hospital of its decision, by telephone 

and subsequently in writing. 

(2) A written notice of the expedited 

initial determination must contain the 

following: 

(i) The basis for the determination;. 

(ii) A detailed rationale for the 

determination; 

(iii) A statement explaining the 

Medicare payment consequences of the 

expedited determination and date of 

liability, if any; and 

(iv) A statement informing the 

beneficiary of his or her appeal rights 

and the timeframe for requesting an 

appeal. 

(e) Effect of an expedited 

determination. The expedited 

determination under this section is 

binding upon the beneficiary, physician, 

and hospital, except in the following 

circumstances: 

(1) When a beneficiary remains in the 

hospital. If the beneficiary is still an 

inpatient in the hospital and is 

dissatisfied with this determination, he 

or she may request a reconsideration 

according to the procedures described 

in § 405.1204. The procedures described 

in § 405.1204 will apply to 

reconsiderations requested under this 

section. If the beneficiary does not make 

a request in accordance with paragraph 

(d)(1) of this section, the timeframes 

described in § 405.1204(c)(3), the 

escalation procedures described in 

§ 405.1204(c)(5), and the coverage rule 

described in § 405.1204(f) will not 

apply. 

(2) When a beneficiary is no longer an 

inpatient in the hospital. If the 

beneficiary is no longer an inpatient in 

the hospital and is dissatisfied with this 

determination, this determination is 

subject to the general claims appeal 

process.

PART 489—PROVIDER AGREEMENTS 

AND SUPPLIER APPROVAL

■ Part 489 is amended as set forth below:

■ 1. The authority citation for part 489 is 

revised to read as follows:

Authority: Secs. 1102, 1819, 1861, 

1864(m), 1866, 1869, and 1871 of the Social 

Security Act (42 U.S.C. 1302, 1395i–3, 1395x, 

1395aa(m), 1395cc, 1395ff, and 1395hh).

■ 2. Section 489.27(b) is revised as 

follows:

§ 489.27 Beneficiary notice of discharge 

rights.

* * * * *

(b) Notification by other providers.

Other providers that participate in the 

Medicare program must furnish each 

Medicare beneficiary, or authorized 

representative, applicable CMS notices 

in advance of the termination of 

Medicare services, including the notices 

required under §§ 405.1202 and 422.624 

of this chapter.

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program)

Dated: December 23, 2003. 

Dennis G. Smith, 

Acting Administrator, Centers for Medicare 

& Medicaid Services.

Approved: July 12, 2004. 

Tommy G. Thompson, 

Secretary.

Editorial note: The Office of the Federal 

Register received this document on 

November 19, 2004.

[FR Doc. 04–26133 Filed 11–24–04; 8:45 am] 

BILLING CODE 4120–01–P