29002 Federal Register / Vol. 77, No. 95 / Wednesday, May 16, 2012 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Chapter IV 

[CMS–9070–F] 

RIN 0938–AQ96 

Medicare and Medicaid Program; 

Regulatory Provisions to Promote 

Program Efficiency, Transparency, and 

Burden Reduction 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule identifies 

reforms in Medicare and Medicaid 

regulations that CMS has identified as 

unnecessary, obsolete, or excessively 

burdensome on health care providers 

and beneficiaries. This rule increases 

the ability of health care professionals to 

devote resources to improving patient 

care, by eliminating or reducing 

requirements that impede quality 

patient care or that divert providing 

high quality patient care. This is one of 

several rules that we are finalizing to 

achieve regulatory reforms under 

Executive Order 13563 on Improving 

Regulation and Regulatory Review and 

the Department’s Plan for Retrospective 

Review of Existing Rules. 

DATES: These regulations are effective 

on July 16, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Ronisha Davis, (410) 786–6882. We have 

also included a subject matter expert 

and contact information under the 

‘‘Provisions of the Proposed Regulations 

and Analysis of and Responses to Public 

Comments’’ section for each provision 

set out in this rule. 

SUPPLEMENTARY INFORMATION: 

I. Executive Summary for This Final 

Rule 

A. Purpose 

In Executive Order 13563, ‘‘Improving 

Regulations and Regulatory Review’’, 

the President recognized the importance 

of a streamlined, effective, and efficient 

regulatory framework designed to 

promote economic growth, innovation, 

job-creation, and competitiveness. To 

achieve a more robust and effective 

regulatory framework, the President has 

directed each executive agency to 

establish a plan for ongoing 

retrospective review of existing 

significant regulations to identify those 

rules that can be eliminated as obsolete, 

unnecessary, burdensome, or 

counterproductive or that can be 

modified to be more effective, efficient, 

flexible, and streamlined. This final rule 

responds directly to the President’s 

instructions in Executive Order 13563 

by reducing outmoded or unnecessarily 

burdensome rules, and thereby 

increasing the ability of health care 

entities to devote resources to providing 

high quality patient care. 

B. Summary of the Major Provisions 

Removes Unnecessary Burdensome 

Requirements: We have reduced burden 

to providers and suppliers by 

modifying, removing, or streamlining 

current regulations that we have 

identified as excessively burdensome. 

• End Stage Renal Disease Facilities 

Life Safety Code: We have limited 

mandatory compliance with the Life 

Safety Code to those ESRD facilities 

located adjacent to high hazardous 

occupancies. We clarified that the 

requirement for sprinklers in facilities 

housed in high rise buildings is 

intended to be applicable to those 

buildings constructed after January 1, 

2008. 

• Ambulatory Surgical Centers (ASC) 

Emergency Equipment: We have 

removed the detailed list of emergency 

equipment that must be available in an 

ASC’s operating room. The current list 

includes outdated terminology as well 

as equipment that are not suitable for 

ASCs that furnish minor procedures that 

do not require anesthesia. 

• Re-enrollment Bar for Providers and 

Suppliers: We have eliminated the 

unnecessarily punitive enrollment bar 

for providers and suppliers when it is 

based on the failure of a provider or 

supplier to not respond timely to 

revalidation or other requests for 

information. 

• Intermediate Care Facilities for 

Individuals who are Intellectually 

Disabled (ICR/IID): We have eliminated 

the requirement for time-limited 

agreements for ICFs/IID and replaced 

the requirement with an open ended 

agreement which, consistent with 

nursing facilities, would remain in 

effect until the Secretary or a State 

determines that the ICF/IID no longer 

meets the ICF/IID conditions of 

participation. We have also added a 

requirement that a certified ICF/IID 

must be surveyed, on average, every 12 

months with a maximum 15-month 

survey interval. This action provides 

States with more flexibility related to 

the current process. 

Removes Obsolete or Duplicative 

Regulations or Provides Clarifying 

Information: We have removed 

requirements in the Code of Federal 

Regulations (CFR) that have become 

obsolete and are no longer needed or 

enforced. 

• OMB Control Numbers for 

Approved Collections of Information: 

We have removed the obsolete list of 

OMB control numbers, approval 

numbers, and information collections in 

the CFR because the list is now 

displayed on the OMB public Web site. 

In our quarterly notice of all CMS 

issuances, we will remind the public 

that the complete listing is available on 

the OMB Web site. 

• Appeals of Part A and Part B 

Claims Determinations: We have 

removed obsolete pre-BIPA regulations 

that apply to initial determinations, reopenings, and appeals of claims under 

original Medicare. This will eliminate 

confusion by Medicare beneficiaries, 

providers, and suppliers regarding 

which appeals rights and procedures 

apply. 

• Ambulatory Surgical Centers (ASC) 

Infection Control Program: We have 

removed the obsolete requirement that 

an ASC must establish a program for 

identifying and preventing infections, 

maintaining a sanitary environment, 

and reporting the results to the 

appropriate authorities. This 

requirement should have been removed 

when a new condition for coverage 

dedicated to infection control was 

adopted. 

• E-prescribing: We have retired older 

versions of e-prescribing transactions for 

Medicare Part D and adopted the newer 

versions to be in compliance with the 

current e-prescribing standards. 

• Physical and Occupational 

Therapist Qualifications: We have 

removed the outdated personnel 

qualifications in the current Medicaid 

regulations and refer to the updated 

Medicare regulations. 

• Organ Procurement Organizations 

(OPOs) Definitions: We have updated 

definitions related to organ procurement 

as the meaning of these definitions has 

changed over time. 

• Organ Procurement Organizations 

(OPOs) Administration and Governing 

Body: We have removed duplicate 

regulations. This change does not alter 

or change the existing regulations 

related to the requirements that the OPO 

governing body must meet, such as, 

having full legal authority for the 

management of all OPO services. 

Responds to Stakeholder Concerns: 

We have identified nomenclature and 

definition changes that will improve 

clarity and update our regulations to 

terms widely used by the public. 

• Removal of the Term ‘‘Recipient’’ 

for Medicaid: We have removed the 

term ‘‘recipient’’ from current CMS 

regulations and made a nomenclature 


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change to replace ‘‘recipient’’ with 

‘‘beneficiary’’ throughout the CFR. In 

response to comments from the public 

to discontinue our use of the 

unflattering term ‘‘recipient’’ under 

Medicaid, we have been using the term 

‘‘beneficiary’’ to mean all individuals 

who are eligible for Medicare or 

Medicaid services. 

• Replace the Term ‘‘Mental 

Retardation’’ with ‘‘Intellectual 

Disability’’: We have replaced all 

references in CMS regulations to the 

unflattering term ‘‘mentally retarded’’ 

with ‘‘individuals who are intellectually 

disabled’’ that has gained wide 

acceptance in more recent disability 

laws. 

C. Summary of Costs and Benefits 

1. Overall Impact 

There are cost savings in many areas. 

Two areas of one-time savings are 

particularly substantial. First, we 

estimate that one-time savings to ESRD 

facilities are likely to range from about 

$47.5 to $217 million, but we are using 

$108.7 million as our estimate. Second, 

we also estimate a one-time savings of 

$18.5 million to ASCs through reduced 

emergency equipment requirements. 

Both of these estimates are conservative 

and total savings could be significantly 

higher. The many types of recurring 

savings that these provisions will create 

include avoidance of business and 

payment losses for physicians and other 

providers that are difficult to estimate 

but likely to be in the tens of millions 

of dollars annually through the reforms 

we propose for re-enrollment and billing 

processes. We have identified other 

kinds of savings that providers and 

patients will realize throughout the 

preamble. Taking all of the reforms 

together, we estimate that the overall 

cost savings that this rule will create 

will exceed $200 million in the first 

year. This includes the one-time savings 

related to ESRD and ASC reforms, as 

well as the savings to providers in 

reductions in lost billings, paperwork 

costs, confusion, and other burden 

reductions discussed throughout this 

preamble. All of these potential savings 

are summarized in the table that 

follows. 

2. Section-by-Section Economic Impact 

Estimates for 2012 

The following chart summarizes the 

provisions for which we are able to 

provide specific estimates for savings or 

burden reductions: 

Provisions Frequency 

Likely savings or 

benefits 

(millions) 

Likely five year 

saving or benefits 

(rounded to nearest 

ten million) 

End-Stage Renal Disease (ESRD) Facilities (§ 494.60) ................. One-Time ................................... $108.7 $110 

ASC Emergency Equipment (§ 416.44) .......................................... One-Time ................................... 18.5 20 

Revocation of Enrollment/Billing Privileges (§ 424.535) ................. Recurring .................................... 100.0 500 

II. Background 

In January 2011, the President issued 

Executive Order 13563, ‘‘Improving 

Regulations and Regulatory Review.’’ 

Section 6 of that order requires agencies 

to identify rules that may be 

‘‘outmoded, ineffective, insufficient, or 

excessively burdensome, and to modify, 

streamline, expand, or repeal them in 

accordance with what has been 

learned.’’ In accordance with the 

Executive Order, the Secretary of the 

Department of Health & Human Services 

(HHS) published on May 18, 2011, a 

Preliminary Plan for Retrospective 

Review of Existing Rules (http://www.

whitehouse.gov/21stcenturygov/actions/ 

21st-century-regulatory-system). As 

shown in the plan, the Centers for 

Medicare & Medicaid Services (CMS) 

has identified many obsolete and 

burdensome rules that could be 

eliminated or reformed to improve 

effectiveness or reduce unnecessary red 

tape and other costs, with a particular 

focus on freeing up resources that health 

care providers, health plans, and States 

could use to improve or enhance patient 

health and safety. CMS has also 

examined policies and practices not 

codified in rules that could be changed 

or streamlined to achieve better 

outcomes for patients while reducing 

burden on providers of care. CMS has 

also identified non-regulatory changes 

to increase transparency and to become 

a better business partner. 

As explained in the plan, HHS is 

committed to the President’s vision of 

creating an environment where agencies 

incorporate and integrate the ongoing 

retrospective review of regulations into 

Department operations to achieve a 

more streamlined and effective 

regulatory framework. The objective is 

to improve the quality of existing 

regulations consistent with statutory 

requirements; streamline procedural 

solutions for businesses to enter and 

operate in the marketplace; maximize 

net benefits (including benefits that are 

difficult to quantify); and reduce costs 

and other burdens on businesses to 

comply with regulations. Consistent 

with the commitment to periodic review 

and to public participation, HHS will 

continue to assess its existing significant 

regulations in accordance with the 

requirements of Executive Order 13563. 

HHS welcomes public suggestions about 

appropriate reforms. If, at any time, 

members of the public identify possible 

reforms to streamline requirements and 

to reduce existing burdens, HHS will 

give those suggestions careful 

consideration. 

We received several comments from 

the public that identified areas for 

possible future reform. We received 

comments from different industries 

including but not limited to national 

organizations (for example, the 

American Academy of Family 

Physicians and the American Academy 

of Ophthalmology), associations, and 

hospitals. Suggestions for areas of 

reform ranged across provider and 

supplier types and included a variety of 

ideas on how to streamline 

requirements, reduce excessive burdens, 

and increase transparency. We are 

reviewing these recommendations to 

determine if and where possible 

improvements can be made through 

future rulemaking or other vehicles. We 

note that some of the recommendations 

in the comments were closely related to 

areas being reformed in this rule. 

Therefore, we have provided responses 

to those comments in the related 

sections below. 

III. Provisions of the Proposed Rule and 

Analysis of and Response to Public 

Comments 

The following is a description of each 

of the proposals set forth in the October 

24, 2011 proposed rule (76 FR 65909). 

We grouped the proposals into three 


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categories—(1) Removes unnecessarily 

burdensome requirements; (2) removes 

obsolete regulations; and (3) responds to 

stakeholder concerns. There were 14 

specific reforms included in the 

proposed rule. As noted above, we 

requested comments on additional areas 

for future reforms in these three areas or 

others. We seek to address these goals 

while maintaining high standards for 

the quality of care delivered to Medicare 

and Medicaid beneficiaries. 

A. Removes Unnecessarily Burdensome 

Requirements 

The following provisions provide 

some form of burden relief to providers 

and suppliers by modifying, removing, 

or streamlining current regulations that 

we have identified as excessively 

burdensome. 

1. End-Stage Renal Disease (ESRD) 

Facilities (§ 494.60) 

Current regulations at 42 CFR part 494 

provide Conditions for Coverage (CfCs) 

for Medicare-participating end-stage 

renal disease (ESRD) facilities. Effective 

February 9, 2009, these regulations were 

updated to include Life Safety Code 

(LSC) provisions that we applied to 

ESRD facilities to standardize CMS 

regulations across provider types. When 

the new regulation was first 

promulgated, we believed that 

standardized application of the LSC was 

desirable and that the costs for ESRD 

facilities would not be excessive. 

However, we have since determined 

that standardization may not be 

appropriate given the non-residential 

and unique characteristics of ESRD 

facilities and the increased burden 

created by these requirements without 

the commensurate benefit. Chapters 20 

and 21 of the National Fire Protection 

Agency’s (NFPA) 101 LSC, 2000 

Edition, were incorporated by reference 

in the ESRD regulations at § 494.60(e). 

When implemented, these LSC 

regulations were found to duplicate 

many provisions of existing State and 

local fire safety codes covering ESRD 

facilities. Although the State and local 

codes protected patients from fire 

hazards, our rule incorporating the 

NFPA 101 LSC by reference 

retroactively imposed some additional 

structural requirements. We believe that 

some of these additional requirements, 

such as smoke compartments (per 

section 20.3.7/21.3.7 of NFPA 101) are 

unnecessary for most ESRD facilities. 

Smoke compartments, for example, are 

required in hospital and ambulatory 

surgical centers where patients are 

anesthetized, unconscious, or sleeping 

overnight. Smoke compartments are 

unnecessary in ESRD facilities as these 

compartments support a ‘‘defend in 

place’’ fire strategy which assumes the 

occupants of a location cannot 

immediately evacuate in case of fire. 

However, in dialysis facilities, this is 

not the case because the evacuation 

process from fire entails rapid 

disconnection from the dialysis 

machine and a quick exit. 

In retrospect, the additional structural 

requirements of NFPA 101 potentially 

could improve patient safety from fire in 

specific dialysis facilities that pose a 

higher risk for life safety from fire by 

their proximity to a potential fire source 

or their barriers to prompt evacuation 

from fire. These higher risk locations are 

those dialysis facilities that are adjacent 

to ‘‘high hazardous’’ occupancies and 

those facilities that do not have a readily 

available exit to the outside for swift, 

unencumbered evacuation. 

However, data demonstrate that there 

is an extremely low risk of fire in 

outpatient dialysis facilities, and there 

are no recorded patient injuries or death 

due to fire in the 40 years of the 

Medicare ESRD program. The Federal 

Emergency Management Agency’s 

(FEMA) Topical Fire Report Series 

(TFRS) documented the low fire risk of 

ESRD facilities, which ranked lowest 

(0.1 percent) in fire incidence among all 

health care facilities. (Medical Facility 

Fires, TFRS Volume 9, Issue 4). We 

believe that the reason the fire risk is so 

low in dialysis facilities is due to the 

following combination of factors: 

• ESRD facilities do not have fire 

ignition sources commonly found in 

other medical facilities, for example, 

cooking, anesthesia, paint shops, or 

piped-in gases, and are generally 

configured with open patient treatment 

areas providing exits directly to the 

outside; 

• Dialysis patients are not 

anesthetized and are required at 

§ 494.60(d)(2) of the ESRD regulation to 

be trained in emergency disconnect 

from their dialysis treatment and 

evacuation from the building; 

• Section 494.60(c)(4) of the ESRD 

regulation requires that staff be present 

in the patient treatment area at all times 

during treatment and therefore 

immediately available to assist in 

emergency evacuation. 

While the risks of fire are very low in 

a dialysis facility, the costs of 

complying with the LSC requirements 

in dialysis facilities are high. Through 

research discussed in the following 

paragraph, CMS learned that the actual 

costs for renovation and construction 

necessary for compliance with the 

additional requirements of NFPA 101 

for dialysis facilities were considerable 

and profoundly exceed the original 

government estimate of $1,960 per 

facility, as published in the proposed 

rule for the 2008 ESRD CfC (70 FR 

6242). 

To estimate the true costs for 

renovation and construction necessary 

to comply with the requirements for 

NFPA 101, in June 2011, CMS asked 

ESRD providers to provide estimates of 

the financial impact of implementing 

four potentially-costly additional 

requirements of NFPA 101. They 

included smoke compartment barriers, 

occupancy separations, hazardous area 

separations, and upgraded fire alarms. 

Owners of 3,756 of 5,600 existing 

certified dialysis facilities responded to 

the CMS request for cost projections. 

The responders represented 

approximately 70 percent of existing 

dialysis facilities, including hospitalowned facilities and those owned by 

small, medium, and large dialysis 

organizations. 

The data collected showed that 

approximately 50 percent (an estimated 

2,800) of the existing ESRD facilities 

would require renovations or upgrading 

of at least one of the four elements to 

comply with the requirements of NFPA 

101. There are several reasons why, in 

June 2011, approximately 50 percent of 

existing dialysis facilities had not been 

renovated to comply with the February 

2009 implementation date. The primary 

reason was the pervasive inconsistency 

in knowledge, interpretation, and 

application of NFPA 101 to ESRD 

facilities that we have become aware of 

since the 2009 implementation date. 

There was a high variability in the cost 

estimates submitted, ranging from a low 

of $23,500 to a high of $222,000 for an 

existing facility which needed to 

renovate, construct and upgrade all four 

components. The average per-facility 

cost estimates submitted for the 

additional structural requirements of 

NFPA 101 are as follows: 

• Smoke compartments—$32,544 

• Occupancy separation—$28,139 

• Hazardous areas separation— 

$16,976 

The total average cost for a facility to 

meet all three requirements would be 

$77,659. We suspect that the variability 

of the estimates may be due to differing 

State and local requirements already in 

existence, differences in contractor 

costs, varying building characteristics 

(for example, age, size, construction 

type), and the inconsistent 

interpretations and applications of 

NFPA 101 that are prevalent across the 

nation. The wide range of estimates 

makes it difficult to determine an 

average cost related to implementation 

of NFPA 101. However, using the 

average costs for the individual 


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structural requirements listed above, if 

50 percent or 2,800 facilities required 

only renovation for hazardous area 

separation, the savings would be $47.5 

million. If 2,800 facilities required 

renovation for all three structural 

requirements, the total savings from the 

burden reduction at the average estimate 

for all three would be $217 million. 

These amounts represent a significant 

financial burden on facilities, and we 

believe that there will be little or no 

improvement in patient safety from fire 

for a majority of them. Expenditures of 

this magnitude would likely divert 

resources away from areas which do 

affect dialysis patient safety, such as 

infection control and prevention. 

The cost estimates do not account for 

the added burden that renovation to 

comply with NFPA 101 would impose 

on dialysis patients who must be 

relocated to other ESRD facilities for 

their treatments during construction. 

Significant additional costs would also 

be incurred by Federal government 

agencies and State Survey Agencies for 

oversight activities of LSC surveys 

which often duplicate State LSC 

surveys. 

Based on information gained since 

publication of the updated ESRD CfC, 

we have concluded that the enforcement 

of the LSC requirements of NFPA 101 

add costs out of proportion to any added 

protection that they may afford in 

dialysis facilities which are not at 

higher risk of fire penetration from 

adjacent industrial ‘‘high hazard’’ 

occupancies and where swift, 

unencumbered evacuation to the 

outside is available. Therefore, we 

proposed revising § 494.60(e)(1) to 

restrict mandatory compliance with the 

NFPA 101 LSC to those ESRD facilities 

located adjacent to ‘‘high hazardous’’ 

occupancies and those facilities whose 

patient treatment areas are not located at 

grade level with direct access to the 

outside. This revision will retain the 

NFPA 101 LSC protections for those 

facilities in higher-risk locations while 

relieving burden on those for whom the 

subdivision of building space and other 

additional LSC requirements of NFPA 

101 are unnecessary. 

We intend to use the NFPA definition 

of ‘‘high hazard occupancy’’ found at 

A.3.3.134.8.2, Annex A, NFPA 101, Life 

Safety Code 2000, which applies to 

‘‘occupancies where gasoline and other 

flammable liquids are handled, used or 

stored under such conditions that 

involve possible release of flammable 

vapors; where grain dust, wood flour or 

plastic dusts, aluminum or magnesium 

dust, or other explosive dusts are 

produced; where hazardous chemicals 

or explosives are manufactured, stored, 

or handled; where cotton or other 

combustible fibers are processed or 

handled under conditions that might 

produce flammable flyings; and where 

other situations of similar hazard exist.’’ 

We noted that all ESRD facilities 

would still be required to comply with 

State and local fire codes and safety 

standards under § 494.20. We also 

proposed revising § 494.60(e)(2) to 

clarify which ESRD facilities must use 

sprinkler-equipped buildings: Those 

housed in multi-story buildings of lesser 

fire protected construction types (Types 

II(000), III(200), or V(000), as defined in 

NFPA 101), which were constructed 

after January 1, 2008; and those housed 

in high rise buildings over 75 feet in 

height. We noted that this revision 

would not change the meaning or intent 

of § 494.60(e)(2), but instead would 

clarify it. That provision states that 

dialysis facilities participating in 

Medicare as of October 14, 2008, may 

continue to use non-sprinklered 

buildings if such buildings were 

constructed before January 1, 2008, and 

if permitted by State law. 

The ESRD CfCs also address other 

topics related to fire and building safety 

that will remain in place under our 

revision. These existing CfC 

requirements include specific rules on 

how to handle chemicals related to the 

dialysis process, as well as general 

requirements for appropriate training in 

emergency preparedness for the staff 

and patients, including provisions for 

instructions on disconnecting from the 

dialysis machine during an emergency 

and instructions on emergency 

evacuation. We sought comments from 

the public on whether the other ESRD 

CfCs can be improved in a way that 

minimizes provider burden while 

protecting patient safety or, alternately, 

the extent to which remaining 

requirements are necessary and 

appropriate for the care and safety of 

dialysis patients. Similarly, we note that 

other CMS regulations include CfCs, 

and we sought comments on whether 

we should revisit these or other 

regulatory provisions or whether 

existing requirements are necessary and 

appropriate. 

We received 15 public comments on 

our proposed changes to the LSC 

requirements for ESRD facilities. 

Commenters represented the entire 

dialysis community, including small, 

independent dialysis providers, large 

corporate dialysis organizations, 

dialysis provider coalitions, a 

nephrology nursing organization, a 

dialysis product manufacturer, and 

individual dialysis community 

members. Two comments were 

submitted by building and fire safety 

organizations. 

All of the comments, with one 

exception, expressed strong support for 

the proposed rule and its intent to limit 

the application of the LSC requirements 

to ESRD facilities whose physical 

locations present a higher risk to life 

safety from fire. One commenter 

generally disagreed with the proposed 

changes. 

Comment: All but one of the 

commenters supported our rationale for 

the proposed rule: that there is a 

historically low fire incidence in 

outpatient ESRD facilities; that most 

ESRD facilities provide available direct 

exits from the patient treatment area 

level to the outside at grade level; and 

that dialysis patients are routinely 

trained in emergency disconnect and 

evacuation procedures, as required in 

the ESRD CfCs, facilitating quick 

evacuation. The commenters concurred 

that these combined elements make the 

building and structural ‘‘defend in 

place’’ requirements of the LSC (as 

incorporated by reference into our 

regulations), which may differ from 

those of some State and local fire codes, 

a significant added burden with little or 

no gain in patient safety. Commenters 

also agreed that the requirements of 

current State and local fire safety codes 

sufficiently protect dialysis patients, 

and that many provisions in the LSC 

provisions are duplicative of those 

existing codes. 

One comment from a building safety 

association agreed that, due to the 

overlapping, duplicative, and 

sometimes conflicting requirements 

between the LSC and State and local fire 

and building codes, limited application 

of the Federal LSC in ESRD would 

realize cost savings in not duplicating 

survey activities, but also for the 

dialysis facilities that may be required 

to comply with the overlapping and 

conflicting codes. The commenter also 

suggested that the cost savings 

published with the proposed rule were 

under-estimated. 

Some of the commenters agreed that 

the expenditures for compliance with 

the LSC would be significantly higher 

than was predicted in the proposed rule 

for the 2008 ESRD CfC. One commenter 

from a large dialysis organization stated 

that the projection of costs for their 

facilities alone was just short of $120 

million. Several commenters 

specifically agreed with the preamble 

language that expenditures for 

renovations and construction to comply 

with LSC requirements would divert 

resources away from issues which have 

been demonstrated to negatively impact 

dialysis patients, such as infections. 


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Many commenters expressed 

appreciation that we reconsidered the 

strict application of the LSC to all ESRD 

facilities and for our responsiveness to 

the dialysis community’s concerns and 

desire to expend their resources where 

the greatest patient safety will be 

realized. 

Response: We thank the commenters 

for their comments. We share the 

common goals of optimizing the health 

and safety of dialysis patients and 

allocating resources where they will 

benefit patients most. We appreciate 

your support for these proposed 

changes. 

Comment: Two commenters suggested 

that more facilities should be included 

in the proposed exemption from the 

LSC requirements. One commenter 

suggested that ESRD facilities that do 

not have exits at grade level should also 

be exempted from the LSC 

requirements. The rationale for this 

suggestion was that these facilities do 

not generate a risk equivalent to those 

facilities located adjacent to ‘‘high 

hazardous’’ occupancies. Another 

commenter suggested that dialysis 

facilities providing only home dialysis 

training and support services be 

exempted from the LSC, citing the 

limited provision of on-site dialysis and 

generally higher staff-to-patient ratios. 

Response: While there may be a 

higher risk of fire when an ESRD facility 

is located adjacent to a ‘‘high 

hazardous’’ occupancy, we consider the 

provision of swift, unencumbered 

evacuation integral to dialysis patients’ 

life safety from fire. Once a dialysis 

patient has performed emergency 

disconnection from their treatment, the 

additional time it may take to traverse 

stairwells and/or passageways from a 

non-grade level treatment area to reach 

an outside exit justifies the additional 

structural requirements of the LSC 

provisions for ‘‘defend in place’’. Home 

dialysis patients who may be 

intermittently receiving their dialysis 

treatments at the dialysis home training 

and support facility have the same life 

safety and fire risks as do in-center 

dialysis patients. To ensure patient 

safety, we are not making changes to the 

proposed regulations in response to 

these comments. 

Comment: Three commenters 

requested further clarification regarding 

the provision of exits from the patient 

treatment level to grade level. The 

commenters inquired whether ESRD 

facilities which were slightly above 

grade level and supplied interior 

Americans with Disabilities Act (ADA)- 

compliant accessibility ramps from 

patient treatment areas to grade level 

(for example, down 5–10 feet) would be 

considered as providing exits at grade 

level, and therefore exempt from the 

LSC requirements. 

Response: The terminology for the 

provision of exit ‘‘to the outside at grade 

level from the patient treatment area 

level’’ is intended to apply to ESRD 

facilities that are on the ground/grade 

level of a building where patients do not 

have to traverse up or down stairways 

or passageways within the building to 

evacuate to the outside. ADA-compliant 

accessibility ramps in the exit area that 

provide ease of access between the 

patient treatment level and the outside 

street level would not be considered 

stairways or passageways. An ESRD 

facility which provides one or more 

exits to the outside at grade level from 

the patient treatment level, and a 

patients’ exit path which includes an 

ADA-compliant accessibility ramp to 

the outside would be exempt from the 

LSC requirement, as long as it was not 

located adjacent to a high hazardous 

occupancy. 

Comment: Three commenters 

requested further clarification of how 

‘‘adjacent to’’ would be defined. All 

three commenters suggested that the 

definition of ‘‘adjacent to’’ should be 

equivalent to sharing a wall with the 

other occupancy. One added that 

sharing a ceiling or floor with the other 

occupancy should be included in the 

definition. 

Response: We recognize that there are 

different definitions of the term 

‘‘adjacent’’, and use it in reference to 

ESRD facilities that share a common 

wall, floor, or ceiling with a high 

hazardous occupancy. Because of the 

higher risk of fire occurrence in high 

hazardous occupancies, sharing a 

common wall, floor, or ceiling increases 

the risk of fire penetration to the ESRD 

facility. This increased risk makes the 

additional structural requirements of the 

LSC appropriate for patient protection. 

Comment: Two commenters requested 

further clarification regarding the 

definition of a ‘‘high hazardous 

occupancy’’, and suggested the 

definition from the preamble language 

be retained. 

Response: As stated in the preamble 

to the proposed rule, we use the 

definition of ‘‘high hazardous 

occupancy’’ from the National Fire 

Protection Association (NFPA) 101, 

2000 Edition at section A.3.3.134.8.2: 

‘‘occupancies where gasoline and other 

flammable liquids are handled, used or 

stored under such conditions that 

involve possible release of flammable 

vapors; where grain dust, wood or 

plastic dusts, aluminum or magnesium 

dust, or other explosive dusts are 

produced; where hazardous chemicals 

or explosives are manufactured, stored, 

or handled; where cotton or other 

combustible fibers are processed or 

handled under conditions that might 

produce flammable flyings; and where 

other situations of similar hazard exist.’’ 

Comment: Two commenters requested 

clarification regarding the proposed 

language change for ESRD facilities that 

require sprinkler systems. The first issue 

raised was how to determine when a 

building was constructed. The second 

issue raised was whether the language 

in the proposed rule indicating that 

ESRD facilities located in high rise 

buildings are required to have sprinkler 

systems would be binding regardless of 

the building construction date. 

Response: We appreciate the 

comments pointing out ambiguities in 

the proposed rule language, which was 

intended to clarify, but not change, the 

sprinkler requirement finalized in the 

April 15, 2008 ESRD CfC final rule (73 

FR20370), and set out at § 494.60(e)(2). 

For the purposes of the sprinkler 

requirement, the date of building 

‘‘construction’’ is the date the structural 

permit approvals and plan reviews were 

completed by the authority having 

jurisdiction. 

Regarding sprinklers in high-rise 

buildings, the commenters are correct 

that the requirement for sprinklers in 

facilities housed in high rise buildings 

was intended to be applicable to those 

buildings constructed after January 1, 

2008. We have revised the language in 

the final rule accordingly. 

Comment: Two commenters believe 

that the effective date for compliance 

with the LSC requirement of February 9, 

2009, the date published in the ESRD 

CfC Final Rule published in 2008, is no 

longer meaningful. The commenters 

stated the uncertainties about the 

applicability and scope of the LSC 

requirements that have existed since the 

ESRD CfC Final Rule have prevented 

facilities from undergoing the necessary 

construction for compliance, and that a 

phase-in period would be needed for 

applicable facilities. One commenter 

suggested that a new effective date for 

compliance be established at 12 months 

from the date of publication of this rule. 

Response: We recognize that the delay 

in enforcement of the LSC requirements 

for ESRD facilities may appear to make 

the February 9, 2009 date less 

meaningful, but that date will still be 

used to determine whether the building 

housing an ESRD facility which must 

comply with the LSC requirement is 

considered ‘‘new’’ or ‘‘existing’’. We did 

not make any changes based on this 

comment. 

Comment: One commenter agreed that 

most ESRD facilities are covered by 


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State and local fire and building safety 

codes. For example, the commenter 

stated that 43 of 50 States have adopted 

the International Fire Code in 

coordination with the International 

Building Code. The commenter 

suggested that there would be no reason 

in such jurisdictions that enforce a 

current building code and life safety and 

maintenance code to require 

enforcement of a LSC requirement. The 

commenter suggested that a LSC 

requirement would be appropriate for 

enforcement in jurisdictions where 

there is no State or local code. Although 

the commenter stated that ‘‘most states, 

and most large population jurisdictions’’ 

do have and enforce such current codes, 

they suggested that this rule apply only 

to those ESRD facilities located in 

jurisdictions that do not adopt a current 

national model building and fire code. 

Response: We do not currently 

maintain an accounting of the fire and 

building safety codes adopted in 

individual States and local jurisdictions. 

Also, we do not adopt CfCs that vary by 

jurisdiction, although CMS defers to 

state law where such laws impose 

stricter standards than CMS 

requirements. We believe that limiting 

required adherence to the NFPA LSC 

requirements based on ESRD location is 

appropriate and did not make any 

changes in response to this comment. 

Comment: Several commenters 

expressed concerns about the ESRD 

survey process in conjunction with the 

LSC. The issues they raised included 

how the designation of ESRD facilities 

as exempt from LSC requirements 

would be made; who would conduct the 

LSC compliance surveys; what 

education those survey personnel would 

receive to prevent inconsistent and 

inaccurate application; and how the 

enforcement of the LSC for the 

applicable facilities would be 

implemented. Some commenters 

provided suggestions relevant to these 

topics. 

Response: We appreciate the many 

suggestions for assuring a smooth, 

efficient, and consistent method for 

implementing a standardized ESRD LSC 

compliance survey and enforcement 

process for applicable facilities. We will 

take them into consideration in the 

development of such a process. 

Comment: The sole opposing 

commenter agreed that there is low risk 

and few fire incidents in outpatient 

ESRD facilities, and suggested that this 

is because ‘‘a majority of’’ ESRD 

facilities already meet the requirements 

of NFPA 101. 

Response: We agree that application 

of a fire and building safety code may 

reduce injuries from fire. However, the 

ESRD CfCs did not include a Medicare 

LSC requirement until 2008, and, as 

stated in the preamble to the proposed 

rule, there have been no reported 

patient injuries or deaths due to fire in 

dialysis facilities in the 35 years of the 

Medicare ESRD program. We believe 

this comment supports the conclusion 

that existing State and local fire and 

building safety codes were adequately 

protecting patients and staff prior to the 

ESRD CfC requirement finalized in 

2008. In the preamble to the proposed 

rule, we noted that all ESRD facilities 

must continue to comply with State and 

local fire codes and safety standards 

under § 494.20. 

Comment: The opposing commenter 

also expressed concern that the 

procedure for emergency disconnect 

from hemodialysis treatment is 

‘‘potentially life threatening if carried 

out by a dialysis patient.’’ The 

commenter cited a CMS publication 

from 2002, which listed instructions for 

an emergency disconnection procedure. 

Response: We appreciate the 

commenter’s concern; however cited the 

publication is 10 years old and no 

longer reflects current standards. In the 

2008 ESRD Conditions for Coverage at 

§ 494.60(d)(2), we require that all 

dialysis patients be instructed in how to 

disconnect themselves from treatment 

and evacuate in case of emergency. We 

contend that it is the unencumbered 

evacuation process that is primary to 

outpatient ESRD life safety from fire. We 

did not make any changes in response 

to this comment. 

We received three public comments 

that suggested areas of ESRD policy for 

possible future reform. 

Comment: Two commenters 

expressed concerns about the 

mandatory reporting of infection data to 

the Centers for Disease Control and 

Prevention (CDC) system, the National 

Healthcare Safety Network (NHSN) that 

is included in the ESRD Quality 

Incentive Program (QIP). The 

commenters support the requirement for 

infection data reporting as an incentive 

to improve care, but detailed multiple 

reasons why NHSN was burdensome, 

cumbersome, and, because it is a 

manual data entry system, subject to 

error and inaccurate data. One 

commenter outlined predicted labor 

costs for enrollment and manual data 

submission to NHSN, and estimated that 

it would cost in excess of $1,000,000 

total for existing ESRD facilities. Both 

commenters suggested that we arrange 

an alternative method for mandatory 

infection data submission to NHSN, 

such as direct electronic data transfer 

and/or batch data submission. 

Response: We are aware of the many 

concerns regarding the mandatory 

infection data submission to NHSN that 

is included in the ESRD QIP, and are 

currently working with the CDC to 

explore methods for facilitating the use 

of NHSN as a reliable national system 

for this important ESRD infection data. 

Comment: One commenter addressed 

burdens of obtaining and documenting 

data regarding ESRD patients’ co-morbid 

conditions for the purpose of claiming 

the case-mix adjustments in the ESRD 

Prospective Payment System (PPS). The 

commenter provided reasons why the 

required documentation of this patient 

information was difficult and costly to 

obtain, resulting in loss of revenue, due 

to under-reporting and the costs of 

collecting, reviewing, and auditing 

medical records. 

Response: The requirement for 

documentation of certain comorbidities, for the purpose of receiving 

additional payment for those 

conditions, is a condition of payment. 

That is, ESRD facilities have the option 

of providing appropriate, designated 

criteria in the medical record to support 

the co-morbidity in order to receive a 

payment adjustment for those comorbidities. For example, there must be 

documentation that a patient had a 

positive chest x-ray or positive sputum 

in order to receive the payment 

adjustment for certain bacterial 

pneumonias. ESRD facilities can choose 

not to provide appropriate 

documentation, but they will not 

receive the payment adjustment. 

Because these payments are elective and 

not mandatory, we consider the 

associated paperwork requirements to 

be appropriate. 

Comment: One commenter 

recommended revisions to the ESRD 

CfC addressing Patients’ Rights (42 CFR 

494.70(a)(7)) that would clarify 

expectations for educating ESRD 

patients on their options for dialysis 

modalities and settings. 

Response: We appreciate the 

commenter’s suggestions, and will take 

them into consideration for possible 

future reform. 

Comment: One commenter suggested 

an annual CMS review and update of 

the ESRD CfCs, to reflect the dynamic 

clinical and technological aspects of the 

dialysis industry. 

Response: We recognize the dynamic 

nature of dialysis care and treatment, 

but when new standards of care are 

developed, it may take years to 

determine the appropriateness of 

precise requirements. With this 

understanding, we strive to develop 

regulations that allow room for 

providers and suppliers to appropriately 


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adopt new standards of care without 

having to wait for new regulations. 

The above summarizes the ESRD LSC 

provision made in our proposed rule 

and the comments we received. We are 

finalizing the policies above as 

proposed and clarifying in the 

regulatory text that the requirement for 

sprinklers in facilities housed in high 

rise buildings was intended to be 

applicable to those buildings 

constructed after January 1, 2008. 

Contact: Lauren Oviatt, 410–786– 

4683. 

2. ASC Emergency Equipment 

Section 1832(a)(2)(F)(i) of the Act 

specifies that Ambulatory Surgical 

Centers (ASCs) must meet health, safety, 

and other requirements specified by the 

Secretary in regulation in order to 

participate in Medicare. The Secretary is 

responsible for ensuring that the 

Conditions for Coverage (CfCs) and their 

enforcement are adequate to protect the 

health and safety of all individuals 

treated by ASCs, whether they are 

Medicare beneficiaries or other patients. 

To implement the CfCs, we determine 

compliance through State survey 

agencies that conduct onsite inspections 

using these requirements. ASCs also 

may be deemed to meet Medicare 

standards if they are certified by one of 

the national accrediting organizations 

whose standards meet or exceed the 

CfCs. The ASC regulations were first 

published on August 5, 1982 (47 FR 

34082). Most of the revisions since then 

have been payment-related, with the 

exception of a final rule published on 

November 18, 2008 (73 FR 68502) that 

revised four existing health and safety 

CfCs and created three new health and 

safety CfCs (42 CFR 416.41 through 

416.43 and 416.49 through 416.52). 

Sections 416.44(c)(1) through (c)(9) 

provide a detailed list of specific 

emergency equipment that must be 

available to the ASC’s operating room, 

for example, emergency call system; 

oxygen; mechanical ventilator 

assistance equipment including airways, 

manual breathing bag, and ventilator; 

cardiac defibrillator; cardiac monitoring 

equipment; tracheotomy set; 

laryngoscopes and endotracheal tubes; 

suction equipment; and emergency 

medical equipment and supplies 

specified by the medical staff. In recent 

years, we have learned from the ASC 

community that some of these 

equipment requirements are outdated, 

while other equipment requirements 

would not be applicable to the 

emergency needs of all ASCs. The 

emergency equipment CfC has not been 

revised since its inception in 1982. To 

ensure that no ASC is burdened with 

maintaining unnecessary equipment, we 

proposed to revise the requirements for 

this CfC. 

In the October 24, 2011 proposed rule 

(76 FR 65909 through 65911), we 

proposed to remove the list of 

emergency equipment at § 416.44(c)(1) 

through (c)(9) and proposed at 

§ 416.44(c) to require that ASCs, in 

conjunction with their governing body 

and the medical staff, develop policies 

and procedures which specify the types 

of emergency equipment that would be 

appropriate for the facility’s patient 

population, and make the items 

immediately available at the ASC to 

handle intra- or post-operative 

emergencies. We also proposed that the 

emergency equipment identified by an 

ASC meet the current acceptable 

standards of practice in the ASC 

industry. We stated that we believe 

these proposed changes would enable 

ASCs to better meet current demands, 

while also ensuring ASCs have the 

flexibility necessary to respond to 

emergency needs and incorporate the 

use of modern equipment most suitable 

for the procedures performed in the 

facility. 

We received ten public comments on 

our proposed changes to the ASC 

emergency equipment requirements. 

Commenters included organizations and 

associations that represent surgeons, 

anesthesiologists, nurse anesthetists, 

gastroenterologists, hospitals, state 

health commissions, ophthalmologists, 

health policy and ambulatory surgical 

centers. 

Seven out of the ten comments that 

we received expressed support for the 

proposed rule and its intent to remove 

the prescribed list of outdated and 

unnecessary emergency equipment from 

the current ASC regulations. Two 

commenters opposed the removal of the 

list and recommended the current 

regulation requirements stay in place. 

One commenter opposed the removal of 

the list, but offered an alternative list of 

emergency equipment for ASCs. 

Comment: Several commenters 

supported our rationale for the proposed 

rule. The commenters concurred that 

the proposed changes would allow 

ASCs to have more flexibility to respond 

to emergency needs and also 

incorporate the use of modern and 

specific emergency equipment most 

suitable for the procedures performed in 

each facility. 

Response: We thank the commenters 

for their support. We share the common 

goals of optimizing the health and safety 

of ASC patients and allowing ASCs to 

allocate their resources to the most 

current and specific emergency 

equipment that is tailored to the needs 

of patients who receive treatment in 

their facilities. 

Comment: One commenter opposed 

the elimination of the current 

emergency equipment list and instead 

offered an alternative list of emergency 

equipment that ASCs must have 

available in an emergency situation. 

Response: As we stated in the 

proposed rule preamble, the purpose of 

removing the outdated list of emergency 

equipment is to remove the burden of 

requiring ASCs to maintain unnecessary 

equipment, incorporate the use of 

modern emergency equipment, and give 

the ASC the flexibility to meet the needs 

of patients for the procedures performed 

in ASC facilities. We would like to 

reiterate that the removal of the 

prescribed list of emergency equipment 

in no way relieves the ASCs of 

maintaining a comprehensive supply of 

emergency equipment and supplies that 

are necessary to respond to a patient 

emergency in an ASC facility. Under 

this final rule, an ASC’s governing body 

and medical staff are required to work 

in conjunction to develop policies and 

procedures which specify the types of 

emergency equipment appropriate for 

the facility and to make all of these 

items immediately available at the ASC 

to handle intra- or post-operative 

emergencies. Every ASC will be 

required to have emergency equipment 

in its facility that meets current 

acceptable standards of practice for the 

types of surgeries performed in the ASC. 

Moreover, we believe replacing the 

current list of emergency equipment 

with a revised standard list of 

emergency equipment would create the 

same problems that we are trying to 

eliminate in terms of mandating 

acquisition of the same equipment by 

every ASC, even when some of that 

equipment is not needed for the types 

of surgeries performed in a particular 

ASC. In addition, removing a 

prescriptive list of emergency 

equipment will eliminate the need to 

continually update the ASC regulations 

with a revised list whenever there is a 

new piece of equipment whose use 

becomes standard for handling various 

types of surgical emergencies. 

Comment: We received two comments 

that suggested the emergency equipment 

list remain in place since it is the same 

list of equipment required for hospital 

surgery that is located in the current 

hospital Conditions of Participation. 

Response: We note that the list of 

equipment required for hospitals at 42 

CFR 482.51(d)(3), while similar to that 

in the current ASC rule at 42 CFR 

416.44(c), is not worded identically and 

is in some cases less specific, providing 

more flexibility to hospitals. Further, as 


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we stated in the previous response, we 

are still requiring ASCs to identify and 

maintain a comprehensive, current and 

appropriate set of emergency 

equipment, supplies and medications 

that meet current standards of practice, 

and which will enable the ASC to 

appropriately respond to anticipated 

emergencies that are specific to the 

types of surgery performed in the ASC 

as well as being appropriate to the 

ASC’s patient population. In addition, 

because hospital operating room suites 

typically handle a wider range of 

surgeries, including more complex 

surgeries than those performed in an 

ASC, it is reasonable that there would 

be differences in the standards for 

hospitals as compared to ASCs. We 

believe the requirement we have 

proposed for ASCs is appropriate to 

assure the safety of ASC patients 

without creating undue burdens on 

ASCs. 

Comment: One commenter that 

supported our proposed changes to the 

emergency equipment requirement 

noted the Malignant Hyperthermia 

Association of the United States 

recommendation that all facilities that 

administer malignant hyperthermiatriggering anesthetics should stock a 

minimum of 36 vials of dantrolene 

sodium for injection. 

Response: We thank the commenter 

for their support of the proposed rule. 

Currently, the ASC requirements do not 

mandate that ASCs stock a prescribed 

supply of any specific medication 

needed to handle specific intraoperative or post-surgical emergencies, 

such as malignant hyperthermia. 

However, we would expect that ASCs 

that perform procedures using 

anesthetics that involve a risk of 

malignant hyperthermia would address 

this risk in the emergency procedures 

they develop, and would stock 

appropriate supplies, including 

medications, to handle such 

emergencies. The proposed changes to 

the standard governing emergency 

equipment and supplies requires that 

ASCs meet the current acceptable 

standards of practice, and that all 

Medicare-certified ASC facilities 

incorporate the identified emergency 

equipment, supplies and medications 

that are most suitable for the potential 

emergencies associated with the 

procedures performed in the ASC, and 

the population the ASC serves. 

Therefore, for the reasons set forth 

above, we are finalizing our proposal, 

without modification, to remove the list 

of emergency equipment at 

§ 416.44(c)(1) through (c)(9). Further, we 

are finalizing our proposal to modify 

§ 416.44(c) to require that ASCs, in 

conjunction with their governing body 

and the medical staff, develop policies 

and procedures specifying the types of 

emergency equipment that are 

appropriate for the facility’s patient 

population, and make the items 

immediately available at the ASC to 

handle inter- or post-operative 

emergencies. We are also finalizing our 

proposal that the emergency equipment 

identified by the ASC meet the current 

acceptable standards of practice in the 

ASC industry. CMS will monitor the 

implementation of this change in 

emergency equipment requirements and 

will revisit the issue if it is determined 

to have an adverse impact on patients. 

Contact: Jacqueline Morgan, 410–786– 

4282. 

3. Revocation of Enrollment and Billing 

Privileges in the Medicare Program 

(§ 424.535) 

On June 27, 2008, we published a 

final rule in the Federal Register (73 FR 

36448) entitled ‘‘Medicare Program; 

Appeals of CMS or CMS Contractor 

Determinations When a Provider or 

Supplier Fails to Meet the Requirements 

for Medicare Billing Privileges.’’ In that 

rule, we added a new provision at 

§ 424.535(c) to provide that: ‘‘After a 

provider, supplier, delegated official, or 

authorizing official has had their billing 

privileges revoked, they are barred from 

participating in the Medicare program 

from the effective date of the revocation 

until the end of the re-enrollment bar. 

The re-enrollment bar is a minimum of 

1 year, but not greater than 3 years, 

depending on the severity of the basis 

for revocation.’’ The purpose of this 

provision was to prevent providers and 

suppliers from being able to 

immediately re-enroll in Medicare after 

their Medicare billing privileges were 

revoked. 

In our October 24, 2011 proposed 

rule, we proposed to revise § 424.535(c) 

to eliminate the re-enrollment bar in 

instances where providers and suppliers 

have had their billing privileges revoked 

under § 424.535(a) solely for failing to 

respond timely to a CMS revalidation 

request or other request for information. 

As we explained in the proposed rule, 

we believe that this change is 

appropriate because the re-enrollment 

bar in such circumstances often results 

in unnecessarily harsh consequences for 

the provider or supplier and causes 

beneficiary access issues in some cases. 

We have learned of numerous instances 

where the provider’s failure to respond 

to a revalidation request was 

unintentional; that is, the provider was 

not aware of the request due to, for 

instance, misrouted mail or a clerical 

mistake. This is different from other 

revocation reasons, which may be more 

serious—for example, when providers 

have been excluded from Medicare, 

Medicaid or other Federal health care 

programs or have been convicted of a 

felony as described in § 424.535(a)(2) 

and (a)(3), respectively. Moreover, there 

is another, less restrictive regulatory 

remedy available for addressing a failure 

to respond timely to a revalidation 

request. This remedy was identified in 

proposed § 424.540(a)(3). 

We received 9 public comments on 

our proposed change to § 424.535(c). 

The comments, which we have 

summarized, and our responses, are as 

follows: 

Comment: Many commenters 

expressed support for our proposed 

revision to § 424.535(c). They agreed 

with our view that the imposition of a 

re-enrollment bar is unduly harsh in 

cases where a revocation is based solely 

upon the provider or supplier’s failure 

to respond timely to a revalidation 

request or other request for information. 

Several commenters added that a reenrollment bar in such instances could 

also cause beneficiary access issues. 

Another commenter stated that a reenrollment bar is more appropriate for 

providers and suppliers that 

intentionally break laws and violate the 

trust of their patients. 

Response: We appreciate the 

commenters’ support for our proposal. 

We are finalizing our proposed change 

to § 424.535(c), which we believe will 

help reduce the administrative burden 

on providers and suppliers whose 

revocations are based solely on a failure 

to respond timely to a revalidation or 

other request for information. As 

commenters pointed out and as we 

explained above, some legitimate 

providers and suppliers were barred 

from being able to treat and bill for 

Medicare patients because of the wide 

scope of this reenrollment bar. 

Comment: Several commenters, while 

expressing support for our proposed 

change to § 424.535(c), sought 

clarification as to: (1) When this change 

would become effective, and (2) 

whether it would apply to providers and 

suppliers that were mailed a 

revalidation notice in September 2011 

but unintentionally missed the 60-day 

deadline for revalidating their 

enrollment. 

Response: The revision to § 424.535(c) 

will become effective upon the effective 

date of this final rule. It will not be 

applied retroactively. 

Comment: Several commenters 

opposed our proposed change to 

§ 424.535(c). One commenter stated that 

under § 424.535(a), CMS may—but is 

not required to—revoke and establish a 


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re-enrollment bar if a provider or 

supplier has not responded timely to a 

revalidation or other informational 

request. Hence, CMS should not remove 

its discretionary authority to impose a 

re-enrollment bar in these instances. 

The commenter also recommended that 

CMS provide data regarding the number 

of times that Medicare contractors have 

revoked Medicare billing privileges and 

established a re-enrollment bar in such 

cases. Another commenter asked how 

our proposed revision to § 424.535(c) 

would reduce fraud, waste and abuse 

and how CMS would deal with 

providers and suppliers that repeatedly 

fail to respond to revalidation or other 

informational requests; the commenter 

asked, for instance, whether a site visit 

would be performed and whether the 

provider’s ownership would be verified. 

Response: While CMS has the 

discretion to revoke a provider or 

supplier’s Medicare billing privileges 

under § 424.535(a) for a provider or 

supplier’s failure to respond to a 

revalidation or other informational 

request, the imposition of a reenrollment bar under § 424.535(c) is not 

discretionary. If the provider or supplier 

is revoked, a re-enrollment bar must 

follow. As explained above, we believe 

that an automatic re-enrollment bar for 

a revocation based on a failure to 

respond to a revalidation or other 

informational request is overly punitive. 

The most appropriate remedy, therefore, 

is to remove the re-enrollment bar in 

such situations. 

With respect to the commenter’s 

request that CMS furnish data regarding 

the number of revocations and 

associated re-enrollment bars that have 

been imposed, we do not believe that 

such information is necessary for our 

analysis. We proposed this change in an 

effort to reduce the administrative 

burden on any provider or supplier 

subject to the bar, regardless of how 

often CMS or its contractors have 

imposed re-enrollment bars. 

We do not believe that the finalization 

of our proposed revision to § 424.535(c) 

will impact our ability to prevent or 

combat fraudulent activity in our 

programs. Providers and suppliers that 

fail to respond once or repeatedly to a 

revalidation or other informational 

request will still be subject to adverse 

consequences, including—as explained 

below—the deactivation of their 

Medicare billing privileges. CMS does— 

and will continue to—closely scrutinize 

every provider and supplier that seeks 

to reactivate its billing privileges or reenroll in Medicare after a revocation. In 

fact, in the latter case, the provider or 

supplier would be subject to the ‘‘high’’ 

level of categorical screening under 

§ 424.518(c)(3), which would include 

additional screening tools. In sum, the 

aforementioned safeguards should 

alleviate any program integrity concerns 

regarding our proposed change—which, 

as already noted, focuses on reducing 

the unfair burden to providers and 

suppliers that inadvertently fail to 

respond to revalidation or other 

informational requests. 

The above summarizes this provision 

in our proposed rule and the comments 

received. We are finalizing our changes 

to § 424.535(c) as proposed. 

Contact: Morgan Burns, 202–690– 

5145. 

4. Deactivation of Medicare Billing 

Privileges (§ 424.540) 

On April 21, 2006, we published a 

final rule in the Federal Register (71 FR 

20753) titled ‘‘Medicare Program; 

Requirements for Providers and 

Suppliers to Establish and Maintain 

Medicare Enrollment.’’ As part of that 

rule, we established provisions for the 

deactivation of Medicare billing 

privileges at § 424.540. 

a. Section 424.540(a)(1) 

Section 424.540(a)(1) specifies that 

Medicare billing privileges may be 

deactivated if Medicare claims are not 

submitted for 12 consecutive months. 

The purpose of this provision was to 

prevent situations in which unused, idle 

Medicare billing numbers could be 

accessed by individuals and entities to 

submit false claims. Currently, Medicare 

billing privileges are deactivated (made 

ineligible for Medicare billing purposes) 

for providers or suppliers that have not 

submitted a Medicare claim for 12 

consecutive months. If the deactivated 

provider attempts to submit a claim 

after the date of deactivation, the claim 

would be denied. To reactivate its 

Medicare billing privileges, a provider 

or supplier is required to recertify— 

generally via the submission of a 

complete CMS–855 enrollment 

application—that the provider or 

supplier’s enrollment information 

currently on file with Medicare is 

accurate. Physicians and non-physician 

practitioners are deactivated most often 

due to billing inactivity. 

In our October 24, 2011 proposed 

rule, we proposed to revise 

§ 424.540(a)(1) to apply only to those 

providers and suppliers that do not 

submit a Form CMS–855I (the 

enrollment form for individual 

physicians and non-physician 

practitioners) to enroll in the Medicare 

program. As we explained in the 

proposed rule, we were mostly 

concerned with organizations that fail to 

submit a claim within a 12-month 

period, since business organizations 

would generally submit a claim on a 

more frequent basis. We felt, on the 

other hand, that there are instances in 

which individual practitioners had 

valid reasons for not filing claims 

within a 12-month period. These 

included, but were not limited to, cases 

where the practitioner: (1) Was enrolled 

in Medicare, but generally only treated 

non-Medicare patients, or (2) had 

multiple, separately-enumerated 

practice locations, yet typically only 

performed services at one of them. We 

also believed that the 12-month 

deactivation and reactivation processes 

increased the workload and 

administrative costs of Medicare 

contractors. For these reasons, we 

proposed the above-mentioned revision 

to § 424.540(a)(1) 

We received 27 separately submitted 

public comments on our proposed 

change to § 424.540(a)(1). The 

comments, which we have summarized, 

and our responses, are as follows: 

Comment: A significant number of 

commenters either opposed or 

expressed concerns about our proposed 

revision to § 424.540(a)(1). One 

commenter, for instance, stated that by 

allowing unused Medicare billing 

numbers to remain active, CMS is 

fundamentally increasing the risk of 

fraud, waste and abuse (for example, 

identity theft) in Medicare. Other 

commenters cited a number of Health 

and Human Services Office of Inspector 

General (OIG) reports, including OEI– 

03–01–00270 and OEI–04–08–4470, in 

support of OIG’s contention that CMS 

should retain its existing discretionary 

authority to deactivate physicians and 

non-physician practitioners for 12 

months of non-billing. Commenters also 

stated that these reports identified, 

among other things, the risks involved 

in allowing unused billing numbers to 

remain active. 

Response: We understand the 

commenters’ concerns and have elected 

not to finalize our proposed change to 

§ 424.540(a)(1) at this time. The 

commenters are correct that our current 

deactivation authority for non-billing is 

discretionary. Upon further analysis, 

and based on the input we received 

from several commenters voicing 

reservations about our proposal, we do 

not believe it is necessary to revise this 

authority at this time. As commenters 

pointed out, a provider or supplier’s 

failure to bill Medicare for an extended 

period of time raises numerous 

questions, such as whether the provider 

is still operational and meets the 

standards for his or her provider type. 

We believe that deactivation can protect 

the agency from risks associated with 


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misused provider numbers by (1) 

allowing CMS to confirm whether the 

provider or supplier continues to meet 

all Medicare requirements based on the 

provider or supplier’s submission of a 

complete CMS–855 application; and (2) 

preventing others from misusing the 

provider or supplier’s billing number, 

which was a concern that several 

commenters expressed. 

CMS intends to study this issue 

further, as we believe that an 

appropriate balance between protecting 

the Medicare Trust Fund and reducing 

the burden on provider and suppliers is 

achievable. For example, CMS 

implemented in December 2011 a 

system for Automated Provider 

Screening that both simplifies 

enrollment into Medicare for providers 

and suppliers while increasing the 

ability of CMS to identify potentially 

ineligible or fraudulent providers and 

suppliers. 

Our decisions not to finalize the 

proposed change to § 424.540(a)(1) and 

finalize our proposed change to 

§ 424.535(c) are both grounded in efforts 

to weigh the potential benefits and costs 

to our program and providers. In the 

former case, we concluded that the 

program integrity risks associated with 

removing our discretionary deactivation 

authority in § 424.540(a)(1) outweighed 

the potential benefits of a reduced 

burden on providers and suppliers. 

However, as explained, we believe our 

proposed changes to § 424.535(c) will 

result in a decrease in provider and 

supplier burden without adversely 

impacting our ability to prevent and 

combat fraudulent activity in our 

programs. In the latter case, we do not 

see any increased program integrity 

risks that could potentially outweigh the 

benefits of reduced provider burden. 

Comment: One commenter stated that 

almost all State Medicaid agencies 

deactivate physician and non-physician 

practitioner billing numbers based on a 

lack of claim submissions over a given 

time. The commenter asked CMS to 

explain—(1) Whether the Federal 

Employee Health Benefit Program 

(FEHBP) also deactivates billing 

privileges based on claim nonsubmissions, and; (2) why CMS will 

forgo deactivation in its proposed 

revision to § 424.540(a)(1) while most 

State Medicaid agencies will continue 

deactivations. 

Response: Approximately 200 private 

plans participate in the FEHBP. In the 

FEHBP, providers bill plans, not the 

Federal government. Hence, there is no 

federal deactivation authority as such in 

the FEHBP. Other management 

approaches, most notably private plan 

decisions on participating providers and 

program-wide debarment, are used to 

deal with provider billing problems 

related to program integrity. Regardless, 

as explained above, we have decided 

not to finalize our proposed revision to 

§ 424.540(a)(1). 

Comment: Several commenters 

requested that CMS explain why it will 

continue its deactivation process for 

Medicare-enrolled provider and 

supplier organizations, yet did not fully 

implement the deactivation process for 

Medicaid and Children’s Health 

Insurance Program providers that was 

proposed in the February 2, 2011 final 

rule titled ‘‘Medicare, Medicaid, and 

Children’s Health Insurance Programs; 

Additional Screening Requirements, 

Application Fees, Temporary 

Enrollment Moratoria, Payment 

Suspensions and Compliance Plans for 

Providers and Suppliers.’’ The 

commenter believes that this represents 

an inconsistency in CMS’s approach to 

deactivation. 

Response: As we stated in the 

February 2, 2011 final rule, we decided 

not to finalize the 12-month 

deactivation provision in proposed 

§ 455.418 based on the comments 

received and certain operational 

considerations. However, we also stated 

in that rule that while States should 

have the discretion ‘‘to police their own 

provider enrollment,’’ we recommended 

that States ‘‘deactivate provider 

numbers that have not been used for an 

extended period of time.’’ This 

recommendation, in our view, is 

consistent with our decision not to 

finalize our proposed change to 

§ 424.540(a)(1). 

Comment: One commenter agreed 

with CMS’ policy to continue to 

deactivate billing privileges associated 

with physicians and non-physician 

practitioners who complete and submit 

the ‘‘Medicare Enrollment 

Application—For Eligible Ordering and 

Referring Physicians and Non-Physician 

Practitioners (CMS–855O).’’ 

Response: While we appreciate the 

commenter’s support, we note that 

physicians and non-physician 

practitioners who complete the Form 

CMS–855O are not granted Medicare 

billing privileges. They do not and 

cannot send claims to Medicare for 

services they provide. They submit the 

form for the sole purpose of ordering or 

referring Medicare-covered items and 

services. 

Comment: One commenter 

recommended that CMS continue to 

deactivate Medicare billing numbers for 

physicians and non-physician 

practitioners who submit the CMS– 

855O and the CMS–855R and who do 

not bill the Medicare program for 12 

consecutive months. The commenter 

added that since CMS did not consider 

the impact of deactivation on physicians 

and other practitioners in the proposed 

rule’s preamble or regulation text, the 

inclusion of our proposed change in 

final rulemaking without adequate 

public notice would violate the 

Administrative Procedures Act. 

Response: As stated above, physicians 

and non-physician practitioners who 

complete the CMS–855O do not receive 

Medicare billing privileges and are thus 

not subject to deactivation under 

§ 424.540(a)(1). In addition, we did not 

predicate our proposed change based on 

whether the physician or non-physician 

practitioner completed the CMS–855R. 

Deactivation for non-billing, in our 

view, should not be based solely on 

whether the physician or non-physician 

practitioner reassigns his or her benefits. 

Finally, we disagree with the 

commenter’s assertion regarding CMS’s 

consideration of the impact of 

deactivation on physicians and nonphysician practitioners. We expressly 

outlined in the preamble to the 

proposed rule the burden imposed on 

such individuals because of the 

deactivation process. Indeed, it was this 

burden that encouraged us to propose 

our change to § 424.540(a)(1). 

Comment: One commenter noted our 

statement in the proposed rule: ‘‘We 

have issued guidance that requires our 

contractors to conduct certain 

verification activities to guard against 

physician and non-physician 

practitioner identity theft.’’ The 

commenter asked CMS to furnish 

additional information about the 

techniques being used to prevent 

physician and non-physician 

practitioner identity theft. 

Response: Since January 2010, 

Medicare contractors have been 

required to perform additional 

verification activities to confirm the 

identity of a physician or non-physician 

practitioner who is reporting, for 

instance, a change in his or her practice 

location address, special payment 

address, or correspondence address. 

Specifically, the contractor is required 

to compare the signature on the 

submitted Form CMS–855 change 

request with the signature on file. If they 

do not match, the provider must submit 

proper identification, such as a copy of 

a driver’s license or passport. These and 

other verification procedures are 

outlined in Chapter 15 of CMS’s 

Program Integrity Manual. 

Comment: A commenter cited our 

statement in the proposed rule: 

‘‘Currently Medicare provider and 

supplier enrollment billing privileges 

are deactivated (made ineligible for 


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Medicare billing purposes) for providers 

and suppliers that have not submitted a 

Medicare claim for 12 consecutive 

months.’’ The commenter believed that 

this statement was incorrect, arguing 

that CMS discontinued the automatic 

deactivation process in late 2010 or 

early 2011. The commenter requested 

that CMS explain why it: (1) 

Discontinued the automatic deactivation 

process for physicians, non-physician 

practitioners, medical groups and other 

suppliers, and (2) has not implemented 

an automatic deactivation process for 

Part A providers. 

Response: To clarify, the statement 

the commenter quotes was meant to 

describe CMS’ existing deactivation 

authority at § 424.540(a)(1). Insofar as 

the automatic deactivation process, we 

believed that a case-by-case approach 

was more appropriate, in part for 

reasons which we have discussed in this 

final rule. Indeed, the burdens posed by 

automatic deactivations—both on our 

contractors and on those providers and 

suppliers that have legitimate reasons 

for not billing Medicare for 12 months— 

did not at that time justify the 

continuation of such a ‘‘one-size-fitsall’’ process. It is primarily for this 

reason, moreover, that an automatic 

deactivation mechanism has not been 

initiated for Part A providers. 

Comment: One commenter 

recommended that CMS explain the 

linkage, if any, between the current 

deactivation policy and the maximum 

period for claim submissions. The 

commenter also asked CMS to explain 

why a physician or non-physician 

practitioner should remain enrolled in 

Medicare if he/she cannot bill for 

services within 12 months from the date 

of service. 

Response: We do not see a significant 

linkage between deactivation and the 

timeframe in which a provider must 

submit a claim for payment. Rather, the 

deactivation policy, as already 

explained, was based largely on the 

need to prevent others from accessing 

unused billing numbers and to ensure— 

via the deactivated provider’s 

submission of a complete Form CMS– 

855—that the provider and supplier 

continues to meet Medicare enrollment 

requirements. With respect to the 

commenter’s second statement, we do 

not believe that a failure to submit 

claims justified the revocation of a 

provider or supplier’s billing privileges 

so long as the provider or supplier is 

still in compliance with all Medicare 

requirements. 

Comment: Several commenters stated 

that CMS did not fully explain its 

rationale for its proposed change to 

§ 424.540(a)(1). They requested that 

CMS do so or otherwise withdraw the 

proposal. They also recommended that 

CMS explain how this change will affect 

CMS’s efforts to reduce fraud, waste and 

abuse. One commenter requested that 

CMS outline the benefits that have 

accrued from the annual deactivation 

process. Another commenter urged CMS 

to explain how it will ensure that 

physician billing numbers are not 

misused by clearinghouses, billing 

agents, or former employees. 

Response: We believe that we 

provided sufficient rationale for the 

proposed change to § 424.540(a)(1) in 

the proposed rule. However, based on 

the concerns that commenters have 

expressed, we will not be finalizing our 

proposed change. 

Comment: A commenter stated that 

CMS should have explained the impact 

that our proposed change would have 

on fraud, waste and abuse by physicians 

and practitioners who only order and 

refer services to Medicare beneficiaries. 

Response: We assume that the 

commenter is referring to physicians 

and non-physician practitioners who 

complete the Form CMS–855O. As 

stated above, such individuals do not 

have Medicare billing privileges. They 

are therefore unaffected by the 

deactivation provisions in 

§ 424.540(a)(1). 

Comment: A commenter requested 

that CMS explain: (1) Why it did not 

include information regarding the 

supplier notification aspect of the 

deactivation process in the proposed 

rule, and (2) whether the postdeactivation process allowed physicians 

and non-physician practitioners to 

update their re-enrollment in the 

Medicare program. 

Response: We did not include 

information about the supplier 

notification process in the proposed rule 

because we believed it was immaterial 

to the larger question of the burden that 

the deactivation process poses as a 

whole. As for the commenter’s reference 

to a ‘‘post-deactivation process,’’ we are 

unclear as to what the commenter 

means. If the commenter is asking 

whether a reactivation application can 

always be simultaneously used as a 

revalidation application, CMS does not 

generally hold that position; 

reactivation and revalidation 

applications are for separate purposes 

and are governed by separate rules. 

Comment: One commenter cited a 

Government Accountability Office 

(GAO) report (GAO–04–707) stating that 

out-of-date information increases the 

risk that Medicaid will pay individuals 

who are not eligible to bill Medicaid. 

The commenter asked CMS to explain 

why it disagrees with this statement and 

why its proposed change will decrease 

the risk to the Medicare program. 

Response: We agree that out-of-date 

enrollment information poses a risk to 

all of our programs. Our ongoing effort, 

in fact, to revalidate all providers and 

suppliers reflects the importance we 

place on the need for Medicare to have 

accurate and up-to-date information on 

all enrolled individuals and entities. As 

explained above, we are not finalizing 

our proposed change due to the program 

integrity concerns raised by comments 

such as this one. 

Comment: One commenter cited a 

December 1995 OIG report (OEI–01–94– 

00231) that: (1) Generally stated that 

CMS should require carriers to 

deactivate unused provider numbers, (2) 

recommended that a 1-year non-billing 

period be used, and (3) pointed out 

certain risks involved with unused 

numbers. The commenter asked why 

CMS did not discuss the history and 

background of the deactivation process 

in the proposed rule. The commenter 

also asked why CMS, through its 

proposal to eliminate non-billing 

deactivations for physicians and nonphysician practitioners, is disregarding 

the OIG’s above-referenced 

recommendation. 

Response: We did not and do not 

believe that a detailed history of the 

deactivation process is necessary, as 

many providers and suppliers are 

already familiar with the concept of 

deactivation. We add that, as explained 

earlier, we are not finalizing our 

proposed change to § 424.540(a)(1). 

Comment: Several commenters 

supported our proposed revision to 

§ 424.540(a)(1). They generally stated 

that it would reduce the burden on 

providers, suppliers and Medicare 

contractors, and would ensure better 

access to care for beneficiaries. They 

added that there are indeed valid 

reasons for a physician or non-physician 

practitioner not to submit a Medicare 

claim for 12 consecutive months; for 

instance, he or she may: (1) Simply not 

have many Medicare patients, (2) have 

been ill, or (3) have been working 

outside the country. Another 

commenter stated that the 

reimbursement delays associated with 

deactivations can be devastating to some 

providers. 

Response: We appreciate these 

supportive comments. However, for 

reasons already discussed, we will not 

be finalizing our proposed change. 

Comment: One commenter urged 

CMS to expand our proposed change to 

§ 424.540(a)(1) to include physician 

group practices. 

Response: As already stated, we are 

not finalizing our proposed change. 


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Based on the comments received and for 

the reasons expressed above, we have 

decided not to finalize our proposed 

change to § 424.540(a)(1). We may, 

however, seek other approaches— 

including future rulemaking—to address 

the concerns of providers and suppliers 

regarding the deactivation of providers 

and suppliers for 12 consecutive months 

of non-billing. 

b. Section 424.540(a)(2) 

Section 424.540(a)(2) specifies that a 

provider or supplier’s Medicare billing 

privileges may be deactivated if the 

provider or supplier fails to report a 

change to its enrollment information 

within 90 calendar days or, for changes 

in ownership or control, within 30 

calendar days. We did not propose to 

alter this provision. We believe it is 

necessary for providers and suppliers to 

understand the importance of furnishing 

updated enrollment information to the 

Medicare program, for incorrect or aged 

data can lead to improper payments. 

We did not receive any comments 

with respect to § 424.540(a)(2). 

c. Section 424.540(a)(3) 

We proposed to add a new 

§ 424.540(a)(3) that would allow us to 

deactivate, rather than revoke, the 

Medicare billing privileges of a provider 

or supplier that fails to furnish complete 

and accurate information and all 

supporting documentation within 90 

calendar days of receiving notification 

to submit an enrollment application and 

supporting documentation, or resubmit 

and certify to the accuracy of its 

enrollment information. While the 

deactivated provider or supplier would 

still need to submit a complete 

enrollment application to reactivate its 

billing privileges, it would not be 

subject to other, ancillary consequences 

that a revocation entails; for instance, a 

prior revocation must be reported in 

section 3 of the Form CMS–855I 

application, whereas a prior 

deactivation need not. Indeed, it is for 

this reason that we believed our 

proposal would reduce the burden on 

the provider and supplier communities. 

We received 5 public comments on 

proposed § 424.540(a)(3), all of which 

supported our proposed addition of 

§ 424.540(a)(3). The comments stated 

that revocation is often too harsh a 

penalty and that deactivation is a more 

suitable remedy. They added that our 

proposal would reduce the burden on 

providers and suppliers that 

inadvertently miss the 90-day deadline. 

We appreciate the support of these 

commenters and are finalizing the 

policy as proposed. 

We note that we received several 

comments in response to our request for 

feedback regarding additional ways to 

reduce the burden on providers and 

suppliers. The comments below pertain 

to the provider enrollment process: 

Comment: A commenter suggested 

that CMS allow providers and suppliers 

120 days—rather than the 90 days 

referred to in § 424.540(a)(2)—to report 

a change of information. The commenter 

believed that such an extension would 

be beneficial in light of CMS’s ongoing 

revalidation effort and would reduce the 

burden on Medicare providers and 

suppliers. 

Response: While we appreciate this 

suggestion, we believe that 90 days 

constitutes more than sufficient time for 

a provider or supplier to submit a 

change of information. We have 

repeatedly stressed to the provider 

community how important it is for CMS 

to have accurate information on 

individuals and entities that bill 

Medicare. Erroneous data can lead to 

improper payments, thereby 

endangering the Medicare Trust Fund. 

Comment: A commenter 

recommended that CMS extend the 

timeframe for reporting a change in 

ownership or control from 30 days to 90 

days. The commenter felt that 30 days 

is too short a timeframe for compliance. 

A 90-day period would: (1) Make this 

reporting requirement consistent with 

that applied to other types of 

informational changes that must be 

reported, and (2) ease the burden on the 

provider community. 

Response: We recognize that 30 days 

is a significantly shorter period than 

that given for reporting most types of 

changes of information. Given, however, 

the relative importance of information 

regarding the provider’s ownership, we 

believe that a 30-day period is 

appropriate. 

Comment: A commenter urged CMS 

to implement safeguards designed to 

avoid contractor application processing 

errors, which can lead to delays in 

payment to providers and, in turn, 

interruptions in patient access to care. 

The commenter also recommended that 

CMS implement a clearer and more 

direct process for streamlining Medicare 

enrollment; this includes identifying 

and resolving application processing 

errors and issues related to the customer 

service hotlines. 

Response: We appreciate these 

recommendations. We can assure the 

commenter that CMS is currently 

undertaking a number of initiatives 

designed to streamline and improve the 

provider enrollment process, such as the 

ongoing enhancement of the Provider 

Enrollment, Chain and Ownership 

System (PECOS) Internet-based 

enrollment mechanism. 

Comment: One commenter 

recommended that CMS reduce the risk 

categorization—as described in CMS 

final rule, published in the Federal 

Register on February 2, 2011, titled 

‘‘Medicare, Medicaid, and Children’s 

Health Insurance Programs; Additional 

Screening Requirements, Application 

Fees, Temporary Enrollment Moratoria, 

Payment Suspensions and Compliance 

Plans for Providers and Suppliers’’—for 

certain types of DMEPOS suppliers. 

Specifically, the commenter suggested 

that the risk category for ‘‘noncommercial’’ DMEPOS suppliers—that 

is, physicians and non-physician 

practitioners who furnish DMEPOS 

items to their own patients—be changed 

from ‘‘high’’ to ‘‘limited.’’ The 

commenter argued that such suppliers 

would have to undergo fingerprinting 

and a criminal background check each 

time they enrolled in Medicare or 

opened a new location. This could spur 

many physicians to opt-out of Medicare, 

rather than be subjected to these 

burdens. 

Response: We understand the 

commenter’s concerns. As we stated in 

the February 2, 2011 final rule, 

however, we predicated our screening 

level assignments on the collective 

experience of provider and supplier 

categories. Based on the continued 

problem of fraud and abuse in the 

DMEPOS arena, we believe that all 

newly enrolling DMEPOS suppliers— 

irrespective of subcategory—should be 

in the ‘‘high’’ level of categorical 

screening. We will, nonetheless, 

continue to monitor this issue and may 

make adjustments to the risk categories 

when appropriate. 

Comment: One commenter suggested 

that hospital-based physician groups be 

permitted to submit enrollment 

applications more than 30 days before 

the effective date listed on the 

application. This would allow such 

groups to begin billing Medicare sooner. 

Response: We appreciate this 

suggestion. We will study the issue 

further and, if needed, furnish clarifying 

guidance to the public. 

Comment: A commenter urged CMS 

to reduce the period in which 

contractors must process enrollment 

applications to no later than 60 days for 

paper applications and 45 days for Webbased applications. The commenter 

asked CMS to modify the proposed 

deadlines in the re-designated § 405.818 

in accordance therewith. 

Response: Medicare contractors must 

process enrollment applications in 

accordance with the timeframes 

outlined in CMS Publication 100–08, 


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chapter 15, and as specified in their 

respective Statements of Work. We note 

that the vast majority of initial 

enrollment applications today must be 

processed within 60 days (paper) and 45 

days (Web-based). 

Comment: Several commenters 

requested that CMS reduce all 

unnecessary paperwork from the 

enrollment process. 

Response: We appreciate this 

comment and are working towards 

making the enrollment process as 

paperless as possible, in part through 

enhancements to the Internet-based 

PECOS enrollment mechanism. 

Comment: A commenter requested 

that CMS: (1) Exempt federally qualified 

health centers (FQHCs) from the 

provider enrollment application fee 

described in § 424.514; (2) have each 

Medicare Administrative Contractor 

assign an FQHC subject matter expert 

and customer service representative 

who can help better facilitate the 

processing of FQHC applications; and 

(3) no longer require each individual 

FQHC site to separately enroll, but to 

allow the parent to enroll with the 

individual sites listed as practice 

locations. The commenter believed that 

these changes would greatly reduce the 

burden on FQHCs. 

Response: Section 1866(j) of the Act 

requires the Secretary to impose a fee on 

each ‘‘institutional provider of medical 

or other items or services or supplier.’’ 

The term ‘‘institutional provider’’ is 

defined in § 424.502 as ‘‘any provider or 

supplier that submits a paper Medicare 

enrollment application using the CMS– 

855A, CMS–855B (not including 

physician and non-physician 

practitioner organizations), CMS–855S 

or associated Internet-based PECOS 

enrollment application.’’ Since FQHCs 

complete the Form CMS–855A to enroll 

in Medicare, they are subject to the 

application fee. 

We appreciate the commenter’s 

suggestion regarding the assignment of 

designated contacts at Medicare 

contractor sites to handle FQHC 

enrollment applications. While we are 

not adopting the commenter’s 

recommendation at this time, we will 

take it under advisement. 

Although we understand the 

commenter’s concern about the FQHC 

‘‘site-by-site’’ process, we intend to 

retain the policy at 42 CFR 

491.5(a)(3)(iii) which states: ‘‘If clinic or 

center services are furnished at 

permanent units in more than one 

location, each unit is independently 

considered for approval as * * * an 

FQHC.’’ We believe it is important that 

each individual FQHC site be able—on 

its own merits—to meet all CMS 

requirements. Since we did not propose 

to change this requirement, it is 

considered outside the scope of the 

regulation, though we may take this 

comment into consideration for future 

rulemaking. 

Comment: A commenter 

recommended that CMS eliminate 

PECOS—which the commenter believes 

is a redundant system—and instead 

standardize the Medicare enrollment 

process with other public and private 

payers via the adoption of the Council 

for Affordable Quality Healthcare 

Universal Provider Datasource. 

Response: We do not believe that 

PECOS should be eliminated. It has 

proven to be an extremely valuable tool 

in capturing provider enrollment 

information that is unique to the 

Medicare program. 

Comment: A commenter requested 

that CMS standardize its fraud and 

abuse regulations, arguing that such 

changes would reduce physicians’ 

burden of complying with multiple 

inconsistent regulatory schemes. 

Response: As the commenter has not 

specifically identified any 

inconsistencies within CMS’s program 

integrity regulations, we unfortunately 

are not in a position to address this 

comment further. 

We also received several comments 

not clearly related to regulatory matters: 

Comment: One commenter 

recommended that CMS consider civil 

monetary penalties for physicians and 

other providers and suppliers who fail 

to report changes in a timely manner. 

Response: We believe that this 

comment is out-of-scope, as it pertains 

neither to the issue of burden reduction 

nor the provisions of the proposed rule; 

nonetheless, we believe that the 

remedies we have outlined in this final 

rule, as well as those which already 

exist, are the most appropriate ones. 

Comment: One commenter 

recommended that CMS remove the 

ordering and referring file from the CMS 

Web site. The commenter argued that 

providing the names of physicians and 

non-physician practitioners and their 

active National Provider Identifiers to 

the public increases the likelihood of 

fraud, waste and abuse. The commenter 

also: (1) Contended that CMS has no 

statutory or regulatory requirement 

mandating the issuance of ordering and 

referring information to the public, and 

(2) requested that CMS explain why it 

is posting the ordering and referring file 

when it has not yet implemented any 

ordering and referring claims edits. 

Response: We believe that this 

comment, too, is out-of-scope, as it is 

unrelated to the issue of burden 

reduction and the provisions of the 

proposed rule. We note, however, that 

making NPIs available online is 

important for the processing of many 

standard health care transactions, for 

Medicare and other payers. 

The above summarizes this proposal 

and the comments we received. As 

noted above, we are not finalizing our 

proposed changes to § 424.540(a)(1) and 

intend to study this issue further and 

possibly address in future rulemaking or 

another suitable vehicle. However, we 

are finalizing our provision to add a 

new § 424.540(a)(3) as proposed. 

Contact: Morgan Burns, 202–690– 

5145. 

5. Duration of Agreement for 

Intermediate Care Facilities for 

Individuals With Intellectual 

Disabilities (Referred to in Current 

Regulations as Intermediate Care 

Facilities for the Mentally Retarded) 

(§ 442.15 Through § 442.109) 

As described elsewhere in this 

preamble, we are replacing the use of 

the term ‘‘mentally retarded’’ with the 

term ‘‘individuals with intellectual 

disabilities’’ as described in this 

program, so we have used the new term 

in these final provisions. 

Section 1910 of the Act provides for 

the certification and approval of 

Intermediate Care Facilities for the 

Individuals with Intellectual Disabilities 

(ICF/IIDs). These facilities were 

formerly known as Intermediate Care 

Facilities for the Mentally Retarded 

(ICF–MRs) and are renamed through the 

change in nomenclature described 

below in this rule. Current regulations at 

§ 442.109 and § 442.110 address ICFsIIDs provider agreements and limit the 

ICFs-IIDs provider agreements under 

Medicaid to annual time limits. We 

proposed to remove the time limited 

agreements for ICF/IIDs at § 442.16. We 

also proposed to eliminate this 

requirement at § 442.15, § 442.109, and 

§ 442.110. In order to give more 

flexibility to States, we proposed to 

replace the requirement with an open 

ended agreement which, consistent with 

nursing facilities (NFs), would remain 

in effect until the Secretary or a State 

determines that the ICF/IID no longer 

meets the conditions of participation for 

ICF/IIDs at subpart I part 483. 

Also, we proposed to add a 

requirement that a certified ICF/IID 

must be surveyed on average every 12 

months with a maximum 15 month 

survey interval. Current regulations at 

42 CFR part 442 require that ICF/IIDs be 

surveyed for compliance with 

conditions of participation at least every 

12 months on a relatively fixed 

schedule. By contrast, nursing homes 

must be surveyed for compliance with 


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certification standards at intervals of 

between 12 and 15 months. We 

anticipate the change in the certification 

period will have positive impacts on the 

care provided in these facilities because 

the new process will be less predictable 

and will require facilities to be more 

proactive in maintaining high standards 

of care. The new process will also 

improve the efficient and effective 

operation of State survey agencies 

responsible for regulating ICF/IIDs. 

In addition, State survey agency 

resources are strained by the rigid 

timelines imposed in the current 

regulation. For example, if a complaint 

results in an abbreviated survey 10 or 11 

months into the facility’s certification 

period, the current regulation does not 

allow the State agency to expand the 

complaint survey for the purpose of 

completing the requirements of annual 

certification at the same time. Instead, 

the State is required to conduct another 

full survey at 12 months, which is 

duplicative. More flexibility would 

allow States to use their survey staff in 

a targeted fashion, allocating resources 

where needed to assure resident safety 

and quality of care, rather than being 

forced to meet rigid regulatory timelines 

that do not bear a relationship to the 

needs of residents. 

We received three public comments 

on our proposed changes to the duration 

of agreement for ICF/IID. 

Comment: One commenter 

representing a state survey agency 

agreed with CMS’s belief that the 

change will provide opportunities to 

increase operational efficiency at the 

state level by enabling more flexible 

scheduling and by reducing duplication 

when complaint survey timing may 

coincide with annual recertification. 

The commenter noted that with the 

proposed changes survey times would 

be less predictable and the expanded 

interval range will improve the quality 

improvement impact of surveys. The 

commenter also noted that the changes 

will provide a reduction in paperwork 

at the survey agency, the state Medicaid 

agency, and certified facilities, and that 

the additional flexibility afforded by the 

change will allow resources to be 

focused on problematic facilities and 

validation processes. 

The commenter requested the survey 

time for ICF/IIDs be expanded to 24 

months to provide States opportunities 

to focus resources on poor performing 

facilities. 

The commenter also requested that 

CMS consider relaxing the requirement 

that surveys be unannounced. The state 

has recently implemented a system of 

announced state surveys and believes 

the practice contributes to improved 

quality improvement efforts by 

encouraging state agency cooperation. 

Response: The commenter’s 

observations regarding the efficiencies 

and process improvements afforded by 

this change reinforce the rationale for 

revising the duration of the agreement. 

The change to the survey time will 

make ICF/IID’s consistent with certified 

nursing facilities regarding survey 

scheduling. At this time CMS has not 

found that extending the survey time for 

ICF/IID’s beyond 12 months on average 

could be accomplished without negative 

impacts on the quality of care delivered 

by these facilities. Therefore, the same 

standard survey time period for nursing 

facilities has been applied to ICF/IID’s. 

However, the proposed change will 

allow states greater latitude to survey 

poor performing facilities more 

frequently and high quality facilities 

less frequently, as long as the overall 

time-frames are observed. The 

requirement that surveys be 

unannounced is intended to assure that 

facilities provide a consistent quality of 

services and care required under the 

conditions of participation. While 

announced surveys may improve state 

and facility cooperation, CMS has not 

determined that overall program 

performance or the quality of care for 

residents would benefit by announcing 

survey visits. 

Comment: One commenter requested 

that CMS allow states, through the State 

Performance Standards, as much 

flexibility as possible during the first 

year of implementation to modify 

survey schedules and thereby produce a 

higher level of survey unpredictability. 

Response: CMS seeks to eliminate the 

administrative burden of the completion 

of forms which extend the provider 

agreement in cases where the survey 

activity has not been completed within 

the required 12 month period. These 

forms, currently exchanged between two 

units of State government and the 

provider, require administrative work 

without adding value or increasing the 

survey frequency. They also serve, to 

some extent, in alerting ICF/IID facilities 

to the prospect of an imminent survey. 

Therefore, in addition to reducing 

administrative burden the regulatory 

change also provides an increased 

opportunity for the State Survey 

Agencies to more greatly vary their 

survey schedules and to decrease the 

predictability of the survey visits by the 

provider. We agree with the commenter 

with regard to State performance 

expectations, and will ensure that the 

State Performance Standards for this 

measure will be listed as 

‘‘developmental’’ to encourage the State 

Survey Agencies to make significant 

changes to their survey schedules for 

ICF/IID and thus enhance the 

unpredictability of surveys 

Comment: Another commenter from a 

state agency expressed the concern that 

the 12 month average survey interval is 

inconsistent with the 15 month 

maximum time interval allowed. The 

commenter also expressed concern that 

the rule does not specify whether the 

state or CMS will determine the 

statewide average interval, nor how the 

state may appeal a determination of 

compliance with the interval if the state 

disagrees. 

Response: As discussed above, the 

proposed change in the rule will make 

the timing of ICF/IID surveys consistent 

with the requirements for surveys of 

certified nursing facilities. Each facility 

will be surveyed at least once every 15 

months, and facilities must be surveyed 

an average of every 12 months. 

Necessarily, this means that if some 

facilities are surveyed only after 12 

months but before the end of 15 months 

from the last survey, other facilities in 

the state must be surveyed more 

frequently than 12 months. We will 

publish in our Mission and Priority 

Document (MPD) the methodology to be 

applied in computing the maximum and 

average survey intervals for ICF/IID’s. 

While there is no formal appeal process 

for States to dispute the calculations 

included in the MPD, this methodology 

will be available to the states which can 

use it to verify CMS’s calculation of the 

average survey interval. 

The above summarizes this provision 

as proposed in our proposed rule and 

the comments we received. We are 

finalizing the policy above as proposed. 

Contact: Thomas Hamilton, 410–786– 

9493. 

B. Removes Obsolete or Duplicative 

Regulations or Provides Clarifying 

Information 

The following provisions remove 

requirements in the Code of Federal 

Regulations (CFR) that are no longer 

needed or enforced. We have identified 

regulations that have become obsolete 

and need to be updated. 

1. OMB Control Numbers for Approved 

Collections of Information (§ 400.300 

and § 400.310) 

Part 400 subpart C requires the 

collection and display of control 

numbers assigned by the Office of 

Management and Budget (OMB) to 

collections of information contained in 

CMS regulations. The chart at § 400.310 

that displays the OMB control numbers 

has not been updated since December 8, 

1995. We believe that, it is no longer 

necessary to maintain the chart, because 


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an inventory of currently approved CMS 

information collections, including OMB 

control numbers, is displayed on a 

public Web site at http://www.reginfo.

gov/public/do/PRAMain. The Web site 

provides more timely access to the OMB 

control numbers for CMS information 

collection requests than the process of 

publishing updates in the CFR. Also, as 

part of our quarterly notice of CMS 

issuances, which is published each 

quarter in the Federal Register, we will 

remind reviewers where they can find 

the most current list of information 

collections and OMB control numbers. 

For these reasons, we proposed to 

remove and reserve subpart C since the 

content of the information contained in 

this subpart is obsolete and more readily 

available on the public Web site. 

We did not receive any public 

comments on our proposed changes to 

remove the list of OMB control and 

approval numbers in subpart C. 

Therefore, we are finalizing the policy 

as proposed. 

Contact: Ronisha Davis, 410–786– 

6882. 

2. Removal of Obsolete Provisions 

Related to Initial Determinations, 

Appeals, and Reopenings of Part A and 

Part B Claims and Entitlement 

Determinations (§ 405.701 Through 

§ 405.877) 

In the proposed rule, we proposed to 

remove obsolete provisions contained in 

42 CFR part 405 subparts G and H 

governing initial determinations, 

appeals, and reopenings of Medicare 

Part A and Part B claims, and 

determinations and appeals regarding 

an individual’s entitlement to benefits 

under Medicare Part A and Part B. See 

76 FR 65913, October 24, 2011. 

Currently, initial determinations, 

appeals and reopenings of Medicare Part 

A and B claims are governed by the 

provisions in section 1869 of the Act 

and in 42 CFR part 405 subpart I. Initial 

determinations and reconsiderations of 

an individual’s entitlement to Medicare 

Parts A and B are governed by the 

provisions in 20 CFR part 404, subpart 

J, and entitlement appeals beyond the 

reconsideration level are governed by 

part 405 subpart I. The part 405 subpart 

I regulations implemented pertinent 

sections of the Medicare, Medicaid, and 

SCHIP Benefits Improvement and 

Protection Act of 2000 (BIPA) (Pub. L. 

106–554) and the Medicare Prescription 

Drug, Improvement, and Modernization 

Act of 2003 (MMA) (Pub. L. 108–173). 

(For more detail see 76 FR 65913– 

65914). 

Part 405 subparts G and H contain 

policies that applied to initial 

determinations, appeals, and reopenings 

of Medicare Part A and Part B claims, 

as well as determinations and appeals 

regarding an individual’s entitlement to 

benefits under Medicare Part A and Part 

B, prior to the implementation of the 

part 405 subpart I provisions 

(collectively referred to as ‘‘pre-BIPA’’ 

actions). Although we phased in the 

implementation of the part 405 subpart 

I regulations, these regulations were 

effective for all claims processed on or 

after January 1, 2006 (See 70 FR 11425, 

March 8, 2005). Once all pre-BIPA 

claims appeals were completed, the 

provisions in part 405 subparts G and H 

would be considered obsolete and 

replaced by the provisions in part 405 

subpart I. 

As explained in the proposed rule (76 

FR 65914), we believe that all pre-BIPA 

claims appeals have been processed. 

Therefore, we proposed to remove the 

obsolete provisions in part 405 subparts 

G and H. However, since we cannot be 

completely certain that there are no 

pending pre-BIPA claims appeals, we 

also proposed that any newly identified 

pre-BIPA claims appeals would be 

handled under the current appeals 

provisions set forth in the part 405 

subpart I regulations to ensure that 

parties would have due process for their 

disputes (See 76 FR 65914). We believe 

maintaining a separate pre-BIPA claim 

appeals process in the unlikely event 

such an appeal is discovered is 

inefficient and impracticable. Using the 

current appeals provisions in part 405 

subpart I for all claim appeal requests 

filed on or after the effective date of this 

final rule, reduces potential confusion 

about applicable appeal procedures, and 

enables parties to take advantage of the 

reduced decision-making timeframes 

and other process improvements offered 

throughout the part 405 subpart I 

regulations. 

We proposed that parties who 

demonstrate that they requested an 

appeal of a pre-BIPA claim but did not 

receive a decision would be entitled to 

refile their appeal request, and would 

have their appeal processed under the 

part 405 subpart I regulations in the 

manner set forth below. Any pre-BIPA 

claims appeals identified on or after the 

effective date of this final rule (‘‘newly 

identified pre-BIPA appeals’’) that are 

still pending at the first level of appeal 

(a reconsideration for Part A claims (42 

CFR 405.710) and review of the initial 

determination for Part B claims (42 CFR 

405.807)) would be processed beginning 

at the redetermination level under the 

part 405 subpart I regulations (see 42 

CFR 405.940–405.958). Any newly 

identified pre-BIPA appeals that are still 

pending at the second level of appeal 

(ALJ hearing for Part A claims (42 CFR 

405.720) and carrier hearing for Part B 

claims (42 CFR 405.821)) would be 

processed beginning at the QIC 

reconsideration level under the part 405 

subpart I regulations (see 42 CFR 

405.960–405.978). In addition, any 

newly identified pre-BIPA appeals of 

Part B claims that are pending at the ALJ 

hearing level (42 CFR 405.855) would be 

processed as QIC reconsiderations 

under the part 405 subpart I regulations. 

Any newly identified pre-BIPA appeals 

that are still pending at the final level 

of administrative appeal, Departmental 

Appeals Board review (42 CFR 405.724 

for Part A claims and 42 CFR 405.856 

for Part B claims) would be processed at 

the Medicare Appeals Council review 

level under the part 405 subpart I 

regulations (see 42 CFR 405.1100– 

405.1134). See 76 FR 65914–65915 for 

additional information. 

We also explained that several 

sections in part 405 subparts G and H 

were either unrelated to claims or 

entitlement appeals and were still in 

effect, or were inadvertently not 

included in part 405 subpart I. See 76 

FR 65915. We proposed to retain 

§ 405.874, ‘‘Appeals of CMS or a CMS 

contractor’’ and redesignate it as 

§§ 405.800–405.818 in part 405 subpart 

H, and to retain § 405.706, ‘‘Decisions of 

utilization review committees’’ and 

redesignate it as § 405.925 in part 405 

subpart I. Finally, we proposed to 

remove § 405.753 and § 405.877 

(‘‘Appeal of a categorization of a 

device.’’) because these sections are 

obsolete and no longer comport with the 

definition of ‘‘national coverage 

determination’’ in section 1869(f) of the 

Act, as amended by section 522 of BIPA. 

See 76 FR 65915. 

We received one public comment 

regarding several of the appeals 

proposals described above. A summary 

of the commenter’s concerns regarding 

these proposals and our responses are 

included below. 

Comment: The commenter stated that 

the proposed changes do not afford 

appeal rights to all initial 

determinations, and expressed concern 

that the complexity and length of the 

appeals process requires legal counsel to 

navigate, is expensive, and does not 

provide physicians a meaningful 

opportunity to challenge claim 

determinations. 

Response: In this rule, we are not 

changing existing policy with respect to 

appeal rights under part 405 subpart I. 

Rather, we are removing obsolete 

provisions in part 405 subparts G and H, 

and redesignating existing policy that is 

not obsolete. We are also finalizing our 

proposal that any newly identified preBIPA appeals that are still pending in 


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the administrative process will be 

handled under the current appeals 

regulations in 42 CFR part 405 subpart 

I. As discussed previously, these 

regulations were effective for all claims 

processed on or after January 1, 2006 

(See 70 FR 11425, March 8, 2005). 

The appeals process for claim 

determinations set forth in the 42 CFR 

part 405 subpart I regulations 

implements the statutory requirements 

found in section 1869 of the Act. In this 

rule, we are not changing what we 

consider to be initial determinations 

under part 405 subpart I (42 CFR 

405.924). When contractors make initial 

determinations, as defined in 42 CFR 

405.924, those determinations may be 

appealed by the parties to the 

determination. However, some actions 

taken by CMS or its contractors are not 

initial determinations and, therefore, do 

not trigger appeal rights. See 42 CFR 

405.926. For example, there is no initial 

determination and, therefore, no right to 

appeal when there is no valid claim or 

request for payment for which a 

determination is made (such as when 

claims are returned to providers as 

incomplete or invalid, in which case 

they must be resubmitted rather than 

appealed), or when administrative 

review is precluded by statute (such as 

for coinsurance amounts prescribed by 

regulation for outpatient services under 

the prospective payment system, see 

§ 1833(t)(12)(B) of the Act). 

We respectfully disagree with the 

commenter’s characterization of the 

administrative appeals process as overly 

complex, expensive and lengthy, and 

the commenter’s assertion that it does 

not provide physicians a meaningful 

opportunity to challenge claim 

determinations and requires legal 

counsel to navigate. As we explain 

above, the appeals process for claim 

determinations set forth in the 42 CFR 

part 405 subpart I regulations 

implements the statutory requirements 

found in section 1869 of the Act. 

Although there are four levels of 

administrative claims appeals, an 

overwhelming majority of disputes are 

resolved at the first level of appeal 

through informal proceedings with the 

claims processing contractor. In 

addition, we offer parties the 

opportunity to correct minor claims 

errors through the reopening process set 

forth in 42 CFR 405.980, et seq. For 

disputes that are not resolved at the first 

level of appeal, parties have an 

opportunity for review by a Qualified 

Independent Contractor, a hearing 

before an Administrative Law Judge, 

and review by the Medicare Appeals 

Council prior to commencing litigation 

in federal district court. Furthermore, 

adjudicators have relatively short 

timeframes for issuing decisions (60 

days at the first and second levels and 

90 days at the third and fourth levels). 

In most cases, these administrative 

proceedings are non-adversarial, and 

less formal than proceedings in federal 

or state court. We believe the 

administrative process crafted by the 

Congress under section 1869 of the Act 

adequately balances the need to develop 

a full and complete administrative 

record should a case result in a civil 

action in federal district court, with the 

ability for parties to obtain quick, 

informal and independent review of 

claim determinations. 

Comment: The commenter also 

expressed concern that adequate time 

may not have elapsed for the resolution 

of all pre-BIPA claims, and that 

channeling pre-BIPA appeals through 

the procedures in 42 CFR part 405 

subpart I does not streamline the 

process for such appeals. The 

commenter also urged CMS to develop 

materials that are widely available to 

explain the claims appeals process. 

Response: It has been over six years 

since we began to transition from the 

claims appeals process in 42 CFR part 

405 subparts G and H to the current 

process in 42 CFR part 405 subpart I. As 

explained in the preamble to the 

proposed rule, it is our expectation that 

in the 6 years since implementation 

began for the part 405 subpart I appeals 

process, any party with a pending preBIPA claims appeal would have 

received a decision or would have 

brought the pending matter to our 

attention (see 76 FR 65914). We 

proposed, and are finalizing in this rule, 

that parties who demonstrate that they 

requested an appeal of a pre-BIPA claim 

but did not receive a decision would be 

entitled to refile their appeal request, 

and would have their appeal processed 

under the part 405 subpart I regulations 

(see 76 FR 65914–65915). We believe 

that channeling appeals of pre-BIPA 

claims through the current process in 

part 405 subpart I will eliminate 

confusion and uncertainty by having 

parties and adjudicators follow a single 

set of rules that have been in place for 

over six years. In addition, as explained 

in the proposed rule (76 FR 65914), 

using the current appeals process under 

part 405 subpart I for all claims appeal 

requests filed on or after the effective 

date of this final rule, will enable parties 

to take advantage of reduced decisionmaking timeframes and other process 

improvements offered throughout part 

405 subpart I. For example, pre-BIPA 

claims appeals did not have timeframes 

within which decisions must be issued. 

Applying the decision making 

timeframes for current claims appeals to 

pre-BIPA claims appeals will likely 

result in quicker turnaround times for 

pre-BIPA claims appeals, and a more 

streamlined process in comparison to 

the pre-BIPA appeals process. Thus, we 

believe our proposal to channel all 

claims appeals through the current 

process in part 405 subpart I will be 

more efficient and effective than 

maintaining separate appeals processes. 

Materials that explain the steps in the 

first and second levels of the claims 

appeals process are currently available 

at: http://www.cms.gov/ 

OrgMedFFSAppeals/ and also at: http:// 

www.medicare.gov/navigation/ 

medicare-basics/understanding-claims/ 

medicare-appeals-and-grievances.aspx. 

Information about hearings before an 

ALJ is available at: http://www.hhs.gov/ 

omha, and information about the 

proceedings before the Medicare 

Appeals Council is available at: http:// 

www.hhs.gov/dab. In addition, shortly 

after this rule becomes effective, we will 

update the CMS online manuals and 

CMS’ Web site to provide instructions 

on how requests for newly identified 

pre-BIPA claims appeals should be 

made, and how such appeals will be 

processed. 

Comment: The commenter raised 

additional concerns about existing 

policies regarding effective dates of 

revocation actions and enrollment 

determinations and existing policies 

regarding submission of claims during 

the appeal of an enrollment 

determination (see, 42 CFR 405.800– 

818). 

Response: The commenter’s concerns 

regarding existing policies for 

enrollment appeals are outside the 

scope of this rule. In this rule, we are 

not changing existing policy with 

respect to enrollment appeals or the 

submission of claims while appeals of 

enrollment determinations are pending. 

Rather, we are removing obsolete 

provisions in part 405 subparts G and H, 

and redesignating existing policy that is 

not obsolete. The technical corrections 

proposed with respect to enrollment 

appeals are purely editorial in nature. 

We are maintaining existing policies in 

42 CFR 405.874 that were previously 

subject to formal notice and comment 

rulemaking (see 73 FR 36460, June 27, 

2008) and redesignating them as 42 CFR 

405.800–818. However, we will 

consider the concerns raised by the 

commenter. Should we determine that 

changes to current enrollment appeals 

policy are necessary, we will conduct 

separate rulemaking. 

Comment: Finally, the commenter 

disagreed with our policy that decisions 

of utilization review committees are not 


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‘‘initial determinations’’ and may not be 

appealed under the part 405 subpart I 

regulations. The commenter stated that 

such decisions have an impact on 

substantive rights. 

Response: Decisions of utilization 

review committees (URC) are decisions 

made by health care professionals at 

hospitals. They are not initial 

determinations made by the Secretary 

within the meaning given in section 

1869 of the Act. It has been our 

longstanding policy that URC decisions 

are not initial determinations, and thus, 

are not appealable; however, the 

decision of a URC may be considered by 

CMS along with other pertinent medical 

evidence in determining whether or not 

an individual has the right to have 

payment made under Medicare Part A 

(42 CFR 405.706). In this rule, we are 

not changing existing policy with 

respect to URC decisions. We are simply 

redesignating the existing provisions in 

§ 405.706 as § 405.925. 

Accordingly, we are finalizing our 

proposed policies without modification. 

Contact: David Danek (617) 565–2682. 

3. ASC Infection Control Program 

(§ 416.44) 

In existing regulations at 42 CFR 

416.51, we require all ASCs to adhere to 

regulations regarding Infection Control, 

which include the requirement that all 

ASCs develop an infection control 

program. The regulations also describe 

how ASCs must set up their infection 

control program, such as the 

requirement that the ASC designate a 

qualified professional who has training 

in infection control and the ASC’s 

obligation to establish a plan of action 

regarding preventing, identifying, and 

managing infections and communicable 

diseases. 

Current regulations also contain a 

provision for infection control that is 

located within the physical 

environment standard in 42 CFR 

416.44(a)(3). The requirement states that 

an ASC must establish a program for 

identifying and preventing infections, 

maintaining a sanitary environment, 

and reporting the results to the 

appropriate authorities. This regulatory 

requirement was part of the original 

CfCs first published for ASCs in 1982. 

The revised CfC final rule published in 

the Federal Register November 2008 (73 

FR 68502) elevated the infection control 

requirements from a standard level 

under the Environment condition to a 

separate condition level requirement, 

thus making the regulatory requirement 

in the Environment CfC section of the 

CFR duplicative. The Infection Control 

CfC located at 42 CFR 416.51 expands 

and broadens the infection control 

requirements that were part of the 

original ASC requirements in the 

Environment CfC section. Therefore, we 

proposed to remove the requirement at 

§ 416.44(a)(3), located in the 

Environment CfC section, as it is 

unnecessary and obsolete. We believe 

this change will alleviate any 

duplicative efforts and confusion 

regarding the infection control 

requirements. 

We received two public comments on 

our proposed changes to the ASC 

Environment CfC section. 

Comment: One commenter supported 

our proposal to remove the unnecessary 

and redundant requirement regarding 

infection control. In addition, the 

commenter supported the elevation of 

the infection control requirements from 

a standard level under the Environment 

CfC section to a separate condition level 

requirement. 

Response: We thank the commenter 

for the comment and appreciate the 

commenter’s support for the proposed 

changes. 

Comment: We received one comment 

that opposed the removal of a particular 

section of the requirement that states 

ASCs must report the results of any 

identified infections to the appropriate 

authorities. In addition, the commenter 

stated it was ill-advised to remove the 

reporting requirement and that the 

Centers for Disease Control recently 

published studies analyzing infection 

rates in ASCs. 

Response: The Federal regulations for 

ASCs do not have specific infection 

control reporting requirements. The 

language we have proposed to delete 

states that ‘‘ASCs must report the results 

to the appropriate authorities’’. We have 

not changed the normal procedures that 

ASCs must follow in order to meet their 

State reporting requirements. Currently, 

there is sufficient authority in the 

infection control CfC at 42 CFR 

416.51(b)(3) that will continue to 

support CMS requirements for such 

reporting. In addition, CMS has similar 

hospital infection control regulations 

and the guidance includes complying 

with reportable disease requirements of 

the local health authorities. 

The above summarizes this provision 

made in our proposed rule and the 

comments we received. We are 

finalizing the policy above as proposed. 

Contact: Jacqueline Morgan, 410–786– 

4282. 

4. E-prescribing (§ 423.160) 

The MMA amended title XVIII of the 

Act to establish a voluntary prescription 

drug benefit program. Under those 

provisions, prescription Drug Plan 

(PDP) sponsors and Medicare Advantage 

(MA) organizations offering Medicare 

Advantage-Prescription Drug Plans 

(MA–PD) are required to establish 

electronic prescription drug programs to 

provide for electronic transmittal of 

certain information to the prescribing 

provider and dispensing pharmacy and 

pharmacist. This includes information 

about eligibility, benefits (including 

drugs included in the applicable 

formulary, any tiered formulary 

structure and any requirements for prior 

authorization), the drug being 

prescribed or dispensed and other drugs 

listed in the medication history, as well 

as the availability of lower cost, 

therapeutically appropriate alternatives 

(if any) for the drug prescribed. The 

MMA directed the Secretary to 

promulgate uniform standards for the 

electronic transmission of this data. 

In the November 7, 2005, final rule 

(70 FR 67568), titled ‘‘Medicare 

Program; E–Prescribing and the 

Prescription Drug Program,’’ CMS 

adopted three e-prescribing foundation 

standards to be used for e-prescribing 

for the Medicare Part D program. The 

three foundation standards are—(1) The 

National Council for Prescription Drug 

Programs (NCPDP) SCRIPT version 5.0., 

which provides for communications 

between the prescriber and dispenser; 

(2) the NCPDP Telecommunication 

Standard Version 5 release 1 and 

equivalent NCPDP Batch Standard 

Batch Implementation Guide version 

1.,1 (NCPDP Telecom 5.1) which 

provides for communication between 

the dispenser and the Plan, and the ASC 

X12N 270/271 Health Care Eligibility 

Benefit Inquiry and Response, Version 

4010; and (3) the Addenda to Health 

Care Eligibility Inquiry and Response, 

Version 4010A1 (4010/4010A) for 

conducting eligibility and benefit 

inquiries between the prescriber and 

Plan Sponsor. The latter two 

transactions, NCPDP Telecom 5.1 and 

the 4010/4010A are also adopted as 

HIPAA transaction standards. 

In the November 7, 2005 final rule, we 

discussed the means for updating the 

Part D e-prescribing standards. In 

instances in which an e-prescribing 

standard has also been adopted as a 

HIPAA transaction standard in 45 CFR 

Part 162, the process for updating the 

e-prescribing standard would have to be 

coordinated with the maintenance and 

modification of the applicable HIPAA 

transaction standard. Additional 

discussion on the updating of the 

Medicare Part D e-Prescribing standards 

can be found in the October 24, 2011 

proposed rule (76 FR 65909). 

For consistency with the current 

HIPAA transaction standards, and the 

need for covered entities (prescribers 


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and dispensers) to comply with HIPAA, 

we proposed to revise § 423.160(b)(3), 

to—(1) Update Version 4010/4010A 

with the ASC X12 Standards for 

Electronic Data Interchange Technical 

Report Type 3—Health Care Eligibility 

Benefit Inquiry and Response (270/271), 

April 2008, ASC X12N/005010X279, (2) 

adopt the NCPDP Telecommunication 

Standard Implementation Guide, 

Version D, Release 0 (Version D.0) and 

equivalent NCPDP Batch Standard 

Implementation Guide, Version 1, 

Release 2 (Version 1.2); and (3) retire 

NCPDP Telecommunication Standard 

Implementation Guide, Version 5, 

Release 1 (Version 5.1) and equivalent 

NCPDP Batch Standard Implementation 

Guide, Version 1, Release 1 (Version 

1.1), for transmitting eligibility inquiries 

and responses between dispensers and 

Part D sponsors. As noted above, this 

change will promote consistency and 

ensure that covered entities are 

compliant with the most current 

transaction standards. 

We received three public comments 

on our proposed changes to the 

Medicare Part D e-prescribing 

foundation standards (§ 423.160). One 

commenter was from a standards 

development organization (SDO) and 

two were from professional medical 

organizations. 

Comment: All commenters agreed 

with our proposal to adopt the abovereferenced standards and guide for 

transmitting eligibility inquiries and 

responses between dispensers and Part 

D sponsors. 

Response: For consistency with the 

current HIPAA transaction standards, 

and the need for covered entities 

(prescribers and dispensers) to comply 

with HIPAA, we agree with the 

commenters and we are finalizing what 

we proposed for § 423.160. 

Comment: One commenter supports 

finalizing what was proposed, but noted 

disappointment that CMS has not yet 

finalized a comprehensive set of 

standards that would fully support the 

Medicare Part D e-prescribing program. 

They commented that, although CMS 

has finalized the formulary and benefits, 

medication history, and fill status 

notification e-prescribing standards, it 

has not addressed the National 

Committee on Vital and Health 

Statistics’ (NCVHS) recommendations 

about the adoption of standards for a 

clinical drug terminology, electronic 

prior authorization (ePA), and 

Structured and Codified Sig Format 

(SIG) (instructions on the prescription 

label). They suggested that CMS should 

propose and finalize such standards. 

Response: We appreciate the 

commenter’s support of our proposed 

changes, and appreciate their interest in 

the adoption of a comprehensive set of 

e-prescribing standards. While several 

of the necessary standards are still 

under development, we are not 

currently in a position to propose 

additional standards that, if finalized, 

would more fully support the Medicare 

Part D e-prescribing Program. Some of 

the standards that the commenter 

mentioned as having support from 

NCVHS, such as ePA and SIG are still 

in the development stage and have not 

yet been pilot tested by industry. Thus, 

it would be premature for us to propose 

the adoption of standards that have not 

been fully developed and tested. 

Since all commenters agreed with our 

proposal to adopt the ASC X12 

Technical Reports Type 3, Version 

005010 (Version 5010), as a replacement 

of the current X12 Version 4010 and 

4010A1 standards (Version 4010/4010A) 

and to adopt the NCPDP 

Telecommunication Standard 

Implementation Guide, Version D, 

Release 0 and equivalent NCPDP Batch 

Standard Implementation Guide, 

Version 1, Release 2 as a replacement to 

NCPDP Telecommunication Standard 

Version 5.1, we are finalizing the 

proposals in this final rule. We note that 

we updated the regulatory text at 

§ 423.160(c) to adopt the updated 

standards and retire the old standards as 

discussed above. Compliance with these 

new adopted standards will be 60 days 

after the publication of this final rule. 

Contact: Andrew Morgan, 410–786– 

2543. 

5. Physical and Occupational Therapist 

Qualifications (§ 440.110) 

Current regulations detail provider 

qualifications for a ‘qualified physical 

therapist’ under Medicaid at 42 CFR 

440.110(a)(2). Current regulations detail 

provider qualification for a ‘‘qualified 

occupational therapist’’ under Medicaid 

at 42 U.S.C. 440.110(b)(2). These current 

regulations contain outdated 

terminology referencing several 

professional organizations. 

Additionally, some of the current 

qualification requirements do not 

address individuals who have been 

trained outside of the United States, or 

refer to outdated requirements, which 

could unintentionally exclude 

otherwise qualified therapists resulting 

in diminished access to care for 

Medicaid beneficiaries. 

Medicare regulations at § 484.4 were 

updated through a November 27, 2007 

final rule (72 FR 66406), effective 

January 1, 2008. While these personnel 

qualifications are detailed under home 

health services, we indicated in the 

preamble to the November 27, 2007 

final rule, that therapy services must be 

provided according to the same 

standards and policies in all settings, to 

the extent possible and consistent with 

statute, and we revised multiple 

regulations to cross-reference the 

personnel qualifications for therapists in 

§ 484.4 to the personnel requirements in 

many other sections. 

We proposed at § 440.110 to remove 

the outdated personnel qualifications 

language in the current Medicaid 

regulations and instead cross reference 

the updated Medicare personnel 

qualifications for physical therapists 

and occupational therapists under 

§ 484.4. This proposal has the potential 

to broaden the scope of providers that 

may be able to provide PT and OT 

services, by streamlining the 

qualifications so that certain providers 

are not excluded from providing 

services under Medicaid. In addition, it 

strengthens the consistency of standards 

across Medicare and Medicaid. 

We received 12 public comments on 

this proposed change. 

Comment: We received several 

comments in support of the proposed 

revisions. 

Response: We appreciate the 

expressions of support. 

Comment: We received several 

comments requesting that we also allow 

individuals who meet State licensure 

requirements to be recognized in the 

Medicaid program as a qualified 

physical or occupational therapist. 

Response: State licensure is already 

taken into account in existing Medicare 

requirements found at 42 CFR 484.4. 

Aligning Medicaid provider 

qualifications with Medicare will 

continue this practice. Adopting these 

qualifications for the Medicaid program 

will ensure consistency among 

programs and enhance the scope of 

individuals qualified to deliver 

Medicaid services. If practices at the 

State level are prohibiting individuals 

from meeting Medicaid qualifications, 

we suggest addressing those concerns 

with the State Medicaid Agency. 

Comment: We received one comment 

requesting retroactive applicability of 

these revised provider qualifications. 

Response: The effective date of these 

changes must be prospective, rather 

than retrospective, as it would be 

impractical to do otherwise. 

Comment: One commenter urged HHS 

to review the ‘‘therapy incident-to’’ rule 

contained in the 2005 physician fee 

schedule regulation, which disallowed 

Medicare Part B payments for outpatient 

rehabilitative therapy services provided 

as incident to services furnished by 

other practitioners. 


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Response: We appreciate this 

comment, but it is outside the scope of 

this regulation. 

Comment: We received two comments 

in opposition to the proposed revisions, 

as they would exclude other health care 

professionals from providing PT and OT 

services, even when they are under the 

direct supervision of a physician. 

Response: We disagree with these 

commenters. Aligning Medicare and 

Medicaid provider qualifications will 

increase the number of individuals 

eligible to furnish PT and OT services 

under the Medicaid program. We also 

point out that current regulations for PT 

and OT at § 440.110 require therapy 

providers to either meet the specified 

qualifications themselves, or furnish 

services under the direction of a 

qualified therapist. Individuals not 

meeting these qualifications could 

potentially still be qualified providers of 

Medicaid services, however, these 

services could not be billed to CMS as 

PT or OT services. 

Comment: We received one comment 

suggesting that HHS modify policies set 

forth in the final provider enrollment 

rule. 

Response: We appreciate this 

comment, but it is outside the scope of 

this regulation. 

Comment: We received one comment 

suggesting that we also incorporate by 

reference into 42 CFR 440.110 the 

Medicare definition of Occupational 

Therapy Assistant found at 42 CFR 

484.4. 

Response: We do not believe that such 

action is necessary at this time. As the 

commenter noted, Medicaid regulations 

are silent as to the qualifications of a PT 

or OT assistant. This is partly due to the 

fact that individuals other than a PT or 

OT assistant could furnish PT or OT 

services under the direction of a 

qualified therapist. However, we do 

agree that States utilizing PT or OT 

assistants would be well served to 

follow the Medicare definition found at 

42 CFR 484.4, to ensure consistency 

across programs. 

The above summarizes this provision 

made in our proposed rule and the 

comments we received. We are 

finalizing the policy above as proposed. 

Contact: Adrienne Delozier, 410–786– 

0278. 

6. Definition of Donor Document 

(§ 486.302) 

Section 486.302 includes the 

following definition: ‘‘Donor document 

is any documented indication of an 

individual’s choice in regard to 

donation that meets the requirements of 

the governing State law.’’ In recent 

years, the concept of the donor 

document and the opportunities for 

individuals to express their wishes 

concerning organ and/or tissue donation 

have changed. An individual can 

indicate his or her wishes not only on 

a driver’s license through a State’s 

Department of Motor Vehicles, but also 

on various registries or even in separate 

documents. Therefore, we believe that 

our definition in § 486.302 should be 

updated. Moreover, the focus on patient 

rights has increased over the last several 

years. For example, we published a final 

rule on November 19, 2010 titled, 

‘‘Changes to the Hospital and Critical 

Access Hospital Conditions of 

Participation to Ensure Visitation Rights 

for All Patients’’ (CMS–3228–F). In light 

of this increased focus, we believe that 

the current definition, does not fully 

allow for the various ways individuals 

can express their choices in the donor 

process. In addition, we believe it is 

important to emphasize that the 

decision to donate organs and/or tissue 

before death is the decision of the 

individual. 

We proposed replacing the current 

definition of ‘‘donor document’’ in 

§ 486.302 with the following definition, 

‘‘[D]onor document means any 

documented indication of an 

individual’s choice that was executed 

by the patient, in accordance with any 

applicable State law, before his or her 

death, and that states his or her wishes 

regarding organ and/or tissue donation.’’ 

The definition as finalized in this rule 

modifies the previous definition in two 

ways. First, while the current definition 

refers to ‘‘an individual’s choice’’ it does 

not recognize the right of the individual 

to identify their wishes more 

specifically. Donor documents may 

simply allow for the choice of whether 

or not to be an organ and/or tissue 

donor, however, some individuals may 

choose to use documents that allow 

them to express their wishes in more 

detail. For example, some people may 

choose to be an organ donor, but not a 

tissue donor. Others may not want to 

consent to the donation of specific 

organs. Therefore, we believe that the 

definition as finalized should cover 

documents or other ways for individuals 

to express their wishes more 

specifically, and we have modified the 

definition accordingly. 

Second, we also believe that it is 

important to include the requirement 

that the donor document be ‘‘executed 

by the patient.’’ While this may appear 

self-evident, we want to emphasize that 

the decision by a living person to donate 

organs and/or tissue after his or her 

death is always a voluntary decision. 

Therefore, we have modified the 

definition to account for this. 

These changes to the definition of the 

donor document only affect the 

documentation of an individual’s 

wishes concerning organ and/or tissue 

donation while they are alive and can 

legally make those decisions. In the 

absence of a valid donor document, the 

donation decisions would rest with the 

individual who is legally responsible for 

making these decisions, usually the 

person’s next of kin. 

We received three public comments 

on our proposed changes to the donor 

document definition located in 

§ 486.302. The commenters represented 

a major patient advocacy organization, a 

major industry organization, and a state 

health and human services commission. 

All three commenters suggested changes 

to the proposed definition of donor 

document. 

Comment: Two of the commenters 

were opposed to the new definition for 

donor document because the proposed 

definition does not appear to be 

consistent with the Uniform Anatomical 

Gift Act (UAGA). The commenters 

suggested that under the UAGA, there 

are other individuals who can make a 

legally binding gift on behalf of the 

donor before his or her death. In 

addition, they felt the new definition 

did not fully address alternatives, such 

as a situation where people may choose 

to be an organ donor but not a tissue 

donor, or may only want to consent to 

the donation of specific organs. The 

commenters noted that the UAGA does 

allow for such alternatives. 

Response: We agree that the proposed 

definition does not acknowledge that 

the UAGA allows other individuals to 

make a legally binding anatomical gift 

during the donor’s lifetime. Section 4 of 

the 2006 revision of the UAGA allows 

for ‘‘an agent of the donor, unless the 

power of attorney for health care or 

other record prohibits the agent from 

making an anatomical gift; a parent of 

the donor, if the donor is an 

unemancipated minor; or the donor’s 

guardian’’ to make an anatomical gift for 

the donor while he or she is still alive. 

We believe this is an unusual 

circumstance; however, we want to 

avoid any confusion. If another 

individual is authorized to make an 

anatomical gift and documents his or 

her decision to do so in accordance with 

any applicable state law, we believe that 

constitutes a valid donor document 

under the OPO CfCs. Therefore, we have 

modified the definition of donor 

document to include that circumstance. 

We agree that the proposed definition 

does not fully address alternatives. One 

commenter noted the use of the word 

‘‘executed’’ implied that donor 

documents must be in writing and noted 


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that under Texas law (citing Tex. Health 

& Safety Code Ann. § 692A.005(West), a 

valid donation can be made if a 

terminally ill or injured donor 

communicates in any way his or her 

desire to donate to at least two adult 

witnesses. One of these individuals 

must be a disinterested witness. We 

believe that a non-written 

communication can be a valid 

expression of the donor’s wishes, as 

long as it is made in accordance with 

any applicable state law. However, there 

must be some documentation of that 

non-written communication. For 

example, if a terminally ill or injured 

patient communicates to his or her next 

of kin and a nurse that he or she wants 

to donate his or her organs in a nonwritten communication and that 

satisfies any applicable state law, we 

would agree that was a valid consent to 

donate from the patient. The next-of-kin 

or the nurse should then document the 

patient’s consent consistent with 

requirements under state law, if 

applicable, and hospital policy. That 

documentation of the patient’s consent 

to donate would then become the donor 

document. Therefore, we have modified 

the definition of ‘‘donor document’’. We 

have removed the word ‘‘executed’’ and 

inserted the word ‘‘made.’’ 

We disagree that the definition does 

not allow for individuals to indicate 

consent to donation of specific organs. 

The proposed definition allows for 

individuals to indicate ‘‘his or her 

wishes regarding organ and/or tissue 

donation.’’ We believe this allows 

individuals to express their wishes 

concerning organ and/or tissue 

donation, including their wishes 

regarding any specific organs. 

Comment: One commenter asked for 

clarification whether, under the 

amendment to the definition of ‘‘donor 

document’’, an organ procurement 

organization may continue to recognize 

a donation made by a communication 

between the patient and at least two 

witnesses. 

Response: Yes, if the communication 

between the patient or potential donor 

and the two witnesses is in accordance 

with any applicable state law. 

The above summarizes our proposal 

in this rule and the comments we 

received. After consideration of the 

public comments, we are finalizing the 

definition of ‘‘donor document’’ as 

follows: ‘‘Donor document means any 

documented indication of an 

individual’s choice regarding his or her 

wishes concerning organ and/or tissue 

donation that was made by that 

individual or another authorized 

individual in accordance with any 

applicable State law.’’ 

Contact: Diane Corning, 410–786– 

8486. 

7. Administration and Governing Body 

(§ 486.324) 

On May 31, 2006, we published a 

final rule in the Federal Register (71 FR 

30982) titled, ‘‘Conditions for Coverage 

for Organ Procurement Organizations 

(OPOs).’’ The final rule established 

several requirements, for OPOs at 

§ 486.324, including a number of 

requirements related to the 

administration and governing body of 

an OPO. Due to an error in publishing 

the final rule, paragraph (e) was 

inadvertently inserted twice (71 FR 

31052). 

In the proposed rule (76 FR 65917), 

we proposed to remove the duplicate 

paragraph (e), which appears 

immediately after § 486.324(d). We 

stated that this deletion will not alter or 

change the legal requirement, nor will it 

create a change in information 

collection requirements or other 

regulatory burden. 

We received no comments on this 

proposed change and are therefore 

finalizing it as proposed. 

Contact: Diane Corning, 410–786– 

8486. 

8. Requirement for Enrolling in the 

Medicare Program (§ 424.510) 

We have identified an incorrect 

reference in § 424.510(a), due to a 

typographic error. We are proposing to 

replace the incorrect reference to 

paragraph (c) (the effective date for 

reimbursement for providers and 

suppliers seeking accreditation from a 

CMS-approved accreditation 

organization) with a reference to 

paragraph (d) (the enrollment 

requirements). 

We received no comments on this 

proposed change and are therefore 

finalizing it as proposed. 

Contact: Morgan Burns, 202–690– 

5145. 

C. Responds to Stakeholder Concerns 

The following provisions responded 

to some of the concerns and feedback 

that we have received from the public. 

We have identified nomenclature and 

definition changes that will increase 

transparency and enhance our 

relationship with the public. 

Nomenclature Changes 

1. Redefining the Term ‘‘Beneficiary’’ 

(§ 400.200 through § 400.203) 

In response to comments from the 

public to discontinue our use of the 

term ‘‘recipient’’ under Medicaid, we 

have been using the term ‘‘beneficiary’’ 

to mean all individuals who are entitled 

to, or eligible for, Medicare or Medicaid 

services. We proposed to add a 

definition of ‘‘beneficiary’’ in § 400.200 

that applies to patients under the 

Medicare and Medicaid programs. We 

will remove the terms ‘‘beneficiary’’ and 

‘‘recipient’’ from § 400.202 and 

§ 400.203, respectively, and we will 

make a nomenclature change to replace 

‘‘recipient’’ with ‘‘beneficiary’’ 

throughout 42 CFR chapter IV. The 

action to refer to beneficiaries instead of 

recipients has already been 

implemented. We are simply 

conforming our regulations to our 

current use of the term ‘‘beneficiary.’’ In 

creating this definition it is not our 

intent to exclude or include anyone who 

would or would not have previously 

been understood to be a beneficiary. We 

sought comments on whether this 

definition could be improved to attain 

that objective. 

We received no comments on this 

proposed change and are therefore 

finalizing it as proposed. 

Contact: Ronisha Davis, 410–786– 

6882. 

2. Replace All the Terms: ‘‘the Mentally 

Retarded; ‘‘Mentally Retarded Persons;’’ 

and ‘‘Mentally Retarded Individuals’’ 

With ‘‘Individuals With Intellectual 

Disabilities’’ and Replace ‘‘Mentally 

Retarded or Developmentally Disabled’’ 

With ‘‘Individuals With Intellectual 

Disabilities or Developmental 

Disabilities’’ 

We proposed to change the 

terminology we use in the program 

currently called Intermediate Care 

Facilities for the Mentally Retarded. 

Section 1905 (d) of the Act states that, 

‘‘The term ‘‘intermediate care facility for 

the mentally retarded’’ means an 

institution (or distinct part thereof) for 

the mentally retarded or persons with 

related conditions * * *.’’ In 2010, 

Rosa’s Law (Pub. L. 111–256) amended 

statutory language in several health and 

education statues, directing that ‘‘in 

amending the regulations to carry out 

this Act, a Federal agency shall ensure 

that the regulations clearly state—(A) 

That an intellectual disability was 

formerly termed ‘‘mental retardation’’; 

and (B) that individuals with 

intellectual disabilities were formerly 

termed ‘‘individuals who are mentally 

retarded.’’ 

CMS regulations at 42 CFR chapter IV 

include numerous references to ‘‘mental 

retardation.’’ These regulatory 

provisions reflect the statutory benefit 

category at section 1905(d) of the Act, 

which uses the term ‘‘mental 

retardation’’ in the facility type 

designation, ‘‘Intermediate Care Facility 

for the Mentally Retarded.’’ Rosa’s Law 


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did not specifically list the Act within 

its scope, and therefore did not require 

any change to existing CMS regulations. 

However, consistent with Rosa’s Law 

and in response to numerous inquiries 

from provider and advocate 

organizations as to when CMS will 

comply with the spirit of Rosa’s Law, 

we proposed to adopt the term 

‘‘intellectual disability’’ (as used under 

Rosa’s Law) in our regulations at 

§ 400.203. We proposed to define the 

term ‘‘individuals with intellectual 

disabilities’’ to mean the condition 

referred to as ‘‘mentally retarded’’ in 

section 1919(e)(7)(G)(ii) of the Act. This 

nomenclature change does not represent 

any change in information collection 

requirements or other burden for the 

provider community or the State survey 

agencies. Current forms may be used by 

the State survey agencies until current 

supplies are exhausted. The change will 

require revision of forms CMS–3070G 

and CMS–3070H, as discussed below. 

We received four public comments on 

our proposed nomenclature change, 

changing ‘‘mental retardation’’ to 

‘‘intellectual disability.’’ 

Comment: One commenter expressed 

appreciation for the effort to change the 

term. He recommends that person-first 

terminology ‘‘individuals with 

intellectual disabilities’’ be substituted 

for ‘‘intellectually disabled.’’ 

Response: We appreciate and agree 

with the comment that the term 

‘‘individuals with intellectual 

disabilities’’ is preferable to 

‘‘intellectually disabled’’ and CMS will 

use ‘‘person first’’ language in our 

agency policies and our internal and 

external communications. The 

nomenclature changes included in the 

NPRM were, by design, intended to 

make the current nomenclature in the 

regulation consistent with the language 

of Rosa’s Law (Pub. L. 111–256). After 

due consideration of the commenter’s 

suggestion, we believe that reasonable 

consistency with Rosa’s law can be 

maintained with the adoption, in this 

final rule, of ‘‘person first’’ language, 

and have made the change accordingly. 

In the rule itself, we therefore use the 

term Intermediate Care Facilities for 

Individuals with Intellectual Disabilities 

(ICF/IID) in place of Intermediate Care 

Facilities for the Mentally Retarded 

(ICF/MR). 

Comment: Two commenters ask for 

clarification of the definition of 

Intellectual Disability. The commenters 

suggest that CMS is unclear when it 

defines Intellectual Disability to be 

equivalent to the term Mental 

Retardation. They point out that the 

definition of Mental Retardation at 42 

CFR 483.102(b)(3) is from 1983 and is 

no longer in use. Furthermore, the 

definition in the Social Security Act still 

references Mental Retardation and the 

rule has no effect on that definition. In 

addition, one commenter notes that in 

medical usage the terms mental 

retardation and intellectual disability 

are not equivalent. 

Response: The rule’s intent is to 

extend the intent of Rosa’s Law, that ‘‘in 

amending the regulations to carry out 

this Act, a Federal agency shall ensure 

that the regulations clearly state—(A) 

That an intellectual disability was 

formerly termed ‘‘mental retardation’’; 

and (B) that individuals with 

intellectual disabilities were formerly 

termed ‘‘individuals who are mentally 

retarded’’ to include those regulations 

that implement the Social Security Act. 

While the term ‘‘mental retardation’’ has 

various definitions in a variety of 

contexts, and those definitions may 

have varied over time, within 42 CFR 

chapter IV the term has uses in 

determining benefit eligibility and 

describing provider types. The change 

simply makes the terms mental 

retardation and mentally retarded 

equivalent to intellectual disability and 

individuals with intellectual 

disabilities, respectively, for the 

purposes of the regulations. 

Comment: One commenter notes that 

the term Mental Retardation also 

appears in Chapter V at 42 CFR 

1001.1301. 

Response: We thank the commenter 

for finding this omission and will 

review the Chapter V reference for 

future action. 

Comment: One commenter correctly 

notes that the rule has no effect on the 

language in section 1919(e)(7)(G)(ii) of 

the Act. 

Response: Making this change to the 

Act will require legislation. We believe 

that the Congress will consider doing so 

in the future. Meanwhile, crossreferences can be changed as necessary. 

Comment: One commenter correctly 

notes the incorrect use of ‘‘title’’ for 

‘‘chapter’’ in the discussion. 

Response: This error has been 

corrected. 

Comment: One commenter notes that 

the change might have unintended 

consequences if applied to historical 

references. 

Response: We will review the 

suggested sections and make changes if 

necessary to avoid confusion regarding 

the meaning of the term as used in the 

regulations. 

The above summarizes this provision 

made in our proposed rule and the 

comments we received. We are 

finalizing the policy above as proposed, 

while adopting a commenter’s 

suggestion of using person-first 

terminology. 

Contact: Peggye Wilkerson, 410–786– 

4857. 

IV. Provisions of the Final Regulations 

For the most part, this final rule 

incorporates the provisions of the 

proposed rule without changes. Those 

provisions of this final rule that differ 

from the proposed rule are as follows: 

• In section II.A.4.a, and for reasons 

stated in that section, we have decided 

not to finalize our proposed revisions to 

§ 424.540(a)(1). 

• In section II. B. 6, we have revised 

our proposed definition of ‘‘donor 

document’’ to be defined as ‘‘any 

documented indication of an 

individual’s choice regarding his or her 

wishes concerning organ and/or tissue 

donation that was made by that 

individual or another authorized 

individual in accordance with any 

applicable State law.’’ 

• In the regulatory text, we have 

revised the proposed language to clarify 

that the requirement for sprinklers in 

facilities housed in high rise buildings 

was intended to be applicable to those 

buildings constructed after January 1, 

2008. 

• Also in the regulatory text, we are 

changing what we proposed to clarify 

that the term ‘‘Individuals with 

Intellectual Disabilities’’ will replace all 

of the following terms: ‘‘the mentally 

retarded’’; ‘‘mentally retarded persons’’; 

and ‘‘mentally retarded individuals’’. 

Also we clarify that ‘‘individuals with 

intellectual disabilities or 

developmental disabilities’’ will replace 

‘‘mentally retarded or developmentally 

disabled.’’ 

We are implementing all other 

provisions as proposed. 

V. Collection of Information 

Requirements 

In the proposed rule, pursuant to the 

Paperwork Reduction Act, we solicited 

public comments for 60 days on each of 

the following issues regarding 

information collection requirements 

(ICRs). No comments were received. For 

the purpose of this final rule, we are 

soliciting public comment for 30 days 

for the following sections of this rule 

regarding ICRs: 

A. Removes Unnecessarily Burdensome 

Requirements 

1. ICRs Regarding End-Stage Renal 

Disease Facilities Condition for 

Coverage: Physical Environment 

(§ 494.60) 

This rule limits the number of ESRD 

facilities that must meet the LSC 


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requirements found in chapters 20 and 

21 of NFPA 101. This action will reduce 

burden on ESRD facilities in terms of 

costly structural modifications and will 

not impact any information collections 

under the Paperwork Reduction Act. 

2. ICRs Regarding Condition for 

Coverage: Emergency Equipment— 

Ambulatory Surgical Centers (ASCs) 

(§ 416.44) 

Section 416.44(c) requires that ASCs 

coordinate, develop, and revise ASC 

policies and procedures to specify the 

types of emergency equipment required 

for use in the ASC’s operating room. 

The equipment must be immediately 

available for use during emergency 

situations, be appropriate for the 

facility’s patient population and be 

maintained by appropriate personnel. 

The burden associated with these 

requirements is the time and effort 

required by an ASC to develop revised 

policies and procedures governing the 

identification and maintenance of 

emergency equipment that would 

typically be required to address the 

intra- or post-operative emergency 

complications specific to the types of 

procedures performed in the ASC and 

the needs of their specific patient 

population. 

We believe that approximately 5,200 

ASCs are subject to these requirements. 

We estimate that § 416.44(c) imposes a 

one-time burden of two hours associated 

with revising the policies and 

procedures pertaining to the list of the 

emergency equipment and supplies 

maintained and commonly used by the 

ASC during emergency responses to 

their specific patient population. The 

total burden associated with this task is 

estimated to be 10,400 (5,200 ASCs x 2 

hours) hours. The cost associated with 

this requirement is estimated to be $90 

per ASC ($45.00—based on an hourly 

nurse’s salary—x 2 hours) or $468,000 

total (10,400 x $45), including fringe 

benefits, as specified by the Bureau of 

Labor Statistics for 2009). 

Consistent with this provision, we are 

submitting a revision to CMS–10279 

(OMB control number 0938–1071; 

expiration date October 31, 2012) to the 

Office of Management and Budget for 

review/approval. 

3. ICRs Regarding Revocation of 

Enrollment and Billing Privileges in the 

Medicare Program (§ 424.535) 

This rule eliminates the re-enrollment 

bar in instances when Medicare 

providers and suppliers have not 

responded timely to requests for 

revalidation of enrollment or other 

requests for information. This will allow 

providers and suppliers to attempt to reenroll in Medicare sooner than would 

be the case if the re-enrollment bar 

applied. However, the overall 

information collection burden 

involved—specifically, the need to 

submit a Form CMS–855 (OMB control 

number 0938–0685) initial enrollment 

application—will not change and, 

therefore, will neither increase nor 

decrease the existing information 

collection burden related to this 

requirement. 

4. ICRs Regarding Duration of 

Agreement for ICFs/ID (§ 442.15) 

This rule removes the time limited 

agreements for intermediate care 

facilities. There is no reduction in 

burden or cost for the intermediate care 

facility providers but the regulation 

change will help to reduce the 

paperwork and staff time required by 

State agencies in processing temporary 

extensions of the provider agreements 

that are required until the onsite survey 

occurs. In addition, providers and State 

agencies will no longer face the 

uncertainty created by the issuance of 

the multiple temporary extensions due 

to the provider agreements. Extensions 

may be made for a maximum of 60 days. 

We estimate that an extension is made 

for most ICF/IID facilities (about 5900 of 

the current 6500 facilities). We further 

estimate that each extension requires 

approximately one hour of staff time to 

complete. Based on CMS’ FY 2012 rate 

for State survey agency Medicaid staff of 

$77.23 per hour, we project an annual 

national savings of State Medicaid 

administrative expenditures totaling 

$455,700 ($77.23 x 5900 ICF/IID 

facilities), of which 75 percent consists 

of Federal funds and 25 percent of State 

funds. Consistent with this change, we 

are submitting a revision to OMB 

control number 0938–0062 (CMS– 

3070G). 

B. Removes Obsolete or Duplicative 

Regulations or Provides Clarifying 

Information 

1. ICRs Regarding Display of Currently 

Valid OMB Control Numbers (§ 400.310) 

This rule removes the chart that 

displays OMB control numbers since 

that information has become obsolete. 

This action does not produce any 

reduction or increase in burden, but will 

ensure that the public is viewing the 

most current information regarding 

OMB control numbers. 

2. ICRs Regarding Removal of Obsolete 

Provisions Related to Initial 

Determinations, Appeals, and 

Reopenings of Part A and Part B Claims 

and Entitlement Determinations 

(§ 405.701 through § 405.877) 

This rule, removes obsolete 

provisions from part 405 subparts G and 

H, and channels any remaining preBIPA claims appeals through the current 

appeals process under part 405 subpart 

I. In addition, we are redesignating 

certain sections of part 405 subparts G 

and H that are still in effect. We do not 

expect an increase or reduction in 

burden and believe that using the 

current appeals process under part 405 

subpart I for all claims appeals will be 

beneficial for appellants and other 

parties. 

3. ICRs Regarding Condition for 

Coverage: Infection Control— 

Ambulatory Surgical Centers (ASCs) 

(§ 416.44) 

This rule removes the requirement at 

§ 416.44(a)(3) regarding infection 

control that substantially duplicates the 

requirements of § 416.51. The removal 

of this requirement will not result in 

any additional burden on ASCs, but will 

alleviate any duplicative efforts and 

confusion regarding the infection 

control requirements. 

4. ICRs Regarding Standards for 

Electronic Prescribing (§ 423.160) 

This rule updates the current eprescribing standards to mirror the 

HIPAA standards that will become 

effective after publication of this final 

rule. There is no burden (addition or 

reduction) associated with this action. 

5. ICRs Regarding Physical Therapy, 

Occupational Therapy, and Services for 

Individuals With Speech, Hearing, and 

Language Disorders (§ 440.110) 

This rule updates and aligns provider 

qualifications for PT and OT 

professionals. This action has the 

potential to broaden the scope of 

providers that may be able to provide 

PT and OT services, by streamlining the 

qualifications so that certain providers 

are not excluded from providing 

services under Medicaid. However, this 

change does not impact any information 

collections under the Paperwork 

Reduction Act. 

6. ICRs Regarding Definitions 

(§ 486.302) 

This rule modifies the definition of 

‘‘donor document’’ to acknowledge that 

there are multiple ways for patients or 

potential donors to indicate their wishes 

regarding the donation of organs and 

tissues, while also emphasizing that the 


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patient’s decision is voluntary. We do 

not expect that there will be any 

changes in the collection of information 

requirements for OPOs. We anticipate 

that the enhanced ability individuals 

initially will have to more specifically 

identify their wishes will reduce burden 

associated with vague and unclear 

designations. 

7. ICRs Regarding Condition: 

Administration and Governing Body 

(§ 486.324) 

This rule removes the duplicate 

paragraph (e). This action will not result 

in any change in information collection 

or other regulatory burden. 

8. ICRs Regarding Requirement for 

Enrolling in the Medicare Program 

(§ 424.510) 

This rule corrects a typographical 

error found in § 424.510(a). This action 

will create no change in information 

collection or other regulatory burden. 

C. Responds to Stakeholder Concerns 

Nomenclature Changes 

1. ICRs Regarding General Definitions 

(§ 400.200) 

This rule adds a definition of 

‘‘beneficiary’’ that applies to patients 

under the Medicare and Medicaid 

programs. This action will create no 

change in information collection or 

other regulatory burden. 

2. ICRs Regarding Definitions Specific to 

Medicaid (§ 400.203) 

This rule adds to a definition of 

‘‘individuals with intellectual 

disabilities’’ for purposes of the 

Medicaid program that would define it, 

consistent with Rosa’s law (Pub. L. 111– 

256), as the condition formerly referred 

to as ‘‘mental retardation’’ and replaces 

all references in CMS regulations to, 

‘‘mental retardation’’ with ‘‘intellectual 

disability.’’ Furthermore, we are 

replacing the term ‘‘the mentally 

retarded,’’ as defined in section 

1919(e)(7)(G)(ii) of the Act, with 

‘‘individuals with intellectual 

disabilities.’’ This action creates no 

change in information collection or 

other regulatory burden. The change 

will require the revision of forms CMS– 

3070G and CMS–3070H, which are 

approved under OMB control number 

0938–0062 (expiration date April 30, 

2013). CMS is submitting this revised 

ICR to OMB for their review/approval. 

If you comment on these information 

collection and recordkeeping 

requirements, please submit your 

comments to the Office of Information 

and Regulatory Affairs, Office of 

Management and Budget, Attention: 

CMS Desk Officer, [CMS–9070–F], Fax: 

(202) 395–5806; or Email: 

OIRA_submission@omb.eop.gov. 

VI. Regulatory Impact Analysis 

We have examined the impact of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (February 2, 

2011), the Regulatory Flexibility Act 

(RFA) (September 19, 1980, Pub. L. 96– 

354), section 1102(b) of the Social 

Security Act, section 202 of the 

Unfunded Mandates Reform Act of 1995 

(March 22, 1995; Pub. L. 104–4), and 

Executive Order 13132 on Federalism 

(August 4, 1999). 

Executive Orders 12866 and 13563 

direct 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). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, 

reducing costs, harmonizing rules, and 

promoting flexibility. A regulatory 

impact analysis (RIA) must be prepared 

for major rules with economically 

significant effects ($100 million or more 

in any 1 year). We estimate that this 

final rule will reduce costs to regulated 

entities and to patients by more than 

$100 million annually and by more than 

$200 million in the first year. 

Accordingly, over five years this rule 

will save about $600 million dollars. It 

will also create significant life saving 

benefits. It is therefore an economically 

significant rule under section 3(f)(1) of 

Executive Order 12866. Accordingly, 

this proposed rule was reviewed by the 

Office of Management and Budget. 

A. Statement of Need 

In Executive Order 13563, the 

President recognized the importance of 

a streamlined, effective, efficient 

regulatory framework designed to 

promote economic growth, innovation, 

job-creation, and competitiveness. To 

achieve a more robust and effective 

regulatory framework, the President has 

directed each executive agency to 

establish a plan for ongoing 

retrospective review of existing 

significant regulations to identify those 

rules that can be eliminated as obsolete, 

unnecessary, burdensome, or 

counterproductive or that can be 

modified to be more effective, efficient, 

flexible, and streamlined. This final rule 

responds directly to the President’s 

instructions in Executive Order 13563 

by reducing outmoded or unnecessarily 

burdensome rules, and thereby 

increasing the ability of health care 

entities to devote resources to providing 

high quality patient care. 

B. Overall Impact 

There are cost savings in many areas. 

Two areas of one-time savings are 

particularly substantial. First, as 

indicated earlier in the preamble, we 

estimate that one-time savings to ESRD 

facilities are likely to range from about 

$47.5 to $217 million, but we are using 

$108.7 million as our point estimate. 

Second, we also estimate a one-time 

savings of $18.5 million to ASCs 

through reduced emergency equipment 

requirements. Both of these estimates 

are conservative and total savings could 

be significantly higher. The many types 

of recurring savings that these 

provisions will create include avoidance 

of business and payment losses for 

physicians and other providers that are 

difficult to estimate but likely to be in 

the tens of millions of dollars annually 

through the reforms we propose for 

reenrollment and billing processes. We 

have identified other kinds of savings 

that providers and patients will realize 

throughout this preamble. All of these 

are summarized in the table that 

follows. 

TABLE 3—SECTION-BY-SECTION ECONOMIC IMPACT ESTIMATES FOR 2012 

Section Frequency 

Likely savings or 

benefits 

(millions) 

Likely five year saving 

or benefits (rounded 

to nearest ten million) 

A. Removes Unnecessarily Burdensome Requirements 

1. End-Stage Renal Disease (ESRD) Facilities (§ 494.60) ..................... One-Time .................. $108.7 ....................... $110. 

2. ASC Emergency Equipment (§ 416.44) ............................................... One-Time .................. $18.5 ......................... $20. 

3. Revocation of Enrollment/Billing Privileges (§ 424.535) ...................... Recurring ................... $100.0 ....................... $500. 


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TABLE 3—SECTION-BY-SECTION ECONOMIC IMPACT ESTIMATES FOR 2012—Continued 

Section Frequency 

Likely savings or 

benefits 

(millions) 

Likely five year saving 

or benefits (rounded 

to nearest ten million) 

4. Duration of Agreement for ICFs/ID (§ 442.15–§ 442.109) ................... Recurring ................... <$1. ........................... <$1. 

B. Removes Obsolete or Duplicative Regulations 

1. OMB Control Numbers for Information Collection (§ 400.300 and 

§ 400.310).

Recurring ................... <$1. ........................... <$1. 

2. Removal of Obsolete Provisions Related to Processing Part A and 

Part B Claims and Entitlement Determinations (§ 405.701 through 

§ 405.877).

Recurring ................... <$1. ........................... <$1. 

3. ASC Infection Control Program (§ 416.44) .......................................... Recurring ................... <$1. ........................... <$1. 

4. E-prescribing (§ 423.160) ..................................................................... Recurring ................... <$1. ........................... <$1. 

5. Physical and Occupational Therapist Qualifications (§ 440.110) ........ Recurring ................... <$1. ........................... <$1. 

6. Definition of Donor Document (§ 486.302) .......................................... Recurring ................... See Text .................... See Text. 

7. Administration and Governing Body (§ 486.324) ................................. Recurring ................... <$1. ........................... <$1. 

8. Requirement for Enrolling in the Medicare Program (§ 424.510) ....... Recurring ................... <$1. ........................... <$1. 

C. Responds to Stakeholder Concerns 

Nomenclature Changes: 

1. Redefining the Term ‘‘Beneficiary’’ (§ 400.200 through 

§ 400.203).

Recurring ................... <$1 ............................ <$1. 

2. Replace ‘‘Mental Retardation’’ terminology with ‘‘Intellectual Disability’’ (throughout 42 CFR chapter IV).Recurring ................... See Text .................... See Text. 

There are two areas of potentially 

significant benefits, beyond the cost 

savings to providers. First, the rule 

acknowledges that individuals can 

specifically express their wishes and not 

simply make the choice to donate or not 

donate. We believe this will encourage 

individuals to be clearer and more 

specific concerning their wishes or 

intentions regarding donation. We also 

believe that families will be more 

willing to accept the potential donor’s 

decision if it is a clear and specific 

statement of his or her wishes 

concerning donation. There are 

approximately 8,000 cadaveric organ 

donors annually in the United States. 

These donors provide a total of about 

21,000 transplanted organs (see the 

OPTN/SRTR Annual Report at http:// 

optn.transplant.hrsa.gov/ar2009/). The 

decision to make a clear and specific 

decision concerning donation, and on 

the willingness of families to honor that 

decision, can turn on personal 

preference. We believe that the change 

we are making could and likely will tip 

that decision in some cases. However, 

we do not have a basis for quantifying 

this potential increase in donations. We 

requested comment on the extent to 

which this policy change may increase 

organ donation, but received no 

comments on this issue. 

In addition, while Rosa’s Law began 

the elimination of official Federal 

government use of the pejorative term 

‘‘mental retardation,’’ our final rule will 

complete this step for CMS regulations. 

The reform undoubtedly has substantial 

value to millions of Americans, not only 

to individuals with intellectual 

disabilities, but also to their families 

and friends, and also to the many 

millions who simply object to such 

labeling. However, we have no data that 

would enable a precise calculation of 

this value. 

Taking all of the reforms together, we 

estimate that the overall cost savings 

that this rule will create will exceed 

$200 million in the first year. This 

includes the one-time savings related to 

ESRD and ASC reforms, as well as the 

savings to providers in reductions in 

lost billings, paperwork costs, 

confusion, and other burden reductions 

discussed throughout this preamble. 

C. Anticipated Impacts 

The potential cost savings from 

reduced ESRD requirements are 

discussed extensively in that preamble 

section on those reforms. Although total 

cost estimates range from about $47.5 to 

$217 million, assuming that the average 

cost for a facility to meet three structural 

standards would have been $77,659, 

and that one half of all facilities would 

have needed to make these investments, 

total savings will be $108.7 million 

(2,800 × ($77,659/2)). We received no 

specific comments on these savings 

estimates and have not reestimated 

them. 

The only other large one-time savings 

estimates are those resulting from 

reforms of Ambulatory Surgical Center 

Emergency equipment requirements, 

and reforms in the revocations or 

deactivation of billing privileges. As to 

ASC, we estimate that the three most 

costly types of equipment are as follows: 

Tracheostomy kit $100.00, 

cricothyrotomy kit $200.00 and 

mechanical ventilator $12,000. We 

utilized fiscal year 2010 surveyor 

worksheets completed by the States 

when conducting ASC surveys to 

project the distribution of the types of 

ASC services nationally. We estimate 

that about two-thirds of the 

approximately Medicare 5,200 certified 

ASCs are functioning as multipurpose 

facilities. Those that are not 

multipurpose facilities would not have 

to spend $12,300 in total for costly 

equipment that would not be utilized. 

We have estimated the savings by 

breaking down each specialty type of 

ASC that will not be considered a 

multipurpose facility and that may not 

eliminate all three pieces of equipment 

or choose just one or two depending on 

the needs of the facility (1500 ASCs × 

$12,300 = total savings of about $18.5 

million). We received no specific 

comments on these savings estimates 

and have not reestimated them. 

With respect to our revision to 

§ 424.535(c), the number of affected 

providers is certainly very small as a 

proportion of the total universe of over 

1.4 million Medicare providers, of 

whom over 800,000 are physicians and 

over 300,000 are non-physician 

practitioners. Based on administrative 

data, we estimate that the number of 

providers and suppliers that will be 

affected by this reform is between 1,000 


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and 2,000, a fraction of one percent of 

these. 

We have no concrete statistical data 

on the resultant economic effects. We 

have, however, re-estimated billing 

losses from the unnecessarily 

conservative figure of $10 million (or 

$10,000 per each of the aforementioned 

1,000 providers/suppliers) used in the 

proposed rule. We instead believe that 

our revision to § 424.535(c) could result 

in total savings of roughly $100 million 

annually. 

We note that gross annual physician 

practice revenue in America often 

exceeds $1 million a year (see, for 

example, http:// 

www.merritthawkins.com/pdf/ 

2010_revenuesurvey.pdf). 

(We chose physician revenue as the 

basis for our estimate because the 

majority of Medicare providers/ 

suppliers are physicians.) Though it 

varies widely by physician type and 

geographic locality, roughly one-third of 

physician practice revenue is Medicarerelated. While, on paper, this could 

result in up to $333 million in projected 

savings (1,000 providers × $1 million × 1⁄3), we believe that a $100 million 

figure is more appropriate for two 

reasons. First, non-physician 

practitioners are likely to be affected by 

our revision. Their annual revenue, on 

average, is significantly less than that of 

physicians. Second, a fair proportion of 

potentially affected physicians will be 

those who infrequently bill Medicare, as 

they may have limited involvement 

with Medicare and, in turn, may be less 

familiar with revalidation and other 

Medicare enrollment requirements. 

These smaller billers, in our view, bring 

down the projected savings to closer to 

$100 million. Although we 

unfortunately do not, as explained 

above, have concrete data regarding the 

actual projected savings, we believe that 

$100 million is a reasonable estimate. 

Of the remaining reforms, most have 

minor cost savings as shown in Table 1 

through entries of $1 million or less. 

We received several comments on our 

cost and burden estimates related to our 

proposed revisions to § 424.540(a)(1) 

and § 424.535(c), but none of these 

comments addressed the average 

billings estimates we decided to revise. 

Comment: Several commenters 

requested that CMS explain its estimate 

that only 12,000 physicians and nonphysician practitioners per year would 

have their Medicare billing privileges 

deactivated pursuant to § 424.540(a)(1). 

One commenter stated that CMS 

previously announced that it had 

deactivated 20,000 Part B billing 

numbers each month beginning in 

January 2007—which, the commenter 

states would have resulted in 240,000 

Part B deactivations per year. The 

commenter requested that CMS 

recalculate the regulatory impact 

analysis using the 240,000-figure minus 

the 12,000-estimate used in the 

proposed rule. 

Response: CMS indeed deactivated 

approximately 20,000 Provider 

Transaction Identification Numbers 

(PTANs) per month between 2007 and 

2010. This does not mean, however, that 

20,000 physicians and non-physician 

practitioners had their billing privileges 

deactivated, as the vast majority of these 

suppliers had multiple PTANs. We 

based our estimate on the number of 

physicians and non-physician 

practitioners who would be affected, not 

the number of PTANs. Nonetheless, the 

issue is largely moot, as we are not 

finalizing our proposed revision to 

§ 424.540(a)(1). 

Comment: Several commenters 

requested that CMS explain why it did 

not consider any alternatives to its 

proposed change to § 424.540(a)(1). 

They suggested that CMS contemplate 

alternatives, such as: (1) Having the 

Medicare contractor attempt to contact 

the provider by telephone or email prior 

to deactivating their Medicare billing 

privileges, or (2) utilizing a 2-year or 3- 

year deactivation period for non-billing 

physicians and non-physician 

practitioners, rather than eliminating 

deactivation altogether. 

Response: CMS did, in fact, explore 

various ways to reduce the burden of 

the deactivation process on physicians 

and non-physicians. Although we are 

not finalizing our proposed revision to 

§ 424.540(a)(1), we intend, as explained 

earlier, to examine other possibilities for 

burden reduction. 

Comment: A commenter asked why 

CMS did not consider alternatives to its 

proposal to revise § 424.535(c) to 

eliminate the re-enrollment bar in 

situations where the provider or 

supplier has failed to respond to a 

revalidation or other informational 

request. 

Response: As stated earlier, the goal of 

the October 24, 2011 proposed rule was 

to set forth approaches to alleviate 

unnecessary burdens on providers and 

suppliers. With respect to provider 

enrollment, the issue of the reenrollment bar in cases where the 

provider or supplier failed to respond to 

a revalidation or other informational 

request was one of the two principal 

concerns expressed by the provider and 

supplier communities, the other being 

the deactivation of billing privileges for 

12 consecutive months of non-billing. 

We therefore focused our primary efforts 

on these two approaches. 

Comment: One commenter 

recommended that CMS provide the 

number of provider enrollment 

reactivations that were entered into 

PECOS in FY 2009, FY 2010 and FY 

2011. The commenter also 

recommended that CMS estimate the 

annual costs in FY 2009, FY 2010 and 

FY 2011 associated with: (1) The 

systematic deactivation process, and (2) 

reactivation. 

Response: As we are not finalizing our 

proposed revision to § 424.540(a)(1), we 

do not believe that the requested 

statistics would be material to our 

discussion. 

Comment: To gauge the impact of the 

proposed change to § 424.540(a)(1), 

several commenters recommended that 

CMS provide information regarding: 

(a) The number of physicians, nonphysician practitioners, and Part B 

organizations whose billing privileges 

were deactivated each year from 2006 

through 2011, (b) the number of 

physicians, non-physician practitioners 

and Part B organizational entities whose 

billing privileges were reactivated in 

2008, 2009, 2010 and 2011, and (c) the 

number of Medicare contractor-initiated 

deactivations that have occurred based 

on the provider or supplier’s failure to 

respond to revalidation or other 

informational requests. 

Response: Again, since we are not 

finalizing our proposed revision to 

§ 424.540(a)(1), we do not believe that 

furnishing the requested statistics is 

necessary. 

The above is a summary of all the 

comments that we received on our 

impact analysis section. 

D. Uncertainty 

Our estimates of the effects of this 

regulation are subject to significant 

uncertainty. While the Department is 

confident that these reforms will 

provide flexibilities to facilities that will 

yield cost savings, we are uncertain 

about the magnitude of these effects. In 

addition, as we previously explained, 

there may be significant additional 

health benefits. Thus, we are confident 

that the rule will yield substantial net 

benefits. In this analysis we have 

provided estimates to suggest the 

potential savings these reforms could 

achieve under certain assumptions. We 

appreciate that those assumptions are 

simplified, and that actual results could 

be substantially higher or lower. We 

plan to evaluate these reforms over time, 

and welcome independent external 

evaluations of their effects by 

professional societies, individual 

providers, provider associations, 

academics, and others. 


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E. Accounting Statement 

As required by OMB Circular A–4 

(available at http:// 

www.whitehouse.gov/omb/circulars/ 

a004/a-4.pdf), we have prepared an 

accounting statement. We estimate that 

the overall cost savings that this rule 

will create will exceed $200 million in 

the first year, and will be approximately 

$100 million per year thereafter. This 

includes the one-time savings related to 

ESRD reforms, as well as the savings to 

providers in lost billings, paperwork 

costs, confusion, and other burden 

reductions discussed throughout this 

preamble. There are also potentially 

substantial life-saving benefits that 

could reach hundreds of millions of 

dollars annually. Annualized savings 

are shown in the accounting statement 

below. 

TABLE 4—ACCOUNTING STATEMENT

[Dollars in millions] 

Category Primary estimate Year dollars Discount rate 

(percent) 

Period 

covered 

Benefits 

Unquantified Qualitative Value of Lives Saved 

Through Increases in Organ Donations.

Potentially hundreds of lives saved but no 

precise estimate.

2012 7 2012–16 

Potentially hundreds of lives saved but no 

precise estimate.

2012 3 2012–16 

Annualized savings from reduced ESRD facility investments and reduced ASC costs 

(see Table 3).

$30 ................................................................. 2012 7 2012–16 

$30 ................................................................. 2012 3 2012–16 

Annualized savings to providers from billing 

improvements and other reforms (see 

Table 3).

$100 ............................................................... 2012 7 2012–16 

$100 ............................................................... 2012 3 2012–16 

Costs 

None. 

Transfers 

None. 

F. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

requires agencies to analyze options for 

regulatory relief of small entities when 

proposed rules create a significant 

economic impact on a substantial 

number of small entities. For purposes 

of the RFA, small entities include small 

businesses, nonprofit organizations, and 

small governmental jurisdictions. Most 

hospitals and most other Medicare or 

Medicaid providers and suppliers are 

small entities, either by nonprofit status 

or by having revenues of $7.0 million to 

$34.5 million in any 1 year. Individuals 

and States are not included in the 

definition of a ‘‘small entity.’’ This final 

rule will reduce costs to tens of 

thousands of physicians, ASCs, ESRD 

facilities, and other small entities. 

Provisions in this final rule will benefit 

some providers or suppliers in all or 

virtually all of the industries identified 

as ‘‘Ambulatory Health Care Services’’ 

under the Census Bureau’s North 

American Industry Classification 

System (NAICS, codes 621111 through 

621999). While most of the effects will 

be minimal (for example, eliminating 

obsolete and redundant or confusing 

regulatory requirements), we estimate 

that the impact on at least several 

thousand of these small entities will be 

economically significant. The purpose 

of the RFA is to reduce burdens on 

regulated entities, and HHS interprets 

the RFA as requiring a Final Regulatory 

Flexibility Analysis (FRFA) only when 

a rule creates an adverse economic 

impact. Accordingly, we certify that this 

final rule will not have a significant 

economic impact on a substantial 

number of small entities. HHS 

nonetheless voluntarily prepares a 

FRFA for final rules that, like this one, 

create a significant positive economic 

impact by reducing burden on small 

entities. In this case all of the economic 

effects of the final rule are positive, and 

some are economically significant. 

Substantial savings will also accrue to 

most of about 6,500 ESRD providers 

from our proposal to eliminate fire 

safety requirements that are vital in 

residential provider settings, but 

unnecessary in ambulatory care 

facilities such as these. Approximately 

half of the 5,200 ASCs will benefit from 

more sensible emergency equipment 

policies. In addition, while we cannot 

estimate the number of positively 

affected entities for every provision we 

proposed, these reforms will benefit 

about 6,400 Intermediate Care Facilities 

through elimination of pejorative 

nomenclature that pervasively affects 

their names and operations. All of the 

provisions included in the final rule aim 

to identify and eliminate duplicative, 

overlapping, outdated and conflicting 

regulatory requirements that 

unnecessarily add confusion or costs to 

various providers or patients as they 

attempt to navigate excessive or obsolete 

or contradictory regulatory 

requirements. By making these changes, 

we believe health professionals will 

have increased resources to devote to 

improving patient care, increasing 

accessibility to care and reducing 

associated health care costs. We invited 

and welcomed comments on any and all 

of the provisions of the proposed rule 

with regard to the impacts of the burden 

reductions, as well as alternatives, if 

any, we should consider in the final rule 

or in future rulemaking on other 

regulatory provisions. 

In addition, section 1102(b) of the 

Social Security Act requires us to 

prepare a regulatory impact analysis if 

a rule may have a significant impact on 

the operations of a substantial number 

of small rural hospitals. This analysis 

must conform to the provisions of 

section 604 of the RFA. For purposes of 


srobinson on DSK4SPTVN1PROD with RULES3
29028 Federal Register / Vol. 77, No. 95 / Wednesday, May 16, 2012 / Rules and Regulations 

section 1102(b) of the Act, we define a 

small rural hospital as a hospital that is 

located outside of a metropolitan 

statistical area and has fewer than 100 

beds. This rule has no direct effects on 

hospitals. Therefore, we are not 

preparing an analysis for section 1102(b) 

of the Act because we have determined, 

and the Secretary certifies, that this final 

rule will not have a significant impact 

on the operations of a substantial 

number of small rural hospitals. 

G. Unfunded Mandates Reform Act 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require expenditures in any 1 year of 

$100 million in 1995 dollars, updated 

annually for inflation on either State, 

local, or tribal governments, or the 

private sector. In 2011, that threshold is 

approximately $139 million. This 

proposed rule mandates no new 

expenditures by either State, local, or 

tribal governments, or by the private 

sector. 

H. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

Since this regulation does not impose 

any costs on State or local governments, 

the requirements of Executive Order 

13132 are not applicable. 

List of Subjects 

42 CFR Part 400 

Grant programs—health, Health 

facilities, Health maintenance 

organizations (HMO), Medicaid, 

Medicare, Reporting and recordkeeping 

requirements. 

42 CFR Part 405 

Administrative practice and 

procedure, Health facilities, Health 

professions, Kidney diseases, Medical 

devices, Medicare, Reporting and 

recordkeeping requirements, Rural 

areas, X-rays. 

42 CFR Part 416 

Health facilities, Health professions, 

Medicare, Reporting and recordkeeping 

requirements. 

42 CFR Part 423 

Administrative practice and 

procedure, Emergency medical services, 

Health facilities, Health maintenance 

organizations (HMO), Health 

professionals, Medicare, Penalties, 

Privacy, Reporting and recordkeeping 

requirements. 

42 CFR Part 424 

Emergency medical services, Health 

facilities, Health professions, Medicare, 

Reporting and recordkeeping 

requirements. 

42 CFR Part 440 

Grant programs—health, Medicaid. 

42 CFR Part 442 

Grant programs—health, Health 

facilities, Health professions, Medicaid, 

Nursing homes, Reporting and 

recordkeeping requirements. 

42 CFR Part 486 

Grant programs—health, Health 

facilities, Medicare, Reporting and 

recordkeeping requirements, X-rays. 

42 CFR Part 494 

Health facilities, Kidney diseases, 

Medicare, Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, and under the authority of 

sections 1102(a), 1871(a)(1), and 

1871(a)(4) of the Social Security Act, the 

Centers for Medicare & Medicaid 

Services amends 42 CFR chapter IV as 

set forth below: 

Chapter IV 

Nomenclature Changes 

■ 1–2. In 42 CFR chapter IV: 

■ a. Remove ‘‘Recipient’’ and 

‘‘Recipients’’ wherever they appear and 

add in their place ‘‘Beneficiary’’ and 

‘‘Beneficiaries,’’ respectively; and 

■ b. Remove ‘‘Mental Retardation,’’ ‘‘the 

Mentally Retarded’’ and the abbreviated 

form ‘‘MR’’ wherever they appear and 

add in their place ‘‘Intellectual 

Disability,’’ ‘‘Individuals with 

Intellectual Disabilities’’ and ‘‘IID,’’ 

respectively. 

PART 400—INTRODUCTION; 

DEFINITIONS 

■ 3. The authority citation for part 400 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh) and 44 U.S.C. Chapter 35. 

Subpart B—Definitions 

■ 4. Section 400.200 is amended by 

adding the definition of ‘‘beneficiary’’ in 

alphabetical order to read as follows: 

§ 400.200 General definitions. 

* * * * * 

Beneficiary means a person who is 

entitled to Medicare benefits and/or has 

been determined to be eligible for 

Medicaid. 

* * * * * 

§ 400.202 [Amended] 

■ 5. Section 400.202 is amended by 

removing the definition of 

‘‘beneficiary.’’ 

■ 6. Section 400.203 is amended by 

removing the definition of ‘‘recipient’’ 

and adding the definition of 

‘‘intellectual disability’’ in alphabetical 

order to read as follows: 

§ 400.203 Definitions specific to Medicaid. 

* * * * * 

Intellectual disability means the 

condition that was previously referred 

to as mental retardation. 

* * * * * 

Subpart C—[Removed and Reserved] 

■ 7. Subpart C, consisting of §§ 400.300 

and 400.310, is removed and reserved. 

PART 405—FEDERAL HEALTH 

INSURANCE FOR THE AGED AND 

DISABLED 

■ 8. The authority citation for Part 405 

continues to read as follows: 

Authority: Secs. 205(a), 1102, 1861, 

1862(a), 1869, 1871, 1874, 1881, and 1886(k) 

of the Social Security Act (42 U.S.C. 405(a), 

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). 

§ 405.706 [Redesignated as § 405.925] 

■ 9. Redesignate § 405.706 in subpart G 

as § 405.925 in subpart I. 

Subpart G—[Removed and Reserved] 

■ 10. Remove and reserve subpart G 

consisting of § 405.701 through 

§ 405.705 and § 405.708 through 

§ 405.753. 

■ 11. Subpart H is revised to read as 

follows: 

Subpart H—Appeals Under the 

Medicare Part B Program 

Sec. 

405.800 Appeals of CMS or a CMS 

contractor. 

405.803 Appeals rights. 

405.806 Impact of reversal of contractor 

determinations on claims processing. 

405.809 Reinstatement of provider or 

supplier billing privileges following 

corrective action. 

405.812 Effective date for DMEPOS 

supplier’s billing privileges. 

405.815 Submission of claims. 

405.818 Deadline for processing provider 

enrollment initial determinations. 


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Federal Register / Vol. 77, No. 95 / Wednesday, May 16, 2012 / Rules and Regulations 29029 

Subpart H—Appeals Under the 

Medicare Part B Program 

Authority: Secs. 1102, 1866(j), and 1871 of 

the Social Security Act (42 U.S.C. 1302, 

1395cc(j), and 1395hh). 

§ 405.800 Appeals of CMS or a CMS 

contractor. 

A CMS contractor’s (that is, a carrier, 

Fiscal Intermediary or Medicare 

Administrative Contractor (MAC)) 

determination that a provider or 

supplier fails to meet the requirements 

for Medicare billing privileges. 

(a) Denial of a provider or supplier 

enrollment application. If CMS or a 

CMS contractor denies a provider’s or 

supplier’s enrollment application, CMS 

or the CMS contractor notifies the 

provider or supplier by certified mail. 

The notice includes the following: 

(1) The reason for the denial in 

sufficient detail to allow the provider or 

supplier to understand the nature of its 

deficiencies. 

(2) The right to appeal in accordance 

with part 498 of this chapter. 

(3) The address to which the written 

appeal must be mailed. 

(b) Revocation of Medicare billing 

privileges—(1) Notice of revocation. If 

CMS or a CMS contractor revokes a 

provider’s or supplier’s Medicare billing 

privileges, CMS or a CMS contractor 

notifies the supplier by certified mail. 

The notice must include the following: 

(i) The reason for the revocation in 

sufficient detail for the provider or 

supplier to understand the nature of its 

deficiencies. 

(ii) The right to appeal in accordance 

with part 498 of this chapter. 

(iii) The address to which the written 

appeal must be mailed. 

(2) Effective date of revocation. The 

revocation of a provider’s or supplier’s 

billing privileges is effective 30 days 

after CMS or the CMS contractor mails 

notice of its determination to the 

provider or supplier, except if the 

revocation is based on a Federal 

exclusion or debarment, felony 

conviction, license suspension or 

revocation, or the practice location is 

determined by CMS or its contractor not 

to be operational. When a revocation is 

based on a Federal exclusion or 

debarment, felony conviction, license 

suspension or revocation, or the practice 

location is determined by CMS or its 

contractor not to be operational, the 

revocation is effective with the date of 

exclusion or debarment, felony 

conviction, license suspension or 

revocation or the date that CMS or its 

contractor determined that the provider 

or supplier was no longer operational. 

(3) Payment after revocation. 

Medicare does not pay, and the CMS 

contractor rejects, claims for services 

submitted with a service date on or after 

the effective date of a provider’s or 

supplier’s revocation. 

§ 405.803 Appeals rights. 

(a) A provider or supplier may appeal 

the initial determination to deny a 

provider or supplier’s enrollment 

application, or if applicable, to revoke 

current billing privileges by following 

the procedures specified in part 498 of 

this chapter. 

(b) The reconsideration of a 

determination to deny or revoke a 

provider or supplier’s Medicare billing 

privileges is handled by a CMS Regional 

Office or a contractor hearing officer not 

involved in the initial determination. 

(c) Providers and suppliers have the 

opportunity to submit evidence related 

to the enrollment action. Providers and 

suppliers must, at the time of their 

request, submit all evidence that they 

want to be considered. 

(d) If supporting evidence is not 

submitted with the appeal request, the 

contractor contacts the provider or 

supplier to try to obtain the evidence. 

(e) If the provider or supplier fails to 

submit the evidence before the 

contractor issues its decision, the 

provider or supplier is precluded from 

introducing new evidence at higher 

levels of the appeals process. 

§ 405.806 Impact of reversal of contractor 

determinations on claims processing. 

(a) Claims for services furnished to 

Medicare beneficiaries during a period 

in which the supplier billing privileges 

were not effective are rejected. 

(b) If a supplier is determined not to 

have qualified for billing privileges in 

one period but qualified in another, 

Medicare contractors process claims for 

services furnished to beneficiaries 

during the period for which the supplier 

was Medicare-qualified. Subpart C of 

this part sets forth the requirements for 

the recovery of overpayments. 

(c) If a revocation of a supplier’s 

billing privileges is reversed upon 

appeal, the supplier’s billing privileges 

are reinstated back to the date that the 

revocation became effective. 

(d) If the denial of a supplier’s billing 

privileges is reversed upon appeal and 

becomes binding, then the appeal 

decision establishes the date that the 

supplier’s billing privileges become 

effective. 

§ 405.809 Reinstatement of provider or 

supplier billing privileges following 

corrective action. 

If a provider or supplier completes a 

corrective action plan and provides 

sufficient evidence to the CMS 

contractor that it has complied fully 

with the Medicare requirements, the 

CMS contractor may reinstate the 

provider’s or supplier’s billing 

privileges. The CMS contractor may pay 

for services furnished on or after the 

effective date of the reinstatement. The 

effective date is based on the date the 

provider or supplier is in compliance 

with all Medicare requirements. A CMS 

contractor’s refusal to reinstate a 

supplier’s billing privileges based on a 

corrective action plan is not an initial 

determination under part 498 of this 

chapter. 

§ 405.812 Effective date for DMEPOS 

supplier’s billing privileges. 

If a CMS contractor, contractor 

hearing officer, or ALJ determines that 

a DMEPOS supplier’s denied enrollment 

application meets the standards in 

§ 424.57 of this chapter and any other 

requirements that may apply, the 

determination establishes the effective 

date of the billing privileges as not 

earlier than the date the carrier made 

the determination to deny the DMEPOS 

supplier’s enrollment application. 

Claims are rejected for services 

furnished before that effective date. 

§ 405.815 Submission of claims. 

A provider or supplier succeeding in 

having its enrollment application denial 

or billing privileges revocation reversed 

in a binding decision, or in having its 

billing privileges reinstated, may submit 

claims to the CMS contractor for 

services furnished during periods of 

Medicare qualification, subject to the 

limitations in § 424.44 of this chapter, 

regarding the timely filing of claims. If 

the claims previously were filed timely 

but were rejected, they are considered 

filed timely upon resubmission. 

Previously denied claims for items or 

services furnished during a period of 

denial or revocation may be resubmitted 

to CMS within 1 year after the date of 

reinstatement or reversal. 

§ 405.818 Deadline for processing provider 

enrollment initial determinations. 

Contractors approve or deny complete 

provider or supplier enrollment 

applications to approval or denial 

within the following timeframes: 

(a) Initial enrollments—Contractors 

process new enrollment applications 

within 180 days of receipt. 

(b) Revalidation of existing 

enrollments—Contractors process 

revalidations within 180 days of receipt. 

(c) Change-of-information and 

reassignment of payment request— 

Contractors process change-ofinformation and reassignment of 

payment requests within 90 days of 

receipt. 


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29030 Federal Register / Vol. 77, No. 95 / Wednesday, May 16, 2012 / Rules and Regulations 

PART 416—AMBULATORY SURGICAL 

SERVICES 

■ 12. The authority citation for Part 416 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

Subpart C—Specific Conditions for 

Coverage 

■ 13. Section 416.44 is amended by 

removing paragraph (a)(3) and revising 

paragraph (c) to read as follows: 

§ 416.44 Condition for coverage— 

Environment. 

* * * * * 

(c) Standard: Emergency equipment. 

The ASC medical staff and governing 

body of the ASC coordinates, develops, 

and revises ASC policies and 

procedures to specify the types of 

emergency equipment required for use 

in the ASC’s operating room. The 

equipment must meet the following 

requirements: 

(1) Be immediately available for use 

during emergency situations. 

(2) Be appropriate for the facility’s 

patient population. 

(3) Be maintained by appropriate 

personnel. 

* * * * * 

PART 423—VOLUNTARY MEDICARE 

PRESCRIPTION DRUG BENEFIT 

■ 14. The authority citation for Part 423 

continues to read as follows: 

Authority: Section 1860D–4(e) of the 

Social Security Act (42 U.S.C. 1395w– 

104(e)). 

Subpart D—Cost Control and Quality 

Improvement Requirements 

■ 15. In § 423.160, paragraphs (b)(3)(i) 

and (ii) and (c)(1)(iii) and (c)(2)(i) are 

revised to read as follows: 

§ 423.160 Standards for electronic 

prescribing. 

* * * * * 

(b) * * * 

(3) Eligibility. (i) The Accredited 

Standards Committee X12N 270/271– 

Health Care Eligibility Benefit Inquiry 

and Response, Version 5010, April 

2008, ASC X12N/005010x279 

(incorporated by reference in paragraph 

(c)(2)(i) of this section), for transmitting 

eligibility inquiries and responses 

between prescribers and Part D 

sponsors. 

(ii) The National Council for 

Prescription Drug Programs 

Telecommunication Standard 

Specification, Version D, Release 0 

(Version D.0), August 2007, and 

equivalent NCPDP Batch Standard 

Batch Implementation Guide, Version 1, 

Release 2 (Version 1.2), January 2006 

supporting Telecommunications 

Standard Implementation Guide, 

Version D, Release 0 (Version D.0), 

August 2007, for the NCPDP Data 

Record in the Detail Data Record 

(incorporated by reference in paragraph 

(c)(1)(iii) of this section), for 

transmitting eligibility inquiries and 

responses between dispensers and Part 

D sponsors. 

* * * * * 

(c) * * * 

(1) * * * 

(iii) National Council for Prescription 

Drug Programs Telecommunication 

Standard Specification, Version D, 

Release 0 (Version D.0), August 2007 

and equivalent National Council for 

Prescription Drug Programs (NCPDP) 

Batch Standard Batch Implementation 

Guide, Version 1, Release 2 (Version 

1.2), August 2007 supporting 

Telecommunication Standard 

Implementation Guide, Version D, 

Release 0 (Version D.0) for the NCPDP 

Data Record in the Detail Data Record. 

* * * * * 

(2) * * * 

(i) Accredited Standards Committee 

(ASC X12 Standards for Electronic Data 

Interchange Technical Report Type 3— 

Health Care Eligibility Benefit Inquiry 

and Response (270/271), April 2008, 

ASC X12N/005010X279. 

* * * * * 

PART 424—CONDITIONS FOR 

MEDICARE PAYMENT 

■ 16. The authority citation for Part 424 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

Subpart P—Requirements for 

Establishing and Maintaining Medicare 

Billing Privileges 

■ 17. Section 424.510 is amended by 

revising paragraph (a) to read as follows: 

§ 424.510 Requirements for enrolling in 

the Medicare program. 

(a) Providers and suppliers must 

submit enrollment information on the 

applicable enrollment application. Once 

the provider or supplier successfully 

completes the enrollment process, 

including, if applicable, a State survey 

and certification or accreditation 

process, CMS enrolls the provider or 

supplier into the Medicare program. To 

be enrolled, a provider or supplier must 

meet enrollment requirements specified 

in paragraph (d) of this section. 

* * * * * 

■ 18. Section 424.535 is amended by 

revising paragraph (c) to read as follows: 

§ 424.535 Revocation of enrollment and 

billing privileges in the Medicare program. 

* * * * * 

(c) Reapplying after revocation. After 

a provider, supplier, delegated official, 

or authorizing official has had their 

billing privileges revoked, they are 

barred from participating in the 

Medicare program from the effective 

date of the revocation until the end of 

the re-enrollment bar. The re-enrollment 

bar is a minimum of 1 year, but not 

greater than 3 years, depending on the 

severity of the basis for revocation. The 

re-enrollment bar does not apply in the 

event a revocation of Medicare billing 

privileges is imposed under paragraph 

(a)(1) of this section based upon a 

provider or supplier’s failure to respond 

timely to a revalidation request or other 

request for information. 

* * * * * 

■ 19. Section 424.540 is amended by: 

■ a. Revising paragraph (a) introductory 

text; 

■ b. Revising paragraph (a)(2); 

■ c. Adding paragraph (a)(3). 

The revisions and addition read as 

follows: 

§ 424.540 Deactivation of Medicare billing 

privileges. 

(a) Reasons for deactivation. CMS 

may deactivate the Medicare billing 

privileges of a provider or supplier for 

any of the following reasons: 

* * * * * 

(2) The provider or supplier does not 

report a change to the information 

supplied on the enrollment application 

within 90 calendar days of when the 

change occurred. Changes that must be 

reported include, but are not limited to, 

a change in practice location, a change 

of any managing employee, and a 

change in billing services. A change in 

ownership or control must be reported 

within 30 calendar days as specified in 

§ 424.520(b) and § 424.550(b). 

(3) The provider or supplier does not 

furnish complete and accurate 

information and all supporting 

documentation within 90 calendar days 

of receipt of notification from CMS to 

submit an enrollment application and 

supporting documentation, or resubmit 

and certify to the accuracy of its 

enrollment information. 

* * * * * 


srobinson on DSK4SPTVN1PROD with RULES3
Federal Register / Vol. 77, No. 95 / Wednesday, May 16, 2012 / Rules and Regulations 29031 

PART 440—SERVICES: GENERAL 

PROVISIONS 

■ 20. The authority citation for Part 440 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 302). 

Subpart A—Definitions 

■ 21. Section 440.110 is amended by 

revising paragraphs (a)(2) and (b)(2) to 

read as follows: 

§ 440.110 Physical therapy, occupational 

therapy, and services for individuals with 

speech, hearing, and language disorders. 

(a) * * * 

(2) A ‘‘qualified physical therapist’’ is 

an individual who meets personnel 

qualifications for a physical therapist at 

§ 484.4. 

(b) * * * 

(2) A ‘‘qualified occupational 

therapist’’ is an individual who meets 

personnel qualifications for an 

occupational therapist at § 484.4. 

* * * * * 

PART 442—STANDARDS FOR 

PAYMENT TO NURSING FACILITIES 

AND INTERMEDIATE CARE 

FACILITIES FOR INDIVIDUALS WITH 

INTELLECTUAL DISABILITIES 

■ 22. The authority citation for Part 442 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302), unless otherwise noted. 

Subpart B—Provider Agreements 

■ 23. Section 442.15 is revised to read 

as follows: 

§ 442.15 Duration of agreement for ICF/ 

IIDs. 

(a) The agreement for an ICF/IID 

remains in effect until the Secretary 

determines that the facility no longer 

meets the applicable requirements. The 

State Survey Agency must conduct a 

survey of the facility to determine 

compliance with the requirements at a 

survey interval of no greater than 15 

months. 

(b) FFP is available for services 

furnished by a facility for up to 30 days 

after its agreement expires or terminates 

under the conditions specified in 

§ 441.11 of this subchapter. 

§ 442.16 [Removed and Reserved] 

■ 24. Section 442.16 is removed and 

reserved. 

Subpart C—Certification of ICF/IIDs 

■ 25. Section 442.109 is revised to read 

as follows: 

§ 442.109 Certification period for ICF/IIDs: 

General provisions. 

(a) A survey agency may certify a 

facility that fully meets applicable 

requirements. The State Survey Agency 

must conduct a survey of each ICF/IID 

not later than 15 months after the last 

day of the previous survey. 

(b) The statewide average interval 

between surveys must be 12 months or 

less, computed in accordance with 

paragraph (c) of this section. 

(c) The statewide average interval is 

computed at the end of each Federal 

fiscal year by comparing the last day of 

the most recent survey for each 

participating facility to the last day of 

each facility’s previous survey. 

■ 26. Section 442.110 is amended by 

revising paragraph (b) to read as follows: 

§ 442.110 Certification period for ICF/IID 

with standard-level deficiencies. 

* * * * * 

(b) The survey agency may certify a 

facility for a period that ends no later 

than 60 days after the last day specified 

in the plan for correcting deficiencies. 

The certification period must not exceed 

15 months, including the period 

allowed for corrections. 

* * * * * 

PART 486—CONDITIONS FOR 

COVERAGE OF SPECIALIZED 

SERVICES FURNISHED BY 

SUPPLIERS 

■ 27. The authority citation for Part 486 

continues to read as follows: 

Authority: Secs. 1102, 1138, and 1871 of 

the Social Security Act (42 U.S.C. 1302, 

1320b–8, and 1395hh) and section 371 of the 

Public Health Service Act (42 U.S.C. 273). 

Subpart G—Requirements for 

Certification and Designation and 

Conditions for Coverage: Organ 

Procurement Organizations 

■ 28. Section 486.302 is amended by 

revising the definition of ‘‘donor 

document’’ to read as follows: 

§ 486.302 Definitions. 

* * * * * 

Donor document means any 

documented indication of an 

individual’s choice regarding his or her 

wishes concerning organ and/or tissue 

donation that was made by that 

individual or another authorized 

individual in accordance with any 

applicable State law.’’ 

* * * * * 

§ 486.324 [Amended] 

■ 29. Section 486.324 is amended by 

removing the second paragraph (e). 

PART 494—CONDITIONS FOR 

COVERAGE FOR END-STAGE RENAL 

DISEASE FACILITIES 

■ 30. The authority citation for Part 494 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. l302 and 

l395hh). 

Subpart B—Patient Safety 

■ 31. In § 494.60, paragraphs (e)(1) and 

(2) are revised to read as follows: 

§ 494.60 Condition: Physical environment. 

* * * * * 

(e) * * * 

(1) Except as provided in paragraph 

(e)(2) of this section, by February 9, 

2009, dialysis facilities that are located 

adjacent to high hazardous occupancies 

or do not provide one or more exits to 

the outside at grade level from the 

patient treatment area level, must 

comply with applicable provisions of 

the 2000 edition of the Life Safety Code 

of the National Fire Protection 

Association (which is incorporated by 

reference at § 403.744(a)(1)(i) of this 

chapter). 

(2) Notwithstanding paragraph (e)(1) 

of this section, dialysis facilities 

participating in Medicare as of October 

14, 2008 that require sprinkler systems 

are those housed in multi-story 

buildings construction Types II(000), 

III(200), or V(000), as defined in the 

2000 edition of the Life Safety Code of 

the National Fire Protection Association 

(which is incorporated by reference at 

§ 403.744(a)(1)(i) of this chapter), 

section 21.1.6.3, which were 

constructed after January 1, 2008, and 

those housed in high rise buildings over 

75 feet in height, which were 

constructed after January 1, 2008. 

* * * * * 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) (Catalog of Federal 

Domestic Assistance Program No. 93.778, 

Medical Assistance Program) 

Dated: February 2, 2012. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: April 2, 2012. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2012–11543 Filed 5–10–12; 9:15 am] 

BILLING CODE 4120–01–P 


srobinson on DSK4SPTVN1PROD with RULES3