[Federal Register Volume 89, Number 32 (Thursday, February 15, 2024)]
[Proposed Rules]
[Pages 11996-12064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-02137]



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Vol. 89

Thursday,

No. 32

February 15, 2024

Part III





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 488 and 489





Medicare Program; Strengthening Oversight of Accrediting Organizations 
(AOs) and Preventing AO Conflict of Interest, and Related Provisions; 
Proposed Rule

Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / 
Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 488 and 489

[CMS-3367-P]
RIN 0938-AU88


Medicare Program; Strengthening Oversight of Accrediting 
Organizations (AOs) and Preventing AO Conflict of Interest, and Related 
Provisions

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would set forth a number of provisions to 
strengthen the oversight of accrediting organizations (AOs) by 
addressing conflicts of interest, establishing consistent standards, 
processes and definitions, and updating the validation and performance 
standards systems. Additionally, this proposed rule would revise the 
psychiatric hospital survey process, add a limitation on terminated 
deemed providers and suppliers when reentering the program, and 
provides technical corrections for End-Stage Renal Disease facilities 
and Kidney Transplant Programs. This proposed rule also solicits 
comments from stakeholders and AOs to refine and revise the AO 
oversight standards and processes. In addition, this proposed rule 
includes a request for information on the timeframes and expectations 
for the submission of AO applications.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on April 15, 2024.

ADDRESSES: In commenting, refer to file code CMS-3367-P.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to https://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-3367-P, P.O. Box 8010, 
Baltimore, MD 21244-8010.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-3367-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Caroline Gallaher, (410) 786-8705 or 
Beth Chalick-Kaplan, (410) 786-6550.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following 
website as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that website to 
view public comments. CMS will not post on Regulations.gov public 
comments that make threats to individuals or institutions or suggest 
that the commenter will take actions to harm an individual. CMS 
continues to encourage individuals not to submit duplicative comments. 
We will post acceptable comments from multiple unique commenters even 
if the content is identical or nearly identical to other comments.
    Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a 
plain language summary of this rule may be found at https://www.regulations.gov/.

Severability of Provisions

    To the extent a court may enjoin any part of the rule as finalized, 
the Department intends that other provisions or parts of provisions 
should remain in effect. Any provision of the rule as finalized held to 
be invalid or unenforceable by its terms, or as applied to any person 
or circumstance, shall be construed so as to continue to give maximum 
effect to the provision permitted by law, unless such holding shall be 
one of utter invalidity or unenforceability, in which event the 
provision shall be severable from this section and shall not affect the 
remainder thereof or the application of the provision to persons not 
similarly situated or to dissimilar circumstances.

Table of Contents

I. Executive Summary
    A. Purpose
    B. Summary of the Major Provisions
II. Background
    A. Legislative History
    B. Regulatory Overview of CMS's Rules Regarding AO Programs
    C. Congressional Report on the Oversight of National AOs and CMS 
Approved Accreditation Programs
    D. CMS Validation Survey Pilot
    E. Overview of Transparency and Oversight of Accrediting 
Organizations
    F. Prior Rulemaking--Accrediting Organizations Conflict of 
Interest Request for Information (RFI)
    G. Conflict of Interest--The AO Owner's, Surveyor's and Other 
Employee's Interest in or Relationship With a Health Care Facility 
That the AO Accredits
III. Request for Public Comment on Whether It Is a Conflict of 
Interest for AO Board Members or Advisors To Have an Interest in or 
Relationship With a Health Care Facility That the AO Accredits
IV. Provisions of the Proposed Rule
    A. Proposal To Add Definition of ``Unannounced Surveys'' to 
Sec.  488.1
    B. Conflict of Interest
    C. Proposal To Require the AOs That Accredit Medicare-Certified 
Providers and Suppliers To Use the Medicare Conditions; and 
Strengthened Survey Process Comparability (Proposed Sec.  
488.4(a)(1) and (2))
    D. Proposal To Revise the AO Crosswalk Requirements at Sec.  
488.5(a)(3)
    E. Proposal To Strengthen the Comparability of the Survey 
Process Between the AOs and the States
    F. Proposal To Revise the AO Application Documentation 
Requirements Related to the Survey Processes (Sec.  488.5(a)(4); 
Sec.  488.5(a)(4)(iii); Sec.  488.5(a)(4)(v); Sec.  
488.5(a)(4)(vii); Sec.  488.5(a)(4)(xi); Sec.  488.5(a)(5); Sec.  
488.5(a)(6); Sec.  488.5(a)(12); Sec.  488.5(a)(13))
    G. Proposal To Require AOs To Provide CMS With Survey Findings 
(Sec.  488.5(a)(4)(viii))
    H. Proposal To Require That AO Surveyors Must Take the CMS 
Online Surveyor Basic Training
    (Sec.  488.5(a)(8)(ii)
    I. Proposal To Establish Criteria for ``National in Scope'' to 
Sec.  488.1
    J. Proposal To Revise the Definition of ``Rate of Disparity'' 
and To Use the Process and Outcome Disparity Rates as Performance 
Measures (Sec.  488.1)
    K. Proposal To Require AOs To Submit a Publicly Reportable Plan 
of Correction for Unacceptable Performance Measure Scores (Sec.  
488.8(a)(2))
    L. Proposal To Revise the AO Survey Validation Program (Sec.  
489.9)
    M. Proposal To Revise the Psychiatric Hospital Survey Process
    N. Limitation on Terminated Deemed Providers/Suppliers Seeking 
Re-Entry Into Medicare/Medicaid (Sec.  489.57, Sec.  488.4(b) & 
Sec.  488.5(a)(21))
    O. Proposal for Technical Correction for End-Stage Renal Disease 
(ESRD) Facilities and Kidney Transplant Programs (Sec.  488.4(a)(4))
V. Request for Information Regarding Timeframes and Expectation for 
the Submission of AO Applications
VI. Collection of Information Requirements

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    A. ICR Related to Conflict of Interest Proposals
    B. ICRs Associated With the Requirement That AOs Incorporate the 
Medicare Conditions
    C. ICRs Associated With the Requirement That AOs Use Survey 
Processes That Are Comparable to That Used by CMS and the SAs
    D. ICR Related to Requirement That the AO Surveyors Take the CMS 
Online Surveyor Training
    E. ICR Associated With the Establishment of a Definition for 
``National in Scope''
    F. ICR Associated With the Proposed Revision of the AO 
Performance Measures and To Require a Publically Reportable Plan of 
Correction
    G. ICR Associated With the Revision of the Definition of 
``Disparity Rate
    H. Burden Reduction Associated With the Revision of the AO 
Validation Program
    I. ICR Associated With the Revision of the Psychiatric Hospital 
Accreditation Process
    J. Burden Associated With Limitations to Terminated Deemed 
Providers Seeking Re-Enrollment and Certification in Medicare/
Medicaid Programs
    K. Summary of Estimated Burden
VII. Response to Comments
VIII. Regulatory Impact Analysis
    A. Statement of Need
    B. Overall Impact
    C. Detailed Economic Analysis
    D. Alternatives Considered
    E. Regulatory Flexibility Act (RFA)
    F. Unfunded Mandates Reform Act (UMRA)
    G. Federalism
Regulations Text

I. Executive Summary

A. Purpose

    The Centers for Medicare & Medicaid Services (CMS) seeks to protect 
the health and safety of patients that receive services from Medicare 
and Medicaid-participating providers that are accredited by CMS-
approved accrediting organizations (AOs). We continue to review and 
revise our health and safety requirements and survey processes to 
ensure that they are effective in driving quality of care for 
beneficiaries receiving services from these accredited providers and 
suppliers.
    In 2015, we published a final rule in the Federal Register 
entitled, ``Medicare and Medicaid Programs: Revisions to Deeming 
Authority Survey, Certification, and Enforcement Procedures'' (80 FR 
29795), hereinafter referred to as the ``2015 AO final rule'' to 
clarify and strengthen the oversight of AOs, specifically to provide 
additional criteria for AOs that apply for, and are granted, 
recognition and approval of an accreditation program (see section II 
``Background'' of this proposed rule for additional background 
information). Over the past 5 years, CMS has continued to evaluate the 
effectiveness of these regulatory changes and the performance of AOs. 
This proposed rule proposes multiple provisions to further strengthen 
our oversight and enforcement capabilities of the AOs. The need for 
these provisions is based on multiple factors, which include: (1) 
direct observation and review of the AOs' accreditation programs for 
those AOs with CMS-approved deeming programs; (2) media reports and 
complaints against facilities that are deemed; (3) the CMS validation 
program and analysis of disparity rates between state survey agency 
(SAs) and the AOs; and (4) our performance evaluations of AOs. The 
preamble discusses each of the proposed provisions (see section IV 
``Provisions of the Proposed Rule'') in this proposed rule. More 
specifically, the preamble provides background and analysis of why CMS 
is proposing additional provisions and revisions to existing 
requirements. CMS is responsible for the oversight of the national AOs' 
Medicare accreditation programs, and for ensuring that providers or 
suppliers under CMS-approved deeming programs by the AOs meet the 
minimum quality and patient safety standards required by the Medicare 
conditions (refer to section II of this proposed rule for additional 
information). Based on several years' experience and data analysis, we 
are proposing the following provisions as described in the preamble to 
strengthen our oversight of AOs.

B. Summary of the Major Provisions

    <bullet> We propose at Sec.  488.1 to add the definitions of 
``geographic regions'', ``national in scope,'' ``outcome disparity 
rate,'' ``process disparity rate,'' and ``unannounced survey''. In 
addition, we propose to revise the definition of ``national accrediting 
organization,'' and remove the definition of ``rate of disparity.''
    <bullet> We propose to establish a new requirement at Sec.  
488.4(a)(1) that would require the AOs that accredit Medicare-certified 
providers and suppliers to incorporate the language of the applicable 
Medicare Conditions of Participation (CoPs), Conditions for Coverage 
(CfCs), conditions for certification, or requirements (collectively 
referred to as ``Medicare conditions'') set forth in the applicable CMS 
regulations for each provider and supplier type as their minimum 
accreditation requirements. However, the AOs would be free to establish 
additional accreditation requirements that exceed Medicare conditions, 
as permitted by section 1865(a)(1) of the Social Security Act (the 
Act).
    <bullet> We propose to add language at Sec.  488.4(a)(2) regarding 
use of a comparable survey process approved by CMS, as outlined and 
contemplated in Sec.  488.5.
    <bullet> We propose to add a new regulation at Sec.  488.4(b) that 
would state that if Medicare terminates the participation agreement of 
a Medicare-certified provider or supplier, then CMS would no longer 
recognize the facility's AO accreditation for deemed compliance. At 
proposed Sec.  488.4(b)(2), we would require a terminated provider or 
supplier to meet all requirements set forth at Sec.  489.57 before 
their new agreement for participation in the Medicare/Medicaid program 
can be approved.
    <bullet> We propose to require AOs to develop a crosswalk between 
their accreditation standards and the Medicare conditions, at proposed 
Sec.  488.5(a)(3).
    <bullet> We propose to revise the existing language at Sec.  
488.4(a)(4) to strengthen our process of evaluating the comparability 
of survey processes of AOs that accredit Medicare-certified providers 
and suppliers with the SAs' survey processes.
    <bullet> We propose to strengthen the requirements at Sec.  
488.5(a)(4), Sec.  488.5(a)(4)(iii), Sec.  488.5(a)(4)(v), Sec.  
488.5(a)(4)(vii), Sec.  488.5(a)(4)(xi), Sec.  488.5(a)(5) and Sec.  
488.5(a)(6) related to the comparability of survey processes as 
mentioned above. We also propose changes under Sec.  488.5(a)(5)(viii) 
related to survey reports. These strengthened requirements would be 
applicable to their initial and renewal applications provided to CMS 
one year after the effective date of the rule.
    <bullet> We propose at Sec.  488.5(a)(8)(i) through Sec.  
488.5(a)(8)(iv) to require AOs that accredit Medicare-certified 
providers and suppliers have their surveyors complete the CMS online 
surveyor training.
    <bullet> We propose to add a requirement at Sec.  488.5(a)(10) that 
the AOs must provide, as part of their initial and renewal 
applications, specific policies and procedures that would address how 
the AOs prevent and address conflicts of interest. We propose that AOs 
provide information on a number of specific policies and procedures.
    <bullet> We propose to also revise requirements under Sec.  
488.5(a)(12) related to the AO procedures for investigating and 
responding to complaints against accredited facilities.
    <bullet> We propose revisions to Sec.  488.5(a)(13) related to the 
AO's accreditation status decision-making

[[Page 11998]]

process, in order to strengthen the comparability of the survey 
processes.
    <bullet> We propose to add a new requirement at Sec.  488.5(a)(21) 
that would require the AOs to submit a statement with its initial or 
renewal application certifying that, in response to a written notice 
from CMS notifying the AO that one of its accredited providers or 
suppliers has been involuntarily terminated from the Medicare/Medicaid 
program, the AO agrees to terminate or revoke its accreditation of the 
terminated provider or supplier within 5-business days from receipt of 
said written notice.
    <bullet> We propose at Sec.  488.5(a)(22) to require the AOs to 
submit a declaration from each surveyor disclosing any interests or 
relationships the surveyor may have in or with another survey agency or 
health care facility the AO accredits (as defined in Sec.  
488.5(a)(10)).
    <bullet> We propose at Sec.  488.8(a)(2) to expand the types of 
validation activities included in the performance review.
    <bullet> We propose at Sec.  488.8(a)(4) to require AOs to submit a 
plan of correction that would be subject to a public reporting 
requirement, when the AO's performance on survey activities identify 
disparity concerns, either through the outcome disparity rates or 
process disparity rates.
    <bullet> We propose at new subsection Sec.  488.8(i) to place 
restrictions on the fee-based consulting services provided by AOs to 
the health care providers and suppliers they accredit. At Sec.  
488.8(i)(1), we propose that an accrediting organization or its 
associated fee-based consulting division or company may not provide 
fee-based consulting services to any health care provider or supplier 
prior to an initial accreditation survey. At Sec.  488.5(i)(2), we 
propose to prohibit AOs from providing fee-based consulting services to 
health care providers and suppliers they accredit within 12 months 
prior to the next scheduled re-accreditation survey of that provider or 
supplier. At Sec.  488.5(i)(3), we propose that AOs may not provide 
fee-based consulting services to a health care provider or supplier in 
response to a complaint received by the AO regarding that provider or 
supplier.
    <bullet> At Sec.  488.8(i)(4), we set forth circumstances in which 
the restrictions to the provision of AO fee-based consulting services 
would not apply.
    <bullet> We propose at Sec.  488.8(i)(5) to require AOs to provide 
specific information to CMS on a bi-annual basis about the fee-based 
consulting services they provide.
    <bullet> We propose at Sec.  488.8(i)(6) to impose penalties on AOs 
for the provision of prohibited fee-based consulting services.
    <bullet> We propose at Sec.  488.8(k) that when an AO owner, 
surveyor, or other employee, currently or within the previous 2 years, 
has an interest in or relationship with a health care facility that the 
AO accredits, the AO would be required to take steps to prevent the 
surveyor from having any involvement with the survey of that facility, 
having input into the results of the survey and accreditation for that 
facility; having involvement with the pre and post survey activities 
for that facility; or having contact with or access to the records for 
the survey of that health care facility.
    <bullet> We propose at Sec.  488.9(b) to revise the types of 
validation programs by adding a new type of validation survey to be 
conducted by SA or CMS surveyors.
    <bullet> We propose a new paragraph (z) at Sec.  489.20 to require 
as a basic commitment of the provider if they are terminated and then 
seek a new provider agreement, they would follow the terms of proposed 
new Sec.  489.57(b) noted below.
    <bullet> We propose to add a new paragraph (b) at Sec.  489.57, to 
require that Medicare-certified providers or suppliers that have been 
involuntarily terminated from the Medicare and/or Medicaid program must 
meet several requirements before their new agreement for Medicare 
participation will be approved. Proposed Sec.  489.57(b)(1) would 
require the terminated provider or supplier to be under the oversight 
of the SA for a reasonable assurance period for a length of time to be 
determined by CMS for the purpose of demonstrating compliance with the 
Medicare conditions. Proposed Sec.  489.57(b)(2) would require the 
provider or supplier to remain under the exclusive oversight of the SA 
until the SA has certified and/or CMS has determined its full 
compliance with all Medicare conditions and the new agreement for 
participation in the Medicare/Medicaid program has been approved. 
Proposed Sec.  489.57(b)(3) would require that during the time period 
in which a provider or supplier is terminated from the Medicare 
program, is under the oversight of the SA, and during the time the new 
agreement for Medicare participation is pending, CMS will not accept or 
recognize deeming accreditation from a CMS-approved accrediting 
organization.
    <bullet> We also propose to remove the reference at Sec.  
488.4(a)(4) that currently excludes ESRD facilities from the 
opportunity for accreditation, to reflect a change included in the 
Bipartisan Budget Act of 2018 (Pub. L. 115-123). Consistent with this 
same provision, we also propose to remove the reference restricting 
transplant programs from an accreditation option.
    <bullet> We are soliciting comments on whether CMS should limit the 
number of times an AO can submit an incomplete initial application for 
a new accreditation program. We seek comment on this question because 
we recently received several incomplete applications which required 
multiple pass backs due to the applicant's failure to provide 
information about issues, such as their financial viability, survey 
processes which appeared not to be operationalized, or similar 
concerns.

II. Background

A. Legislative History

    To participate in the Medicare program, providers and suppliers of 
health care services must, among other things, be in substantial 
compliance with the applicable statutory requirements of the Social 
Security Act (the Act), as well as CMS' regulatory requirements related 
to the health and safety of patients. These health and safety 
requirements are generally called Conditions of Participation (CoPs) 
for most providers; Requirements for Participation for skilled nursing 
facilities (SNFs) and Medicaid Nursing Facilities (NFs) (collectively, 
long-term care facilities); and Conditions for Coverage or Conditions 
for Certification (CfCs) for Ambulatory Surgical Centers (ASCs), Rural 
Health Clinics (RHCs), Federally Qualified Health Centers (FQHCs), 
dialysis facilities (or End-Stage Renal Disease [ESRD] facilities), and 
some types of suppliers (collectively referred herein as Medicare 
conditions). A Medicare-certified provider or supplier that does not 
comply with the Medicare conditions risks having its Medicare provider 
or supplier agreement terminated. Medicaid service providers or 
suppliers that are required by CMS or the State to have Medicare 
approval would also be affected.
    In accordance with section 1864 of the Act, the SAs or other 
appropriate local agencies, under an agreement with the Secretary of 
the Department of Health and Human Services (the Secretary), perform 
surveys of health care providers and suppliers to assess their 
compliance with the applicable Medicare conditions for the purpose of 
certification for participation in the Medicare/Medicaid program. There 
are several types of surveys conducted, including initial 
certification, recertification, and complaint surveys. The SAs and CMS 
also perform surveys

[[Page 11999]]

in certain circumstances for the providers and suppliers that are 
accredited by an AO and deemed to meet Medicare requirements. For 
example, the SA performs complaint surveys for health care providers 
that are accredited by an AO, if the complaint was received by the SA 
directly. The SA also performs surveys of AO-accredited health care 
providers that have had their participation in the Medicare program 
terminated, that wish to be surveyed by the SA instead of an AO, and 
for the purpose of validation of the results of an AO's surveys. Rules, 
regulations, and guidance for the certification process performed by 
the Sas are discussed in the CMS State Operations Manual (SOM) \1\ or 
communicated via Quality, Safety & Oversight (QSO) policy 
memorandums.\2\
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    \1\ CMS Internet Only Manual, Pub. 100-07, available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs-Items/CMS1201984.
    \2\ https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Policy-and-Memos-to-States-and-Regions.
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    Some provider types may only be surveyed by the SA and cannot use 
AOs while others cannot be surveyed by SAs pursuant to statute but can 
only be accredited by a CMS-approved AO. We refer readers to section 
IV, ``Provisions of this Proposed Rule'' for additional information. 
Based on the SA's certification of a provider's compliance or 
noncompliance and recommendation, CMS determines whether the provider 
or supplier qualifies, or continues to qualify, for participation in 
the Medicare program. Additionally, section 1865(a) of the Act allows 
most health care facilities to demonstrate their compliance with the 
Medicare conditions through accreditation by a CMS-approved program of 
an AO, in lieu of being surveyed by SAs for certification. This is 
referred to as ``deeming'' accreditation. This is because CMS-approved 
AOs are recognized by the Secretary as having accreditation programs 
with accreditation standards that meet or exceed those of Medicare. 
Therefore, any provider or supplier that is accredited by an AO under a 
CMS approved accreditation program is deemed by CMS to have also 
complied with the applicable Medicare conditions or requirements. The 
AOs perform initial, re-accreditation, follow-up, and certain complaint 
surveys.
    In December, 2020, Division CC, section 407 of the Consolidated 
Appropriations Act of 2021 (CAA 2021), amended Part A of Title XVIII of 
Act to add a new section 1822 to the Act, and amended sections 1864(a) 
and 1865(b) of the Act, establishing new hospice program survey and 
enforcement requirements. CMS issued implementing regulations for SAs 
and AOs in the CY 2022 Home Health Prospective Payment System Rate 
Update (HH PPS) final rule (86 FR 62240). The HH PPS rule finalized 
changes to increase and improve transparency, oversight, and 
enforcement for hospice programs under SA and AO oversight. 
Additionally, the HH PPS final rule in part requires hospice programs 
to measure and reduce inconsistency in the application of survey 
results among all surveyors. The HH PPS final rule requires: (1) AOs 
with CMS-approved hospice programs to use the same survey deficiency 
reports as the SAs (Form CMS-2567, ``Statement of Deficiencies'' or a 
successor form) to report survey findings; (2) comprehensive training 
and testing of SA and AO hospice program surveyors; and (3) prohibits 
SA and AO surveyors from surveying hospice programs for which they have 
worked in the last 2 years from which they would have a perceived or 
actual conflict of interest.
    CMS is responsible for: (1) providing ongoing oversight of the AOs' 
accreditation programs to ensure that providers or suppliers accredited 
by the AOs meet the required Medicare conditions; (2) ensuring that the 
AOs have formalized procedures to determine whether the health care 
facilities deemed under their accreditation programs meet the AO's 
accreditation standards (which must meet or exceed the applicable 
Medicare program requirements); and (3) ensuring that the AO's 
accreditation standards and practices for surveying providers and 
suppliers meet or exceed the Medicare conditions and practices for 
granting approval.
    For some provider and supplier types, accreditation is voluntary 
and seeking deemed status through an accreditation organization is an 
option, not a requirement for these Medicare-certified providers and 
suppliers. A provider or supplier has the choice to seek deeming status 
and accreditation from an AO with a CMS-approved program or 
certification through the SA survey process. A nationally-recognized AO 
may have accreditation services which are not specifically related to 
Medicare-participation or Medicare conditions and an AO may offer 
accreditation services to a provider or supplier which Medicare does 
not recognize for deeming status, such as long-term care facilities. 
The AO may also provide accreditation with a deeming option, which is 
that their deemed program is recognized and approved by CMS to meet or 
exceed the Medicare program requirements. We refer readers to section 
IV.C ``Proposal to Require the AOs that Accredit Medicare-Certified 
Providers and Suppliers to Use Medicare Conditions; and Strengthened 
Survey Process Comparability'' of this proposed rule for additional 
context.
    AOs typically charge health care facilities a fee for the 
accreditation services they provide. AOs generally offer at least two 
accreditation options, which include non-CMS approved accreditation, 
and accreditation for the purpose of participating in the Medicare 
program. By ``non-CMS approved accreditation'' we mean accreditation 
that is offered by the AOs with an accreditation program that is not 
approved by Medicare and which is not used for Medicare purposes. Such 
accreditation could be used for individual State accreditation purposes 
or additional professional accreditations that a provider or supplier 
seeks for business purposes, such as the Joint Commission's (TJC's) 
Nursing Care Center accreditation for skilled nursing facilities, which 
is not recognized by CMS as an option for deemed status.
    This proposed rule would apply only to the AOs with CMS-approved 
programs that accredit Medicare-certified providers and suppliers and 
those entities they accredit. The provisions of this proposed rule 
would not apply to the following parties: (1) health care providers and 
suppliers that are not accredited by AOs, such as but not limited to, 
nursing homes and comprehensive outpatient rehabilitation facilities 
(CORFs); (2) health care providers and suppliers that are certified by 
the SAs, such as those who elect not to be deemed through an AO; (3) 
AOs that accredit non-certified suppliers; (4) non-certified suppliers; 
and (5) AOs that accredit laboratories (under the Clinical Laboratory 
Improvement Amendments of 1988 (CLIA)).

B. Regulatory Overview of CMS's Rules Regarding AO Programs

    The current regulations at 42 CFR 488.4 set forth the general 
provisions for CMS approved accreditation programs for Medicare-
certified providers and suppliers. Section 488.5 sets out application 
and re-application procedures for national AOs that seek to obtain CMS 
approval of their accreditation programs, often called ``deeming 
authority.''
    The AO application and re-application procedures set forth at Sec.  
488.5 for Medicare-certified providers and suppliers task CMS with the

[[Page 12000]]

responsibilities of approval and oversight of the AOs' accreditation 
programs while ensuring that the accredited providers and suppliers 
meet or exceed the Medicare conditions.
    CMS conducts a thorough review of each accreditation program 
application that is submitted by an AO for CMS approval. This review 
establishes the ``comparability'' of the AOs accreditation standards 
with Medicare, to determine whether the AO's standards meet or exceed 
the Medicare conditions. The application review process also includes a 
review of the AO's survey processes and procedures, the AO's surveyor 
training, and their policies and procedures for the oversight and 
enforcement of provider or supplier entities they accredit. The 
application review team also reviews the qualifications of the AO 
surveyor staff. In addition, CMS reviews the AO's financial status, to 
determine their solvency and potential for longevity of operations.
    Section 488.5(e)(1) requires that we publish a notice in the 
Federal Register when we receive a complete initial or renewal 
application from a national AO seeking CMS approval of its 
accreditation program. The Federal Register notice identifies the 
organization and the type of providers or suppliers to be covered by 
the accreditation program and provides a 30-day public comment period. 
CMS has 210 days from the receipt of a complete application to publish 
notice of approval or denial of the application. Upon approval, any 
provider or supplier subsequently accredited by the AO's approved 
program would be deemed by CMS to have met the applicable Medicare 
conditions and would be referred to as having ``deemed status.''

C. Congressional Report on the Oversight of National AOs and CMS 
Approved Accreditation Programs

    We are required by section 1875(b) of the Act to submit an annual 
Report to Congress \3\ on CMS' oversight of national AOs and their CMS-
approved accreditation programs. This report contains information 
related to the AOs' activities in a fiscal year (FY) and provides a 
comparison of these activities to the activities of previous years. 
Within this report, we also measure the ``disparity rate,'' which is a 
comparison rate based on AO findings of non-compliance during an 
accreditation survey and the SA findings of non-compliance for the same 
facilities found during a look-back validation survey.
---------------------------------------------------------------------------

    \3\ The most recent Report to Congress may be accessed at: 
https://www.cms.gov/files/document/qso-22-06-ao-clia.pdf.
---------------------------------------------------------------------------

    There are three levels of adverse findings on a SA survey, which 
include immediate jeopardy (IJ), condition-level and standard-level 
deficiencies. Sections 488.1 and 489.3 define immediate jeopardy as a 
situation in which the provider's or supplier's non-compliance with one 
or more of Medicare requirements, conditions of participation, 
conditions of coverage or certification ``has caused or is likely to 
cause, serious injury, harm, impairment, or death to a resident or 
patient.'' When investigating a potential immediate jeopardy situation, 
surveyors must find that there is non-compliance by the provider or 
supplier, that serious harm has occurred or is likely to occur, and 
that immediate action needs to be taken by the provider/supplier. (See 
Appendix Q of the SOM for additional guidance.) A condition-level 
deficiency means that for that particular Medicare condition of 
participation, also known as a CoP, the facility's noncompliance is 
such that it substantially limits the provider or supplier's capacity 
to furnish adequate care or which adversely affects the health and 
safety of patients (Sec.  488.24). There can be noncompliance with a 
Medicare condition at a regulatory standard level that does not rise to 
the level of noncompliance with the condition. For example, a hospital 
may fail to have written policies and procedures regarding the 
evacuation of patients during an emergency (as required at Sec.  
482.15(b)(3)) but complies with the remaining standards set forth at 
Sec.  482.15 (a) through (f) such as having policies and procedures for 
alternate source power, provisions, tracking of patients and staff and 
has a communication plan and training and testing program. In this 
situation, the hospital generally would not be cited at a condition-
level deficiency for the entire Emergency Preparedness Medicare 
condition (at Sec.  482.15). The manner and degree of the noncompliance 
is considered to determine whether there is substantial compliance or 
not. A standard-level deficiency means that the provider may be out of 
compliance with one or more aspects of a regulatory condition or 
requirement, but is considered less severe than a condition-level 
deficiency. A condition-level deficiency, however, is considered more 
serious in nature and could lead to a facility being terminated from 
the Medicare and Medicaid programs for non-compliance. Immediate 
jeopardy citations are condition-level deficiencies that pose immediate 
jeopardy to patient health and safety.
    On a validation survey, when the SA cites a condition-level 
deficiency for which the AO has not cited a comparable deficiency, the 
deficiency is considered by CMS to have been missed by the AO and is a 
factor in determining the AO's ``disparity rate'' for each facility 
type. The identification of one missed condition-level deficiency by 
the AO results in the entire survey being counted toward the disparity 
rate. The number of disparate surveys is divided by the total number of 
validation surveys performed with respect to that AO by various States' 
SAs, in order to determine the AO's disparity rate.
    According to the most recent report, the FY 2020 Report to 
Congress,\4\ disparity rates for all CMS approved AO programs for the 
following facility types for the most recent year in the report (FY 
2019) are: Hospitals (42 percent); Psychiatric hospitals (45 percent); 
Critical Access Hospitals (46 percent); Home Health Agencies (8 
percent); Hospices (19 percent) and Ambulatory Surgical Centers (34 
percent). From FY 2018 to FY 2019, hospitals, HHAs and ASCs had the 
only decreases in disparity rates, with a decrease of 5-percentage 
points, 11-percentage points, and 7-percentage points, respectively. 
The disparity rates for psychiatric hospitals increased by seven 
percentage points from FY 2018 to FY 2019. The disparity rates for CAHs 
and hospices increased by five percentage points and three percentage 
points respectively from FY 2018 to FY 2019. The findings and other 
information are consistent with previous reports, and no notable 
changes were observed in the FY 2020 RTC covering the FY 2019 period of 
activities.
---------------------------------------------------------------------------

    \4\ https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/QSO-19-17-AO-CLIA.pdf.
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D. CMS Validation Survey Pilot

    As part of our ongoing efforts to enhance transparency and our 
oversight of the AOs, in 2018, CMS began a pilot for integrated 
validation surveys for accredited hospitals, known as the Validation 
Redesign Program (VRP) pilot. In a VRP pilot survey, the SA teams 
accompany the AO survey teams on a reaccreditation survey for an 
accredited facility for the purpose of evaluating the AO surveyors' 
competency at performing surveys and overall effectiveness during the 
survey process. The initial findings of the VRP pilot will be discussed 
further later in this preamble at sections IV.J and IV.L.3. CMS plans 
to continue to refine the

[[Page 12001]]

validation process over the next several years in an effort to enhance 
AO oversight, and verify that providers/suppliers under deemed status 
are in compliance with the Medicare conditions, and focus surveys on 
key quality concerns while reducing provider burden.
    A national AO seeking approval of its accreditation programs in 
accordance with section 1865(a) of the Act must apply for and be 
approved by CMS for a period not to exceed 6 years. (See Sec.  
488.5(e)(2)(i)). An AO must submit a renewal application seeking re-
approval of its accreditation program(s) before the expiration date of 
its current CMS approval. Review of the AO's renewal application in a 
timely manner allows CMS to ensure that there would not be a lapse in 
accreditation for the providers and suppliers accredited by the AO. 
Requiring the AO to submit a renewal application periodically allows 
CMS to ensure that the accreditation provided by the AO continues to 
ensure that the providers or suppliers accredited by that AO meet or 
exceed the Medicare conditions.

E. Overview of Transparency and Oversight of Accrediting Organizations

    In September 2017, an article in the Wall Street Journal \5\ raised 
concerns regarding the performance and transparency of AO surveys, and 
noted potential conflicts of interest between an AO's accreditation 
services and its consulting services. As a result of this article, CMS 
initiated an investigation into these allegations.
---------------------------------------------------------------------------

    \5\ The Wall Street Journal, ``Watchdog Awards Hospitals Seal of 
Approval Even After Problems Emerge'' Stephanie Armour (September 8, 
2017) https://www.wsj.com/articles/watchdog-awards-hospitals-seal-of-approval-even-after-problems-emerge-1504889146.
---------------------------------------------------------------------------

F. Prior Rulemaking--Accrediting Organizations Conflict of Interest 
Request for Information (RFI)

    CMS is aware, from the information submitted with their 
applications, that some AOs with CMS-approved accreditation programs 
are also providing fee-based consultative services to Medicare-
participating health care facilities. Our understanding is that typical 
AO fee-based consultative services include, but are not limited to the 
following:
    <bullet> Assistance for clinical and non-clinical leaders 
(including administrators) in understanding the AO and Medicare 
conditions for compliance;
    <bullet> Review of facility standards and promised early 
intervention and action through simulation of a real survey, such as a 
mock survey with comprehensive written reports of findings;
    <bullet> Review of a facility's processes, policies and functions;
    <bullet> Identification of and technical assistance for changing 
and sustaining areas in need of improvement; and,
    <bullet> Educational consultative services.
    CMS acknowledges that independent fee-based consulting is a 
valuable resource that can help providers and suppliers improve the 
quality and safety of the care they provide. This does not mean that 
the providers or suppliers who elect not to receive fee-based 
consulting from an AO that offers it, or that providers or suppliers 
that are accredited by an AO that does not offer this service would not 
provide safe, quality care.
    There are many third-party consultants that offer fee-based 
consulting across all provider and supplier types. The availability of 
third-party fee-based consultants give providers and suppliers access 
to this educational service, if their AO does not provide fee-based 
consulting. If a provider's/supplier's AO already offers fee-based 
consulting, third-party consultants can offer such providers and 
suppliers, with an alternative, allowing providers and suppliers to 
compare the effectiveness and quality of consultants to address their 
needs within their cost limitations. The provider or supplier may also 
be able to negotiate a price for educational services provided by a 
third-party consultant, while this may not be an option with the AOs 
that offer fee-based consulting. It is important to note there would be 
no conflict of interest associated with the use of third-party fee-
based consultants because these consultants do not also make compliance 
determinations about the provider or supplier.
    Fee-based consulting services are not prohibited by law or 
regulation. However, CMS is concerned that an AO's provision of such 
fee-based consulting results in perceived or actual conflicts of 
interests because of the contractual and financial relationship that 
exists between the health care provider and the AO, which is a private 
entity that profits from the performance of the inherently governmental 
function of regulating health care providers through accreditation.
    Because of this, on December 20, 2018, we published a Request for 
Information (RFI) in the Federal Register entitled, ``Medicare Program: 
Accrediting Organizations Conflict of Interest and Consulting Services; 
Request for Information'' (83 FR 65331) hereinafter referred to as 
``2018 AO Conflict of Interest RFI'', in response to increasing concern 
about potential conflicts of interest created by the accreditation and 
consultative activities of the AOs. Specifically, we solicited public 
comments to determine whether offering consultative services to the 
same entities an AO accredits may create actual or perceived conflicts 
of interest between an AO's accreditation program and its consultative 
program. We stated that this dual function may undermine, or appear to 
undermine, the integrity of the accreditation programs and could erode 
public trust in the safety of providers and suppliers that have been 
accredited by CMS-approved AOs. We further acknowledged that certain 
consulting services offered by some of the AOs, such as quality 
improvement work and training of facility staff, may be beneficial to 
some facilities and result in improvements in operations or the quality 
of care furnished and may be provided with the best of intentions. We 
stated that circumstances could arise where an AO has recommended a 
facility for deemed status through their accreditation service, while 
the consultancy service of the AO was generating revenue assisting the 
same facility in passing the AO's own accreditation surveys. Some AOs 
have indicated that they establish firewalls between the arms of their 
businesses, but we stated that these firewalls may not be sufficient to 
ensure that no conflicts of interest result from these activities.
    We further stated that, similar to quality improvement organization 
(QIO) and external quality review organization (EQRO) programs, any AO 
with a Medicare-approved accreditation program has assumed a position 
of public trust and is responsible for acting on behalf of the public, 
because the AO is performing a function that assists in the federal 
government's enforcement programs. We also expressed our view that AOs 
voluntarily take on this position and responsibility when they seek 
accreditation approval from CMS to accredit providers and suppliers for 
participation in Medicare. Because of the responsibility to maintain 
public trust and public health, we continually ensure that all entities 
and programs, including AOs and their accreditation programs that 
require CMS approval, be held to high standards of ethical conduct so 
that everyone can have complete confidence in the integrity of federal 
government certification. We stated that the AOs' decisions to accredit 
facilities must be made without regard to any additional services that 
a Medicare provider or supplier might

[[Page 12002]]

obtain through the AO or its subsidiaries. We stated that this policy 
would ensure and maintain public trust in the Medicare certification 
program.
    In the 2018 AO Conflict of Interest RFI, we solicited public 
comments to gather information for potential future rulemaking and to 
obtain insight on mechanisms to address this potential conflict of 
interest. We were specifically interested in ways to potentially modify 
Sec.  488.5(a), which sets out the required information to be submitted 
with an AO's application. For example, Sec.  488.5(a)(10) states that 
the application information from the AO include the organization's 
policies and procedures to avoid conflicts of interest, including the 
appearance of conflicts of interest, involving individuals who conduct 
surveys or participate in accreditation decisions.
    We stated that potentially expanding Sec.  488.5(a)(10) by adding 
provisions that would require the AOs to disclose information about any 
consultative services they offer to facilities could further enhance 
our oversight of AOs.
    In addition, we solicited comments on the following issues:
    <bullet> With respect to fee-based consultative services provided 
by AOs to the facilities they accredit--
    ++ How are these services provided and communicated to the 
facilities?
    ++ Are potential conflicts of interest disclosed?
    <bullet> Are there other entities that could provide this training 
besides the AOs?
    <bullet> Whether commenters perceive a conflict of interest in AOs 
providing fee-based consultative services to the facilities they 
accredit.
    <bullet> Whether the ability of an AO to collect fees for 
consultation services from entities they accredit could degrade the 
public trust inherent in an AO's CMS approved accreditation programs.
    <bullet> What the appropriate consequences or impacts should be, if 
a conflict does exist.
    <bullet> What firewalls may exist within an AO between 
accreditation and consultation services, or what firewalls would be 
prudent, to avoid potential and actual conflicts of interest.
    <bullet> Examples of positive and negative effects which may be as 
a result of a conflict of interest.
    <bullet> What the potential impact, financially and overall would 
be if CMS were to finalize rulemaking which would restrict certain 
activities that might give rise to a real or perceived conflict of 
interest.
    <bullet> When and/or under what circumstances it would be 
appropriate for AOs to provide fee-based consultative services to the 
facilities which they accredit.
    <bullet> Whether, and if so, under what specific circumstances CMS 
should review a potential conflict of interest, and what factors CMS 
should look at to determine if a conflict of interest exists.
    <bullet> A list describing under what circumstances the AOs or 
stakeholders would believe there to be a conflict; and under which 
circumstances conflict does not exist.
    <bullet> The type of information which would be considered 
necessary, useful and/or appropriate in proving or refuting our 
hypothesis of a connection between the use of consultative services and 
preferential treatment of accredited providers and suppliers. (See 83 
FR 65336.)
    We received approximately 128 public comments in response to the 
2018 AO Conflict of Interest RFI. Approximately half of the commenters, 
(consisting primarily of AOs and health care facilities that use 
consulting services) supported the use of AO consulting services and 
stated that there is no conflict of interest associated with fee-based 
consulting. The other half of commenters (consisting of individuals, 
provider associations, medical advocacy groups and one AO) stated that 
the provision of fee-based consulting by the AOs creates a conflict of 
interest.
    Several commenters stated that the benefits derived from AO fee-
based consulting far outweighs any potential or actual conflict of 
interest that may result. Many commenters believe that AO consulting 
services allow the facility to seek information and guidance that helps 
them understand, interpret and comply with the Medicare conditions and 
regulatory requirements. These commenters stated that use of the AO's 
fee-based consulting services helped to improve the safety and quality 
of the care provided by the health care facility.
    Many commenters stated that there are already-implemented checks 
and balances between CMS and the AOs that are sufficient to ensure that 
no conflicts of interest occur between the AOs and their accredited 
facilities. These commenters stated that the AOs have robust firewall 
policies and procedures in place to prevent conflicts of interest 
related to fee-based consulting. Many commenters also stated that CMS 
has a specific AO fee-based consulting firewall policy in place and 
that this policy is adequate to prevent any conflicts of interest. 
However, CMS does not currently have such a policy.\6\
---------------------------------------------------------------------------

    \6\ In section IV.B.6 of this rule, we propose to require any AO 
that provides fee-based consulting services or its associated fee-
based consulting division or company to have written fee-based 
consulting ``firewall'' policies and procedures.
---------------------------------------------------------------------------

    Several commenters stated that AOs are commissioned to ensure 
compliance with the Medicare conditions. These commenters stated that a 
big part of compliance is not only being punitive but informational/
educational. One commenter suggested that AOs are in a unique position 
to provide this education and technical assistance because they 
understand the complexity of the Medicare conditions. One commenter 
stated that if AO fee-based consulting services were not provided, 
facilities could see additional deficiencies cited due to 
misinterpretation of requirements and multiple rounds of surveys, 
generating still more cost to the facility.
    Several commenters stated that the financial benefit derived by the 
AOs from providing fee-based education is not significant. Some of 
these commenters also stated that the AOs gained no benefit from the 
success or results of accreditation whether they had assisted the 
provider to deliver better services or not.
    One commenter stated that they were are not aware of other 
organizations who would be capable of educating and advising health 
care providers in a similar fashion as the AOs' consulting services. 
Several other commenters expressed concern about having fee-based 
consulting services provided by an independent third-party. These 
commenters stated that, while there are other entities beside the AOs, 
such as QIOs that could provide training, the focus would solely be on 
quality rather than the outcome of an accreditation.
    Many commenters stated that the integrity of the accreditation 
process is of utmost concern for regulators, providers and patients 
alike and that AOs should position themselves to be above reproach in 
regard to overseeing patient care and quality of services that health 
care facilities provide, so as to retain the trust of patients and the 
public. Several commenters suggested that anything that may undermine 
the integrity of accreditation programs or the public trust in CMS 
accredited providers and suppliers be considered and addressed. One 
commenter stated that the ability of AOs to provide both survey 
services and consulting services is a conflict of interest, which 
results in a decreased level of trust among providers, Medicare, and 
the public.
    Many commenters expressed concern about the financial and 
contractual relationship that exists between AOs and the health care 
facilities they accredit. These commenters expressed

[[Page 12003]]

concern that the existence of a financial relationship between AOs and 
health care providers casts a veil of doubt over the entire CMS 
hospital accreditation process, eroding the public trust in CMS to 
maintain the standard of care at our nation's hospitals and to ensure 
that Medicare patients are receiving safe, therapeutic care. One 
commenter stated the belief that the business connection between the 
provider and the AO creates a relationship that the AO could have an 
incentive to manipulate.
    In addition, several commenters expressed concern about the 
significant financial interest the AOs have in the provision of fee-
based consulting. One commenter stated that since AOs are being paid by 
the health care facilities for both accreditation services as well as 
consulting services, it is obviously in their financial interest to 
keep the health care facilities accredited and not to create too much 
dissatisfaction to incite the organization to seek another AO. Several 
commenters expressed concern that this financial relationship might 
provide the incentive for the AOs to ignore or downplay deficiencies 
during the survey of a consultative client in order to increase the 
apparent efficacy of its consulting services. Or, perhaps more 
undetectably, an AO could exaggerate the deficiencies on surveys in 
order to increase the apparent value of the consulting services to 
providers. Because of the above-stated concerns, several commenters 
suggested that CMS prohibit the AOs from providing fee-based consulting 
to the health care providers and suppliers they accredit.

G. Conflict of Interest--The AO Owner's, Surveyor's and Other 
Employee's Interest in or Relationship With a Health Care Facility That 
the AO Accredits

    It is typical for an individual health care professional, such as a 
physician or nurse, to have concurrent employment relationships with 
more than one health care provider. Many health care professionals, 
such as physicians, physician assistants, and nurse practitioners have 
multi-setting practices or are employed at more than one health care 
facility. For example, a registered nurse (RN) may work on staff at a 
hospital but also work at other hospitals through a medical staffing 
agency. In addition, as employees of a health care facility, these 
health care professionals could possibly gain a financial interest in 
the health care facility through means such as being a contributor to 
the construction costs of a new wing of the facility or buying stock in 
the facility or its parent corporation. Management employees could be 
awarded stock or stock options for the facility or its parent 
corporation as part of their compensation and benefits package.
    AOs frequently hire surveyors that are also employed at one or more 
outside health care settings because the professional associations, 
expertise, knowledge and skills held by these health care practitioners 
make them an asset as a surveyor. This might include, for example, a RN 
who is employed by a hospital and also works as a surveyor for an AO. 
This employment scenario does not generally violate CMS policy or 
regulations. Furthermore, an AO surveyor having other employment does 
not, in and of itself, necessarily create a conflict of interest. 
However, if the AO provides accreditation services to the health care 
facility that employs the AO surveyor, this would cause a conflict of 
interest if that surveyor is permitted to have any involvement in the 
survey process for that health care facility.
    CMS has recently encountered two situations in which an AO's 
surveyor was also employed by the health care facility that was being 
accredited by the AO. In one of these situations, an AO surveyor was 
also employed in an administrative position at a rehabilitation 
facility that was being surveyed by the AO. This situation was not 
disclosed to CMS by the AO. Currently CMS has no specific regulations 
that would prohibit a conflict of interest related to an AO surveyor's 
relationship with a health care facility that the AO accredits, except 
for home health agencies and hospice programs.
    Section 488.5(a)(10) of our regulations requires that an AO 
provide, with its application seeking CMS approval of its accreditation 
program, ``the organization's policies and procedures to avoid 
conflicts of interest, including the appearance of conflicts of 
interest, involving individuals who conduct surveys or participate in 
accreditation decisions.'' However, Sec.  488.5(a)(10) does not provide 
requirements for specific types of information or requirements that 
should be contained in the AO's conflict of interest policy and 
procedures. This regulation does not specifically prohibit or define 
conflicts of interest and, based on the comments to the 2018 AO 
Conflict of Interest RFI, CMS proposes to revise this regulation to 
more specifically address situations that should be included in the 
AO's conflict of interest policy.
    As noted above, the SAs and AOs perform similar work. Section 4008 
of the SOM describes examples of scenarios that would be conflicts of 
interest for SA surveyors who have an outside relationship with a 
facility that is surveyed by the SA.\7\ Currently, section 4008 of the 
SOM applies only to the SA surveyors and not AO surveyors.
---------------------------------------------------------------------------

    \7\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/som107c04pdf.pdf.
---------------------------------------------------------------------------

    Scenarios in which an AO surveyor has a relationship with a health 
care facility that their AO accredits could represent a conflict of 
interest. As CMS has no specific regulations that would proactively 
address such conflicts of interest for AOs that accredit healthcare 
providers other than home health agencies and hospice programs, we 
propose to establish several requirements to help mitigate such 
conflicts of interest in section IV.B.7 of this proposed rule.

III. Request for Public Comment on Whether It Is a Conflict of Interest 
for AO Board Members or Advisors To Have an Interest in or Relationship 
With a Health Care Facility That the AO Accredits

    As previously stated, it could be a conflict of interest when an AO 
surveyor is involved with the survey of a facility with which that 
surveyor has an employment, financial, business or other interest or 
relationship. We note that in most cases, the AO board members do have 
interests in or relationships with the health care facilities the AO 
accredits. In many cases, the board members of the AOs frequently hold 
upper management positions of a health care facility the AO accredits, 
such as chief executive officer (CEO), director, or President. In an 
article published in the Wall Street Journal on September 8, 2017,\8\ 
it was stated that ``[t]wenty of the Joint Commission's 32 board 
members are executives at health systems it accredits or else work at 
parent organizations of such health systems. Some other board members 
are named by healthcare lobbying groups, such as the American Hospital 
Association and the American Medical Association. This article compared 
this situation to ``Big Pharma setting up its own accrediting 
organization'' and stated that ``if you look beneath the surface, there 
are conflicts and problems.''
---------------------------------------------------------------------------

    \8\ S. Armour, Hospital Watchdog Gives Seal of Approval, Even 
After Problems Emerge, Wall Street Journal, September 8, 2017.
---------------------------------------------------------------------------

    We seek public comment as to whether it would be a conflict of 
interest for an AO board member, AO advisor, or CEO or other executive 
team members to also have a relationship with a health care 
organization accredited by such AO. An AO advisor

[[Page 12004]]

would be an advisory committee member, advisor to the CEO, or an 
advisor to the board of directors. We refer readers to proposals 
related to an AO owner's, surveyor's, or other employee's interest in 
or relationship with a health care facility the AO accredits in section 
IV.B.7 of this proposed rule.

IV. Provisions of the Proposed Rule

    We establish health and safety standards, known as the Conditions 
of Participation, Conditions for Coverage, or Requirements for 
Participation for different types of health care providers and 
suppliers, and these standards are based on specific statutory 
authorities for the different provider and supplier types. Pursuant to 
such authorities, each specific type of Medicare-certified provider and 
supplier must meet our health and safety standards. As part of the CMS 
certification process, compliance with these standards is evaluated by 
SAs under agreement at section 1864 of the Act, through the survey and 
certification process. However, CMS makes the final Medicare 
certification determination. In the alternative, we can deem these 
providers and suppliers to have met those standards if they are 
accredited by the CMS-approved AOs that are the subject of this 
proposed rule.
    CMS is using the authority established by Congress under section 
1865 of the Act to establish certain requirements for AOs in this 
proposed rule. Section 1865(a)(2) of the Act establishes a process for 
the Secretary to make a finding with respect to approval of an 
accrediting organization. In making this finding, the Secretary must 
consider, among other factors, the AO's requirements for accreditation, 
its survey procedures, its ability to provide adequate resources for 
conducting required surveys and supplying information for use in 
enforcement activities, its monitoring procedures for provider entities 
found out of compliance with the conditions or requirements, and its 
ability to provide the Secretary with necessary data for validation.
    In addition, ``Non-certified'' suppliers are a statutory category 
for which CMS does not set health and safety standards, even though 
they must obtain accreditation in accordance with statute. Because we 
have not set health and safety standards for these facility types, we 
are not applying these provisions to non-certified supplier types at 
this time. These suppliers include (1) Advanced Diagnostic Imaging 
(ADI) suppliers; (2) home infusion therapy (HIT) suppliers; (3) 
diabetes self-management training (DSMT) suppliers; and (4) durable 
medical equipment prosthetics, orthotics supplies (DMEPOS). We are also 
not proposing to extend any of the provisions set forth in this 
proposed rule to AOs that accredit non-certified suppliers.
    Non-certified suppliers are those suppliers that are required to be 
accredited by a CMS-approved AO for Medicare payment, do not enter into 
a Medicare agreement but are enrolled in the Medicare program, and do 
not receive a CMS certification number (CCN). These non-certified 
suppliers are a smaller, discrete group that are not under the 
jurisdiction of the SAs and do not undergo validation surveys. For 
example, there are no health and safety regulations for advanced 
diagnostic imaging (ADI) suppliers and only minimal such standards for 
DMST suppliers. Also, many ADI suppliers are physician's practices that 
provide an ADI service, such as computerized tomography (CT) scans in 
their office. CMS has not yet developed a survey process and health and 
safety requirements for these supplier types, however we reserve the 
right to do so in the future. CMS does a review of the applications for 
AOs that accredit non-certified programs. The provisions proposed in 
this rule would not align to these programs at this time.
    As stated in section I ``Executive Summary'' and section II 
``Background'' of this proposed rule, since issuing the 2015 AO final 
rule, there are several provisions related to oversight of AOs that 
require strengthening. Throughout the last several years, we have 
worked closely with the AOs, provided guidance and instituted an AO 
Liaison program in which CMS meets with each AO at least on a quarterly 
basis. These meetings and discussions have provided an avenue for CMS 
to also receive feedback on existing Medicare conditions, our 
interpretive guidelines and allowed for an opportunity for CMS to 
clarify expectations for the AOs. This experience has helped us to 
identify areas of our regulations in need of revision to more clearly 
articulate the requirements for all AOs with a CMS-approved 
accreditation program. Furthermore, as we have taken actions to 
exercise more oversight of existing CMS-approved AO programs, we have 
become aware of the need to clarify, reorganize, and amend our 
regulations to support a more efficient and effective oversight 
process.
    The below proposal outlines the background behind each proposal and 
what led to CMS' development of this proposed rule.

A. Proposal To Add Definition of ``Unannounced Survey'' to Sec.  488.1

    We propose to add a new definition of ``unannounced survey'' to 
Sec.  488.1. The definition of ``unannounced survey'' would be 
consistent with the definition of ``unannounced'' contained in the 
Merriam-Webster dictionary, which is ``without previous notice or 
arrangement and therefore unexpected.'' Adding this definition of 
``unannounced survey'' would support the existing requirements set out 
at Sec.  488.5(a)(4)(i) and in our sub-regulatory guidance. This 
proposal clarifies and codifies existing requirements under Sec.  
488.5(a)(4)(i), which requires that surveys must be unannounced, which 
means that the facility must be unaware of the survey until the time 
that the survey team arrives, and that the provider or supplier would 
not receive notice of the survey until the survey team arrives at the 
facility. Our long standing policy behind the term ``unannounced 
survey'' has been within section 2700A, chapter 2 of the SOM, outlining 
the expectation that all surveys of providers and suppliers (other than 
clinical laboratories) must be unannounced to the provider or supplier 
being surveyed. This means that the provider or supplier to be surveyed 
would not receive notice of the survey until the survey team arrived at 
the facility for the survey, as is also currently the AO's process for 
complaint surveys. The proposed definition for ``unannounced survey'' 
would also state that unannounced surveys must be scheduled by the AO 
in a manner so that their timing and occurance will not be predictable 
to the healthcare facility being surveyed.
    One of the primary reasons surveys conducted by either the SA or 
the AO are required to be unannounced is to prevent the provider or 
supplier from making unusual preparations for the survey that would not 
represent the ongoing typical condition of the provider and true nature 
and quality of care provided. Examples of these activities would 
include unusual cleaning activities, painting, clearing obstructions 
from halls and entrances, denying leave to staff during that time or 
calling staff back to inflate staffing availability, and re-reviewing 
medical records outside of what is normally done. If a provider or 
supplier knows the exact time a surveyor will be onsite, it may 
temporarily adjust its typical practices such as staffing, which would 
provide an unrepresentative picture to surveyors of the quality of care 
typically provided to patients or residents. A notice to facility 
leadership via

[[Page 12005]]

organizational websites, emails, or phone calls prior to surveyors 
arriving onsite is considered a violation with CMS regulations.
    In 2009, CMS clarified this expectation in the Survey & 
Certification Policy Memorandum 09-41,\9\ to advise that announcing of 
surveys was in conflict with CMS regulations. In the effort to align AO 
survey processes with CMS survey processes (which are followed by the 
SA surveyors), as outlined in section IV.C of this proposed rule, 
additional clarity regarding this prohibition is needed. Defining the 
term ``unannounced survey'' within the regulation as opposed to our SOM 
(subregulatory guidance) would provide clarity regarding our 
expectations, and would mirror the processes used by our SAs, who do 
not announce their surveys (except for clinical laboratories); as 
noted, any AO practice of announcing surveys could undermine the 
integrity of the survey process. While we recognize AOs may have 
provided up to a 60-minute advance notice of the survey team arriving 
onsite for initial and reaccreditation survey activities, this is 
inconsistent with the processes followed by our SAs, and is 
inconsistent with the AOs' own survey processes for complaint surveys 
(which are always unannounced).
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    \9\ https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Policy-and-Memos-to-States-and-Regions-Items/CMS1223113.
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    Therefore, in accordance with Sec.  488.5(a)(4)(i), which requires 
unannounced surveys, as well as our long-standing policy in section 
2700A, chapter 2 of the SOM, we propose that all surveys of providers 
and suppliers (other than clinical laboratories) must be unannounced 
and any advance notice to facilities would be prohibited. This proposed 
requirement would apply to AOs as well as SAs and further support our 
initiative to bring consistency to survey practices as outlined in 
section IV.C of this proposed rule.
    Furthermore, the definition of ``unannounced survey'' must ensure 
that the recertification surveys are unpredictable. AOs generally 
complete comprehensive re-accreditation surveys of their client 
providers and suppliers every 32 to 36 months. However, some providers 
or suppliers have informed us that they know when an AO is scheduled to 
survey the facility--the AO may schedule the facility for survey within 
the same week or month every survey cycle, or has narrowed its schedule 
via the use of blackout days, or informed the facility close to the 
time of the survey via administrative contact from the AO, such as 
payment collection, confirmation or change of address notification or 
other facility-AO specific information. All of these practices 
undermine the integrity of the unannounced survey process.

B. Conflict of Interest

1. Proposal for Information To Be Submitted With the AOs' Conflict of 
Interest Policies and Procedures (Proposed Revisions to Sec.  
488.5(a)(10))
    Section 488.5(a)(10) currently requires that the AO submit ``the 
organization's policies and procedures to avoid conflicts of interest, 
including the appearance of conflicts of interest, involving 
individuals who conduct surveys or participate in decisions.'' This 
requirement does not require the AO to address any specific areas or 
issues in their conflict of interest policies and procedures. In 
addition, the AOs only need to submit this information to CMS with 
their initial and renewal applications, which is currently every 6 
years or less, as established by CMS.
    We propose to revise Sec.  488.5(a)(10) by adding a requirement 
that AOs must provide CMS with more specific conflict of interest 
policies and procedures. We propose at Sec.  488.5(a)(10)(i) to require 
the AOs to provide CMS with their policies and procedures for 
separation of their fee-based consulting services from their 
accreditation services (that is, fee-based consulting ``firewall'' 
policies and procedures). We propose at Sec.  488.5(a)(10)(ii) to 
require the AOs to provide their policies and procedures for protecting 
the integrity of the AOs' accreditation program, including the 
requirements of proposed Sec.  488.8(i) and (j) noted below. Section 
488.8(i) pertains to restrictions on certain fee-based consulting 
services provided by AOs, and Sec.  488.8(k) pertains to conflicts of 
interest which arise due to AO owners, surveyors, and other employees 
having a business, employment, financial or other type of relationship 
with a health care facility accredited by the AO.
    At Sec.  488.5(a)(10)(iii), we propose to require the AOs to 
provide policies and procedures for the prevention and handling 
potential or actual conflicts of interest that could arise from 
situations in which an AO owner, surveyor, or other employee has a 
business, employment or financial interest in or relationship with 
another survey agency or health care facility to which the AO provides 
accreditation services.
    Proposed Sec.  488.5(a)(10)(iii) would further state that such 
interests or relationships would include but not be limited to: (1) 
being employed as a SA surveyor; (2) being employed in a health care 
facility that is accredited by the AO; (3) having an ownership, 
financial or investment interest in a health care facility that is 
accredited by the AO; (4) serving as a director of or trustee for a 
health care facility that is accredited by the AO; (5) serving on a 
utilization review committee of a health care facility that is 
accredited by the AO; (6) accepting fees or payments from a health 
facility or group of health facilities that is/are accredited by the 
AO; (7) accepting fees for personal services, contract services, 
referral services, or for furnishing supplies to a health care facility 
that is accredited by the AO; (8) providing consulting services to a 
health care facility that the AO accredits; (9) having members of their 
immediate family engaged in any of the stated activities, other than 
being a non-managerial employee of a health facility that is accredited 
by the AO; and (10) engaging in any activities during the course of the 
survey of the facility that would be or cause a conflict of interest.
    In proposed Sec.  488.5(a)(10)(iii)(I), we have defined the term 
``immediate family member'' as a husband or wife, birth or adoptive 
parent, child, or sibling; stepparent, stepchild, stepbrother, or 
stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law, 
brother-in-law, or sister-in-law; grandparent or grandchild; and spouse 
of a grandparent or grandchild. This is also consistent with the 
definition of ``immediate family member'' used for the hospice program 
conflict of interest regulations at Sec.  488.1115.
    We further propose at Sec.  488.5(a)(10)(iv) to require AOs to 
provide policies and procedures for providing notification to CMS when 
such a conflict of interest is discovered.
    We propose at Sec.  488.5(a)(10)(v) to define ``conflict of 
interest'' as a situation in which an AO, its owner(s), surveyors, or 
other employees, or the AO's successors, transferees, or assigns, or 
the immediate family members of the AO owners(s), surveyors and other 
employees have an employment, business, financial or other type of 
interest in or relationship with a health care facility the AO 
accredits. We would deem a conflict of interest to have occurred if one 
of the above-stated parties either knowingly or unknowingly exploited 
their interest in or relationship with that provider or supplier. We 
remind readers that in the CY 2022 Home Health Prospective Payment 
System Rate Update (86 FR 62368) that we finalized similar conflict of 
interest regulations for hospice

[[Page 12006]]

programs at Sec.  488.1115(b). The proposed requirements of this rule 
for accrediting organizations are consistent with, and build upon, the 
current conflict of interest regulation for hospice programs at Sec.  
488.1115(b). For additional discussion on the Hospice final rule see 86 
FR 62368.
    We are proposing changes to Sec.  488.5(a)(10) to require the AO to 
have policies and procedures for the prevention, handling of and 
notification of CMS when conflicts of interest arise, because on 
several occasions, AOs have failed to notify CMS of such conflicts of 
interest. These changes would broaden our oversight of the AOs' 
handling and reporting of conflicts of interests. Additionally, by 
requiring the AOs to provide CMS with more specific information about 
their conflict-of-interest policies and procedures, CMS would be 
afforded a more comprehensive look at how the AOs plan to handle 
specific scenarios that CMS would deem to be conflicts of interest. 
These proposed requirements would require those AOs that did not have 
policies and procedures to prevent, address and handle conflicts of 
interests to develop and use them.
    The proposed requirements at Sec.  488.5(a)(10)(iii), for the 
conflict of interest and information that must be submitted with the 
AOs' conflict of interest policies and procedures, are more detailed 
than the requirements currently set forth in section 4008 of the SOM, 
which provide examples of possible scenarios that could be conflicts of 
interest for the SA surveyors. Section 4008 of the SOM leaves it to the 
discretion of the SA management to decide how to identify and address 
these conflicts of interest.
    A more detailed conflict of interest requirement is not necessary 
for the SA surveyors because SA surveyors, who are state employees, are 
generally required to report incidences of conflicts of interest to the 
SA management, who is tasked with taking the appropriate action.
    Unlike the SAs, the AOs are more likely to encounter scenarios with 
conflicts of interest. For example, AO owners, board members, surveyors 
and other employees might also be employed by health care facilities 
that are surveyed and accredited by that AO. Therefore, the proposed 
requirements for AOs must be more detailed and prescriptive than SAs 
because of the likelihood of them encountering conflicts of interest.
2. Proposal To Require AOs To Obtain and Submit Surveyor Declarations 
of Any Interest in and Relationships With Health Care Providers the AO 
Accredits to CMS on an Annual Basis (Proposed Sec.  488.5(a)(22))
    A conflict of interest may exist when an AO surveyor has 
interest(s) in or relationship(s) with a health care facility the AO 
accredits. Requiring AOs to obtain and submit declarations detailing 
such interests and relationships would ensure that CMS is notified of 
potential or actual conflicts of interest AO surveyors might have with 
the providers and suppliers the AO accredits. Such notice would allow 
CMS to be aware of the existence of these potential or actual conflicts 
of interest, some of which would preclude a surveyor from participating 
in survey activities (see Sec.  488.8(j) discussion at section IV.B.6 
of this proposed rule) and some of which would not.
    We propose to add a new provision at Sec.  488.5(a)(22) that would 
require the AO to obtain declarations from all surveyors employed or 
contracted to the AO regarding any employment, business, financial or 
other interests in or relationships they have with the health care 
facilities the AO accredits. We propose that AOs would initially be 
required to submit the surveyor declarations with their initial 
application for CMS approval of their accreditation programs. We 
further propose to require the AOs to update the surveyor declarations 
on an annual basis, and that the information from the annual updated 
surveyor declarations be submitted to CMS no later than December 31st 
each year. Annual updates would be necessary because a surveyor's 
interests in and relationships with health care facilities the AO 
accredits could change over time. This requirement would ensure that 
the information contained in the surveyor declarations remains up-to-
date and accurate. This provision at paragraph (a)(22) would be 
implemented 1 year after the effective date of the final rule (which 
would be 60 days after publication of the final rule). We further 
propose to require the AOs to begin submitting their surveyor 
declaration information on or before the December 31st that occurs 
after the implementation date of this requirement.
3. Proposal To Place Restrictions on Fee-Based Consulting Services 
Provided by AOs to the Medicare-Certified Providers and Suppliers They 
Accredit (Proposed Sec.  488.8(i))
    CMS recognizes the value of fee-based consulting by independent, 
third-party consultants who provide insight or expertise to assist 
facilities in achieving or maintaining compliance with AO and/or 
Medicare's health and safety standards. These interventions are 
beneficial and often tailored to meet a facility's specific compliance 
needs. Consulting services also may assist a provider or supplier in 
identifying quality concerns, whether based on a Medicare requirement 
or standards of practice, and therefore these services may improve the 
safety of patient care. AO fee-based consulting activities are not 
prohibited by federal law and there are no current CMS regulations 
prohibiting AOs from providing fee-based consulting services.
    However, AOs assume a public trust role when voluntarily applying 
to CMS for deeming authority. This authority, once granted, conveys 
Medicare certification for those entities accredited by the AO and it 
is essential that the integrity of their oversight process be above 
question. A number of AOs with CMS-approved accreditation programs 
currently provide AO fee-based consulting services to the Medicare-
participating health care facilities they accredit. When an AO provides 
fee-based consulting services to a provider or supplier it accredits it 
could create a conflict of interest for several reasons.
    First, AOs provide deeming surveys to providers or suppliers on 
behalf of CMS. AOs are required to use accreditation standards that are 
comparable to or exceed the Medicare standards and survey processes in 
the performance of deeming surveys. A potential or actual conflict of 
interest arises from allowing a CMS-approved AO with deeming authority, 
the ability to charge a provider or supplier to conduct a deeming 
survey to identify non-compliance (for Medicare participation), and 
also charge for providing AO fee-based consulting services to help the 
provider meet Medicare requirements.
    Second, providers and suppliers often choose AO fee-based 
consulting specifically for the additional resources and assistance 
provided. Some AOs publicly advertise the ability of their fee-based 
consulting to simulate what to expect from the actual AO survey. It is 
possible that Providers and suppliers found to be non-compliant by 
their AO may assume that the most direct path to compliance is to hire 
the AO's fee-based

[[Page 12007]]

consulting services. Such an assumption would provide AOs with fee-
based consulting services with an unfair advantage over other, third-
party consulting services.
    Finally, by charging for accreditation services (for example, 
deeming surveys) and also for the subsequent fee-based consulting 
services, for the purpose of remediating deficiencies identified by the 
same AO, there may be an expectation from providers and suppliers that 
the AO demonstrate the effectiveness their consulting services on 
subsequent compliance surveys. In other words, the provider or supplier 
may expect to receive a favorable survey report because they have paid 
the AO not only for accreditation but also for fee-based consulting 
services which are promoted by the AOs to help the provider or supplier 
do well on their survey. In addition, this expectation may push AOs to 
ignore significant deficiencies found during survey of its fee-based 
consulting clients in order to demonstrate the efficacy of its fee-
based consulting and promote these services.
    In short, an AO's business model is geared toward retention of its 
accredited providers and suppliers. AOs that provide both regulatory 
oversight through Medicare deeming surveys and also fee-based 
consulting services, which are geared towards assisting clients comply 
with the requirements required to pass the surveys, invites concerns 
about the integrity of their final compliance determinations.
    CMS issued an AO Conflict of Interest RFI (83 FR 65331) in 2018 to 
gather feedback related to AO conflict of interest practices. We 
received 128 public comments in response to the RFI. Many commenters 
stated that fee-based consulting provided by an AO or its associated 
consulting division or company to the health care facilities it 
accredits is a conflict of interest. These commenters stated that this 
conflict of interest arises from granting the inherently governmental 
function of monitoring patient safety, by regulating health care 
providers through accreditation, to a private entity, especially when 
that private entity profits from those who are regulated.
    Several commenters alleged that AOs that provide fee-based 
consulting may have the incentive to ignore deficiencies detected 
during the accreditation survey, in order to provide a ``good'' survey 
report to demonstrate the apparent efficacy of their AO fee-based 
consulting services and also to keep the paying customer(s) happy. Many 
commenters also suggested that if an AO provides poor survey results to 
a health care facility that has paid a significant fee for 
accreditation, it is unlikely that the facility would continue to 
retain that AO as a service provider.
    After careful review and analysis of the public comments received 
in response to the RFI, we agree that a conflict of interest arises 
from the contractual and financial relationship between the health care 
provider and the AO, which is a private entity that profits from the 
performance of regulating health care providers through accreditation. 
AOs that provide fee-based consulting services generate additional 
revenue beyond the fees realized for accreditation services by 
providing fee-based consulting services to the same facilities they 
accredit.
    We propose at Sec.  488.8(i) several restrictions on fee-based 
consulting provided by these AOs, their consulting divisions, or 
separate business entities. By ``fee-based consulting division,'' we 
mean a separate division within the AO that provides fee-based 
consulting services. This division of the AO would have a separate 
manager and staff. By ``separate business entity,'' we mean a business 
entity, such as a company or corporation, that is separate and apart 
from the AO and that has been established by the AO, either under a 
similar or different name, for the purpose of the providing fee-based 
consulting services.
    The proposed regulation at Sec.  488.5(i) would still allow AOs to 
provide fee-based consulting services to the providers and suppliers 
they accredit with restrictions that address the conflict of interest 
issues associated with this service.
    We propose at Sec.  488.8(i)(1) that, unless excepted under 
proposed Sec.  488.8(i)(4), AOs and their associated consulting 
divisions or companies would be prohibited from providing fee-based 
consulting services to any health care provider or supplier to which 
the AO provides accreditation services prior to an initial 
accreditation survey. However, the health care provider or supplier may 
seek fee-based consulting services from an entity entirely uninvolved 
in that provider or supplier's accreditation process. This option 
allows these providers and suppliers support they may believe necessary 
to meet Medicare standards and requirements prior to serving patients 
while eliminating any conflict of interest for their AO.
    For purposes of proposed Sec.  488.8(i)(1), the term ``initial 
survey'' would mean the first accreditation survey of a health care 
provider or supplier performed by an AO. The term ``prior to the 
initial accreditation survey'' would mean the time period beginning on 
the day the provider or supplier enters into a contract with the AO to 
provide accreditation services and continuing until the date that the 
initial accreditation survey is completed. The survey completion date 
would include the completion of any required plans of correction by the 
provider or supplier. In addition, if a health care provider or 
supplier was terminated or withdrew from the AO's accreditation and 
later retained the services of that AO, the first survey of the 
returning health care provider or supplier performed by the AO would be 
considered an initial accreditation survey.
    The requirement of proposed Sec.  488.8(i)(1), which would prohibit 
an AO from providing fee-based consulting or coaching to a health care 
provider or supplier prior to the initial accreditation survey, would 
provide a more accurate assessment of the provider's or supplier's 
baseline operating conditions and deficiencies on the initial survey. 
Such a raw assessment would not be possible if the provider or supplier 
receives AO fee-based consulting prior to the initial accreditation 
survey.
    In addition, such a baseline assessment of deficiencies would be 
useful to the AO in assessing areas needing improvement, developing a 
plan of correction and areas of focus for the fee-based consulting. 
This proposed restriction would also remove the financial incentive on 
the part of the AO to ignore deficiencies during the initial survey of 
providers and suppliers that paid for fee-based consulting prior to an 
initial survey.
    We note that this proposal only restricts an AO with deeming 
authority and a fee-based consulting practice from providing fee-based 
consulting services to its accredited providers and suppliers prior to 
the initial accreditation survey. It does not prohibit providers and 
suppliers from hiring third-party fee-based consulting services prior 
to their initial AO survey, in other words, this proposal does not 
prohibit other consulting services from being used during this period.
    We do not anticipate that this proposal would cause a negative 
impact on the patient care provided by the provider or supplier for 
several reasons. First, providers or suppliers would be able to obtain 
AO fee-based consulting during the first 24 months of the 36-month 
reaccreditation cycle which occurs after the initial survey. This 
education could be tailored to address the deficiencies found during 
the initial survey. If the AO were to provide fee-based consulting 
prior to the initial survey, the AO would not know what

[[Page 12008]]

deficiencies exist and would only be able to provide generalized fee-
based education to the provider or supplier. Second, the provider and 
supplier could always seek fee-based education prior to the initial 
survey from a third -party consultant. The purpose of our proposal to 
prohibit AO fee-based consulting prior to the initial survey and during 
the 12-month period prior to each reaccreditation survey is to reduce 
or remove any potential or actual conflict of interest. However, if a 
provider or supplier were to seek fee-based consulting from a third-
party consultant, that has no relationship to the AO that accredits 
that provider or supplier, no conflict of interest would exist.
    We also propose at Sec.  488.8(i)(2) to prohibit AOs from providing 
fee-based consulting services to a health care provider or supplier it 
accredits within 12 months prior to the next scheduled re-accreditation 
survey of that provider or supplier. For purposes of proposed Sec.  
488.8(i)(2), the term ``re-accreditation survey'' would mean any 
subsequent accreditation surveys performed by the AO after the initial 
survey.
    The accreditation cycle for most Medicare-certified providers and 
suppliers is 36 months (3 years), which means that the AOs perform an 
accreditation survey of these providers and suppliers no less than 
every 36 months. The proposed language at Sec.  488.8(i)(2) would allow 
AOs to provide fee-based consulting during the first 24 months (2 
years) of the accreditation cycle, but not during the 12-month (1-year) 
period preceding the re-accreditation survey. For example, with this 
proposal, if the initial survey was completed on June 1, 2025, the 
provider's or supplier's reaccreditation survey would be due by June 2, 
2028. The AO could provide fee-based consulting to the provider or 
supplier from June 2, 2025, to June 2, 2027. The AO would be prohibited 
from providing AO fee-based consulting to the provider or supplier from 
June 2, 2027, to June 2, 2028. An accredited provider or supplier would 
retain the ability to use consultants not affiliated with their AO at 
any time, including any timeframe prior to or after an accreditation 
survey for Medicare compliance.
    The proposed requirement would provide the accredited provider or 
supplier ample time to obtain the education they need in order to 
understand the CMS requirement, the AO's accreditation standards and 
survey process, and 1-year period, prior to their next accreditation 
survey, in which to implement the AO's accreditation standards and CMS 
standards (CoPs) in their facility and rectify any deficiencies found 
during the initial survey.
    The proposed requirement at Sec.  488.8(i)(2) would address the 
actual or potential conflicts of interest associated with AO fee-based 
consulting because it creates a 1-year time period prior to the re-
accreditation survey in which the AO is prohibited from providing any 
type of additional teaching or ``coaching'' that would help the 
provider or supplier ``pass'' or obtain better scores on the upcoming 
accreditation survey.
    We further propose at Sec.  488.8(i)(3) that the AOs or their 
associated consulting divisions or companies be prohibited from 
providing fee-based consulting services to a health care provider or 
supplier in response to a complaint received by the AO regarding that 
provider or supplier. Our rationale for this requirement is that AOs 
are required by CMS regulation to investigate and resolve complaints 
received regarding their accredited providers and suppliers (that is, 
42 CFR 488.5(a)(4)(ix); 42 CFR 488.5(a)(12)). This regulatory 
requirement includes investigating the complaint and working with the 
accredited provider or supplier to help them resolve any deficient 
practices identified in the complaint. AOs charge a significant fee for 
their fee-based consulting. AOs should not profit by providing fee-
based consulting to a provider and supplier in response to a complaint 
that they are regulatorily required to investigate and resolve. This 
proposed regulation would prevent this from occurring.
    We propose at Sec.  488.8(i)(4)(i) to (iv) that the restrictions 
upon AO fee-based consulting would not apply to the following 
situations: (1) AO fee-based consulting services provided during the 
24-month period after the date the initial or re-accreditation survey 
is performed (proposed Sec.  488.8(i)(4)(i)); (2) AO fee-based 
consulting services provided to address complaints received and 
investigated by the SA regarding an AO's accredited provider or 
supplier in which one or more condition-level or immediate jeopardy 
deficiencies are identified, provided however that, the fee-based 
consulting must occur after the complaint investigation and survey has 
been completed and must only address those issues identified by the 
complaint survey (proposed Sec.  488.8(i)(4)(ii)); (3) AO fee-based 
consulting services provided to health care providers or suppliers to 
which the AO has never provided accreditation services (proposed Sec.  
488.8(i)(4)(iii)); and (4) no-cost consulting or general education 
provided by the AO about their accreditation program (proposed Sec.  
488.8(i)(4)(iv)).
    Proposed Sec.  488.8(i)(4)(ii) would allow AOs to provide AO fee-
based consulting services in response to complaints received by the SA 
regarding an AO's accredited provider or supplier. However, this fee-
based consulting must be provided by the AO after completion of the SA 
investigation and complaint survey. We would permit AO fee-based 
consulting services after a complaint is received by the SA, because 
the SA, not the AO, would perform an investigational survey. Therefore, 
the affected provider or supplier should be permitted to seek fee-based 
consulting from its AO, in accordance with the restrictions stated 
above, to address the issues identified in the SA complaint and 
complaint survey, if appropriate.
    It is important to note that AO fee-based consulting should only be 
provided when serious deficiencies have been identified in the SAs 
complaint investigation report. By serious deficiencies, we mean 
deficiencies that would be considered condition level by the SA and the 
AO. However, the AO should first work directly with the provider or 
supplier, as part of their accreditation services package, to resolve 
the issues identified in the SAs complaint investigation report and 
only provide AO fee-based consulting if these issues cannot be resolved 
successfully, through other methods. It has always been the duty of the 
AOs to address and resolve complaints received regarding its accredited 
providers and suppliers, whether said complaint is received by the AO 
or the SA. An AO receives a significant fee for the accreditation 
services provided. We believe that the investigation and resolution of 
complaints falls squarely under these paid accreditation services. We 
do not believe it appropriate for AOs to offer fee-based consulting/
educational services in response to each and every complaint received 
regarding one of its accredited providers or suppliers. In other words, 
the AOs should not realize additional profit from its paying customers, 
when it has already been paid to perform the task at hand.
    More specifically, we would expect that an AO not offer fee-based 
consulting to an accredited provider or supplier in response to a 
complaint, unless the deficiency(ies) identified in the complaint are 
substantiated by the investigation, and found to be systemic, 
widespread, and ingrained in the culture of the organization. We would 
also expect to find that the AO first attempted to work with the 
provider or supplier, as part of the accreditation services provided, 
to resolve the deficiencies identified in the complaint,

[[Page 12009]]

before resorting to fee-based consulting. Finally, we would expect to 
find that if an AO offers fee-based consulting/educational services to 
the provider or supplier, they do so after trying all non-cost options 
available, and that the fee-based consulting/education was reasonably 
expected to resolve the deficiencies identified in the compliant.
    Proposed Sec.  488.8(i)(4)(ii) requires that the AO fee-based 
consulting cannot be provided until after completion of the SA's 
investigation and complaint survey. By ``completion of the SA's 
investigation'', we mean the date upon which the SA has completed all 
work required to investigate the complaint and has issued its findings. 
This restriction is necessary because if the affected provider or 
supplier were to receive fee-based consulting from the AO prior to the 
completion of the SA's investigation and complaint survey, the affected 
provider or supplier potentially could alter processes, operations or 
documentation, all of which could compromise the SAs investigation of 
the complaint. In such a scenario, the investigation and complaint 
survey report would not be an accurate reflection of the issues 
identified in the complaint. While it may seem counter-productive for 
the affected provider or supplier to obtain AO-fee-based consulting 
after completion of the SA's investigation and complaint survey, we 
believe that it would actually be helpful to the affected provider or 
supplier. After completion of the SA's complaint survey and 
investigation, the affected provider or supplier will receive a 
complaint investigation report, which will allow the AO to tailor the 
fee-based consulting services or other educational activities to 
address any deficiencies identified in said report. Also, through AO 
fee-based consulting services, the AO could work with the affected 
provider or supplier, at their own pace, to implement long-lasting and 
sustainable changes that address the deficiencies identified, as 
opposed to the implementation of quick temporary solutions or 
corrective action prior to completion of the complaint investigation. A 
quick temporary solution would be one that the provider or supplier 
implements on a short-term basis, typically only during the time that 
the surveyors are present. By contrast, a long-lasting and sustainable 
solution would be one in which the provider or supplier implements the 
solution, orients the staff to its requirements, regularly monitors for 
compliance with the requirements and corrects non-compliance on a 
continual basis.
    Proposed Sec.  488.8(i)(4)(iii) would further allow AOs to provide 
fee-based consulting services to health care providers or suppliers the 
AO does not accredit at the time the consulting services are furnished. 
If the AO has not provided accreditation services to a provider or 
supplier at the time fee-based consulting services are provided, the AO 
would not have a preexisting financial relationship with that provider 
or supplier. Thus, no conflict of interest would exist.
    Proposed Sec.  488.8(i)(5) would require AOs to report information 
about the fee-based consulting provided to the providers and suppliers 
they accredit to CMS. See section IV.B.4 for information about this 
proposed rule.
    Proposed Sec.  488.8(i)(6) provides for penalties for AOs that 
provide fee-based consulting in violation of the restrictions set forth 
on proposed Sec.  488.8(i)(1) to Sec.  488.8(i)(3). See section IV.B.5 
of this proposed rule for a discussion of this proposed section.
    We propose at Sec.  488.8(i)(7) that the requirements at Sec.  
488.8(i) would become applicable 1 year from the effective date of the 
final rule to allow for an appropriate time of transition. We believe 
that this would provide ample time for the AOs to prepare for and 
implement the proposed requirements at Sec.  488.8(i).
    The conflict inherent in AO fee-based consulting on accreditation 
standards while an AO is also performing surveys to determine 
compliance with those same standards is what the proposed restrictions 
on AO fee-based consulting seek to address. An entity that collects 
fees to remedy findings or prepare for a survey performed by another 
arm of the same entity creates a perceived conflict of interest that 
undermines the integrity of the health and safety oversight process. 
These proposals seek to allow continuance of independent consulting 
activities while addressing concerns related to fee-based consulting 
performed by the AOs, themselves.
    We note that this proposed restriction on AO fee-based consulting 
services at Sec. Sec.  488.8(i)(1), 488.8(i)(2), and Sec.  488.8(i)(3) 
would not prohibit the AOs from providing no-cost education, such as 
general education about the AO's accreditation and survey process and 
mock surveys. The restrictions on AO fee-based consulting would also 
not prohibit AOs from providing education about the Medicare 
conditions, AO standards, or survey process, to its accredited health 
care providers and suppliers, as long as this education is provided 
completely free of charge. This means that the AO would not be allowed 
to raise the price of their accreditation services because of the 
provision of this education, or do anything else that would cause the 
provider or supplier to incur any additional costs for the education 
provided by the AO, its consulting division or separate consulting 
company to the providers or suppliers it has contracted with to provide 
accreditation services. We believe that it is important that health 
care providers and suppliers receive education that would assist them 
in compliance, so long as it is not provided on a fee basis, which 
would introduce another financial relationship between the AO and the 
provider or supplier that could cause a conflict of interest.
    We also note that other CMS programs have established similar 
conflict of interest and independence provisions for organizations that 
have a public trust role in assessing the quality of services provided. 
For example, in the Medicaid program, CMS has established regulatory 
standards with respect to the independent judgment of any External 
Quality Review Organization that reviews the quality of the Medicaid 
managed care organization for the state (42 CFR 438.354). These 
regulations establish, among other requirements, that an External 
Quality Review Organization may not review any managed care entity for 
which that organization has also conducted a private accreditation 
review within the previous 3 years.
    Our proposal to place restrictions on the provision of fee-based 
consulting by AOs to their current accredited providers and suppliers 
is authorized by section 1865(a)(2) of the Act, which gives CMS the 
broad power of oversight over the activities of AOs. The provision of 
AO fee-based consulting is one of the factors in section 1865(a)(2) of 
the Act that should be considered in determining whether a national 
accreditation body demonstrates that all of the applicable conditions 
or requirements of this title are met or exceeded.
4. Proposal To Require AOs To Provide CMS With Information About the 
Fee-Based Consulting They Provide (Proposed Sec.  488.8(i)(5))
    We proposed at Sec.  488.8(i)(1), Sec.  488.8(i)(2), and Sec.  
488.8(i)(3) to place restrictions on the fee-based consulting services 
provided by AOs. In order to enforce our proposals, we propose at Sec.  
488.8(i)(5) to require the AOs that provide fee-based consulting 
services to submit information to CMS, on a calendar year bi-annual 
basis, about the fee-based consulting services they provide.
    We propose to add a requirement at Sec.  488.8(i)(5) that would 
require the AOs

[[Page 12010]]

that accredit Medicare-certified providers and suppliers to provide CMS 
with information regarding the fee-based consulting services no later 
than 15 days after the end of each calendar year bi-annual (6-month) 
period.
    More specifically, this proposal would require these AOs to submit 
a document which contains the following information to CMS:
    <bullet> Whether the AO or an associated consulting division or 
company established by the AO provides fee-based consulting services.
    <bullet> The names and CMS Certification Number (CCN) numbers of 
all health care providers and suppliers to which the AO or its 
associated consulting division or company has provided fee-based 
consulting services during the previous calendar year quarter.
    <bullet> The dates the AO fee-based consulting services were 
provided to each provider and supplier listed.
    <bullet> Whether the accrediting organization has, at any time in 
the past provided, or is currently providing accreditation services to 
each health care provider or supplier listed in said document, and if 
so, the date the accreditation services were provided.
    <bullet> The date of the most recent accreditation survey 
performed, and the date the next re-accreditation survey is due to be 
performed for each health care provider and supplier listed in said 
document.
    <bullet> A description of the AO fee-based consulting services 
provided to each health care provider or supplier listed in said 
document.
    We are further proposing that the two bi-annual reporting periods 
would consist of January 1st to June 30th and July 1st to December 31st 
each year. The submission deadline for the first period would be July 
15th each year. The submission deadline for the second period would be 
January 15th each year. This would ensure that AOs are not providing 
fee-based consulting services to providers and suppliers prior to an 
initial survey, within 12 months prior to a re-accreditation survey, or 
in response to a complaint received regarding an accredited provider or 
supplier. In addition, this information would also allow CMS to see the 
number of providers and suppliers to which the AOs are providing fee-
based consulting services.
    We propose that these provisions would become applicable 1 year 
from the effective date of final rule to allow for an appropriate time 
of transition. We believe that this would provide the AOs with ample 
time to prepare for and implement this requirement.
5. Proposal for Penalties for AOs Found To Be Providing AO Fee-Based 
Consulting Services to the Health Care Providers or Suppliers They 
Accredit in Violation of the Restrictions in 42 CFR 488.5(i)(1) Through 
Sec.  488.5(i)(3) (Proposed Sec.  488.8(i)(6))
    In section IV.B.3 of this proposed rule, we propose to implement 
regulations that place restrictions on the fee-based consulting 
services AOs provide to the health care providers and suppliers that 
they accredit. In order to enforce these regulations, we propose at 
Sec.  488.8(i)(6) to implement penalties for the violation of the 
restrictions on AO fee-based consulting.
    We propose at Sec.  488.8(i)(6)(i) that if an AO is found to be in 
violation of the restrictions set forth in paragraphs Sec.  
488.8(i)(1), (2) and (3), CMS may initiate penalties against the AO. 
These penalties are set forth in proposed Sec.  488.8(i)(6)(i) and 
Sec.  488.8(i)(6)(ii) and include placing the AO on a program review, 
and involuntary termination of the CMS-approved AO's accreditation 
program(s).
    Whether or not we impose the penalties provided in Sec.  
488.8(i)(6)(i) and (ii) would depend on the severity of the violation 
and the facts and circumstances surrounding the violation. Such facts 
might include the number of providers and suppliers that contracted for 
prohibited AO fee-based consulting services, the number of times the AO 
violated the restrictions of Sec.  488.8(i).
    The purpose of these proposed provisions is to discourage AOs from 
violating the proposed restrictions on the provision of fee-based 
consulting to the providers and suppliers they accredit.
    We propose that these provisions would become applicable 1 year 
from the effective date of the final rule. We believe that this would 
provide ample time for the AOs to prepare for the implementation of the 
requirements of this rule.
6. Proposal To Require Accrediting Organizations To Have Written Fee-
Based Consulting Firewall Policies and Procedures (Sec.  488.8(j))
    We propose at Sec.  488.8(j) to require any AO that provides fee-
based consulting services or its associated fee-based consulting 
division or company to have written fee-based consulting ``firewall'' 
policies and procedures. We have defined the terms ``consulting 
division'' and ``associated company'' in section IX.B.3 of this 
proposed rule. We define the term ``firewall'' as the complete and 
total separation between the AO's accreditation activities and its fee-
based consulting services.
    We propose that these firewall policies and procedures must, at a 
minimum, include the following provisions: at paragraph (j)(1)(i) the 
AO's fee-based consulting services must be provided by a separate 
division of the AO or separate business entity (that is company or 
corporation) from the AO; at paragraph (j)(1)(ii) the AO's fee-based 
consulting division or separate company must maintain separate staff 
from that of the AO's accreditation division(s) to ensure that the fee-
based consulting division staff do not perform AO's accreditation 
division functions and that the AO's accreditation division staff do 
not perform fee-based consulting division functions; and at paragraph 
(j)(1)(iii), the AO's accreditation staff and surveyors would be 
prohibited from marketing the AO's fee-based consulting services to the 
AO's accreditation clients.
    The purpose of the provisions of proposed Sec.  488.8(j) is to 
ensure that the AO maintains a complete division between their fee-
based consulting program and their accreditation program. In other 
words, we seek to require the AOs to prevent any co-mingling of fee-
based consulting activities and staff with their accreditation 
activities and staff. These requirements are necessary because several 
commenters to our 2018 AO Conflict of Interest RFI, noted concern that 
while some AOs that provide fee-based consulting have such firewall 
policies in place, they have been breached. For example, one commenter 
stated that one AO's accreditation staff aggressively marketed that 
AO's fee-based consulting services to his health care facility. In 
addition, during a CMS validation pilot joint survey with an AO, a SA 
surveyor witnessed the AO's surveyors providing detailed education 
about the survey process to the healthcare facility staff prior to the 
start of the survey. This is inappropriate because surveys are to be 
unannounced to prevent the facility from preparing for the survey. At 
the beginning of a survey, a brief entrance conference is held for the 
purpose of introducing the survey team, providing the survey agenda to 
the facility staff, and telling the facility what records the surveyors 
will be reviewing during the survey. However, providing detailed 
information about the survey process and what areas the AO is going to 
focus on during the survey gives the facility an advantage and time to 
prepare for the survey. This negates the purpose of requiring surveys 
to be unannounced and could allow the facility staff time to clean up 
and

[[Page 12011]]

remove deficiencies that would normally be present. In addition, 
providing such education to a health care facility prior to a survey 
could assist that facility in getting a better survey report.
    We do not currently have any regulations that provide oversight of 
the fee-based consulting services provided by AOs or their separate 
divisions or companies. Likewise, we do not currently have any 
regulations that specifically require AOs that provide fee-based 
consulting services to have written firewall policies or regulations 
that provide requirements for such policies. Regulations are needed so 
that CMS may ensure that an AO's fee-based consulting remains separate 
from an AO's accreditation activities. This division is necessary to 
reduce the conflict on interest associated with the provision of AO 
fee-based consulting services.
7. Proposal To Prohibit AO Owners, Surveyors, and Other Employees From 
Involvement With the Survey and Accreditation Process for Health Care 
Facilities With Which They Have an Interest or Relationship (Proposed 
Sec.  488.8(k))
    Surveyors must rely on their professional judgment, in addition to 
federal rules and guidelines, to determine compliance. An AO surveyor, 
owner, or other employees' interest in or relationship with a health 
care facility that the AO accredits could present a conflict of 
interest that could affect the results of a survey in several ways. For 
example, an AO owner, surveyor, or other AO employee involved in the 
survey of a healthcare facility with which the individual has an 
interest or relationship could have compromised judgment, consciously 
or unconsciously, regarding that facility. For example, a surveyor with 
an interest in or relationship with the health care facility being 
surveyed could be inclined to minimize or ignore deficiencies, possibly 
because he or she believes these deficiencies are not representative of 
the facility. A surveyor who has an interest in or relationship with 
the facility being surveyed could possibly influence the findings made 
by other members of the survey team by asking them to give the facility 
credit for things not observed, since he or she can ``vouch'' for the 
facility.
    Even if the AO employee with the interest in or relationship with 
the facility being surveyed is not part of the survey team for the 
facility, he or she could still potentially influence the members of 
the survey team prior to or after the survey. For example, attempting 
to influence the survey decision making process, or the AO's survey 
follow-up activities by attempting to discuss the facility with the 
survey team, such as explaining the facility's policies and procedures 
to the survey team, or even actively advocating on the facility's 
behalf, potentially influencing their analysis of observed survey 
results.
    An AO surveyor, owner, or other employee that has an interest in or 
relationship with a health care facility the AO accredits might have 
additional motivation to improperly give that health care facility 
notice about the survey ahead of the scheduled survey date. Surveys are 
required to be unannounced to prevent the facility from preparing for 
the survey by activities such as unusual cleaning activities, painting, 
clearing obstructions from halls and entrances, covering up and hiding 
deficiencies, coaching staff, and otherwise preparing in advance for 
the survey. If the survey is unannounced, the health care facility is 
not able to make advance preparations so that the survey team is able 
to assess the facility in its usual condition and observe the typical 
standard of care provided.
    We propose to add a new requirement at Sec.  488.8(k)(1) to 
prohibit AOs from allowing AO owners, surveyors, or other employees 
from participating in the survey and accreditation process for health 
care facilities with which they have had an interest or relationship 
within the previous 2 years. At proposed Sec.  488.8(k)(1) we would 
require that if an AO owner, surveyor or other employee has an interest 
in or relationship with a health care facility accredited by the AO, 
they would be prohibited from: (1) participating in the survey of that 
health care facility (proposed Sec.  488.8(k)(1)(i)); (2) having input 
into the results of the survey and accreditation for that health care 
facility (proposed Sec.  488.8(k)(1)(ii)); (3) having involvement with 
the pre- or post-survey activities for that health care facility 
(proposed Sec.  488.8(k)(1)(iii)); or (4) having contact with or access 
to the records for the survey and accreditation of that health care 
facility (proposed Sec.  488.8(k)(iv)). Proposed Sec.  
488.5(a)(10)(iii) lists proposed prohibited interests in or 
relationships with a health care facility accredited by the AO, which 
would include, but not be limited to, the following situations: (1) 
being employed as a SA surveyor; (2) being employed in a health care 
facility that is accredited by the AO; (3) having an ownership interest 
in a health care facility that is accredited by the AO; (4) serving as 
a director of or trustee for a health care facility that is accredited 
by the AO; (5) serving on a utilization review committee of a health 
care facility that is accredited by the AO; (6) accepting any fees or 
payments from a health care facility or group of health care facilities 
that is/are accredited by the AO; (7) accepting fees for personal 
services, contract services, referral services, or for furnishing 
supplies to a health care facility that is accredited by the AO; (8) 
providing consulting services to a health care facility that the AO 
accredits; (9) having members of an immediate family engaged in any of 
the above activities; or (10) engaging in any activities during the 
course of the survey of the facility that would be or cause a conflict 
of interest.
    We propose at Sec.  488.8(k)(2) to define the term ``immediate 
family member'' as any person that has a lineal familial or marital 
relationship with the AO owner, surveyor or other employee. Immediate 
family members would include a husband or wife, birth or adoptive 
parent, child, or sibling; stepparent, stepchild, stepbrother, or 
stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law, 
brother-in-law, or sister-in-law; grandparent or grandchild; and spouse 
of a grandparent or grandchild. This definition is consistent with the 
definition used for the home health and hospice conflict of interest 
requirements. This definition is required for the purposes of Sec.  
488.8(k)(1), which states that a conflict of interest can also exist 
when an AO owner, surveyor or other employee has an interest in or 
relationship with a health care facility the AO accredits.
    Allowing an AO owner, surveyor or other employee that has an 
interest in or relationship with a health care facility the AO 
accredits would not only be inappropriate but could result in 
inaccurate survey results and/or preferential treatment of the 
facility.

C. Proposal To Require the AOs That Accredit Medicare-Certified 
Providers and Suppliers To Use Medicare Conditions; and Strengthened 
Survey Process Comparability (Proposed Sec.  488.4(a)(1) and (2))

    Section 1865(a)(1) of the Act requires that if the Secretary finds 
that the requirements for accreditation from an accreditation 
organization demonstrates that a provider entity meets or exceeds all 
applicable conditions, the Secretary must deem such requirements to be 
met by the provider entity. However, the statutory language of ``meets 
or exceeds'' currently allows AOs to develop standards that are more 
stringent than those of Medicare. When an AO applies for ``deeming 
authority'',

[[Page 12012]]

we determine whether those standards meet or exceed ours. In accordance 
with Sec.  488.5(e), CMS publishes a proposed rule when CMS receives a 
complete application from a national accrediting organization seeking 
CMS's approval of an accreditation program. The proposed notice 
identifies the organization and the type of providers or suppliers to 
be covered by the accreditation program and provides 30 calendar days 
for the public to submit comments to CMS. CMS subsequently publishes a 
final notice, rendering its decision to either approve or disapprove a 
national accrediting organization's application, within 210 calendar 
days from the date CMS determines the AO's application was complete. 
The final notice outlines a summary of the findings of CMS's review and 
any corrective action which was required to be taken by the AO in order 
to be considered to meet or exceed our standards, or comparable survey 
processes. When CMS approves or reapproves an accrediting organization 
for deemed status, the approval may not exceed 6 years.
    We are concerned that the current application review processes 
under Sec.  488.5 does not go far enough. Some of our concerns with the 
efficacy of the AO application review process are based on the results 
of the initial and renewal applications and the SA findings, as noted 
below:
    <bullet> AO Application Reviews: Between 2017 to September 2021, we 
received a total of 22 AO applications for review. After review of 
these applications, we returned all 22 applications to the AOs because 
we found that the AOs' standards were not comparable to ours. AO most 
common standards requiring revisions to meet or exceed Medicare 
conditions included: governing body, physical environment, emergency 
preparedness patient rights, medical/clinical records and care 
planning. Additionally, AO standards regarding coordination of 
services; skilled professional services; infection control; staff 
responsibilities and quality improvement assessment programs (QAPI) all 
required revisions by the AOs.
    <bullet> SA Findings: In FY 2019, CMS conducted 119 hospital 
surveys (including psychiatric hospitals) and 196 non-hospital surveys 
totaling 315 validation surveys. In FY 2019, the SAs found serious 
``condition-level'' instances of non-compliance 60 times in accredited 
hospitals (including psychiatric hospitals), and 51 instances in which 
the AO missed the deficiencies. In these instances, even though the AOs 
did not find comparable levels of non-compliance, this non-compliance 
was sufficient to start enforcement proceedings against the subject 
hospitals. These results demonstrated that the AOs may have failed to 
ensure their facilities were meeting Medicare's minimum standards. In 
total, between FY 2017 and FY 2019, CMS conducted 363 hospital 
(including psychiatric hospitals) validation surveys, with SAs 
identifying condition-level non-compliance a total of 185 times and 158 
instances in which the AOs missed comparable deficiencies. Between FY 
2017 and FY 2019, CMS also conducted a total of 369 validation surveys 
for HHAs and Hospices, with SAs identifying condition-level non-
compliance a total of 57 times and 50 instances in which the AOs missed 
comparable deficiencies.\10\ This data has amplified CMS' concerns 
related to the comparability of survey processes as well as the need 
for increased AO oversight.
---------------------------------------------------------------------------

    \10\ FY 2020 Report to Congress (RTC): Review of Medicare's 
Program Oversight of Accrediting Organizations (AOs) and the 
Clinical Laboratory Improvement Amendments of 1988 (CLIA) Validation 
Program https://www.cms.gov/files/document/qso-22-06-ao-clia.pdf.
---------------------------------------------------------------------------

    Therefore, under the statutory authority granted to us under 
section 1865(a)(1) of the Act, we propose revisions at Sec.  
488.4(a)(1) to require that the AOs that accredit Medicare-certified 
providers and suppliers use the applicable Medicare conditions as their 
minimum accreditation standards. This means that the AOs must 
incorporate the Medicare conditions identical to our regulations within 
their accreditation standards for their deeming programs. However, AOs 
would be allowed to use additional accreditation standards that exceed 
the Medicare conditions, as permitted under section 1865(a)(1) of the 
Act. We would, however, require the AOs' to clearly delineate their 
additional accreditation standards that exceed the Medicare conditions 
when seeking CMS approval for deeming authority.
    The requirement that the AOs identify the Medicare conditions as 
their accreditation standards would also allow providers and suppliers 
to know what the minimum Medicare deeming standards are and where the 
AO standards exceed these standards through its accreditation program, 
as permitted under section 1865(a)(1) of the Act. Facilities are 
expected to comply with regulatory requirements of CMS and the 
accreditation standards of the AO, however we have found that in 
certain circumstances, the facilities were more familiar with AO 
standards and did not fully understand the AO standards are more 
stringent than the Medicare conditions. There were several instances in 
which our comparability review of AO standards under Sec.  488.5 
resulted in the need for AOs to correct deficiencies in their survey 
standards and processes, because we determined that the minimum 
Medicare conditions would have not been adhered to. Despite these 
frequent reviews, the regulations only require AO standards to be 
comparable, not exact to the Medicare conditions, therefore increasing 
the likelihood of gaps in interpretation.
    This proposed requirement would increase the likelihood that AO 
standards and processes would meet or exceed our regulatory 
requirements and transparency for providers to understand when the AO 
has more stringent standards, further explained in sections IV.D of 
this proposed rule.
    We also propose to strengthen our process for comparability review 
of the AOs survey processes at proposed Sec.  488.4(a)(2), further 
explained in sections IV.E and IV.F of this proposed rule. More 
specifically, we propose to re-designate existing paragraph (a)(1) as 
(a)(3) and re-designate existing paragraph (a)(2) as (a)(4) with 
revisions, and add a new requirement at Sec.  488.4(a)(1). This 
provision would require the AOs that accredit Medicare-certified 
providers and suppliers to use the exact text of the applicable 
Medicare conditions set forth in the applicable CMS regulations for 
each provider and supplier type as their minimum accreditation 
requirements. However, the AOs would be free to establish additional 
accreditation requirements that exceed Medicare conditions as permitted 
by section 1865(a)(1) of the Act. We propose to add language at Sec.  
488.4(a)(2) that AOs use a survey process comparable to the processes 
set out for SAs in the SOM and approved by CMS, as outlined throughout 
Sec.  488.5(a)(4). We also propose that these requirements and changes 
at paragraphs (a)(1) and (2) would be applicable beginning 1 year from 
the effective date of the final rule.
    These proposed changes to Sec.  488.4(a)(1) and Sec.  488.4 (a)(2) 
would align national health and safety standards across all AOs and 
strengthen the survey processes used by the AOs. We further believe 
that our proposal would ensure uniformity and transparency of the 
surveys performed by the AOs for deeming purposes and improve CMS' 
ability to accurately evaluate an AO's performance.
    We propose to re-designate the current Sec.  488.4(a)(1) and (a)(2) 
to Sec.  488.4(a)(3) and (a)(4). We also propose

[[Page 12013]]

to add requirements at paragraphs (a)(1) and (a)(2) that AOs 
incorporate the Medicare conditions and use survey processes comparable 
to those of the SA. We also refer readers to additional proposed 
changes made to Sec.  488.4(a)(4) in section VI.O of this proposed 
rule.
    The proposal to require AOs to incorporate the Medicare conditions 
(as defined in Sec.  488.1) as their minimum accreditation standards 
would become applicable 1 year after the effective date of the final 
rule.

D. Proposal To Revise the Crosswalk Requirements at Sec.  488.5(a)(3)

    As a result of our proposal at Sec.  488.4(a)(1) to require the AOs 
to incorporate the Medicare conditions (as defined in Sec.  488.1) into 
their accreditation standards for their deeming programs, we would also 
modify the regulations at Sec.  488.5 that would be affected by this 
requirement. Section 488.5(a)(3) requires the AOs to submit with their 
initial and renewal application, ``[a] detailed crosswalk (in table 
format) that identifies, for each of the applicable Medicare conditions 
or requirements, the exact language of the organization's comparable 
accreditation requirements and standards.'' Because section 1865(a) of 
the Act allows AOs to have accreditation standards for their deeming 
programs that meet or exceed the Medicare conditions, the content, 
format, and wording of AOs' accreditation standards frequently differ 
significantly from that of the Medicare conditions. Therefore, we 
require the AOs to provide a crosswalk which identifies the applicable 
Medicare conditions that corresponds to each of the AO's accreditation 
standards. The purpose of this crosswalk is to help us determine to 
which Medicare condition each AO accreditation standard corresponds.
    Since we proposed at Sec.  488.4(a)(1) to require the AOs to 
incorporate the Medicare conditions into their accreditation standards, 
it would no longer be necessary to require the AOs to submit a 
crosswalk that provides ``comparable'' standards. Instead, we propose 
that AOs would need to provide a crosswalk which demonstrates that the 
AO has incorporated the language of the Medicare conditions, as well as 
provide the AO standards which exceed the Medicare conditions (see 
Table 2 in section VI.B.I of this proposed rule for an example). 
Similar to the existing process for submission of the AO's crosswalk 
during an application, we propose to revise Sec.  488.5(a)(3) to 
require a crosswalk that demonstrates the AO's use of CMS's 
requirements and standards. AOs would provide additional or exceeding 
standards under their use of the required exact language and annotate 
the exceeding standards. This would further allow providers and 
suppliers to know what the minimum Medicare deeming standards are and 
where the AO standards exceed these standards through its accreditation 
program.
    We propose to revise Sec.  488.5(a)(3) to first remove the 
requirement that the AO provide a ``comparable'' standard for each of 
the applicable Medicare conditions or requirements and replace it with 
the '' incorporation of the CMS requirements in the AO accreditation 
standards for any deeming program.'' Second, in the application that is 
submitted to CMS for review, the AO would have to submit a detailed 
crosswalk. We would not expect the AOs to use the same survey tags (a 
letter/number identifier, for example, A-0001) as used by SA surveyors. 
For example, CMS' regulatory requirement at Sec.  482.11(c) requires 
hospitals to ``assure that personnel are licensed or meet other 
applicable standards that are required by State or local laws.'' In 
this example and aligned with our proposed provisions, the AO would be 
required to have an accreditation standard for its hospital deeming 
program which would state ``The hospital must assure that personnel are 
licensed or meet other applicable standards that are required by State 
or local laws,'' with the AOs applicable standard number. Using Table 2 
in section VI.B.1 of this proposed rule for this example, the crosswalk 
would appear as follows:
[GRAPHIC] [TIFF OMITTED] TP15FE24.000

    As seen in this example, the AO standard number identification may 
vary from CMS' CFR regulatory citation. Additionally, as previously 
described, CMS is not restricting AOs from exceeding the Medicare 
conditions. Therefore, if an AO believes that additional accreditation 
standards would need to apply to their deemed facilities, an AO would 
submit the exceeding requirements under the particular standard. Using 
the same example, the AO would submit a crosswalk similar to the 
example below. As seen, AO Standard Number XX.001 would be exceeding 
the Medicare conditions.

[[Page 12014]]

[GRAPHIC] [TIFF OMITTED] TP15FE24.001

    Establishing a consistent standard across all AOs would bring 
transparency to the accreditation process. This would allow providers 
and suppliers to know what the minimum Medicare deeming conditions are 
and where the AO standards exceed these Medicare conditions through its 
accreditation program. It would also provide greater uniformity between 
an AO certification survey at a facility and a state survey that may be 
subsequently performed at that same facility, which could include a 
complaint survey or a validation survey.
    Additionally, from CMS' oversight perspective of the AO 
applications for deeming authority and review of the crosswalks over 
the last several years, we have also identified that AOs have 
inadvertently omitted certain standards in their crosswalk submissions. 
Therefore, while the impression that requiring a crosswalk for AOs may 
seem unnecessary as we would be requiring AOs to incorporate the 
Medicare conditions into their accreditation standards, it is 
imperative that CMS be able to ensure the AO has standards for each 
Medicare condition. The review of the exceeding standards is also 
critical for CMS to ensure that any additional requirements established 
under accreditation for deemed providers or suppliers do not conflict 
with the Medicare conditions.
    We propose that the proposed provision would be applicable 1 year 
after the effective date of the final rule.

E. Proposal To Strengthen the Comparability of the Survey Process 
Between the AOs and the States

    An AO must demonstrate to CMS that it has the ability to 
effectively evaluate a health care facility's compliance with the 
Medicare conditions using survey processes that are comparable to those 
survey methods, procedures, and forms required by CMS and as 
implemented by the SAs. A general description of SAs' survey processes 
are set out at Sec.  488.26 and specified in the SOM.
    As part of the application process as set out at Sec.  488.5, CMS 
is required to complete a survey processes review as part of the AO 
application review process. The purpose of the survey processes review 
is to determine whether the AO's survey processes are comparable to the 
CMS survey processes. The survey process comparability review is done 
by reviewing information in the application, such as, the AO's survey 
activity guides, organizational procedures for surveyors, surveyor 
training materials and AO survey requirements. CMS also conducts an in-
person observation of an AO survey (carried out by a CMS survey 
observation team) as part of CMS' review of an AO's application. The 
purpose of the survey observation is to ensure that the AO surveyors 
follow the processes set out in the application and to ensure that the 
AO surveyors evaluate all Medicare requirements.
    Sections 1865(a)(1) and 1865(a)(2) of the Act require us, when 
making this finding, to consider a national AO's ``survey procedures'' 
and ``. . . its ability to provide adequate resources for conducting 
required surveys and supplying information for use in enforcement 
activities, its monitoring procedures for provider entities found out 
of compliance with the conditions or requirements. . . .'' Our 
longstanding requirements at Sec.  488.4(a)(3) implemented this 
statutory provision by requiring AOs to provide us with detailed 
information on their survey processes, and our regulations at Sec.  
488.5 and Sec.  488.8 set out the procedures for comparability review. 
We further discussed AO survey procedures' comparability to our SA 
survey processes and the SOM in the May 22, 2015 final rule published 
in the Federal Register, entitled ``Medicare and Medicaid Programs: 
Revisions to Deeming Authority Survey, Certification, and Enforcement 
Procedures'' (80 FR 29795) (hereinafter referred to as the ``2015 AO 
final rule''). We assess comparability by reviewing the information in 
the AO's application in light of the SOM survey process requirements 
for SAs, which implements the survey process requirements found in 
parts 488 and 489 of our regulations. The role of the SOM is to provide 
explicit guidance on the process to assess providers' and suppliers' 
compliance with our regulatory requirements. We do however note, that 
the AOs are already required to submit the documentation and that most 
AOs provide this within their applications, therefore we do not believe 
this imposes any additional burden on the AOs, as this has been a long-
standing expectation as described in the preamble of this proposed rule 
and the 2015 AO final rule (80 FR 29795) which stated that while the 
explicit reference to the SOM was removed, ``this will not change our 
practice of assessing comparability in light of the SOM survey process 
requirements for SAs, which implement survey process requirements found 
in parts 488 and 489 of our regulations governing certification and 
provider agreements.

[[Page 12015]]

    As previously noted, CMS received 22 AO applications between 
January 2017 and August 2021. Of those 22 applications, 14 were 
returned to the AO for revisions to the AO's survey processes and 
policies, distinct from the finding that all 22 AO's standards were not 
initially comparable with the Medicare conditions. These required 
survey process revisions included ensuring all surveys were unannounced 
in accordance with Sec.  488.5(a)(1)(i), which we discuss in section 
IV.A of this proposed rule. Other applications were returned for 
inconsistencies with our patient or representative complaint processing 
guidance set out in chapter 5 of the SOM. Additionally, among these 22 
applications, we identified concerns within the AO survey processes 
during the on-site survey observations, as authorized under Sec.  
488.8(h). The following concerns were noted during the survey 
observations for these 22 applications:
    <bullet> The survey citations and rationales for citing or not 
citing ``Governing Body'' Medicare condition violations (for example, 
42 CFR 482.12) were inconsistent with CMS' SA survey methodologies;
    <bullet> The AO's failure to enforce the deadlines by which 
facilities must come into compliance after receiving adverse survey 
results;
    <bullet> Conflicting timeframe(s), such as the required number of 
days required to conduct follow-up activities, including follow-up 
surveys, for facilities that have previously demonstrated non-
compliance at the condition-level; and
    <bullet> Incorrect number of medical records reviews during a 
survey. (CMS requires that AO surveyors review a specific number of 
medical records, based on the facilities' patient volume, to ensure the 
surveyor have an accurate picture of patient care services provided 
within the facility).
    CMS' concerns about the failures of AOs to conduct in-depth 
investigations; the lack of consistency and comparability exhibited by 
our having to return all received AO applications for corrections in 
survey standards and processes; the excessive frequency of disparate 
findings between AOs and SAs, as further explained in section IV.I of 
this proposed rule; and the failure to review medical records, as 
required by SA procedures, all strengthen our resolve to ensure 
consistency in AO performance. Our initial and renewal application 
reviews are the foundation for our oversight of AOs to determine the 
AO's ability to ensure facilities adhere to minimum Medicare 
conditions.
    Because of these disparities, we propose to strengthen our 
requirements under Sec.  488.5. We refer readers to our discussion of 
these proposals found in section IV.F of this proposed rule, that would 
require AOs that accredit Medicare-certified providers and suppliers to 
use a survey process that is comparable to the survey processes and 
procedures used by CMS and the SA. We note that this has been the 
expectation under the existing requirements, as a condition of 
obtaining and retaining deeming authority. We propose to increase the 
specificity of our application and reapplication requirements for 
national AOs to improve documentation that would demonstrate this 
comparability.

F. Proposal To Revise the AO Application Documentation Requirements 
Related to the Survey Processes (Sec.  488.5(a)(4); Sec.  
488.5(a)(4)(iii); Sec.  488.5(a)(4)(v); Sec.  488.5(a)(4)(vii); Sec.  
488.5(a)(4)(xi); Sec.  488.5(a)(5); Sec.  488.5(a)(6); Sec.  
488.5(a)(12); Sec.  488.5(a)(13))

    To achieve our goal to require the AOs to use a survey process that 
is comparable to that used by CMS and the SAs (and in alignment with 
our proposal at Sec.  488.4(a)(2) regarding comparable survey 
processes), we propose the following revisions and additions to the 
existing AO application regulation requirements.
1. Proposed Revisions to Sec.  488.5(a)(4)(Description of Survey 
Process)
    At Sec.  488.5(a)(4), we propose to add language which includes 
what we believe to be the core fundamental activities of the survey 
process, such as pre survey preparation; offsite preparation; entrance 
interview and activities; information gathering and investigation, 
analysis of information; exit conference; post-survey activities; and 
statement of deficiencies-related activities. These are processes used 
by the SA which are needed to ensure that a Medicare-participating 
provider or supplier receives an unbiased, independent survey.
    We have observed, both in our on-site observation of AOs during the 
existing process set out at Sec.  488.8(h), as well as during the VRP 
pilot conducted 2018 through 2019, that AOs often provided daily 
briefings to and had frequent discussions with the management of the 
surveyed facility whose purpose was not clearly described in the AO's 
applications. We noted that these ``meetings'' with facility management 
impeded or did not allow for sufficient time for the survey team to 
complete survey activities, such as direct observations or interviews.
    Therefore, the proposal to add the core activities, as well as the 
revisions outlined below, would further strengthen comparability 
between SAs and AOs, while continuing to allow for flexibilities in the 
survey processes used by AOs. These requirements, as revised, shall 
become applicable beginning [date 1 year after the effective date of 
the final rule].
2. Proposed Revisions to Sec.  488.5(a)(4)(iii) (Documentation of 
Surveyor Forms and Guidance)
    Section 488.5(a)(4)(iii) currently requires that AOs applying for 
deeming authority provide, among other documentation, copies of the 
organizations survey forms, guidelines and instructions to surveyors. 
We propose to be more specific about the level of detail we require 
from the survey instructions and guidance the AO provides to us when 
seeking our approval. Specifically, we propose to require detailed 
information regarding how the AO surveys for facility compliance with 
the following core activities or standards within the Medicare 
Conditions, such as: Governing Body; Patient Rights; Emergency 
Preparedness; Quality Assessment and Performance Improvement; Medical 
Staff; Nursing Services; Medical Records Services; and Infection 
Control. These core activities and standards are part of every state 
survey and based on Medicare Conditions. With respect to each of these 
survey subject areas, we would require the applying AO to provide 
documentation on the instructions it provides for surveying these 
Medicare conditions, including survey probes, interview questions, and 
methods for their own review of facility documentation pertaining to 
these Medicare conditions.
    It has become evident through our validation and comparability 
reviews of AOs that the documentation we currently request from them no 
longer suffices to adequately determine whether the AO surveyors are 
investigating these Medicare conditions sufficiently to ensure the 
health and safety of Medicare beneficiaries and other patients. AOs 
have failed to survey adequately for facility compliance with their 
respective documentation requirements, including specific standards or 
survey processes. We also propose that AOs submit their patient and 
staff interview questions. By having access to these questionnaires, we 
would be able to determine whether there are gaps in the survey 
processes

[[Page 12016]]

which are leading to the disparity findings, as we have seen in our 
validation surveys.
3. Proposed Revisions to Sec.  488.5(a)(4)(v) (Survey Review Process)
    At Sec.  488.5(a)(4)(v), we propose to add additional areas 
clarifying and strengthening the requirement that AOs provide a 
description of their document review processes in their approval 
applications. We propose to add that AOs must describe processes and 
surveyor procedures related to the review of medical records, medical 
staff credentialing procedures; personnel files (including staff 
competency); and the number of patient observations, patient interviews 
and staff and facility interviews.
    We have noticed that many AOs fail to review adequate numbers of 
records for the provider/supplier type involved. In the review of the 
22 AO applications received between 2017 and September 2021, a total of 
nine AOs were identified to have not reviewed the adequate number or 
records. Additionally, we have observed that some AO survey practices, 
such as interviewing patients in non-confidential settings, and 
deficient complaint investigations, undermine the integrity and 
accuracy of AO surveys. We are concerned that staff or patients may not 
be honest and candid if another facility staff member or supervisor is 
present during interviews. The expectations are that interviews are 
conducted privately with staff. For example, in Appendix A of the SOM, 
we explicitly require surveyors to ``Explain that all interviews will 
be conducted privately with patients, staff, and visitors, unless 
requested otherwise by the interviewee.'' Privacy in interviews with 
staff is important and encourages the likelihood of honest feedback 
about an organization. Additionally, we also identified a few (three of 
22 applications) during our survey observations of AOs onsite, 
instances in which the AO did not observe actual performance of 
medication administration, wound care or other services provided by the 
accredited facility, and most observations within the hospital setting 
were surgical time-outs (part of the Universal Protocol and performed 
in the operating room, immediately before the planned procedure is 
initiated). In one instance, the AO failed to ask the facility for any 
patient/representative complaint information, which indicates that the 
AO failed to conduct any investigation as to how the facility manages 
complaints and grievances. These specific examples raise concern in 
that the AO survey process does not sufficiently ensure safe practices 
for patients.
    Furthermore, as noted in our discussion of proposed Sec.  
488.5(a)(4)(iii), we have also identified multiple instances in which 
the AOs have conducted limited review of facilities' staff 
credentialing and competency testing activities. For instance, in one 
survey observation, we observed that the AO reviewed the personnel 
files of only one licensed practical nurse (LPN) and one phlebotomist, 
and did not review any personnel files for RNs, pharmacists, or 
dietitians, as outlined in Appendix A of the SOM, which we consider to 
be critical staff for this provider setting. In another survey, the AO 
determined that nursing staff were not documenting chains of custody of 
narcotic medications, but failed to review the facility's 
pharmaceutical policies and procedures, and conducted no interviews of 
pharmacy staff. In such circumstances where a category of documentation 
was missing from the facility's record, we would mandate that the AO or 
SA conduct further investigations to determine the reason for the 
lapse.
4. Proposed Revision to Sec.  488.5(a)(4)(vii) (Correction of 
Identified Non-Compliance)
    At Sec.  488.5(a)(4)(vii), we propose to add additional language to 
the existing requirement that the AO must provide us with descriptions 
of their procedures and timelines for monitoring the provider's or 
supplier's correction of identified non-compliance with the 
accreditation program's standards. We believe this requirement is not 
specific enough for enforcement; we have regularly had to request 
revisions of documents submitted by AOs during our review of 
applications and re-applications over the years. We propose to clarify 
this language by adding the requirement that AOs must also include 
documentation related to dates established by the AO and how those 
accreditation dates are determined by the AO when deficiencies may be 
found during initial and reaccreditation surveys, as well as the AOs 
process for accreditation decisions based on survey findings. We also 
propose to require the AOs to provide as part of this standard, their 
investigative and organizational process which the AO uses to make 
determinations on accreditation or the removal of accreditation and 
recommendation to the Survey Operations Group (based out of the various 
CMS Survey and Enforcement Division Locations) to remove deemed status 
of the non-compliant facility. We have also proposed additional changes 
at Sec.  488.5(a)(4)(viii) and refer readers to section IV.G ``Proposal 
to Require AOs to Provide CMS with Survey Findings'', of this proposed 
rule.
5. Proposed Revisions to Sec.  488.5(a)(4)(xi) (AO Training and 
Education Programs)
    At Sec.  488.5(a)(4)(xi), we propose to add a new requirement to 
require AOs to provide CMS with documentation summarizing their staff 
training programs, whether web-based or via methods such as Power Point 
presentations or hard-copy materials, which would provide an overview 
of how they train surveyors to follow their survey processes, and, 
where applicable, highlight differences from CMS survey processes. 
Currently, CMS receives limited training materials the AO provides to 
its surveyors; therefore, when conducting survey observations as under 
our authority at Sec.  488.8(h), it is often challenging to understand 
differences in survey processes. We may receive an AO's printed 
materials for training and/or downloaded versions of electronic 
surveyor training platforms; however, these materials vary. These 
materials indicate that some AOs collect employees' oral evidence for a 
survey, as opposed to a more document-focused review done by the SAs. 
AOs' applications do not always provide us with the entire scope of 
surveyor education the AO provides to its surveyors, therefore 
challenging our review of comparability. The current regulation at 
Sec.  488.5(a)(8) only requires the AO to give us ``[a] description of 
the content and frequency of the organization's in-service training it 
provides to survey personnel.'' CMS frequently asks AOs to submit 
additional training and education materials during the application 
review processes. Requesting the AOs' staff training programs and 
documentation as outlined in the proposal will provide CMS with greater 
enforcement capabilities and allow CMS to assess the AOs' consistency 
in training against those of required by the SAs. Additionally, because 
we review AO applications for comparability to CMS survey processes, 
this additional information would be invaluable to CMS' better 
understanding of the AOs' survey processes prior to conducting a survey 
or during the validation or proposed direct observation process, as 
discussed in sections II.D and IV.K.3 of this proposed rule.
6. Proposed Revisions to Sec.  488.5(a)(5) (Composition of Survey Team)
    At Sec.  488.5(a)(5), we propose to add requirements which describe 
the AOs'

[[Page 12017]]

minimum criteria for determining the size and composition of survey 
teams for the facilities they accredit. We propose to require the AO to 
provide us with documentation describing the criteria or process by 
which the AOs determines the makeup of their survey teams, based on: 
(1) the size of the facility to be surveyed, based on average daily 
census; (2) the complexity of services offered, including outpatient 
services; (3) the type of survey to be conducted; (4) Whether the 
facility has special care units or off-site clinics or locations; (5) 
Whether the facility has a historical pattern of serious deficiencies 
or complaints; and, (6) Whether new surveyors are to accompany a team 
as part of their training.
    Our on-site survey observation of AO surveyors has found some 
concerning practices. For example, we understand some AOs use time 
limits on the length of their investigations, which can limit the depth 
and accuracy of the investigation. One AO also only permitted a 2-day 
period in which to conduct a survey of a critical access hospital 
(CAH), whereas the policy of the SA is based on the scope of services 
provided by the provider, type of survey to be conducted, complexity of 
services offered and whether the facility has off-site locations. The 
AO's policies did not allow for flexibility to have the survey exceed 2 
days, which would likely not allow for all departments to be surveyed, 
or in the event of an immediate jeopardy or condition-level non-
compliance finding, for an investigation to be conducted. While 
fortunately no condition-level no-compliance was identified, the strict 
AO policy on timeframe of survey conflicts with the intent to complete 
the investigative process and did not allow for flexibility in survey 
length. It appears based on this example that at least one AO may not 
be giving considerations to the size and number of outpatient 
departments or provider-based locations per facility and the need to 
investigate immediate jeopardy or condition-level non-compliance when 
deciding on time limits for surveys. Additionally, some AOs have not 
always ensured surveys are conducted on all off-site locations that are 
still certified under the main campus or facility CCN as is required 
for SAs in accordance with Appendix A of the SOM--Survey Protocol, 
Regulations and Interpretive Guidelines for Hospitals, Survey Protocol, 
Task 3 (``Information Gathering/Investigation''). This proposed 
provision would be effective one year following the publication of the 
final rule.
    Clarifying these minimum expectations would help AOs meet Medicare 
conditions and create more consistency between the approaches used by 
AOs and the SAs.
7. Proposed Revisions to Sec.  488.5(a)(6) (Adequate Number of 
Surveyors for Size of Facility)
    At Sec.  488.5(a)(6), we propose to add language to the existing 
requirement that requires the AO to provide documentation demonstrating 
the overall adequacy of the number of the organization's surveyors, 
including how the organization will increase the size of the overall 
survey staff to match growth in the number of accredited facilities 
while maintaining regular re-accreditation intervals for existing 
accredited facilities. We propose to add language demonstrating that 
the AO has enough surveyors to ensure that a sufficient amount of time 
can be allotted to its clients to complete all survey activities.
    Through our direct observations as part of the application process, 
we identified several instances in which the scope of document reviews 
was limited and the content of medical records was not thoroughly 
reviewed, because it seems the AO surveyors did not have enough time to 
review records. This may be a systemic issue across AOs. This proposed 
provision would be effective 1 year following the publication of the 
final rule.
8. Proposed Revisions to Sec.  488.5(a)(12) (Complaint Survey 
Documentation Requirements)
    At Sec.  488.5(a)(12), we propose to add additional elements 
critical to the AOs' effective investigation of complaints about their 
client facilities. Specifically, we propose that the AO in its 
application documents for CMS approval of its deeming authority would 
also have to include: (1) a description of its process for triaging and 
categorizing complaints about the surveyed facility; (2) timeframes for 
responding to complaints and a method to track and trend complaints 
(for example, frequency of similar complaints, complaint type, etc.) 
received with respect to the AOs accredited facilities; (3) procedures 
and persons responsible for the review of plans of corrections; and 
procedures for follow up if the plans of corrections are not adequate; 
(4) AO requirements for plans of corrections for standard level 
deficiencies; (5) follow up survey procedures and monitoring of 
condition-level findings; (6) procedures for addressing immediate 
jeopardy deficiencies; and (7) sharing of previous deficiency findings 
or complaints with survey teams. The existing regulatory requirement 
for the AO to provide procedures for responding to, and investigating, 
complaints against accredited facilities, including policies and 
procedures regarding referrals is insufficient. Of our 19 AO initial 
and renewal applications received in the past years, CMS has requested 
additional AO documentation for this particular standard in order to 
adequately assess the comparability of survey processes. Strengthening 
the language will bring greater clarity as to the expectations for 
documents to the AO submitting an initial or renewal application.
9. Proposed Revisions to Accreditation Decision-Making Policies and 
Reporting Sec.  488.5(a)(13)
    At Sec.  488.5(a)(13), we propose to re-designate existing 
paragraph (ii) to (iii) and add two new paragraphs at (ii) and (iv). 
The section currently requires an AO applying or re-applying for 
deeming authority to provide CMS with a description of its processes 
for accreditation status decision making. The proposed revision would 
require the AO to document its specific policies and procedures for 
reporting accreditation decisions to CMS, including timeframes for 
notification. Additionally, we propose to require the AO to submit 
specific documentation describing how it will inform us when one of the 
facilities they accredit withdraws from accreditation. This 
communication is necessary since it alerts us that such facility will 
need to be surveyed by the SA next time. By requesting this additional 
information related to accreditation decisions made by the AOs, as well 
as reviewing documentation on how the AO notifies their facilities and 
CMS and our SAs of a facility withdrawing from the AO, CMS will 
strengthen the existing requirements and would create a more 
consistent, uniform review of the AO survey process for comparability. 
We also believe by requiring this information, we will be able to 
review the AOs' processes for reporting. Additionally, we will also be 
able to identify under what circumstances an AO maintains accreditation 
of a facility versus the potential CMS decision to drop deeming 
authority. We have found in several instances that even in light of 
serious health and safety deficiencies and CMS's removal of deeming 
authority, a facility can still remain accredited, which may provide an 
untrustworthy perception to the public that the facility has no health 
and safety concerns. When CMS provides deeming

[[Page 12018]]

authority to an AO, the expectation is that its standards meet or 
exceed Medicare conditions and that surveys are comparable to those of 
the SAs, which is not the case for accreditation versus deeming. 
Facilities may voluntarily end their deeming and accreditation from an 
AO or be involuntarily removed from deeming authority. When this occurs 
under the deeming process, the facility is placed under the SA's 
jurisdiction, meaning the SA will survey and monitor the facility for 
compliance with federal requirements. However, in situations where the 
facility's deemed status is removed involuntarily for non-compliance, 
yet the AO continues to accredit the provider, CMS believes the public 
perception is that these facilities are still meeting or exceeding the 
requirements for Medicare, which may not be true.
    Through the establishment of a more rigorous and comprehensive 
survey process review during the required application and renewal 
process, our concerns regarding insufficient compliance would be 
addressed. The proposed additional and revised requirements would 
ensure a more uniform assessment and improve our evaluation of AO 
performance to ensure that surveys conducted by AOs are comprehensive 
and fully examine all Medicare conditions. We also believe that 
codifying these detailed documentation requirements in regulation would 
establish a consistent standard across all AOs and would bring 
uniformity and transparency to the accreditation process.
    We propose that the provisions clarifying the existing requirements 
to require AOs that accredit Medicare-certified providers and suppliers 
to provide us with more detailed descriptions of their survey processes 
and procedures would become applicable 1 year from the effective date 
of final rule.

G. Proposal To Require AOs To Provide CMS With Survey Findings (Sec.  
488.5(a)(4)(viii))

    General AO survey findings are entered into a CMS database known as 
the Accrediting Organization System for Storing User Recorded 
Experiences (ASSURE). This database collects general information about 
the accreditation survey, such as, date, survey findings and severity 
of problems indicated by the findings. It generally does not include 
actual survey reports. Currently AOs provide a limited set of data for 
surveys within the ASSURE database. We use this information in 
addressing administrative program elements, and in assessing AO 
performance. While we have the authority to request this information 
from the AO, we generally do so only when we determine that it is 
necessary for follow-up. To date, we have not consistently required the 
AOs to submit copies of their survey reports and related information.
    We propose to modify Sec.  488.5(a)(4)(viii) to require that AOs 
provide all survey reports to CMS, which would not be disclosed except 
as permissible by statute, pursuant to subsection 1865(b) of the Act. 
AOs would be required to submit a statement that organization agrees to 
provide with a copy of all survey reports, including but not limited 
to, initial, re-survey, and complaint survey reports, and/or any other 
information related to survey activities as CMS may require (including 
corrective action plans) as part of its initial and renewal 
applications, or upon CMS request. The proposed revision to Sec.  
488.5(a)(4)(viii) would expand the requirement from the current 
requirement that AOs provide survey reports from applicants seeking 
initial participation in Medicare (with other surveys only upon 
request). Under our proposal, we would have access to any survey 
reports, including initial, reaccreditation, complaint surveys, and 
corrective action plans that CMS may require. These reports, like those 
of survey agencies, would assist CMS in program analysis of tracking 
citations issued to accredited facilities to determine whether there is 
a concern with an AO's performance. Similarly, these reports would 
assist in reviewing disparate findings in which the SA may have cited a 
deficiency within an accredited facility that the AO failed to 
recognize.
    Current Sec. Sec.  488.5(a)(4)(viii) and 488.5(a)(11)(ii) allow CMS 
to receive copies of the AOs' survey reports. However, CMS is 
prohibited by section 1865(b) of the Act as well as Sec.  488.7(b) from 
disclosing these surveys to the public, with the exception that CMS may 
disclose such a survey and related information to the extent that they 
are from home health agencies, or hospice programs, or pertain to an 
enforcement action taken by CMS. Furthermore, the stem statement of 
Sec.  488.7 requires that a Medicare participating provider or 
supplier, in accordance with Sec.  488.4, must authorize its respective 
AO to release to CMS a copy of its most current accreditation survey 
including corrective action plans and any information related to the 
survey that CMS may require.'' Section 488.7(b) further provides that 
CMS may publicly disclose an accreditation survey and information 
related to the survey, upon written request, but only to the extent 
that the accreditation survey and survey information are related to an 
enforcement action taken by CMS.
    CMS has the authority under section 1875(b) of the Act as well as 
regulations at Sec.  488.8(a)(1) to evaluate the performance of the AOs 
through review of the organizations' survey activity. Through 
consistent access to AO survey findings CMS would enhance our ability 
to analyze survey findings and process, identify emerging quality of 
care issues and patterns in AO survey findings, and, ultimately, 
improve care for our beneficiaries.
    As the proposal for revision to Sec.  488.5(a)(4)(viii) is being 
made in connection with our proposal to require the AOs that accredit 
Medicare-certified providers and suppliers to use the proposed revised 
comparable survey processes and procedures, we propose that the 
revisions to Sec.  488.5(a)(4)(viii) become applicable 1 year from the 
effective date of the final rule.

H. Proposal To Require That AO Surveyors Must Take the CMS Online 
Surveyor Basic Training

    Prior to 2006, CMS offered basic surveyor training courses in a 
traditional in-person classroom setting. Over time, we began providing 
online basic surveyor training courses for each provider and supplier 
type (ambulatory surgical centers (ASCs), hospitals, home health 
agencies (HHAs), etc.), as well as training specific to writing skills 
for surveyor documentation.
    Basic training online courses are designed to provide surveyors 
with the basic knowledge and skills needed to survey the respective 
provider or supplier type for compliance with the Medicare conditions. 
The online courses also help develop and refine surveying skills, 
foster an understanding of the survey process, and enhance surveyors' 
overall ability to conduct and document surveys. Courses are self-paced 
web-based training. Users may access the online courses at any time and 
have ongoing access to the course. This affords surveyors the 
opportunity to refresh knowledge regarding Medicare conditions and 
processes whenever necessary. The numbers of learners trained in online 
courses have been steadily increasing since their inception.
    Currently, the trainings are publicly available through the CMS 
Quality, Safety & Education Portal (QSEP) website at https://qsep.cms.gov. These trainings are free of charge for AO surveyors and 
the public at large.

[[Page 12019]]

    SA surveyors are required to take CMS program-specific trainings 
along with SA-led orientation, field survey observations, and mentoring 
as part of a comprehensive training and education program to assure an 
adequately trained, effective surveyor workforce.
    SAs perform validation surveys on a sample of providers and 
suppliers (such as hospitals, CAHs, ASCs, and HHAs) accredited by the 
AOs. Validation surveys compare the survey findings of the AO to those 
of the SA to see if there are any disparities. The disparities found 
between an AO's surveys and an SA's surveys is used in a performance 
measure called the ``disparity rate'' and is tracked by CMS as an 
indication of the quality of the surveys performed by the AO as 
described earlier in this proposed rule.
    The disparity findings between AO surveyors and SA surveyors may, 
in part, be attributed to differences in surveyor training and 
education, which varies from AO to AO, and may be inconsistent with the 
CMS-provided SA surveyor training discussed earlier in this proposed 
rule.\11\ We further believe that uniform surveyor training would 
increase the consistency between the results of the surveys performed 
by SAs and AOs, and have a positive impact on the historically high 
disparity rates. The Fiscal Year 2020 ``Report to Congress: Review of 
Medicare's Program Oversight of Accrediting Organizations (AOs) and the 
Clinical Laboratory Improvement Amendments of 1988 (CLIA) Validation 
Program,'' \12\ showed variation in overall disparity rates, by 
provider type, as well as by the AO. For example, the disparity rate 
from FY 2018 to FY 2019, hospitals, HHAs and ASCs had the only 
decreases in disparity rates of all the program types, with a 5-
percentage point, 11-percentage point and 7-percentage point decrease 
respectively. The disparity rates for psychiatric hospitals increased 
by 7-percentage points from FYs 2018 to 2019. The disparity rates for 
CAHs and hospices increased by 5-percentage points and 3-percentage 
points respectively from FY 2018 to FY 2019. On November 4, 2021, we 
published a final rule in the Federal Register, entitled, ``Medicare 
and Medicaid Programs; CY 2022 Home Health Prospective Payment System 
Rate Update'' (86 FR 62240). In that final rule, we finalized 
implementing regulations to require AO surveyors to have successfully 
completed the relevant CMS-sponsored basic hospice surveyor training 
prior to conducting any hospice program surveys in accordance with 
Division CC, section 407 of the Consolidated Appropriations Act of 2021 
(CAA 2021) .
---------------------------------------------------------------------------

    \11\ https://qsep.cms.gov.
    \12\ The most recent Report to Congress may be accessed at: 
https://www.cms.gov/files/document/qso-22-06-ao-clia.pdf.
---------------------------------------------------------------------------

    In addition to the recent hospice program surveyor training 
requirements, we propose to amend the provision at Sec.  488.5(a)(8) by 
adding new paragraphs (a)(8)(i) to (a)(8)(iv), which would impose a new 
training requirement on those surveyors working for AOs that accredit 
Medicare-certified provider and suppliers. We note that we had 
previously made a similar proposal in the calendar year (CY) 2019 Home 
Health Prospective Payment System Rate Update proposed rule (83 FR 
32470, July 12, 2018). However, we did not finalize this proposal, due 
to commenters' concerns with course enrollment access and the amount of 
time we estimated it would require for an AO surveyor to complete the 
course.
    CMS believes the concerns raised by interested parties during the 
previous proposed rule comment period have been addressed by narrowing 
the scope of the required training and providing additional details 
regarding implementation. Therefore, we are again making this proposal 
to address the consistency of surveyor knowledge and interpretation, 
since we propose to require the AOs to use Medicare conditions and 
survey processes. We describe the courses required as well as the 
estimated time for each in section VI of this proposed rule. We propose 
at Sec.  488.5(a)(8) a description of the content and frequency of the 
organization's in-service training it provides to survey personnel and 
we would also require AOs to submit their training materials to CMS as 
part of the application process. We additionally propose at Sec.  
488.5(a)(8)(i) to require that all AO surveyors complete two CMS 
mandatory courses which instruct surveyors, for all facility types, how 
to document their findings in the standardized survey materials. We 
would also require AO surveyors to complete all relevant CMS online 
program-specific basic surveyor training, which we have already 
established for state and federal surveyors. For example, AO hospital 
surveyors would be required to take the following CMS online courses: 
(1) Principles of Documentation for Non-Long-Term Care; (2) Basic 
Writing Skills for Surveyor Staff; (3) and, Hospital Basic Training. A 
hospice surveyor would take the Principles of Documentation for Non-
Long-Term Care; Basic Writing Skills for Surveyor Staff; and Hospice 
Basic Training courses. If an AO surveyor participates in both hospital 
and hospice surveys they would take the two documentation courses and 
the two basic training courses. These courses would be the minimum 
mandatory requirements for AO surveyors. In addition, we would also 
require that all AO surveyors would be required to take any updates to 
the CMS online surveyor courses when necessary. Any training above and 
beyond the minimum CMS online surveyor courses would be at the AO's 
discretion.
    We propose at Sec.  488.5(a)(8)(ii), that AO surveyors hired after 
the date of implementation of this provision would be required to 
complete the required CMS online surveyor training courses prior to 
serving on a survey team (except as a trainee). A time requirement is 
necessary to ensure that the AO surveyors take the CMS online surveyor 
training in a timely manner and is consistent with the existing hospice 
program surveyor training requirements at 42 CFR 488.1115(a).
    We propose at Sec.  488.5(a)(8)(iii) that AOs would also be 
required to document that the CMS online surveyor training courses were 
completed and the date of completion in the surveyor's staff personnel 
records. The purpose of this requirement would be to allow the AO and 
CMS to have records that document that the requirements had been met by 
each surveyor. We would review these training records during our onsite 
visit to the AO's office that is performed as part of the initial and 
renewal application process. We further propose at Sec.  
488.5(a)(8)(iii) to require that the AOs maintain this documentation of 
course completion by each surveyor for no less than one accreditation 
cycle, so we can verify that AO surveyors had completed the online 
courses as part of the AO's next renewal application process. One 
accreditation cycle would be defined as the period of time during which 
the AOs' CMS approval is in effect, starting from the date of 
application approval and continuing until the date of approval of the 
next renewal application.
    This proposed requirement aligns with and expands upon recent 
regulations that require hospice program AO surveyors to successfully 
complete the CMS online Basic Hospice Surveyor Training prior to 
performing any hospice program surveys.
    In addition, we propose at Sec.  488.5(a)(8)(iv) that the 
provisions proposed at Sec. Sec.  488.5(a)(8)(i) through (a)(8)(iv) 
would be applicable beginning 1 year after the effective date of the 
final rule.

[[Page 12020]]

I. Proposal To Establish Criteria for ``National in Scope'' (Sec.  
488.1)

    On April 5, 2013, we published a proposed rule in the Federal 
Register entitled, ``Medicare and Medicaid Programs; Survey, 
Certification, and Enforcement Procedures'' (78 FR 20564), hereinafter 
referred to as ``2013 AO oversight proposed rule'', which proposed 
modifications to the CMS AO oversight regulations. In the 2013 AO 
oversight proposed rule, we stated that the demonstration of ``national 
in scope'' by an AO must be specific to each accrediting program for 
which new or renewed CMS approval is sought. We also proposed to define 
``national accreditation organization'' in Sec.  488.1 to specify that 
CMS requires an AO program seeking initial approval to ``already be 
fully implemented and operational nationally'' (78 FR 20566). However, 
in the 2015 AO final rule (80 FR 29796), we finalized the policy that 
we would not require an AO to reach facility minimums or meet specific 
geographic distribution requirements to be deemed ``national in scope'' 
(80 FR 29802). We did this because we believed AOs should be able to 
demonstrate the ability to scale over time.
    Currently, we require that an AO's accreditation program be 
national in scope in order to receive CMS approval. However, we have 
never specified objective criteria for ``national in scope'' in 
regulations. Therefore, as the number of AOs (and the number of 
applications from AOs) grow, it is in the best interest of CMS and the 
AOs to establish specific criteria to define ``national in scope.'' 
Establishing a specific definition and criteria for what CMS would 
consider to constitute widely located geographically across the United 
States (U.S.) would ensure that CMS is objective and consistent during 
the AO application review process when making a determination as to 
whether an AO's accreditation program is, in fact, national in scope. 
This would further ensure that new AOs, submitting applications for 
deeming authority, are represented across the nation and not clustered 
within one area of the country. Furthermore, this also provides an 
opportunity for facilities to choose any AO with a CMS-recognized 
accreditation program for its provider/supplier type, versus only 
having one AO to choose.
    Therefore, we propose to add a definition for ``National in 
scope,'' to the CMS regulations at Sec.  488.1 to establish criteria 
for determining when an AO's accreditation program meets the 
requirement. We propose that the definition, ``National in scope'' 
would mean that the providers and suppliers accredited by an AO under a 
specific accreditation program, must be widely located geographically 
across the U.S. The proposed requirement for ``national in scope'' 
would have two components. First, the AO would be required to have 
accredited at least five providers or suppliers under the accreditation 
program in question. Second, the five providers or suppliers accredited 
by the AO under that accreditation program would have to be 
geographically located in at least five out of the six geographic 
regions.
    The addition of the proposed definition of ``National in scope'', 
requires that we also define the term ``geographic regions of the 
U.S.'', because this is a component of the definition of ``National in 
scope.'' Therefore, we propose to add a definition for ``Geographic 
regions'' at Sec.  488.1.
    The proposed six geographic regions consist of six groups of states 
that cover the northeast, southeast, mid-west, central, south, and 
western areas of the United States which provide six possible areas in 
which an AO could accredit a provider or supplier to meet the second 
part of the ``national in scope'' test. In contrast, the use of a 
simple north, south, east and west geographical division of the U.S. 
would only provide four possible regions in which an AO have accredited 
providers and suppliers.
    We believe that use of these six geographic regions as the 
geographical test for ``national in scope'' would provide a standard by 
which CMS could measure whether an AO has accredited the required 
number of health care providers or suppliers in varying geographical 
areas of the U.S. We further believe the requirement that an AO have 
one provider or supplier in at least five of the six geographic regions 
would demonstrate the AO's ability to scale up and develop a national 
presence over time and align with CMS' current consortiums or 
regions.\13\ AOs would need to be able to demonstrate this standard in 
their initial applications for deeming authority, as well as continue 
to meet this definition, which would be evaluated within their renewal 
applications.
---------------------------------------------------------------------------

    \13\ CMS Organizational Chart, Page 17, Survey Operations Group 
https://www.cms.gov/About-CMS/Agency-Information/CMSLeadership/Downloads/CMS_Organizational_Chart.pdf.
---------------------------------------------------------------------------

    We also believe that this proposed definition of ``Geographic 
regions'' would ensure that we are impartial and consistent during the 
application review process. We also believe that this proposed 
definition would provide the AOs with objective criteria for the 
definition of ``national in scope'' that they can strive to meet prior 
to submitting an application, especially for possible new accrediting 
programs.
    We note that Sec.  488.1 currently defines ``national accrediting 
organization'' as ``an organization that accredits provider entities 
(as that term is defined in section 1865(a)(4) of the Act) under a 
specific program and whose accredited providers and suppliers are 
widely located geographically across the U.S.'' Because we proposed to 
add a specific definition for ``National in scope'' to Sec.  488.1, 
that requires a two-part test, it is also necessary to update the 
definition of ``National accrediting organization'' to add the 
requirement that the AO must be national in scope.
    This would ensure that new AOs submitting applications for Medicare 
approval of their accreditation programs, would be required to show 
that they have the ability to provide accreditation services to 
providers and suppliers across the nation and not just those clustered 
within one area of the country. Making it a requirement that AOs be 
capable of providing accreditation services throughout the U.S. 
provides the opportunity to health care providers and suppliers in all 
regions of the U.S. to obtain deeming accreditation from the AO of 
their choice.
    Therefore, we propose to revise the existing definition of 
``National accrediting organization'' at Sec.  488.1. The proposed new 
definition of ``National accrediting organization'' would read as 
follows ``National accrediting organization means an accrediting 
organization that is national in scope and accredits provider or 
suppliers, under a specific accreditation program.''
    We propose to add the new definition for ``National accrediting 
organization'' so that we can include the phrase ``is national in 
scope'' within the said definition. The purpose for revising the 
definition of ``National accrediting organization'' is to enforce 
national in scope requirement for AOs.

J. Proposal To Revise the Definition of ``Rate of Disparity'' and To 
Use the Process and Outcome Disparity Rates and Performance Measures 
(Sec.  488.1)

    In section IV.L of this proposed rule, we propose to revise the 
validation program by using two different types of validation surveys, 
which are: (1) the 60-day ``look-back'' validation survey and, (2) and 
a direct survey observation approach, to evaluate the performance of 
the AOs. Validation surveys are full surveys performed for a 
representative

[[Page 12021]]

sample of accredited facilities. Look-back validation surveys are 
completed by the SA within 60 days of an AO's full accreditation survey 
for the same facility. In some cases, representative sample ``mid-cycle 
validation surveys'' may be conducted whether or not there has been a 
preceding AO survey.
    The analysis of the validation survey findings are reported as a 
``disparity rate.'' As previously discussed in section II.C of this 
proposed rule, this rate of disparity is currently defined at Sec.  
488.1 as the percentage of all sample validation surveys for which a SA 
finds noncompliance with one or more Medicare conditions and where no 
comparable condition-level deficiency was cited by the AO and it is 
reasonable to conclude that the deficiencies were present at the time 
of the AO's most recent survey of that provider or supplier. The goal 
of the validation process is to determine whether the findings of the 
two surveys are comparable.
    In calculating the current rate of disparity, the numerator is the 
number of surveys in which the AO missed at least one condition-level 
deficiency found by the SA and the denominator is the number of surveys 
in the validation sample. The result is the percentage of validation 
surveys where the AO missed finding a significant deficiency identified 
by the SA. If the AO missed at least one serious deficiency in a third 
of the validation surveys, the disparity rate would be 33 percent. A 
lower disparity rate indicates better AO performance.
    The existing definition of ``rate of disparity'' is not applicable 
to the direct observation validation survey because it focuses on the 
survey process as opposed to outcome of the survey. Therefore, we 
propose to revise the current definition of ``rate of disparity'' 
located at Sec.  488.1 and replace this definition with two new 
definitions, which are ``outcome disparity rate'' and ``process 
disparity rate.''
    The outcome disparity rate would be applicable to the look-back 
validation survey, which is the current method of validation. We 
propose that the new definition of ``outcome disparity rate'' would 
generally remain as the existing definition of ``rate of disparity'' at 
Sec.  488.1, but would be revised and retitled as ``outcome disparity 
rate'' to distinguish it from the ``process disparity rate.''
    When calculating the process disparity rate, the numerator for one 
provider or supplier for which the direct observation validation survey 
is done would be the number of observed survey process findings and the 
denominator would be the number of expected survey process findings for 
all direct observation validation surveys. The observed survey process 
findings are the actual number of Medicare conditions that were 
observed being surveyed for by the AO. The expected survey process 
findings are the total number of Medicare conditions that the AO should 
have surveyed for during the survey observation. The result would be 
reported as a percentage. A high percentage indicates greater disparity 
between the expected AO performance on direct observation validation 
survey and the actual AO performance on the direct observation 
validation survey. For example, a direct observation validation survey 
with 75 observed process findings out of 100 expected process findings 
would yield a process disparity rate of 25 percent [((100-75) / 100) * 
100], indicating a 25 percent difference between what is observed and 
what is expected (See Figure 1).
[GRAPHIC] [TIFF OMITTED] TP15FE24.002

    The proposed process disparity rate would be applicable to the 
direct observation validation survey and would be defined as the 
difference between the observed survey process findings and the 
expected survey process findings.
    The overall process disparity rate for a particular AO would be 
calculated by taking the average of the process disparity rate for each 
direct observation validation survey performed for an accreditation 
program of an AO. Preliminary results obtained from the VRP pilot 
during the period of June 2018 to July 2019 are shown in Figure 2. 
While we will analyze and explain the pilot data when more is 
available, we share preliminary data here as a sample of how the 
process disparity rate would be calculated if this proposed rule is 
finalized as proposed.

[[Page 12022]]

[GRAPHIC] [TIFF OMITTED] TP15FE24.003

    The outcome disparity rate measure would also be a component of 
evaluating AO performance. We have been measuring the outcome disparity 
rate as a performance measure for years and have historical data to 
share. This measure would comprise any look-back validation survey 
condition level findings made by the SA that had not been identified by 
the AO during their reaccreditation survey, where it is reasonable to 
conclude that these deficiencies were present when the AO performed the 
survey (see Figure 3).
[GRAPHIC] [TIFF OMITTED] TP15FE24.004

    In addition to reporting the overall disparity between the outcomes 
found by both the AO and SA, the differences between the observed and 
expected survey processes would also be reported as the process 
disparity rate.
    In FY 2019, we found that 42 percent of the state validation look-
back validation surveys performed for hospitals, the AO did not cite a 
comparable deficiency to those cited by the SA. The proposed definition 
of new process disparity rate would showcase the average percent 
difference between the observed survey process findings and the 
expected survey process findings, by provider type.
    Figure 4 provides the FY 2020 outcome disparity rate for Medicare 
provider types as reported in the January 2021 Report to Congress.
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[[Page 12023]]

[GRAPHIC] [TIFF OMITTED] TP15FE24.005

BILLING CODE 4120-01-C
    We note that the average disparity rate across all Medicare 
provider types is 32 percent, based on the most recent data, with the 
largest disparity rate being

[[Page 12024]]

CAHs' accreditation surveys, at 46 percent. By continuing to monitor 
outcome disparities, and further investment in our methodologies for 
measuring process disparities would help to bring AOs up to the 
standards of SAs.

K. Proposal To Require AOs To Submit a Publicly Reportable Plan of 
Correction for Unacceptable Performance Measure Scores (Sec.  
488.8(a)(2))

    In section IV.J of this proposed rule, we proposed to revise the 
definition of ``disparity rate'' to include a process and outcome 
disparity rates. We noted that the proposed definition of outcome 
disparity rate generally remains the same as the currently defined 
definition of disparity rate. We further noted that we have been 
measuring the outcome disparity rate as a performance measure for 
years. We would note that we would use the new process disparity rate 
as a performance measure.
    To monitor an AO's ongoing performance as provided by section 
1875(b) of the Act and Sec.  488.8, we propose in paragraph (a)(2) to 
expand the types of validation activities included in the performance 
review. We also propose in paragraph (a)(4) to require AOs to submit a 
plan of correction that would be publicly reported, when the AO's 
performance on survey activities identify disparity concerns either 
through the outcome disparity rates or process disparity rates.
    We propose to revise Sec.  488.8(a)(2) to broaden activities that 
CMS would evaluate in our ongoing review of AOs. Specifically, we would 
monitor the results of our outcome disparity rate, the look-back 
validation surveys, complaint surveys and the process disparity rate as 
determined by the direct observation survey.
    We propose to revise Sec.  488.8(a)(4) to require that when an AO's 
outcome disparity or process disparity performance measure scores, as 
determined from look-back and direct observation validation surveys, 
reveal that the AO's accreditation survey activities do not meet an 
acceptable performance threshold established by CMS, the AO would be 
required to submit an acceptable plan of correction to CMS which 
identified corrective action the AO proposed to take to correct their 
performance.
    We propose at Sec.  488.8(a)(4)(i), to require that the plan of 
correction be submitted to CMS for review within 10 business days the 
AO being notified by CMS of not meeting the acceptable performance 
threshold. We also propose that in order to be acceptable, the AO's 
plan of correction would have to: (1) document specific actions being 
taken by the AO to address improving performance (proposed Sec.  
488.8(a)(4)(i)(A); (2) document the timeframe for implementation of the 
plan (proposed Sec.  488.8(a)(4)(i)(B)); (3) plan for ongoing 
monitoring of the plan of correction toward achieving an acceptable 
level of performance (proposed Sec.  488.8(a)(4)(i)(C); and, (4) 
identify the individual responsible for implementation and monitoring 
of the acceptable plan of correction (Sec.  488.8(a)(4)(i)(D)).
    CMS would subsequently communicate with the AO on the acceptability 
of the plan of correction and would provide oversight of 
implementation. We propose at Sec.  488.8(a)(4)(ii) that upon review 
and approval of the submitted plan of correction, CMS would provide 
ongoing evaluation of the progress of plan implementation.
    Finally, we propose at Sec.  488.8(a)(4)(iii) that the AO's plan of 
correction be made subject to public reporting by CMS. Once approved, 
the plan of correction would be publicly available for review. This 
means that the acceptable plan of correction would be displayed 
publicly by CMS once approved. This plan of correction would be 
utilized to increase an AO's accountability for maintaining performance 
standards.
    The purpose of this oversight is to improve AO survey activity 
outcome and processes with the presumption that improvements toward 
acceptable performance would improve the health and safety of patients 
receiving services in Medicare-participating facilities. This is an 
effort to strengthen AO oversight by requiring AOs to address issues 
and take corrective action to improve to an acceptable level of 
performance. Previously, this was handled verbally or through written 
correspondence between the AO and CMS staff without a specific plan of 
correction.
    The proposed publicly reportable plan of correction would be based 
on both an analysis of data to identify the outcome and process 
disparity performance measure(s) for which the AO did not meet 
acceptable performance as well as significant instances of disparity. 
An analysis matrix would outline both outcome performance and process 
performance areas of successful achievement and those areas for which 
achievement was less than acceptable as demonstrated by the outcome and 
process disparity rate data. An example of what a plan of correction 
matrix might look like is indicated in Figure 5.
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[[Page 12025]]

[GRAPHIC] [TIFF OMITTED] TP15FE24.006

BILLING CODE 4120-01-C
    The matrix in Figure 5 is representative of FY 2018 data collected 
during the direct observation validation surveys, look-back validation 
surveys, and complaint surveys (which investigates specific 
allegations) conducted by the SA at AO facilities. If deficiencies were 
cited first by the AO and validated by the SA during a look-back or 
complaint survey this is considered an outcomes match. If the AO survey 
process under direct observation by the SA did not raise concerns, this 
indicates a positive outcome and positive process, which are 
represented in the top left box. The top right and bottom left boxes 
indicate where improvements need to be made in either the process or 
outcome of the respective Medicare condition, also known as CoP, while 
the bottom right box shows where improvements in both measures should 
be made.
    The AO would be able to use this matrix to identify if the less 
than acceptable performance is either outcome-focused, process-focused, 
or both. The proposed plan of correction would be required to be 
submitted to CMS within 10-business days following CMS' notification to 
the AO of less than acceptable performance, and would have to address 
the areas of improvement and the specific actions to be taken by the AO 
to improve those areas on a sustainable basis.

L. Proposal To Revise the AO Survey Validation Program (Sec.  488.9)

    Prior to discussing our proposed changes below, the following 
provides (1) background on validation surveys, (2) background on look-
back validation surveys, and (3) background on additional approaches to 
conduct validation surveys, before (4) introducing CMS' proposed 
changes.
1. Background on Validation Surveys
    Section 1864(c) of the Act permits the SAs to perform validation 
surveys of provider and supplier types deemed for Medicare 
participation under section 1865(a) of the Act as a means of validating 
the AOs' accreditation processes. The accreditation validation program 
is one component of CMS' oversight of AOs with approved Medicare 
accreditation programs, and consists of two types of validation 
surveys:
    <bullet> Complaint surveys--focused surveys based on complaints, 
which, if substantiated, could indicate serious non-compliance with one 
or more Medicare conditions; and
    <bullet> Validation surveys--full surveys, which are routinely 
performed for a representative sample of deemed facilities as part of 
the annual CMS-AO representative sample validation survey program. 
These surveys are completed by the SA within 60 days of an AO full 
accreditation survey for the same facility.
    Prior to 2007, section 1875 of the Act required CMS to report to 
Congress annually only on the Joint Commission's (TJC's) hospital 
accreditation program.\14\ In FY 2007, we expanded this oversight and 
began conducting 60-day representative sample validation surveys for 
selected non-hospital facility types (CAHs, HHAs and ASCs), in addition 
to those already being performed for deemed status hospitals. In FY 
2010, hospice look-back validation surveys were added, and in FY 2011, 
psychiatric hospital 60-day validation surveys were added. In FY 2019, 
we conducted a total of 315 representative sample look-back validation 
surveys for six facility types across AOs.\15\ This total comprised of 
119 hospital surveys (including 20 psychiatric hospitals) and 196 non-
hospital validation surveys. (See Graph 1.)
---------------------------------------------------------------------------

    \14\ Section 125(b)(4) of Public Law 110-275 (2008), which was 
subsequently revised to apply to all AOs.
    \15\ Outpatient physical therapy and rural health clinics were 
not part of the validation sample.

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

[[Page 12026]]

[GRAPHIC] [TIFF OMITTED] TP15FE24.007

[GRAPHIC] [TIFF OMITTED] TP15FE24.008

    Since 2007, CMS has worked to strengthen its oversight of AOs and 
increase the number of validation surveys. The recent history of 
validation survey samples is as follows:
    2015: 118 hospital and 240 non-hospital surveys totaling 358 
surveys.
    2016: 119 hospital and 254 non-hospital surveys totaling 373 
surveys.
    2017: 116 hospital and 244 non-hospital surveys totaling 360 
surveys.
    2018: 128 hospital and 188 non-hospital surveys totaling 316 
surveys.
    2019: 119 hospital and 196 non-hospital surveys totaling 315 
surveys.
    These numbers represent a 250 percent increase in the overall 
number of validation surveys conducted, from 90 in FY 2007 to 315 in FY 
2019. During the same time period, the number of non-hospital 
validation surveys conducted increased by 460 percent, from 35 surveys 
in FY 2007 to 196 surveys in FY 2019. The number of hospital validation 
surveys conducted increased by 116 percent, from 55 surveys in FY 2007 
to 119 surveys in FY 2019.
2. Background on Look-Back Validation Surveys
    The purpose of look-back validation surveys of deemed providers or 
suppliers is to assess the AO's ability to ensure compliance with 
Medicare conditions. These surveys are on-site full surveys completed 
by SA surveyors no later than 60 days after the end date of an AO's 
Medicare accreditation program full survey. The SA performs these 
surveys without any knowledge of the findings of the AO's accreditation 
survey. CMS determines the number of look-back validation surveys to 
perform

[[Page 12027]]

for each AO based on its total number of facilities, as well as the 
overall budgeted validation survey targets, by state and facility type.
    The proportion of look-back surveys completed for deemed facilities 
is calculated by dividing the number of look-back validation surveys 
conducted by the total number of deemed facilities. The proportion of 
deemed facilities that received a look-back validation survey in FY 
2019 is as follows:
    <bullet> Hospitals: Three percent of deemed hospitals received a 
validation survey in FY 2019 (99 validation surveys conducted out of 
3,332 deemed facilities).
    <bullet> Psychiatric Hospitals: Four percent of deemed psychiatric 
hospitals received a validation survey in FY 2019 (20 validation 
surveys conducted out of 466 deemed facilities).
    <bullet> CAHs: Three percent of deemed CAHs received a validation 
survey in FY 2019 (13 validation surveys conducted out of 449 deemed 
facilities).
    <bullet> HHAs: Two percent of deemed HHAs received a validation 
survey in FY 2019 (84 validation surveys conducted out of 4,034 deemed 
facilities).
    <bullet> Hospices: One percent of deemed hospices received a 
validation survey in FY 2019 (32 validation surveys conducted out of 
2,458 deemed facilities).
    <bullet> ASCs: Four percent of deemed ASCs received a validation 
survey in FY 2019 (67 validation surveys conducted out of 1,803 deemed 
facilities).
3. Background on Additional Approaches To Conducting Validation Surveys
    Over the years, we have looked for ways to improve the validation 
survey process and the disparity rate methodology. As discussed earlier 
in this proposed rule, the disparity rate for various provider types 
ranged between 8 percent for HHAs and 46 percent for CAHs.
    To address concerns about high disparity rates, CMS has been 
testing a VRP pilot since 2018. In the VRP pilot, instead of the 
separate look-back validation survey, a direct observation of the AOs 
survey by is performed. During the direct observation validation 
survey, the SA surveyors are present when the AO surveyors perform an 
accreditation survey, so that they can directly observe and evaluate 
the ability to the AO surveyors to assess compliance with the Medicare 
conditions. The purpose of this direct observation is to evaluate, in 
real time, the AO performance on the survey process. The real time 
observation of the survey allows the SA surveyors to make suggested 
improvements and address any concerns with AOs immediately.
    From June 2018 through August 2019, CMS conducted a total of 30 VRP 
pilot surveys in 17 states in the acute care hospital program (11), ASC 
program (10), psychiatric hospital program (3), HHA program (5) and 
hospice program (1). This proposed direct observation validation 
process has yielded additional information about the extent to which 
the AO's process meets or exceeds the survey process used by the SA 
surveyors. Our preliminary findings from our VRP pilot surveys include 
the following:
    <bullet> Certain AOs have rigid survey schedules that prove to be 
burdensome to the SA observers while onsite.
    <bullet> AOs have strict timeframes for each section of the survey 
to which they adhere, regardless of the findings or need to further 
investigate an issue within a facility.
    <bullet> Not all AOs survey offsite locations consistently for all 
portions of the survey.
    <bullet> Certain AO survey methodology favored a ``yes/no,'' 
``have/don't have'' format versus a more in-depth investigative 
approach.
    <bullet> Verbal assertion was considered adequate evidence of 
compliance without verification via observations and/or document 
review.
4. Proposal To Revise the Existing AO Survey Validation Program 
(Proposed Revisions to Sec.  488.9)
    We propose to revise the validation program by using two different 
types of validation surveys, which are: (1) the look-back validation 
survey and, (2) and a direct observation validation survey approach, to 
evaluate the performance of the AOs. We propose that direct observation 
surveys can be performed by the SA or CMS surveyors.
    We will also be looking at programmatic adjustments to the look-
back validation survey to address some of the concerns stakeholders 
have raised, to focus on key quality concerns, and to reduce provider 
burden. These programmatic changes do not require a regulatory change 
and are under development.
    Specifically, we propose at Sec.  488.9(b) to revise the types of 
validations surveys. We will continue using the existing look-back 
validation survey, through use of a sample of facilities in each 
program type, which would take place within 60 days following the AO 
surveys. These 60-day validation surveys are referred to as look-back-
validation surveys. As discussed above, we are planning to make 
additional programmatic adjustments to the existing look-back 
validation survey process to address the scope of the review and 
provider burden. Those adjustments would not require a regulatory 
change and are under development.
    We propose at Sec.  488.9(b)(2) to require validation using the 
direct observation validation survey, which focuses on real-time 
observation and evaluation of the AOs survey process. At Sec.  488.9(c) 
we propose the rules for look-back validation surveys. At Sec.  
488.9(d) we propose the rules for selection for look-back validation 
surveys. More specifically, proposed Sec.  488.9(d)(1) would provide 
that ``a provider or supplier selected for a look-back validation 
survey must cooperate with the SA that performs the look-back 
validation survey.'' We propose at Sec.  488.9(d)(2) that ``if a 
provider or supplier selected for a look-back validation survey fails 
to cooperate with the SA, it will no longer be deemed to meet the 
Medicare conditions or requirements, will be subject to a review in 
accordance with paragraph (a) of this section, and may be subject to 
termination of its provider agreement under Sec.  489.53 of this 
chapter.''
    At Sec.  488.9(e), we propose the rules for the direct observation 
validation surveys. These rules would include the following: (1) All 
direct observation validation surveys will be unannounced to the AO and 
the facility being surveyed (proposed Sec.  488.9(e)(1)); (2) The SA or 
CMS surveyors will generally be assigned to the AO surveyors on a 1:1 
basis, matching the experience of the accreditation surveyor where 
possible, and using the CMS approved standards and processes to 
determine compliance with the Medicare conditions (proposed Sec.  
488.9(e)(2)); (3) the SA surveyors will observe the AO survey in 
accordance with CMS established policies and procedures and will report 
the findings directly to CMS (proposed Sec.  488.9(e)(3)); and, (4) 
where the SA or CMS surveyors disagree with the findings of the AO 
surveyors, and these differences cannot be reconciled, CMS will render 
a final decision (proposed Sec.  488.9(e)(4)). This finding would not 
be appealable pursuant to 42 CFR 498.3(d)(1), which provides that 
administrative actions that are not initial determination (and 
therefore not subject to appeal under this part) are not appealable. 
Specifically, the findings that a provider or supplier determined to be 
in compliance with the conditions or requirements for participation or 
for coverage has deficiencies is such a non-appealable administrative 
action.

[[Page 12028]]

    At proposed Sec.  488.9(f), we propose circumstances in which an 
accredited provider or supplier would be deemed to have not met the 
applicable Medicare conditions or requirements, such as if: (1) the 
provider or supplier refuses to authorize its AO to release a copy of 
their current accreditation survey to CMS (proposed Sec.  488.9(f)(1)); 
(2) the provider or supplier refuses to allow a validation survey (for 
either look-back or direct observation validation surveys) (proposed 
Sec.  488.9(f)(2)); or (3) CMS finds that the provider or supplier does 
not meet the applicable Medicare condition (also known as CoP, CfC, 
conditions of certification, or requirements) (proposed Sec.  
488.9(f)(3)).
    At Sec.  488.9(g), we propose the consequences for non-compliance. 
At Sec.  488.9(g)(1), we propose that if a CMS validation look-back or 
direct observation validation survey results in a finding that the 
provider or supplier is out of compliance with one or more Medicare 
conditions, deemed status may be removed by CMS and the provider or 
supplier will be subject to ongoing review by the SA or CMS (in 
accordance with Sec.  488.10(d)) until the provider or supplier 
demonstrates compliance. At proposed Sec.  488.9(g)(2), we propose that 
CMS may take actions for the deficiencies identified in the in 
accordance with Sec.  488.24, or may first direct the SA or CMS 
surveyors to conduct another survey of the provider's or supplier's 
compliance with specified Medicare conditions or requirements before 
taking the enforcement actions provided for at Sec.  488.24. At 
proposed Sec.  488.9(g)(3), we propose that if CMS determines that a 
provider or supplier is not in compliance with applicable Medicare 
conditions or requirements, the provider may be subject to termination 
of the provider agreement and any other applicable intermediate 
sanctions and remedies.
    At proposed Sec.  488.9(h), we propose the re-instatement of the 
deemed status of a provider or supplier. An accredited provider or 
supplier would be deemed to meet the applicable Medicare conditions or 
requirements in accordance with this section if any of the requirements 
are met, as applicable:
    <bullet> It withdraws any prior refusal to authorize its AO to 
release a copy of the provider's or supplier's current accreditation 
survey (proposed Sec.  488.9(h)(1)).
    <bullet> It withdraws any prior refusal to allow a look-back or 
direct observation validation survey, if applicable (proposed Sec.  
488.9(h)(2)).
    <bullet> CMS finds that the provider or supplier meets all 
applicable Medicare CoP, CfC, conditions of certification, or 
requirements (proposed Sec.  488.9(h)(3)).
    At proposed Sec.  488.9(i), we propose that the existence of any 
performance review, comparability review, deemed status review, 
probationary period, or any other action by CMS, does not affect or 
limit CMS in conducting any subsequent validation survey.
    By providing a flexible approach to the validation process, this 
could reduce provider burden by reducing the frequency with which CMS 
would perform validation using the look-back validation survey method 
in which CMS performs a look-back validation survey within 60 days of 
the end date of the AOs accreditation survey. This would reduce the 
number of times that health care providers would have to undergo two 
full surveys within a 60-day period. We further believe this approach 
broadens the validation program activities and would be welcomed by 
both the AOs and the providers and suppliers.
    We propose that our proposals to revise the validation process by 
adding direct observation validation surveys and our proposed revisions 
to Sec.  488.9 would be applicable 60 days after the effective date of 
the final rule.
    We also propose that the direct observation surveys may be 
performed by not only the SA but also by CMS surveyors. This allows for 
flexibility and expediency in the performance of these validation 
surveys.
    The proposal to revise the validation process by adding look-back 
and direct observation validation surveys and our proposed revisions to 
Sec.  488.9 would not apply to laboratories, as they are subject to the 
provisions under part 493.

M. Proposal To Revise the Psychiatric Hospital Survey Process

    Under section 1861(f) of the Act, psychiatric hospitals are a 
defined provider type. This statutory provision requires psychiatric 
hospitals to comply with most hospital Medicare conditions, known as 
CoPs, but includes a few provisions applicable exclusively to them. In 
1986, special Medicare conditions for psychiatric hospitals were 
published and included, as part of the hospital Medicare conditions, as 
provisions of 42 CFR part 482. At that time, psychiatric hospital 
surveys were performed by either SA personnel or Health Care Financing 
Administration \16\ (HCFA) mental health surveyors (board-certified 
psychiatrists, masters prepared psychiatric nurses, masters prepared 
psychiatric social workers, doctorally prepared clinical psychologists, 
and doctorally prepared clinical psychopharmacologists) who were under 
contract with HCFA. This extensive experience requirement was beyond 
what is required for other types of hospital services. This requirement 
limited the number of SAs with qualified surveyors. Therefore, a CMS 
contractor with specially-trained and/or experienced psychiatric 
surveyors assisted the SAs in performing such surveys. This has 
resulted in a bifurcated survey process, as most psychiatric hospitals 
were subjected to two survey teams for each accreditation survey: the 
hospital survey team and the psychiatric component survey team.
---------------------------------------------------------------------------

    \16\ Health Care Financing Administration was the former name 
for CMS, which was changed on June 14, 2001.
---------------------------------------------------------------------------

    However, in the FY 2014 QSOG Mission and Priority Document, the 
restrictive requirement for extensive education and/or experience for 
psychiatric surveyors was removed. CMS developed online psychiatric 
surveyor training, provided on-site psychiatric surveyor training 
through contractors and offered partnership training for surveyors who 
did not have extensive psychiatric education or experience. This 
training became the standard and expectation for qualification to 
survey to the psychiatric Medicare conditions.
    The special Medicare conditions applying to psychiatric hospitals 
are set forth in Sec.  482.60 through Sec.  482.62. The special 
provisions at Sec.  482.60 require the following: (a) that the hospital 
be primarily engaged in providing, by or under the supervision of a 
doctor of medicine or osteopathy, psychiatric services for the 
diagnosis and treatment of mentally ill persons; (b) meet the 
conditions of participation specified in Sec. Sec.  482.1 through 
482.23 and Sec. Sec.  482.25 through 482.57; (c) maintain clinical 
records on all patients, including records sufficient to permit CMS to 
determine the degree and intensity of treatment furnished to Medicare 
beneficiaries, as specified in Sec.  482.61; and (d) meet the staffing 
requirements specified in Sec.  482.62. As noted earlier, participating 
psychiatric hospitals must also meet the Medicare conditions for acute-
care hospitals.
    In March 2020, we eliminated the contract for separate psychiatric 
hospital surveyors and provided comprehensive online training for all 
SAs. This training focused on the specific psychiatric hospital 
Medicare conditions so that the SA surveyors would be fully trained to 
conduct all aspects of a complete psychiatric hospital inspection. At 
this time, we also combined the interpretive guidance at Appendix AA 
for psychiatric hospital

[[Page 12029]]

surveys into the Appendix A for hospital surveys to provide a single 
location for all of the Medicare conditions during a full psychiatric 
survey.
    At this time, TJC and DNV are the only AOs that have CMS-approved 
psychiatric hospital accreditation programs. They conduct one complete 
survey of the entire psychiatric hospital, to include inspection of the 
regular hospital Medicare conditions and the psychiatric hospital 
Medicare conditions. Any AO is eligible to submit an application for 
consideration for accreditation to survey psychiatric hospitals.
    We propose to integrate the acute care hospital and psychiatric 
hospital survey processes for SAs to ensure that there is a systematic, 
and integrated look at psychiatric hospital quality. Therefore, AOs 
that currently survey only hospitals would need to expand their 
hospital accreditation programs to include Medicare conditions to 
survey for psychiatric hospitals as well.
    We believe that consolidating psychiatric and acute-care hospital 
Medicare condition oversight will improve the overall quality of the 
care by ensuring that systemic issues are more easily identified. With 
a single survey team conducting the survey for the entire facility, 
inconsistencies, trends, and subtle discrepancies can be connected more 
easily and provide a more comprehensive overview of underlying systemic 
issues. We believe that this comprehensive approach to survey both the 
psychiatric and acute-care hospital will enhance patient health and 
safety by ensuring the system as a whole is evaluated to meet the 
applicable Medicare requirements. Moreover, a single survey team 
decreases the team's physical imprint on the facility which minimizes 
any facility disruption resulting from the survey. When revisits are 
required related to deficiencies in the psychiatric Medicare 
conditions, only one survey team will return for re-inspection, which 
will reduce coordination time and resources as well as impact on 
individual facilities. Finally, we have determined that combining the 
survey process for psychiatric hospital Medicare conditions into the 
hospital program would improve the cost efficiency of CMS's survey and 
certification activities and simplify the survey process for SAs and 
AOs alike.
    For SAs, we would consolidate the deficiency report from 
psychiatric hospital survey activity into one Form CMS-2567, reporting 
on compliance with both the hospital Medicare conditions as well as the 
psychiatric services Medicare conditions. The survey process for 
inpatient psychiatric units located in acute care hospitals would not 
change, and this change would not require any revisions to our 
regulations.
    To ensure that surveys of psychiatric hospitals and units located 
in hospitals are performed properly by the SA surveyors, they have been 
provided online training on the psychiatric hospital Medicare 
conditions. CMS developed this online training and released it in March 
2020. It is now available to all SA and AO surveyors at https://qsep.cms.gov/.
    We would expand the acute care hospital accreditation program for 
AOs to include current psychiatric hospital accreditation standards. As 
per Sec.  488.8(b), CMS assesses the equivalency of the AOs programs to 
the CMS-approved program requirements, and, as such, this proposal to 
combine acute care and psychiatric hospital surveys necessarily 
required that we also propose to revise the hospital accreditation 
program application process for AOs that have an approved hospital 
program, so as to include psychiatric hospital accreditation in their 
hospital programs. Those AOs who currently have an approved hospital 
program would be required to resubmit their standards, survey process 
and surveyor training (which may include as part of CMS' training) to 
include review of the psychiatric Medicare conditions for psychiatric 
hospitals for CMS approval. This means that an AO that is seeking 
approval of a hospital accreditation program would be required to file 
one application that includes how they will assess for the two special 
Medicare conditions for psychiatric hospitals within their hospital 
accreditation program, whether or not they are currently accrediting 
psychiatric hospitals or have plans do to so in the future.
    As part of this proposal, we would also require that the AOs that 
already have an existing CMS-approved hospital program expand their 
existing hospital programs to include survey activities of psychiatric 
services in psychiatric hospitals. Those AOs who currently have an 
approved hospital program would be required to resubmit their 
standards, survey process and surveyor training for CMS approval in 
accordance with Sec.  488.8(b) by no later than 30-calendar days from 
CMS notice to the hospital AOs using the existing process described in 
Sec.  488.5(a)(19)(i). That process also permits CMS to give due 
consideration to a request for extension.
    We hope that this would encourage additional AOs to participate in 
deeming psychiatric hospitals. Overall, the intent of these proposals 
is to ensure that psychiatric services are evaluated in the context of 
the larger hospital program evaluation so that systemic quality issues 
are not missed. A single, comprehensive and focused survey team will be 
able to identify and connect individual issues and trends which may be 
occurring under two separate programs. Combining the two programs 
provides a more global view of the facility's potential deficiencies 
and is more likely to ensure the overall safety and quality of care 
delivered. For example, if there were significant issues with staff 
supervision of patients, one team of surveyors would be investigating 
areas which now cross the two sets of requirements and survey teams 
including patient-specific care planning, staff training, patient 
rights, and potentially governing body. Integrating the survey 
activities for hospital and psychiatric standards would also provide an 
avenue for additional AOs to participate in deeming psychiatric 
hospitals, which would produce more competition and provide facilities 
with more options for surveying authorities.

N. Limitation on Terminated Deemed Providers/Suppliers Seeking Re-Entry 
Into Medicare/Medicaid (Sec.  489.57, Sec.  488.4(b) & Sec.  
488.5(a)(21))

    Involuntary termination of the Medicare provider agreement is the 
ultimate sanction for non-compliance with Medicare's basic health and 
safety requirements. On average, less than ten involuntary terminations 
occur each year. From January 2015 through September 2023, a total of 
fifty-eight accredited providers and suppliers, including ASCs, ESRD 
facilities, HHAs, Hospices, Hospitals, RHCs, and OPTs, were 
involuntarily terminated from the Medicare program for unresolved 
health and safety concerns. These providers currently have the option 
of seeking re-approval to participate in Medicare/Medicaid through an 
AO with a CMS-approved program. We remain concerned that providers who 
have been involuntarily terminated from the Medicare program may 
continue to remain accredited by an AO, and hold their continued 
accreditation out to the public as a marker of high-quality care. Most 
consumers, due to branding and advertising by the accredited community, 
associate quality of care with accreditation, rather than CMS 
certification. Therefore, involuntarily terminated providers who retain 
their AO accreditation status convey that they continue to meet high 
quality of care standards, despite their termination

[[Page 12030]]

from Medicare. This situation could weaken public trust in 
accreditation as a marker of patient quality and safety. Since AO 
standards are required to meet or exceed those of Medicare, we are 
proposing at Sec.  488.5(a)(21)) that termination by Medicare 
represents a prima facie case that the facility similarly fails to meet 
accreditation standards.
    These concerns were highlighted in media reports that noted 
psychiatric hospitals whose provider agreements under Medicare were 
terminated for harm to patients. These psychiatric hospitals 
nonetheless retained their accreditation despite serious health and 
safety concerns.<SUP>17 18</SUP> An article published in the Wall 
Street Journal (WSJ) on September 8, 2017 \19\ discussed patient-safety 
problems at a hospital accredited by one of the AOs that provides fee-
based consulting. These safety issues were so severe that Medicare 
considered terminating the hospital's Medicare participation agreement. 
The AO that accredited the hospital made no changes in the hospital's 
accreditation status and allowed it to continue promoting itself as 
fully accredited, despite being out of compliance with the Medicare 
safety requirements.
---------------------------------------------------------------------------

    \17\ S. Armour, Psychiatric Hospitals With Safety Violations 
Still Get Accreditation, Wall Street Journal, December 26, 2018.
    \18\ D. Gilbert Behind Joint Commission's `Gold Seal of 
Approval,' a history of missed safety violations at psychiatric 
hospitals, Seattle Times, October 9, 2019.
    \19\ S. Armour, Hospital Watchdog Gives Seal of Approval, Even 
After Problems Emerge, Wall Street Journal, September 8, 2017.
---------------------------------------------------------------------------

    The WSJ article reinforced concerns CMS had previously identified 
regarding the very small number of facilities which we terminated for 
failing to meet our basic health and safety regulations, but which 
nonetheless retained their AO accreditation. Continued accreditation of 
these outlier facilities which receive the ultimate sanction CMS may 
impose based on their ongoing failure to meet basic health and safety 
requirements raises serious concerns about the survey integrity and 
public trust attached to AO accreditation. Therefore, we would propose 
to explicitly prohibit AOs from allowing terminated facilities to 
retain their accreditation, in order to reduce confusion for patients 
and families about the continued health and safety of terminated 
entities.
    To address the issue of terminated providers or suppliers remaining 
accredited by an AO, we propose to add a new regulatory requirement at 
Sec.  488.4(b) (currently reserved). More specifically, proposed Sec.  
488.4(b)(1) would provide that if CMS terminates the participation 
agreement of a Medicare-certified provider or supplier, under our 
authority at section 1865(c) of the Act, we would no longer recognize 
the accreditation provided by an AO as evidence that Medicare standards 
had been met or exceeded for that terminated provider or supplier.
    In support of the proposed requirements at Sec.  488.4(b), we also 
propose to add a new requirement at Sec.  488.5(a)(21) that would 
require AOs to provide, with their initial and subsequent renewal 
applications, a statement certifying that, in response to a written 
notice from CMS notifying the AO that one of its accredited providers 
or suppliers has been terminated from the Medicare/Medicaid program, 
the AO agrees to terminate or revoke its accreditation of the 
terminated provider or supplier within 5-business days from receipt of 
said written notice.
    The Medicare-approved deeming accreditation provided to Medicare-
certified providers and suppliers by AOs permits Medicare participation 
in lieu of certification by the SA. Therefore, if a Medicare-certified 
provider or supplier chooses to obtain deeming accreditation from an 
AO, and then their Medicare participation is involuntarily terminated 
after failing to meet the Medicare conditions, we would no longer 
recognize the validity of the AO's accreditation with respect to that 
provider/supplier under our oversight authority at section 1865 of the 
Act. We do not believe that it is appropriate for a terminated provider 
or supplier's AO deeming accreditation to remain effective for CMS 
purposes after we have terminated this provider or supplier for 
significant deficiencies that the AO may not have cited, discovered, or 
fully recognized. A terminated provider or supplier may attempt to use 
the AO's accreditation as a quality marker, when in fact their 
practices are severely deficient, unsafe and non-compliant with the CMS 
conditions.
    Under section 1865 of the Act, we may involuntarily terminate CMS 
approval of an AO's overall deeming authority if they miss egregious 
deficiencies in one of their accredited providers or suppliers' 
practices. However, we would prefer to withdraw our recognition of the 
individual provider's or supplier's deeming accreditation instead, and 
separately work with the AO to determine why such deficiencies went 
undiscovered.
    Proposed Sec.  488.4(b)(2) would provide that if CMS terminates the 
participation agreement of a Medicare certified provider or supplier, 
that terminated provider or supplier would be required to meet the 
requirements set forth at Sec.  489.57 before a new agreement for 
Medicare participation will be approved. We also propose a new 
paragraph at Sec.  489.20(z) that reinstatement of a terminated 
provider or certified supplier agreement is subject to the proposed 
revision to Sec.  489.57.
    The introductory text to Sec.  489.57 states that when CMS has 
terminated a provider agreement under Sec.  489.53, or by the OIG under 
Sec.  489.54, a new agreement with that provider will not be accepted 
unless CMS or the OIG, as appropriate, finds that said provider or 
supplier meets the requirements set forth in sections Sec.  489.57(a) 
and (b). We propose to redesignate Sec.  489.57(a) and (b) as Sec.  
489.57(a)(1) and Sec.  489.57(a)(2) without any change to the text. 
Redesignated Sec.  489.57(a)(1) requires a provider or supplier that 
has been terminated from the Medicare program to demonstrate that the 
reason for termination of the previous Medicare provider agreement has 
been removed and provide reasonable assurance that it will not recur. 
Redesignated Sec.  489.57(a)(2) requires the terminated provider or 
supplier to fulfill, or make satisfactory arrangements to fulfill, all 
of the statutory and regulatory responsibilities of its previous 
agreement.
    We also propose to add a new paragraph (b) at Sec.  489.57. 
Proposed Sec.  489.57(b) would provide that before a new agreement for 
Medicare participation of the terminated provider or supplier is 
approved, such terminated provider or supplier would have to meet the 
requirements of proposed Sec.  489.57(b)(1) through (b)(3).
    Proposed Sec.  489.57(b)(1) would require that the terminated 
provider or supplier be under the exclusive oversight of the SA for the 
purposes of the initial certification survey, initial certification and 
demonstration of compliance with the Medicare conditions. Proposed 
Sec.  489.57(b)(2) would require that the terminated provider or 
supplier remain under the exclusive oversight of the SA until the SA 
had certified the provider's/supplier's full compliance with all 
applicable Medicare conditions and their application for participation 
in the Medicare/Medicaid program had been approved. Finally, proposed 
Sec.  489.57(b)(3) would provide that CMS would not recognize 
accreditation from a CMS-approved accrediting organization for deeming 
purposes while the terminated provider or supplier was under the 
oversight of the SA and its new agreement for Medicare participation 
was pending.

[[Page 12031]]

    Our intent for proposing the new requirements at Sec.  489.57(b) is 
to ensure that the SA would have the initial survey and certification 
oversight authority over terminated providers and suppliers seeking re-
entry into the program about which we had significant health and safety 
concerns. The terminated provider or supplier would remain under the 
oversight of the SA for a reasonable assurance (RA) period of a 
duration to be determined by CMS. During the RA period, the terminated 
provider or supplier would be required to provide reasonable assurance 
to the SA and CMS that the deficiencies that caused the termination 
have been rectified and that they are not likely to recur. This means 
that a terminated provider or supplier would have to use the SA, as 
opposed to an accrediting organization, to perform their initial 
participation survey and assessment of compliance before a new 
agreement for Medicare participation is approved. If, after completion 
of the reasonable assurance period, the SA found that the provider or 
supplier met all of the applicable Medicare conditions, it would 
certify said provider or supplier's compliance and notify CMS of its 
findings. CMS would consider the SA's survey findings (certification) 
in deciding whether to approve or deny the provider's or supplier's new 
initial certification request for participation in the Medicare 
program. However, if the SA were to find deficiencies and determine 
that the provider or supplier did not meet the CMS conditions, the SA 
could take several courses of action, depending on the severity of the 
deficiencies. The SA could require the provider or supplier to submit a 
plan of correction and give the provider or supplier time to correct 
the deficiencies. The SA would then perform a subsequent survey to see 
if the deficiencies have been removed and compliance with all 
requirements has been achieved. If the deficiencies found during the 
initial SA survey were significant or egregious, the SA may not approve 
a plan of correction, notify CMS of its findings and recommendation, 
and CMS may deny the provider's or supplier's request for new 
participation in the Medicare program.
    The SA cannot recommend certification of a previously terminated 
provider or supplier that has significant condition or immediate 
jeopardy level deficiencies, unless these deficiencies are properly and 
promptly addressed and removed by the provider or supplier. Therefore, 
the proposed new requirements at Sec.  489.57(b) would help to provide 
reasonable assurance to CMS that the significant health and safety 
concerns that warranted termination of the provider or supplier's 
Medicare agreement have been corrected and compliance with all 
applicable requirements and conditions have been achieved before a new 
agreement for participation in the Medicare program is approved. We 
believe that SA oversight during a reasonable assurance period of a 
length to be determined by CMS, and survey and certification that the 
terminated provider or supplier now meets the Medicare conditions is a 
safer alternative to accepting AO deeming of that terminated provider 
or supplier. This is because in the majority of cases of terminated 
providers and suppliers, the SA discovered the egregious deficiencies 
that caused terminations during a validation or complaint survey that 
took place within 60 days of an AO reaccreditation survey. The AOs that 
accredited the terminated providers and suppliers had not detected or 
cited these deficiencies during their surveys.
    Section 1865(b) of the Act prohibits public disclosure of surveys 
performed by AOs (with the exception of HHAs, hospice programs, and 
surveys that relate to an enforcement action taken by the Secretary). 
However, the proposed new requirements at Sec.  489.57(b) will allow 
the findings from the compliance surveys performed by the SA to be made 
publicly available under our authority at subpart B, 42 CFR 401.133(a) 
and section 1864(a) of the Act states: ``within 90 days following the 
completion of each survey of any health care facility, ambulatory 
surgical center, rural health clinic, comprehensive outpatient 
rehabilitation facility, laboratory, clinic, agency, or organization by 
the appropriate State or local agency described in the first sentence 
of this subsection, the Secretary shall make public in readily 
available form and place, and require (in the case of skilled nursing 
facilities) the posting in a place readily accessible to patients (and 
patients' representatives), the pertinent findings of each such survey 
relating to the compliance of each such health care facility, 
ambulatory surgical center, rural health clinic, comprehensive 
outpatient rehabilitation facility, laboratory, clinic, agency, or 
organization with (1) the statutory conditions of participation imposed 
under this title and (2) the major additional conditions which the 
Secretary finds necessary in the interest of health and safety of 
individuals who are furnished care or services by any such health care 
facility, ambulatory surgical center, rural health clinic, 
comprehensive outpatient rehabilitation facility, laboratory, clinic, 
agency, or organization.''
    Thus, the proposed new requirements at Sec.  489.57(b) would allow 
for greater transparency regarding the current compliance of terminated 
health care providers and suppliers seeking re-entry into the program.

O. Proposal for Technical Correction for End-Stage Renal Disease (ESRD) 
Facilities and Kidney Transplant Programs (Sec.  488.4(a)(4))

    Section 1865(a)(1) of the Act had historically excluded dialysis 
facilities from participating in Medicare via a CMS-approved 
accreditation program; however, section 50403 of the Bipartisan Budget 
Act of 2018 amended section 1865(a) of the Act to include renal 
dialysis facilities as provider entities allowed to participate in 
Medicare through a CMS-approved accreditation program. In addition, the 
Bipartisan Budget Act of 2018 also amended section 1865(a) of the Act 
to remove a reference to section 1881(b) of the Act, which had 
prevented kidney transplant programs from being accredited via CMS-
approved accreditation programs. CMS' existing regulations at Sec.  
488.4(a)(4), requires that when a national AO has applied for and has 
received CMS-approval of a provider or supplier accreditation program, 
then when a provider or supplier demonstrates full compliance with all 
of the accreditation program requirements of the accrediting 
organization's CMS-approved accreditation program, the accrediting 
organization may recommend that CMS grant deemed status to the provider 
or supplier. Further, the regulation at Sec.  488.4(a)(4) states that 
``CMS may deem the provider or supplier, excluding kidney transplant 
centers within a hospital and ESRD facilities, to be in compliance with 
the applicable Medicare conditions or requirements.'' The CMS 
regulatory language of ``excluding kidney transplant'' programs is 
therefore in direct conflict with the Bipartisan Budget Act of 2018 
amendment. We therefore propose to remove the exclusion specifically in 
our accreditation regulations under Sec.  488.4(a)(4) to align with the 
statutory changes implemented the Bipartisan Budget Act of 2018.

V. Request for Information Regarding Timeframes and Expectation for the 
Submission of AO Applications

    We are requesting public comments on the timeframes and expectation 
for the submission of applications submitted by AOs, because our 
existing

[[Page 12032]]

AO oversight regulations do not restrict how many times an AO may 
submit an initial application to CMS for review. Based on our initial 
review of an application for completeness, which verifies the AO has 
submitted all required elements under Sec.  488.5, we often find the 
application to be incomplete and must return it to the AO for 
additional clarifications, missing items or revisions. CMS also 
receives applications, which require multiple pass backs due to the 
applicant's failure to provide information about issues, such as their 
financial viability, survey processes which appeared not to be 
operationalized, or similar concerns. However, our existing regulations 
do not limit the number of times an AO may submit an application for 
review by CMS. Therefore, it is possible that incomplete application 
could be submitted an unlimited number of times.
    Therefore, we are soliciting public comments on the following 
possible future limitations to the submission of applications by the 
AOs that accredit Medicare-certified providers and suppliers:
    <bullet> An AO may only re-submit an application for CMS re-review 
two additional times after CMS initially deems the application to be 
``incomplete''.
    <bullet> If the AO's application is found by CMS to be incomplete 
after the third submission, the AO must wait a minimum of 2 years 
before resubmitting the entire application for CMS consideration.

VI. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
    <bullet> The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
    <bullet> The accuracy of our estimate of the information collection 
burden.
    <bullet> The quality, utility, and clarity of the information to be 
collected.
    <bullet> Recommendations to minimize the information collection 
burden on the affected public, including the use of automated 
collection techniques.
    We are soliciting public comment on each of these issues stated in 
sections III and IV of this proposed rule.
    If you comment on these information collections, that is, 
reporting, recordkeeping or third-party disclosure requirements, please 
submit your comments electronically as specified in the ADDRESSES 
section of this proposed rule.
    Comments must be received on April 15, 2024.

Wage Data

    To derive average costs, we used data from the U.S. Bureau of Labor 
Statistics' May 2021 National Occupational Employment and Wage 
Estimates for all salary estimates (http://www.bls.gov/oes/current/oes_nat.htm). In this regard, Table 1 presents the mean hourly wage, 
the cost of fringe benefits and overhead (calculated at 100 percent of 
salary), and the adjusted hourly wage.

[[Page 12033]]

[GRAPHIC] [TIFF OMITTED] TP15FE24.009

A. ICRs Related to Conflict of Interest Proposals

    In this proposed rule, we made several proposals related to AO and 
AO surveyor conflicts of interest. We will address the cost and time 
burden associated with each of these proposals separately below.
1. ICR Related to Proposed Conflict of Interest Policies & Procedures 
AOs Must Submit to CMS (Sec.  488.5(a)(10))
    We proposed to modify Sec.  488.5(a)(10) to add a requirement that 
the AOs must provide specific information with their conflict of 
interest policies and procedures with the application they submit to 
CMS. Specifically, the AO must submit the following policies and 
procedures: (1) the AO's policies and procedures for separation of its 
fee-based consulting services from its accreditation services; (2) 
policies and procedures for protecting the integrity of the AO's 
accreditation program, including the requirements of Sec.  488.8(k)(3) 
policies and procedures for the prevention and handling potential or 
actual conflicts of interest that could arise from situations in which 
an AO owner, surveyor, or other employee has a direct interest in or 
relationship with another survey agency or health care facility to 
which the AO provides

[[Page 12034]]

accreditation services, including being employed as a SA surveyor or 
having an ownership interest in a health care facility, etc., and (4) 
policies and procedures for notification of CMS when a conflict of 
interest is discovered.
    The AO would need to modify their current conflict of interest 
policy and procedures to include the above-stated information required 
under the proposed revisions to Sec.  488.5(a)(10). We estimate that 
this task would be performed by a team of at least two AO staff 
members. The AO staff that would most likely perform this task would be 
a person whose background is a RN or a health or medical services 
manager. According to the U.S Bureau of Labor statistics, the mean 
hourly wages for an RN is $39.78. This wage adjusted for the employer's 
fringe benefits and overhead would be $79.56. According to the U.S 
Bureau of Labor statistics, the mean hourly wages for a medical or 
health services manager is $57.61. This wage adjusted for the 
employer's fringe benefits and overhead would be $115.22.
    We estimate that it would that at least two persons working in a 
full-time basis for 3 days for the AO staff to revise their conflict of 
interest policies and procedures to add the required information. 
Therefore, we estimate that the total time required for the two team 
members to perform this task would be 48 hours (8 hours x 3 days = 24 
hours per each person) + (24 hours per person x 2 persons = 48 hours).
    As of February 4, 2020, there are 11 AOs, that accredit Medicare-
certified providers and suppliers. We estimate that the total time 
burden across these 11 AOs would be 528 hours (48 hours x 11 AOs).
    We estimate that the cost burden related to the work performed by 
the RNs on the team would be $1,909.44 (24 hours x $79.56). We estimate 
that the cost burden related to the work performed by the medical or 
health services manager on the team would be $2,765.28 (24 hours x 
$115.22). Finally, we estimate that the total burden costs related to 
the requirements for proposed Sec.  488.8(i)(1) would be $4,674.72 per 
AO ($1,909.44 + $2,765.28). The total cost across the 11 AOs that 
accredit Medicare-certified providers and suppliers is $51,421.92 (11 
AOs x $4,674.72).
    We believe that the stated burden would be incurred by the AO once 
prior to the time that they submit their first application after this 
requirement becomes effective. However, we believe that after the AOs 
have made required modifications to their conflict of interest 
policies, they will not have to revise them again, but will submit the 
same revised conflict of interest policies every 6 years with their 
renewal applications, so this burden would not be incurred again. We do 
not count the burden related to the submission of the application 
because the AO would be required to submit the application every 6 
years to renew the CMS approval for their accreditation programs.
2. ICR Related to Requirement That the AOs Submit Surveyor Declarations 
to CMS on an Annual Basis (Sec.  488.5(a)(22))
    We propose to add a new paragraph (22) to Sec.  488.5(a), which 
would require that the AO submit a declaration by each surveyor of any 
outside interests or relationships with the health care facilities that 
the AO accredits. This section would also require that the surveyor 
declarations must be updated on an annual basis and submitted to CMS no 
later than December 31st each year.
    There would be a time and cost burden to the AO for having to 
collect declarations from each of their surveyors annually. There would 
also be a time and cost burden to the AO for the submission of the 
surveyor declarations to CMS.
    We estimate that it would take at least two persons working on a 
full-time basis for 3 days (8 hours per day) to prepare the surveyor 
declarations, get each AO surveyor to complete a declaration and submit 
them to CMS. This would equate to 24 hours per person or 48 hours 
across both staff performing this task.
    We believe that the AO staff that would be performing these tasks 
would be an RN and a management staff person, whose job duties meets 
the description of the U.S. Bureau of Labor Statistics job of category 
of health and medical services manager. As stated previously, the 
adjusted mean hourly wage for an RN is $79.56. The adjusted mean hourly 
wage for a medical and health services manager is $115.22.
    We estimate that the time burden for this task per each AO would be 
48 hours (24 hours x 2 staff persons). We further estimate that the 
total time burden across all 11 AOs that accredit Medicare-certified 
providers and supplier would be 528 hours (48 hours x 11 AOs).
    We estimate that the cost burden related to the work performed by 
the RN would be $1,909.44 (24 hours x $79.56). We estimate that the 
cost burden related to the work performed by the medical or health 
services manager would be $2,765.28 (24 hours x $115.22).
    Finally, we estimate that the cost burden associated with the 
requirements for proposed Sec.  488.5(a)(22) per each AO would be 
$4,674.72 ($1,909.44 + $2,765.28. The total annual cost burden across 
the 11 AOs that accredit Medicare-certified providers and supplier is 
estimated to be $51,421.92 (11 AOs x $4,674.72).
3. ICRs Related to Proposal To Place Restrictions on AO Fee-Based 
Consulting Services Provided by AOs to the Medicare-Certified Providers 
and Suppliers They Accredit (Proposed Sec.  488.8(i)(1) through (3))
    In section IV.B.3 of this proposed rule, we propose restrictions on 
AO fee-based consulting provided by accrediting organizations or their 
associated consulting divisions or companies. We believe the proposed 
regulations at Sec.  488.5(i) would still allow AOs to provide fee-
based consulting services to the providers and suppliers they accredit 
with restrictions that address the conflict of interest issues 
associated with this service.
    This proposal would require the AOs that provide fee-based 
consulting to modify their fee-based consulting to revise their fee-
based consulting business documents, such as their business charter, 
business documents, employee training information, informational 
documents that are distributed to prospective clients, and their as 
policies and procedures.
    We believe that the AO staff that would be performing these tasks 
would be an RN and a management staff person that has a job that meets 
the U.S. Bureau of Labor Statistics job of category of health and 
medical services manager. The adjusted mean hourly wage for an RN is 
$79.56. The adjusted mean hourly wage for a medical and health services 
manager is $115.22.
    We estimate that this proposal would require the above-stated two 
AO staff member to work on a full-time basis for 1 week (that is, 40 
hours per person) to complete the required revisions to the AO's fee-
based consulting business documents. Therefore, we estimate that the 
time burden per each AO for the two AO staff members to perform the 
required tasks would be 80 hours (2 team members x 40 hours).
    At this time, there are only four AOs that provide fee-based 
consulting. Therefore, the total annual time burden would be 320 hours 
(80 hours x 4 AOs).
    The cost burden related to the work performed by the RN on this 
task would be $3,182.40 (40 hours x $79.56). The cost burden related to 
the work performed by the medical or health services manager on this 
task would be $4,608.80 (40 hours x $115.22).
    Finally, we estimate that the annual cost burden per each AO 
related to the

[[Page 12035]]

requirements for proposed Sec.  488.8(i)(1) would be $7,791.20 
($3,182.40 + $4,608.80). We estimate that the total annual cost burden 
to the four AOs that provide fee-based consulting would be $31,164.80 
($7,791.20 x 4 AOs).
4. ICR Related to Proposed Requirement for Submission of Information 
About AO Fee-Based Consulting Services Provided (Sec.  488(i)(5))
    We propose to add a requirement at Sec.  488.8(i)(5) that would 
require the AOs to provide CMS with the following information about the 
fee-based consulting services they provide to CMS on a bi-annual basis: 
(1) whether the AO or its fee-based consulting division or separate 
business entity (such as a company or corporation, that provides fee-
based consulting) provides fee-based consulting services; (2) the names 
and CCN numbers of all health care providers and suppliers to which the 
accrediting organization or its associated consulting division or 
company has provided fee-based consulting services during the previous 
6-month period; (3) the dates the AO fee-based consulting services were 
provided to each provider and supplier; (4) whether the accrediting 
organization has, at any time in the past provided, or is currently 
providing accreditation services to each health care provider or 
supplier listed in said document; (5) for each health care provider and 
supplier listed in said document, the date of the most recent 
accreditation survey performed, and the date the next re-accreditation 
survey is due to be performed; and, (6) a description of the AO fee-
based consulting services provided to each health care provider or 
supplier listed in said document.
    This proposed regulation further requires that statement containing 
the information require by Sec.  488.8(i)(5)(i) through (i)(5)(iv) must 
be submitted to CMS every 6 months. We proposed that the document 
containing this information must be submitted to CMS by no later than 
15 days after the end of each calendar bi-annual period which consist 
of January 1st to June 30th and July 1st (period #1) through December 
31st (period #2) each year. This means that the submission deadline for 
period #1 would be July 15th and the submission deadline for period #2 
would be January 15th each year.
    We estimate that the burden associated with this proposed 
requirement would include the time and costs associated with the 
gathering of the information necessary to prepare the required 
document, the time required to prepare the document and the time 
required to send the document to CMS. This burden would occur on a 
continuing bi-annual basis.
    We believe that the burden would be greater for the preparation of 
the first report. Thereafter, the AOs would have already prepared and 
formatted this report and would simply have to update the information 
every 6 months.
    We estimate that it would that at least two persons working on a 
full-time basis for 3 days to prepare and submit the first required 
statement to be submitted CMS. We further estimate that this team would 
consist of one RN and one Medical or Health Service Manager. Therefore, 
we estimate that the total hourly time burden for each team member 
would be 24 hours (3 days x 8 hours per).
    We estimate that the time burden per each AO per for the work 
performed by the two AO staff members to prepare each report would be 
48 hours (2 team members x 8 hours x 3 days). The total annual time 
burden per each AO would be 96 hours (2 reports x 48 hours).
    There are four AOs that provide fee-based consulting. However, we 
propose that this provision would apply to all 11 AOs that accredit 
Medicare-certified providers and suppliers because it would require 
each AO to, at a minimum, respond to question #1 which asks whether the 
AO or an associated consulting division or company established by the 
AO provides fee-based consulting services. Those AOs that do not 
provide fee-based consulting would simply respond in the negative to 
this question and would not have to provide any further information.
    The time and cost burden to the AOs that do not provide fee-based 
consulting would be negligible because they would send this notice to 
CMS via email. This task would take an AO staff member less than a 
minute to complete every 6 months. Therefore, as this task is so 
minimal, we have not assessed burden for this task for the AOs that do 
not provide fee-based consulting.
    The estimated total annual time burden across all AOs that do 
provide fee-based consulting would be 384 hours (96 hours per 2 reports 
annually x 4 AOs). The estimated total time burden across these 11 AOs 
would be 384 hours (96 hours x 4 AOs).
    The cost burden related to the work performed by RNs on the team 
would be $1,909.44 (24 hours x $79.56 per hour). The cost burden for 
the work performed by the medical or health services manager would be 
$2,765.28 per each AO (24 hours x $115.22). The total estimated cost 
burden per each AO would be $4,674.72. ($1,909.44 + $2,765.28) The 
total estimated cost burden across the 4 AOs that provide fee-based 
consulting services would be $18,698.88 ($4,674.72 x 4 AOs).
    We believe that the above stated time and cost burdens would be 
incurred by the AOs that provide fee-based consulting only the first 
time that they prepare the required document and send it to CMS. We 
believe that after the AO has prepared their first report, they would 
have this report in an electronic format on their computers. Therefore, 
for the second and all subsequent report, we estimate that the related 
to the preparation and submission of this report would be reduced by at 
least two-thirds. This means that it would take only one RN a period of 
8 hours to prepare the required statement and submit it to CMS. We 
estimate that the total time burden across the four AOs that provide 
fee-based consulting, would be 32 hours (8 hours x 4 AOs).
    We estimate that the cost burden per each AO related to the work 
performed by an RN to prepare the second or subsequent report would be 
$636.48 (8 hours x $79.56). The total cost burden across the four AOs 
that provide fee-based consulting would be $2,545.92 ($636.48 x 4 AOs).
    We are requesting comments from the public on our estimated burden 
for this activity and whether the frequency of bi-annual (every six 
months) is appropriate.
5. ICR Related to Proposed Requirement That Accrediting Organization 
Establish Fee-Based Consulting Firewall Policies and Procedures 
(Proposed Sec.  488.8(j))
    We propose at Sec.  488.8(j) to require any AO that provides fee-
based consulting services or its associated fee-based consulting 
division or company to have robust, written AO fee-based consulting 
firewall policies and procedures. These firewall polices and procedure 
must, at a minimum, include the following provisions: (1) the AO's fee-
based consulting services must be provided by a separate division or 
company from the AO's accreditation division; (2) the AO's fee-based 
consulting division or separate company must maintain separate staff 
from that of the AO's accreditation divisions to ensure that the fee-
based consulting division staff do not perform AO's accreditation 
division functions and that the AO's accreditation division staff do 
not perform fee-based consulting division functions; and, (3) the AO's 
accreditation staff and surveyors are prohibited from marketing the 
AO's fee-based consulting services to the AO's accreditation clients.
    This proposed requirement would only apply to the AOs that provide 
fee-

[[Page 12036]]

based consulting and would require these AOs that establish new fee-
based consulting firewall policies or revise their policies and 
procedures to meet the proposed requirements. It is our understanding, 
from review of the comments received on the submitted by the AOs in 
response to the AO Conflict of Interest RFI, that these AOs already 
have such fee-based consulting firewall policies in place. If this is 
the case, then the time and cost burden associated with revising these 
policies and procedures would not be extensive.
    In section VI.A.5 of this proposed rule, we estimated that it would 
take each AOs that provide fee-based consulting services 80 hours to 
revise their fee-based consulting business documents, such as their 
business charter, business documents, employee training information, 
informational documents that are distributed to prospective clients, 
and their as policies and procedures.
    We have included the burden associated with the revision of AO fee-
based consulting firewall policies and procedures. We believe that the 
burden associated with the revision of the AO's fee-based consulting 
policies and procedures would fall under the time and cost burden 
estimated in section VI.A.5 of this proposed rule. As such, we will not 
assess a separate burden here.
6. ICR Related to Proposed Regulation To Prevent Conflicts of Interest 
Caused by AO Owners, Surveyors or Other Employees Interest In or 
Relationship With a Health Care Facility Accredited by the AO (Proposed 
Sec.  488.8(k))
    We propose to avoid conflicts of interest related to employment 
relationships between AO surveyors and health care facilities that are 
accredited by the AO, the AO's shall do the following: (1) AOs shall 
not allow its surveyors to participate in the survey of facilities with 
which they have a relationship; (2) AOs shall not allow its surveyors 
to have any input into or influence the outcome of any survey performed 
for facilities with which they have a relationship; (3) AOs shall not 
allow its surveyors to have any involvement with the pre or post survey 
activities for the health care facilities with which they have a 
relationship; and, (4) AOs shall not allow its surveyors to have any 
contact with the records from the surveys for any health care 
facilities with which they have a relationship.
    We believe that this in exempt from the PRA in accordance with 5 
CFR 1320.3(b)(2). We believe that this should already be a usual and 
customary practice of the AOs.

B. ICRs Associated With the Requirement That AOs Incorporate the 
Medicare Conditions

1. ICRs Associated With the Requirement That the AOs Provide Detailed 
Crosswalks Identifying Incorporation of the CMS Standards
    As proposed under Sec.  488.5(a)(3), we would require AOs to 
incorporate the language of the CMS' Medicare conditions and provide 
CMS with a detailed crosswalk. While AOs are required to provide a 
similar crosswalk under the existing process, CMS previously only 
required a ``comparable'' standard, therefore through this proposal, 
AOs would need to recreate their AO standards to incorporate the 
Medicare condition language into their accreditation standards for 
their deemed programs. We also note that this proposal would require a 
one-time overhaul of AO standards and burden would be imposed for the 
first year following the effective date of this rule and not be a 
reoccurring annual burden. Burden costs subsequent to changes would 
remain as current practice with updates required to be reviewed and 
approved as outlined in existing Sec.  488.5.
    We would expect that the AOs use the existing CFR language they are 
required to crosswalk currently and assign an AO standard number or 
realign their existing AO standards in a manner which would allow for a 
one-to-one comparison to ensure their accreditation standards 
incorporate the CFR language. Aforementioned, CMS is not restricting 
the AOs from exceeding the Medicare conditions, however if exceeded the 
AO would need to provide additional language or clearly delineate the 
exceeding language. For example, we would only anticipate that the 
format used be similar to the one seen in Table 2.
[GRAPHIC] [TIFF OMITTED] TP15FE24.010


[[Page 12037]]


    We anticipate that the AOs for each program type (that is, hospice, 
home health, outpatient physical therapy, hospitals, ESRD facilities, 
RHC, CAH, ASCs, psychiatric hospitals) for which the AO has deeming 
authority would be required to review and revise their existing 
crosswalk and standards into the required format. We further anticipate 
that the review and updating of AO standards crosswalk would be done by 
AO staff consisting of at least one RNs and a medical secretary.
    We estimate that the RN would spend 2 hours performing this task. 
We further estimate that a medical secretary would spend 198 hours 
performing this task. Therefore, the total time burden per each AO for 
this task would be 200 hours. (2 hours per 1 RN + 198 hours per 1 
medical secretary).
    This requirement applies only to those AOs that accredit Medicare-
certified providers and suppliers. There are 11 AOs that accredit 
Medicare-certified providers and suppliers. Therefore, the total time 
burden for this task would be 2,200 hours (200 hours x 11 AOs).
    The adjusted mean hourly wage for an RN is $79.56. We estimate that 
the cost for the work performed by the RN to perform the work on this 
task would be $159.12 (2 hours x $79.56 per hour).
    The adjusted mean hourly wage for a medical secretary is $38.22. We 
estimate that the cost burden for the work performed by the medical 
secretary on this task would be $7,567.56 (198 hours x $38.22 per 
hour). The total estimated cost burden for all work performed on this 
task would be $7,726.68 ($159.12 + $7,567.56).
    There are currently 11 AOs that accredit Medicare-certified 
providers and suppliers. Therefore the annual burden cost for all 11 
AOs for one program only would be $84,993.48 ($7,726.68 x 11 AOs).
    However, the majority of our AOs have multiple accreditation 
programs, therefore this cost would increase based on the number of 
programs. For example, one of the AOs has deeming authority for six 
program types, therefore this AO would be subject to a burden cost of 
$46,360.08 ($7,726.68 x 6 programs).
    CMS has 24 approved accreditation programs across 11 AOs (as of 
February 15, 2022) which are accredited, and so the total cost across 
all AOs and their programs would be $185,440.32 ($7,726.68 x 24).
2. ICRs Related to AO Providing Their New Accreditation Standards to 
Their Accredited Providers and Suppliers
    In addition to changing the survey standards as proposed under 
Sec.  488.5(a)(3), the AOs would be required to provide the newly 
revised AO standards to the facilities they accredit. There are 
approximately 14,904 accredited facilities across the program types. We 
anticipate that a Medical Secretary (see Table 1 in section VI of this 
proposed rule for wage estimates) would provide all accredited 
facilities a copy of the revised standards for accreditation. We 
believe that the majority of AOs have a website portal which standards 
are available to their facilities, therefore we anticipate the 
estimated time to upload and notify facilities of the revisions to take 
2 hours per program type. Between the 11 AOs we have 24 programs which 
are accredited.
    As noted above, we estimate that this task would take approximately 
2 hours to complete per each program. We also estimate that the total 
burden hours for this task would be 48 hours (2 hours x 24 programs).
    We estimate that the cost burden per each program would be $76.22 
($38.22 x 2 hours). We further estimate that the total cost associated 
with uploading the AOs revised standards across the 24 accreditation 
programs would be $1,829.28 ($76.22 x 24 AO programs).
    In addition, we believe the AOs would also notify their individual 
facilities impacted. We believe this would be done by an AO staff 
person with a job that falls under the U.S. Bureau of Labor Statistics 
job category of medical secretary. The adjusted mean hourly wage for a 
medical secretary is $38.22.
    We estimate this task would take 15 minutes per each facility 
notified. There are 14,904 facilities that must be notified. Therefore, 
the total time required to notify all of these facilities would be 
3,726 hours (.25 hours x 14,904 facilities).
    We estimate that the annual cost burden per each AO for notifying 
the facility would be $9.55 per each facility (60 minutes divided by 15 
minutes = 4) and ($38.22 divided by 4 = $9.55). We estimate that the 
total annual cost across all of these facilities would be $142,333.20 
($9.55 x 14,904 facilities).
3. ICRs Related to Education to Providers and Suppliers Regarding New 
Standards
    We believe the AOs would be required to provide education to their 
deemed facilities related to the new standards (standards incorporating 
the CMS Medicare condition language). As part of this education, the 
AOs would provide an overview of the changes in the AOs accreditation 
standards to the healthcare facilities accredited by the AO. We further 
believe that the regulations to persons from the health care facility 
that would take this training would be staff such as a regulatory 
compliance specialist (general manager) at the health care facilities 
the AO accredits. We further believe the AO would generally send an 
education specialist or RN to provide this overview of the revised 
standards, or have an online platform of training for the facilities to 
use.
    The adjusted mean hourly wage for a general and operations manager 
is $60.45. This wage adjusted for the employer's fringe benefits and 
overhead would be $120.90 (see Table 1). According to the U.S Bureau of 
Labor Statistics, the mean hourly wage for a RN is $39.78. This wage 
adjusted for the employer's fringe benefits and overhead would be 
$79.56 (see Table 1).
    We anticipate that the training to be provided by the AOs about the 
new regulations would take approximately 1 hour to complete. We believe 
that each facility would send at least two persons to this training. We 
believe that the persons that would be likely to attend this training 
would be a general or services operation manager at the facility and an 
RN, who is a regulatory compliance manager.
    There are approximately 14,904 deemed facilities. Therefore, we 
estimate that the total time burden to each health care facility for 
the completion of the AO training would be 2 hours. The total estimated 
time burden for the accredited facilities would be 29,808 hours (2 
hours x 14,904 facilities).
    We estimate that the cost burden for the time spent for the RN to 
attend the training would be $79.56. RN (1 hour x $79.56 per hour). We 
further estimate that the cost burden for the general or services 
manager from the facility to attend the training would be $120.90 (1 
hour x $120.90 per hour). We estimate that the total cost burden per 
each accredited facility for the completion of this training by the two 
facility staff persons would be $200.46 ($79.56 per RN + $120.90 per 
general or services manager). We further estimate that the total annual 
cost burden across all 14,904 accredited facilities would be 
$2,987,655.84 ($200.46 x 14,904 facilities).
    The burden associated with these requirements will be submitted to 
OMB

[[Page 12038]]

under OMB control number (0938-NEW).

C. ICRs Associated With the Requirement That AOs Use Survey Processes 
That are Comparable to That Used by CMS and the SAs

    Our proposal to Sec.  488.5(a)(4) through (13), would require the 
AOs to submit revised initial and renewal application information 
supporting comparability in the survey processes and guidance 
established by CMS and used by the SA. However, we note that while 
additional regulatory language changes are being made under Sec.  
488.5(a)(4) through (13), AOs are already required to submit this type 
of documentation. Our intent is to clarify in regulation the minimum 
standards and required documentation that AOs show comparability to CMS 
survey process, forms, guidelines and instructions to surveyors.
1. ICR Related to Revised Documentation Submission Requirements Imposed 
by Requirements That AOs Use Comparable Survey Process at Sec.  
488.5(a)(4), Sec.  488.5(a)(4)(iii), Sec.  488.5(a)(4)(v), and Sec.  
488.5(a)(4)(vii)
    The requirements under(Sec.  488.5(a)(4), Sec.  488.5(a)(4)(iii), 
Sec.  488.5(a)(4)(v), and Sec.  488.5(a)(4)(vii)) would require AOs to 
ensure that with the submission for an initial or renewal application 
for deeming authority, in addition to what is required in the existing 
regulations, that the AO includes: (1) core principals of the survey 
process; (2) comparable survey guidance and instructions, including 
specific processes for certain survey activities; and, (3) description 
of the organizations survey review process, including the accreditation 
decisions and investigative and organizational processes used to make 
determinations of non-compliance. We do however note, that the AOs are 
already required to submit the documentation and that most AOs provide 
this within their applications, therefore we do not believe this 
imposes any additional burden on the AOs, as this has been a long-
standing expectation as described in the preamble of this proposed rule 
and the 2015 AO Final Rule, (80 FR 29795, May 22, 2015), which stated 
that while the explicit reference to the SOM was removed, ``this will 
not change our practice of assessing comparability in light of the SOM 
survey process requirements for Sas, which implement survey process 
requirements found in parts 488 and 489 of our regulations governing 
certification and provider agreements. Therefore, we believe no 
additional burden is imposed through these proposed provisions.
2. ICR Related to Revised Documentation Submission Requirements Imposed 
by Requirements That AOs Use Comparable Survey Process at Sec.  
488.5(a)(5), Sec.  488.5(a)(6), and Sec.  488.5(a)(12)).
    As described above related to the clarified and strengthened 
proposed requirements under Sec.  488.5(a)(4), Sec.  488.5(a)(4)(iii), 
Sec.  488.5(a)(4)(v), and Sec.  488.5(a)(4)(vii), we further propose to 
require additional information under Sec.  488.5(a)(5), Sec.  
488.5(a)(6), and Sec.  488.5(a)(12). As also mentioned above, we 
believe that the AOs currently submit this information with their 
initial and renewal applications, however by codifying the requirements 
within regulation, we are clarifying the requirements which are 
instrumental to maintaining the integrity of the survey process, 
whether conducted by the SA or the AO. Therefore, we do not believe 
these clarifications to what our expectations are within regard to the 
survey process documentation would impose any additional burden on the 
AOs.
3. ICR Related to Revised Documentation Submission Requirements Imposed 
by Requirements That AOs Use Comparable Survey Process at Sec.  
488.5(a)(13)
    The proposed requirements under Sec.  488.5(a)(13) would require 
AOs to submit specific information on the AOs' notification procedures, 
including timeframes for notification, to CMS in regards to a facility 
which the AO accredits if the facility fails to meet accreditation 
standards or its accreditation status is affected, as part of the 
documentation currently required under Sec.  488.5(a)(13). Furthermore, 
the existing requirements currently require the AOs to have: (1) 
procedures for responding and investigating complaints; and (2) a 
process for decision-making as it relates to accrediting status. In 
addition to the above added proposed requirement, we also propose to 
add that AOs must submit documentation regarding the AO's process for 
facilities that withdraw from accreditation, including notification 
procedures.
    We believe this review and revision would be conducted by a one RN, 
one general health care support member, one medical secretary and the 
CEO to develop these procedures, review and approve all changes. The 
adjusted mean hourly wage for an RN is $79.56. The adjusted mean hourly 
wage for a health care support staff person is $32.04. The adjusted 
mean hourly wage for a medical secretary is $38.22. The adjusted mean 
hourly wage for a CEO is $204.82.
    We anticipate it would take approximately 5 hours for the AO staff 
to review the new requirements set forth in the final rule and to 
determine what changes need to be made to their standards, policies and 
procedures. We also estimate that it would take an additional 5 hours 
for the AO staff to make the revisions required to align their 
accreditation standards and policies and procedures with our proposed 
revisions. Therefore, the total estimated time burden per each AO would 
be 10 hours.
    This requirement applies to the 11 AOs (as of February 15, 2022) 
that accredit Medicare-certified providers and suppliers. Therefore, 
the total time burden across these 11 AOs would be 110 hours (10 hours 
x 11 AOs).
    As stated above, we believe that the AO staff that would perform 
this task would consist of an RN, a health care support staff person, a 
medical secretary and the AO's CEO to review and approve all changes. 
We estimated that the cost burden for the work performed by the RN 
would be $198.90 (2.5 hours x $79.56 per hour). We estimate that the 
cost burden for the work performed by the health care support staff 
person would be $80.10 (2.5 hours x $32.04). We estimate that the cost 
burden for the work performed by the medical secretary would be $95.55 
(2.5 hours x $38.22). We estimate that the cost burden for the work 
performed by the CEO would be $512.05 (2.5 hours x $204.82).
    We estimate that the total cost burden per each AO for this task 
would be $886.60 ($198.90 + $80.10 + $95.55 + $512.05). The burden 
across the 11 AOs that accredit Medicare-certified providers and 
suppliers would be $9,752.60 ($886.60 x 11 AOs).
4. ICR Associated With the Requirement That the AOs Prepare a Training 
for CMS About Its Revised Survey Process (Proposed Sec.  
488.5(a)(4)(xi))
    The proposed requirement at Sec.  488.5(a)(4)(xi) would require the 
AOs to submit a presentation or web-based training materials to CMS, in 
a format to be chosen at the discretion of the AO, which would provide 
CMS with an overview of the AOs survey process and demonstrate how the 
AO's survey process is comparable to that of CMS. We would require the 
AOs to provide this presentation to CMS prior to the performance of any 
direct observation surveys as provided for at Sec.  488.8(h).
    As the AOs currently have existing training for its surveyors on 
the survey process, we believe that the preparation

[[Page 12039]]

of this presentation would only require the AOs to extrapolate what 
they believed are the core differences within CMS survey process and 
that of their organization.
    We believe it would take approximately 5 hours for the review of 
the current AO processes and approximately 25 hours to develop an 
abbreviated course of their survey processes for their accredited 
programs. We believe that the persons at the AO who would perform these 
tasks would be two RNs and a medical secretary. We estimate that each 
RN would spend approximately 25 hours performing the required work. We 
further estimate that the medical secretary would spend 5 hours 
performing work on this task. The adjusted mean hourly wage for an RN 
is $79.56. The adjusted mean hourly wage for a medical secretary is 
$38.22.
    We estimate that the total time burden per each AO would be 55 
hours. This provision would apply to all 11 AOs that accredit Medicare-
certified providers and suppliers. Therefore, the estimated total 
annual time burden for these tasks would be 605 hours (55 hours x 11 
AOs).
    We estimate that the cost burden to each AO for the work performed 
by the RNs would be $3,978 ($79.56 x 50 hours). We further estimate 
that the cost burden to each AO for the work performed by the medical 
secretary would be $191.10 ($38.22 x 5 hours). The total estimated cost 
burden per each AO for this task would be $4,169.10 ($3,978 + $191.10).
    This requirement would apply to all 11 AOs that accredit Medicare-
certified providers and suppliers. Therefore, we estimate that the 
total cost would be $45,860.10 ($4,169.10 x 11).
    Across these 11 AOs there are 24 different types of accreditation 
programs. We estimate that the burden associated with this task would 
be $100,058.40 ($4,169.10 x 24 accreditation programs).
5. ICR Related to Requirement for AO To Submit Survey Findings/Reports
    As mentioned in section IV.C of this proposed rule, we also propose 
to require the AOs as part of their application under Sec.  
488.5(a)(4)(viii) to acknowledge that it will submit any requested 
survey findings and reports, to include complaint survey reports to CMS 
for internal use.
    This requirement would not cause the AOs to incur any new 
additional burden as the submission of this information is already 
required by this regulation and is therefore a usual and customary 
component of initial and renewal applications. AOs are also already 
required to submit the deficiencies and facility non-compliance in a 
roll up format. Therefore, this proposed requirement for a full survey 
report could potentially be seen as a burden reduction as CMS would not 
require a specific new entry or format and reduce time spent by the AO 
summarizing the survey activity.
6. ICR Related to Documentation Requirements for Submission to CMS for 
Approval of the AOs' Revised Accreditation Standards and Survey Process 
as Required by Sec.  488.8(b)
    The AOs would be required to resubmit their new survey processes 
and standards for a comparability review as required by Sec.  
488.8(b)(1).
    We believe that the AO staff that would work on this task would be 
a medical secretary. We believe that the medical secretary would gather 
all required documents, complete the compilation of documents and 
verification. The adjusted mean hourly wage for a medical secretary is 
$38.22.
    We anticipate the total burden hours for each AOs to compile each 
accrediting program and the revisions as proposed within Sec.  
488.4(a)(1) and Sec.  488.4(a)(2) for a resubmission to CMS for review 
and approval would be 80 hours.
    This requirement would apply to the 11 AOs that accredit Medicare-
certified providers and suppliers. Therefore, we estimate that the 
total annual would be 880 hours (80 hours x 11 AOs).
    The total estimated cost burden for each AO is $3,057.60 (80 hours 
x $38.22). The total annual cost burden s is $33,633.60 ($3,057.60 x 11 
AOs).
    There are 24 accreditation programs across the 11 AOs that accredit 
Medicare-certified providers and suppliers. We estimate that the total 
annual cost burden across all 24 accreditation programs would be 
$73,382.40 ($3,057.60 x 24 accredited programs).
    As mentioned in section IV.C of this proposed rule, the proposed 
changes would not implement a reoccuring annual burden, but rather have 
a one-time burden on the AOs until the survey processes and activities 
are aligned with our proposed changes. CMS would resume the current 
process for approval and re-approval of AOs and their accrediting 
programs as outlined within the revised proposed Sec.  488.5.
    We note, there is no direct burden associated with these changes to 
the deemed provider or supplier, and there is no cost burden or 
reporting burden associated with the proposed addition of the 
definition of unannounced under Sec.  488.1.

D. ICR Related to Requirement That the AO Surveyors Take the CMS Online 
Surveyor Training

    We proposed at Sec.  488.5(a)(8), to add a new requirement that 
would require AOs to state in their application for CMS approval, that 
all AO surveyors have completed or will complete two CMS mandatory 
documentation courses and the relevant program specific CMS online 
trainings established for SA surveyors, initially, and thereafter.
    There are a total of 163 online training programs that are 
available to SA surveyors on the CMS QSEP website. These courses are 
self-paced and the person taking the course can take the courses over a 
period of time. The amount of time required to complete each of these 
training course varies depending on the pace at which the surveyor 
completes the training. The basic surveyor training courses for 
specific programs range in time from 16-82 hours for completion. We 
estimate the average time it takes for completion of one of the basic 
surveyor courses is 27 hours. This could be more or less depending upon 
the specific program that AO surveyors need to take.
    We propose that each AO surveyor take the two mandatory 
documentation courses (that is ``Principles of Documentation for Non-
Long-Term Care'' and ``Basic Writing Skills for Surveyor Staff'') and 
the basic surveyor course for the care setting for which they perform 
surveys. We further estimate that it would take approximately 4 hours 
to complete each of the documentation courses, however, these courses 
are self-paced and could take less or longer. Therefore, an AO surveyor 
would incur a time burden of approximately 35 hours for the completion 
of these CMS surveyor training courses (27 hours for the basic surveyor 
course + 4 hours for ``Principles of Documentation for Non-Long-Term 
Care'' course + 4 hours for ``Basic Writing Skills for Surveyor Staff'' 
course).
    Each AO had different numbers of surveyors, depending on its size 
and the number of accreditation programs it has. Therefore, for the 
purposes of this burden estimate, we will estimate that each AO has an 
average of 75 surveyors. This would equate to an estimated time burden 
to each AO associated with this requirement would be 2,625 hours. (35 
hours x 75 surveyors).
    As of February 15, 2022, there are 11 AOs that accredit Medicare-
certified providers and suppliers. We estimate that the time burden 
across all of these AOs associated with the requirement that their 
surveyors take the CMS online

[[Page 12040]]

surveyor training would be 28,875 hours (2,625 hours x 11 AOs).
    The adjusted mean hourly wage for an RN is $79.56. We estimate that 
each AO would incur wages in the amount of $2,784.60 per each surveyor 
that completes the CMS online surveyor training (35 hours x $79.56). 
Each AO would incur a total cost burden in the amount of $208.845 for 
all 75 surveyors that take the CMS online surveyor training (75 
surveyors x $2,784.60).
    The estimated cost burden across all AOs (that accredits Medicare-
certified providers and supplies) associated with this requirement 
would be $2,297,295. ($208.845 x 11 AOs). The burden associated with 
this requirement will be submitted to OMB under OMB control number 
0938-NEW.

E. ICR Associated With the Establishment of a Definition for ``National 
in Scope''

    As proposed at Sec.  488.1, we would require the AO to provide 
documentation for meeting the definition of ``national in scope'' 
within their initial and reapplication process. As currently required 
by Sec.  488.1, the AO must provide documentation that demonstrates the 
organization meets the definition of a ``national accrediting 
organization'' as it relates to the accreditation program. Therefore, 
we estimate the burden on AOs to be minimal as they are already 
required to provide documentation to this effect. Therefore, we 
estimate the following:
1. ICR Related to Documentation Requirements for ``National in Scope''
    We anticipate that a CEO of an AO would compile and verify that the 
AO meets the proposed definition of ``national in scope''.
    Since CMS is not requiring a specific format for this 
documentation, but suggests the AO provide a list which identifies the 
accredited facilities meeting the definition, we anticipate the 
compiling of this information would take approximately 40 minutes (0.66 
hour) per each AO. For existing CMS approved AOs, the general re-
application cycle is not to exceed 6 years. Therefore, we anticipate 
this burden to be applicable every 4 to 6 years. Therefore, we estimate 
that the total time burden across all 11 AOs would be 7.33 hours (or 7 
hours & 20 minutes) every 4 to 6 years.
    The average hourly wage of the AOs CEO is $204.82. Therefore, we 
estimate that the total cost burden for this task per each AO would be 
is $136.52 ($204.82 divided by 60 minutes = $3.413 per min.) and 
($3.413 x 40 min. = $136.52 per 40 min.)). We further estimate that the 
total cost burden across the 11 AOs that accredit Medicare-certified 
providers and suppliers would be $1,501.72 ($136.52 x 11 AOs).
2. ICR Related to Incorporation of the ``National in Scope'' 
Requirements Into the AO's Application
    We anticipate that a medical secretary would finalize and package/
send the application for CMS approval.
    We believe this additional document of meeting ``national in 
scope'' would take approximately 5 minutes (0.083 hours) per each AO to 
be included in the package which is already required under Sec.  488.5. 
This requirement would apply only to the 11 AOs that accredit Medicare-
certified providers and suppliers. We estimate that the total time 
burden associated with this task across these 11 AOs would be 55 
minutes (0.91 hour) (5 minutes per each AO x 11 AOs).
    The adjusted mean hourly wage for a medical secretary is $38.22. 
Therefore, we estimate that the cost burden per each AO for this task 
would be $3.18 (5 minutes (0.083 hour) x $38.22). We further estimate 
that the total cost burden would be $35.03 ($38.22/60 min. per hour = 
$0.637 per min.) and ($0.637 per min. x 55 min. = $35.03 per 55 min.) 
or ($3.185 x 11 AOs = $35.03).
    We would anticipate that this burden would be imposed to ensure AOs 
submit verification of meeting the new definition. However, this burden 
would only be incurred by the AOs during the submission of their 
initial or renewal applications which would only take place every 4 to 
6 years. The burden associated with these requirements will be 
submitted to OMB under OMB control number 0938-NEW.
    We do note, there is no direct burden associated with these changes 
to the deemed provider or supplier.

F. ICR Associated With the Proposed Revision of the AO Performance 
Measures and To Require a Publically Reportable Plan of Correction

    SAs perform validation surveys on a sample of providers and 
suppliers (such as hospitals, CAHs, ASCs, and HHAs) accredited by the 
AOs. Validation surveys compare the survey findings of the AO to those 
of the SA to see if there are any disparities. The disparities found 
between an AO's surveys and an SA's surveys is used in a performance 
measure called the ``disparity rate'' and is tracked by CMS as an 
indication of the quality of the surveys performed by the AO as 
described earlier in this proposed rule.
    We proposed to revise the validation process for Medicare-certified 
providers and suppliers by adding a new type of validation survey know 
as direct observation validation survey. As a result of the revisions 
made to the validation process, we have necessarily been required to 
propose a new two-part definition for ``disparity rate'' to revise the 
definition of disparity rate.
    At Sec.  488.8(a)(4), we propose that the AO submit a publicly 
reportable plan of correction for performance that is less than an 
acceptable threshold for established performance measures.
    This is a new requirement and therefore would be a new burden for 
AOs to complete. The plan of correction will be completed and submitted 
to CMS within 10-business days following the notification of the AO of 
their less than acceptable performance. It will address the areas of 
improvement and the specific actions to be taken to improve those areas 
on a sustainable basis, the process for ongoing monitoring of progress 
of the toward acceptable performance, as well as the individuals 
responsible for overseeing the plan of correction and the anticipated 
implementation dates of the proposed actions.
    We believe that this task would be performed by the AO's CEO. We 
also anticipate that each AO would prepare approximately 123 plans of 
correction per year. We further estimate that it would take 80 hours of 
time by the AO's CEO to prepare each plan of correction. This is using 
the overall average disparity rate of 33 percent. There are 
approximately 374 annual validation surveys performed across all 
provider types (374 x 0.33 total plans of correction). We further 
estimate that the total annual time burden per each AO for the 
completion of POCs would be 9,840 hours (80 hours x 123). We further 
estimate that the total annual time burden for the completion of all 
POCs across all 11 AOs that accredit Medicare-certified providers and 
suppliers would be 108,240 hours (9,840 hours x 11 AOs).
    We estimate that the cost burden to each AO for the completion of 
each POC would be $16,385.60 (80 hours x $204.82). We further estimate 
that the annual cost burden per each AO for the completion of the 
estimated 123 POCs per year would be $2,015,428.80 (9,840 hours x 
$204.82). We further estimate that the total annual cost burden across 
all 11 AOs that accredit Medicare-certified providers and suppliers for 
the completion of all POCs annually would be $22,169,716.80 
($2,015,428.80 x 11 AOs).

[[Page 12041]]

G. ICR Associated With the Revision of the Definition of ``Disparity 
Rate''

    In the proposal for the definition of disparity rate as dicussed in 
section IV.I of this proposed rule, there is no associated burden as 
look-back validation surveys are a usual and customary part of the 
existing validations program. Direct observation validation surveys are 
already being performed under current regulatory authority Sec.  
488.8(a)(2) and are a usual and customary part of the VRP. AO will 
continue to perform survey activities as required, the revised and 
expanded definition of disparity would impact data collection by CMS, 
but no additional burden to the AO or provider.

H. Burden Reduction Associated With the Revision of the AO Validation 
Program

    At Sec.  488.9, we propose to revise the AO validation program to 
include the additional component of a direct observation of the AO's 
survey process by SA or CMS surveyors. This would be called a direct 
observation validation survey. There is no associated burden to the AO 
or SA. Currently, CMS funds validation surveys. We do not anticipate 
additional costs.
    However, there are associated burden reductions to the provider 
community since half of the traditional validation survey will be 
replaced by direct observation validation surveys. To determine the 
amount of burden reduction on the provider community, it would be 
assumed that providers undergoing a traditoinal validation survey 
assign facility liaison staff to accompany and assist SA surveyors 
during their on-site validation survey. We believe that this task would 
be performed by RNs and other medical administrative staff. We estimate 
that the time burden for this task would be 8 hours per day for an 
average of 3 days. Therefore, we estimate that the time burden per each 
direct observation surveys would be 24 hours.
    We anticipate a burden reduction based on our proposed changes 
because the implementation of the direct observation validation surveys 
would decrease the number of look-back validation validation surveys to 
be performed by at least 50 percent.
    The anticipated annual burden reduction calcualtions are based on 
our FY 2019 look-back validation survey data collection. In FY 2019, we 
conducted approximately 315 surveys.
    We estimate that at least a 50 percent reduction in the look-back 
validation surveys would reduce the provider and supplier burden by 144 
hours per survey (3 days x 8 hours x 6 liaison staff) for a total of 
25,920 hours (144 hours x 180 look-back validation surveys) across all 
programs that receive validation surveys. This figure assumes on 
average a look-back validation on-site survey of 3 days with three SA 
surveyors and a total of six provider facility staff as provider 
liaisons. Total annual burden reduction to providers and supplier 
nationwide would be -$2,062,195.20 (25,920 hours x $79.56).

I. ICR Associated With the Revision of the Psychiatric Hospital 
Accreditation Process

    As discussed in section IV.L of this proposed rule, we propose to 
require AOs which have a CMS-approved hospital accreditation program to 
expand their programs to include the three special conditions for 
psychiatric hospitals and provide CMS with a detailed crosswalk which 
identifies the inclusion of the psychiatric standards that meet or 
exceed CMS psychiatric Medicare conditions. While these AOs already 
have approved hospital programs, we note that this proposal would 
require a one-time overhaul of the AO's hospital program standards to 
be expanded to include the psychiatric standards and burden would be 
imposed for the first year following the effective date of this rule 
and not be a reoccurring annual burden. Burden costs subsequent to 
changes would remain as current practice with updates required to be 
reviewed and approved as outlined in existing Sec.  488.5. As proposed 
in multiple sections of this proposed rule, we propose to require the 
AOs to use Medicare conditions, more comparable survey processes 
through clarifications of what CMS considers ``core survey processes'' 
with the ability to delineate where they exceed and take the CMS online 
surveyor training courses. Therefore, we believe burden would be 
minimal and most of the burden would be in areas in which the AO would 
``exceed'' Medicare requirements.
    As of December 7, 2022, there are four CMS-approved AOs which have 
established hospital accreditation programs. Two of these four AOs 
already have an established CMS approved psychiatric accreditation 
program.
    We anticipate that this requirement would be of moderate burden for 
AOs, however we anticipate the burden to be a one-time burden for two 
of four hospital AOs, because two of these AOs already have a CMS-
approved psychiatric accreditation program and, therefore, would not be 
required to submit a new application to CMS. This requirement would be 
part of the initial and renewal application process as defined in Sec.  
488.5, therefore would not impose annual reoccurring burden to any AOs 
initially applying or reapplying. We would expect that the AOs use the 
existing CFR language they are required to crosswalk currently in the 
regular hospital program and expand it to assign an AO standard number 
to the psychiatric standards with language which meets or exceeds the 
Medicare conditions.
1. ICR Associated With the Requirement That AOs Develop a Psychiatric 
Hospital Accreditation Program
    We anticipate that the AOs would be required to review and revise 
their existing hospital program crosswalk and standards to include the 
psychiatric standards. We believe this review and revision would be 
conducted by a cadre of AO professionals consisting of two RNs, one 
physician, one medical secretary and the CEO to review and approve all 
changes.
    We believe the two RNs would develop the initial psychiatric 
standards incorporated under the AOs hospital program. We estimate that 
this task would take approximately 150 hours to complete. The adjusted 
mean hourly wage for an RN is $79.56.
    We believe the AO's CEO would review and approve the revised 
standards and that this task would take approximately 45 hours. The 
adjusted mean hourly wage for a CEO is $204.82.
    We believe the medical secretary would process the AO's revised 
application and send it to CMS. We estimate that this task would take 5 
hours. The adjusted mean hourly wage for a medical secretary is $38.22.
    We estimate that the time burden for each AO would be 200 hours 
(150 hours for the two RNs + 45 hours by the CEO and 5 hours by the 
medical secretary).
    There are currently three AOs that would need to revise their 
hospital programs to incorporate the three psychiatric special 
standards. We estimate that the total time burden across these three 
AOs would be 600 hours (200 hours x 3 AOs).
    We estimate that the cost burden for the work performed by the RNs 
would be $11,934 ($79.56 x 150 hours), the CEO would be $9,216.90 
($204.82 x 45 hours), the medical secretary would be $191.10 ($38.22 x 
5 hours). Therefore, the total estimated cost burden per AO for these 
tasks would be $21,342 ($11,934 + $9,216.90 + $191.10).
    We further estimate that the total cost burden across the three AOs 
which

[[Page 12042]]

would need to revise their hospital programs to incorporate the three 
psychiatric special standards into their hospital accreditation 
programs would be $64,026 ($21,342 x 3 AOs).
2. ICR Associated With Accrediting Facilities Under the Revised 
Psychiatric Hospital Accreditation Program
    As aforementioned, there are four existing AOs which have a CMS 
approved hospital accreditation program; however, two of four AOs would 
need to resubmit their applications for CMS-approval based on the 
proposed provisions for the psychiatric standards as well as meeting 
the definition and criteria of national in scope. The scope of the CMS 
approved hospital programs would not change with this proposed 
expansion of the program to include the psychiatric special conditions. 
Once the hospital program is approved as national in scope, the 
addition of the three special conditions does not change the overall 
scope of the entire program. Therefore, there would be no additional 
burden associated with this requirement.

J. Burden Associated With Limitations to Terminated Providers Seeking 
Re-Enrollment and Certification in Medicare/Medicaid Programs

    We propose to add a new policy at Sec.  488.4(b) which would 
withdraw CMS recognition of the ``deeming authority'' accreditation of 
any Medicare certified provider or supplier that is involuntarily 
terminated from the Medicare/Medicaid program, if such provider/
supplier subsequently applies to re-enter the Medicare program. We also 
propose adding a new requirement at Sec.  488.4(b)(2) that would 
require a terminated provider or supplier to have to meet all of the 
requirements of Sec.  489.57 before a new agreement with that provider 
or supplier into the Medicare program will be approved.
    In support of proposed Sec.  488.4(b), we also propose to add a new 
requirement at Sec.  488.5(a)(21) that would require AOs to provide, 
with their initial and subsequent renewal applications, a statement 
certifying that, in response to a written notice from CMS notifying the 
AO that one of its accredited providers or suppliers has been 
terminated from the Medicare/Medicaid program, the AO agrees to 
terminate or revoke its accreditation of the terminated provider or 
supplier within 5-business days from receipt of said written notice.
    We have also made revisions and added proposed new requirements at 
Sec.  489.57(b) that would require a terminated provider or supplier to 
meet the requirements set forth at Sec. Sec.  489.57(b)(1) to (b)(3) 
before their new agreement for Medicare participation will be approved.
    Proposed new Sec.  489.57(b)(1) would require that a terminated 
provider or supplier must be under the exclusive oversight of the SA 
for the purpose of the initial survey, certification and demonstration 
of compliance with the Medicare conditions before their new agreement 
for Medicare participation can be approved. Proposed new Sec.  
489.57(b)(2) would require that the previously terminated provider or 
supplier must remain under the exclusive oversight of the SA until the 
SA or the applicable CMS Location (formerly called CMS Regional Office) 
has performed a reasonable assurance survey, determined that the 
terminated provider or supplier has corrected the deficiencies that 
caused the termination and that they are unlikely to recur and has 
certified its full compliance with all applicable Medicare conditions. 
The previously terminated provider's or supplier's new agreement for 
participation in the Medicare/Medicaid program may not be approved 
until such certification has been provided by the SA or CMS Location. 
Finally, our proposal at new Sec.  489.57(b)(3) would require that 
during the time period in which the terminated provider or supplier is 
under the exclusive oversight of the SA and while the new agreement for 
Medicare participation is pending, CMS will not accept or recognize 
accreditation from a CMS-approved accrediting organization.
    We believe that there would be no additional cost or time burden 
associated these proposed requirements for several reasons. First, the 
terminated providers and suppliers would have to undergo periodic, 
unannounced surveys performed by the SA or CMS. We believe that this is 
exempt from the PRA in accordance with 5 CFR 1320.3(b)(2) because these 
surveys are a usual and customary practice of accreditation. Therefore, 
the terminated provider or supplier would incur no additional time or 
cost burden related to the SA survey process.
    Also, considering that as a result of the above-stated proposals, 
CMS would not recognize deeming accreditation from an AO while a 
provider or supplier is terminated from the Medicare program, the AOs 
would be required to terminate or revoke accreditation for terminated 
providers and suppliers; and that during the time that a new agreement 
for Medicare participation is pending, would be under the exclusive 
oversight of the SA, they would not incur any fees for SA's services. 
If they remained accredited by the AO, they would pay fees for this 
accreditation.
    In addition, all prospective providers and suppliers, including 
those that were terminated and seeking re-entry into the Medicare/
Medicaid program are already required to submit an initial Form CMS-855 
provider enrollment application to CMS. The provider or supplier would 
therefore not incur any new time or cost burden related to the 
submission of this application.
    The burden associated with all requirements stated above will be 
submitted to OMB for approval under OMB control number (0938-NEW).

K. Summary of Estimated Burden

    The Table 3 provides a summary of the estimated burden related to 
the proposals being made in this proposed rule.
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VII. Response to Comments

    Because of the large number of public comments, we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

VIII. Regulatory Impact Analysis

A. Statement of Need

    We seek to strengthen the public trust in CMS-approved AOs' 
findings and to protect the health and safety of patients that seek 
services from Medicare and Medicaid-participating providers that are 
accredited by CMS-approved AOs. We believe that AOs that voluntarily 
seek approval for ``deeming purposes'' are taking on a critical quality 
assurance role for the American people. Patients need to be able to 
rely on the strength of that accreditation to be assured that their 
health care services will be safe and of high quality. Where there are 
gaps in that accreditation process, or where quality issues are not 
fully identified or investigated by the AO, it means that current and 
future patients may experience unnecessary harm or quality issues. 
Therefore, we are seeking to strengthen our oversight of AOs by 
revising existing regulations or implementing new regulations that 
would address the following issues: (1) place limitations on the fee-
based consulting services AOs offer to the providers and suppliers they 
accredit; (2) implement penalties for violation of the prohibition 
against AO fee-based consulting; (3) require AOs to report information 
to CMS on a bi-annual basis about the fee-based consulting services 
they provide; (4) require AOs to report specific conflict of interest 
information to CMS with their initial and renewal applications; (5) 
require AOs to submit surveyor conflict of interest declarations to CMS 
on an annual basis; (6) prohibit AO owners, surveyors and other 
employees, that currently or within the previous 2 years have had an 
interest in or relationship with a health care facility the AO 
accredits from doing the following: (a) participating in the survey of 
that health care facility; (b) having input into the results of the 
survey and accreditation for that health care facility; (c) having 
involvement with the pre- or post-survey activities for that health 
care facility, or (d) having contact with or access to the records for 
the survey and accreditation of that health care facility; (7) require 
AOs to incorporate the CMS conditions into their accreditation 
standards for its deeming programs; (8) use a comparable survey 
processes; (9) revise the validation process, implement new performance 
measures and the use of plans of correction for unacceptable 
performance measure scores; (10) revise

[[Page 12047]]

the hospital application process for AOs that have an approved hospital 
accreditation program to incorporate surveys of psychiatric hospitals 
into their hospital programs; (11) add new definitions for the terms 
``unannounced survey'', ``national in scope'', ``geographic regions'', 
``process disparity rate'', and ``outcome disparity rate''; and (12) 
place limitations on terminated providers or suppliers seeking re-entry 
into the Medicare program. In addition, we are soliciting comments from 
the public on whether CMS should limit the number of times an AO can 
submit an incomplete initial application for a new accreditation 
program and soliciting comments regarding other opportunities to 
improve the public transparency of quality of care findings at 
facilities surveyed by AOs; recognizing that under section 1865(b) of 
the Act, surveys performed by AOs may not be disclosed except for 
hospices, home health agencies, and surveys related to enforcement 
activity.
    We continue to review and revise our health and safety requirements 
and survey processes to ensure they are effective in driving quality of 
care for our accredited providers and suppliers.

B. Overall Impact

    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 
(January 18, 2011), Executive Order 14094 entitled ``Modernizing 
Regulatory Review'' (April 6, 2023), 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), 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). The 
Executive Order 14094 entitled ``Modernizing Regulatory Review'' 
(hereinafter, the Modernizing E.O) amends section 3(f)(1) of Executive 
Order 12866 (Regulatory Planning and Review). The amended section 3(f) 
of Executive Order 12866 defines a ``significant regulatory action'' as 
an action that is likely to result in a rule: (1) having an annual 
effect on the economy of $200 million or more in any 1 year (adjusted 
every 3 years by the Administrator of OIRA for changes in gross 
domestic product), or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, territorial, or 
tribal governments or communities; (2) creating a serious inconsistency 
or otherwise interfering with an action taken or planned by another 
agency; (3) materially altering the budgetary impacts of entitlement 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or (4) raise legal or policy issues for which 
centralized review would meaningfully further the President's 
priorities or the principles set forth in this Executive Order as 
specifically authorized in a timely manner by the Administrator of OIRA 
in each case.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with significant regulatory action/s and/or with significant effects as 
per section 3(f)(1) of Executive Order 12866 ($200 million or more in 
any 1 year). Based on our estimates, OMB's Office of Information and 
Regulatory Affairs has determined that this rulemaking is 
``significant''.

C. Detailed Economic Analysis

1. Benefits
    In developing this proposed regulation, we carefully considered its 
potential effects including both costs and benefits. The overall 
benefit of this rule would be to improve CMS' oversight of the AOs and 
to improve the overall quality and safety of healthcare. More 
specifically, the benefits of this rule include the prevention and 
removal of potential and actual conflicts of interest, the improvement 
of the validation process and anticipated reductions in the validation 
disparity rate, the additional performance measure and the 
implementation of plans of correction that would help AOs that have low 
performance measure scores to prepare a plan for how to improve their 
performance. We note that the generation of benefits is contingent upon 
behavior change, which entails costs; provisions that are discussed, 
below, as having negligible costs would therefore be anticipated to 
have minimal benefits.
2. Provision-Specific Costs, Benefits and Transfers
    We have identified the direct costs associated with this proposed 
rule as the costs associated with reporting, recordkeeping, and other 
costs. These costs are discussed below.
a. Impact Related to Conflict of Interest Proposals
    In this proposed rule, we have made several proposals related to AO 
and AO surveyor conflicts of interest. In the 2018 AO Conflict of 
Interest RFI, many commenters stated that AOs tend to ignore 
deficiencies during surveys in order to promote the efficacy of their 
consulting services. These commenters also stated the belief that the 
AOs may ignore deficiencies to avoid giving poor survey results to 
their clients, who have paid substantial fees for both accreditation 
and AO fee-based consulting services. These commenters further stated 
the belief that the financial relationship between the AO and the 
health care facilities they accredit causes a conflict of interest. We 
believe that the proposed restrictions on AO fee-based consulting would 
reduce this conflict of interest and hopefully remove the incentive for 
AOs to ignore deficiencies during surveys. We further believe that the 
conflict of interest proposals we have made would prevent potential and 
new conflicts of interests from occurring. We will address the 
financial impacts associated with each of these proposals separately 
below.
(1) Impact Related to Proposed Conflict of Interest Policies & 
Procedures AOs Must Submit to CMS (Proposed Revisions to Sec.  
488.5(a)(10))
    We proposed to modify Sec.  488.5(a)(10) to add a requirement that 
the AOs must provide specific information with their conflict of 
interest policies and procedures with the application they submit to 
CMS. Specifically, the AO must submit the following policies and 
procedures: (1) for separation of its fee-based consulting services 
from its accreditation services; (2) policies and procedures for 
protecting the integrity of the AO's accreditation program, including 
the requirements of Sec.  488.8(j); and, (3) for the prevention and 
handling potential or actual conflicts of interest that could arise 
from situations in which an AO owner, surveyor, or other employee has a 
direct interest in or relationship with another survey agency or health 
care facility to which the AO provides accreditation services, 
including a surveyor's outside interest, abuse of influence or 
disclosures of privileged information, etc.
    The AO would need to modify their current conflict of interest 
policy and procedures to include the above-stated information required 
under the proposed revisions to Sec.  488.5(a)(10). We estimate that 
this task would be performed by a team of at least two AO staff members 
which would be a RN and

[[Page 12048]]

a health services manager. We estimate that the total burden costs 
related to the requirements for proposed Sec.  488.8(i)(1) would be 
$4,674.72. We estimate that the cost across all AOs would be 
$51,421.92.
    We believe that the above stated burden impact would be incurred by 
the AO once prior to the time that they submit their first application 
after this requirement becomes effective. However, we believe that 
after the AOs have made required modifications to their conflict of 
interest policies, they will not have to revise them again, but will 
submit the same revised conflict of interest policies every 6 years 
with their renewal applications, so this burden would not be incurred 
again. We do not count the burden related to the submission of the 
application because the AO would be required to submit the application 
every 6 years to renew the CMS approval for their accreditation 
programs.
(2) Impact Related to Requirement That the AOs Submit Surveyor Conflict 
of Interest Declarations to CMS on an Annual Basis (Proposed Sec.  
488.5(a)(22))
    We proposed to add a new paragraph (a)(22) to Sec.  488.5, which 
would require that the AO must submit a declaration by each surveyor of 
any outside interests or relationships with the health care facilities 
that the AO accredits. This section would also require that the 
surveyor declarations must be updated on an annual basis and submitted 
to CMS by no later than December 31st each year.
    We believe that the AOs would incur time and cost burdens for 
having to collect declarations from each of their surveyors annually. 
There would also be a time and cost burden to the AO for the submission 
of the surveyor declarations to CMS.
    We estimate that the total burden costs related to the requirements 
for proposed Sec.  488.8(i)(1) would be $4,674.72. We further estimate 
that the total cost across the 11 AOs that accredit Medicare-certified 
providers and supplier, would be $51,421.92.
(3) Impacts Related to Proposed Restrictions on Fee-Based Consulting 
Provided by AOs to the Health Care Providers and Suppliers They 
Accredit (Sec.  488.8(i)(1), Sec.  488.8(i)(2), and Sec.  488.8(i)(4)
    In this proposed rule, we propose to modify the AO oversight 
regulations Sec.  488.8(i) by adding a new provision which would add 
restrictions on the fee-based consulting services provided by the AOs 
to the same health care providers and suppliers they accredit for 
Medicare deeming purposes.
    At proposed Sec.  488.8(i)(1), an AO or its associated fee-based 
consulting division or company would not be permitted to provide fee-
based consulting services to any health care provider or supplier prior 
to an initial accreditation survey. For purposes of this requirement, 
the term ``initial survey'' means the first accreditation survey 
performed of a health care provider or supplier by an accrediting 
organization. If a health care provider or supplier is terminated or 
withdraws from the services of an accrediting organization and then, a 
later time, again retains the services of that accrediting 
organization, the first survey performed by the accrediting 
organization of the returning health care provider or supplier would be 
considered an initial accreditation survey.
    At proposed Sec.  488.8(i)(2), an AO or its associated fee-based 
consulting division or company may not provide fee-based consulting 
services to a health care provider or supplier the accrediting 
organization accredits within 12 months prior to the next scheduled re-
accreditation survey of that provider or supplier. For purposes of this 
paragraph, the term ``re-accreditation survey'' means the any 
subsequent accreditation surveys performed by the accrediting 
organization following the initial survey.
    At proposed Sec.  488.8(i)(4), an AO or its associated fee-based 
consulting division or company may not provide fee-based consulting 
services to a health care provider or supplier, to which the 
accrediting organization provides accreditation services, in response 
to a complaint received by the AO regarding that provider or supplier.
    At proposed Sec.  488.8(i)(4)(i) through Sec.  488.8(i)(4)(iv) the 
restriction upon AO fee-based consulting shall not apply to the 
following situations: AO fee-based consulting services provided during 
the 24-month period after an initial or re-accreditation survey is 
performed; AO fee-based consulting services provided to address 
complaints received and investigated by the SA regarding an accrediting 
organization's accredited provider or supplier in which one or more 
condition-level or immediate jeopardy deficiencies are identified, 
provided however that, the AO fee-based consulting must occur after the 
complaint investigation and survey has been completed and must only 
address those issues identified by the complaint survey; AO fee-based 
consulting services provided to health care providers or suppliers to 
which the accrediting organization has never provided accreditation 
services; no-cost consulting or general education provided by the 
accrediting. Also, as we stated in the preamble, the proposed 
restriction on AO fee-based consulting services at Sec.  488.8(i)(1) 
through (3) would not prohibit the AOs from providing fee-based 
consulting services to health care providers and suppliers the AO is 
accrediting such as mock surveys, education about the Medicare 
conditions or the survey process. This proposal would also not prohibit 
the general education provided by the AO about their accreditation 
program. This proposal would apply only to the four AOs that provide 
fee-based accreditation,
    We believe that there would be two types of impact related to the 
proposals for Sec.  488.8(i). First, the AOs would incur time and cost 
burden to the AOs related to having to make changes to their fee-based 
consulting program standards and policies. Second, we recognize that 
there would be a financial impact to the AOs due to the loss of revenue 
that would have been realized from the fee-based consulting services 
they currently provide that would now be prohibited. We will address 
these two burdens separately below.
    As a result of our proposals at Sec.  488.8(i)(1) through (3), the 
AOs will no longer be allowed to provide fee-based consulting services 
to a health care provider or supplier prior to an initial survey, 
within 12-months prior to a provider's or supplier's re-accreditation 
survey or in response to a complaint received in response to an 
accredited provider or supplier. We believe that this limitation on the 
AOs' fee-based consulting model will require the AOs to revise their 
fee-based consulting business documents, such as their business 
charter, business documents, employee training information, 
informational documents that are distributed to prospective clients, 
and their policies and procedures as well as potentially restructure 
their staffing.
    We estimate that these changes would cause each AO to incur a total 
time burden of 80 hours and a total cost burden of $7,791.20. We 
further estimate that the total impact across the four AOs that provide 
fee-based-consulting would be a time burden of 320 hours and a cost 
burden of $31,164.80. (See section VI.A.3 of this proposed rule for the 
details of how these time and cost burdens were calculated.)
    We also believe that there will be a financial impact to the four 
AOs that provide fee-based consulting from the proposed restrictions on 
of fee-based consulting. Although the 2018 AO

[[Page 12049]]

Conflict of Interest RFI gathered information about the nature of these 
relationships, they did not provide enough information for us to 
accurately calculate the financial impact that the requirements of 
proposed Sec.  488.8(i)(1) would have on the AO. We do estimate that 
the AOs would have a decrease in approximately 25 percent of the fee-
based consulting business due to the restriction on providing fee-based 
consulting prior to initial surveys. We say this because AOs perform 
accreditation on a 3-year cycle, following the initial survey. We 
estimate that 25 percent of the fee-based consulting performed by an AO 
on an annual basis would be for new clients prior to their initial 
survey. We further estimate that the remaining 75 percent of the AOs 
fee-based consulting business would be provided to providers and 
suppliers prior to a reaccreditation survey.
    According to IRS financial disclosure statements filed by the AO 
that provides the most fee-based consulting through an associated fee-
based consulting, this AO realized gross revenue from fee-based 
consulting services in the amount of $44,960,143 in 2020 and 
$55,970,543 in 2021.\20\ This equates to an average annual revenue of 
$50,465,298 from fee-based consulting.
---------------------------------------------------------------------------

    \20\ https://www.jcrinc.com/-/media/jcr/jcr-documents/about-jcr/financial-statements/2021-jcr-form-990-redacted-pdc.pdf.
---------------------------------------------------------------------------

    We estimate that new accreditation clients make up approximately 33 
percent of an AOs client base and that the remaining 66 percent consist 
of existing clients that require reaccreditation surveys. We further 
estimate that, currently, only 25 percent (out of the 33 percent) of an 
AO's new clients elect to have fee-based consulting prior to the 
initial survey. Therefore, if the AOs are restricted from performing 
fee-based consulting prior to the initial survey of new clients, they 
would lose 25 percent of the revenue they receive from their fee-based 
consulting business. We estimate that the proposed restrictions on fee-
based consulting would cause the AO that provides the most fee-based 
consulting services to incur lost revenue in the amount of $12,616,324 
per year ($50,465,298 divided by 4).
    While we do not have any independent information about the amount 
of profits the other AOs realize from their fee-based consulting 
services, we presume that these three AOs do not realize as much 
revenue from the provision of fee-based consulting as this large AO. We 
say this for several reasons. First, the other AOs are smaller 
businesses and have a smaller client base than does this large AO. It 
is our understanding that these AOs provide fee-based consulting on a 
smaller scale because they have less clients and some that are smaller 
businesses that may not have the funds to pay for fee-based consulting 
services. Therefore, we are not able to provide an accurate estimate of 
how much loss in revenue will result from the restrictions in AO fee-
based consulting.
    We estimate that the AOs charge between $100,000 and $500,000 for 
the fee-based consulting they provide to each healthcare provider or 
supplier. We do not know how many providers or suppliers currently use 
the fee-based consulting services of their AO prior to their initial 
survey. Therefore, we are not able to provide an accurate estimate of 
the total amount of consulting services shifting to new consultants and 
away from AOs no longer permitted to provide such services to the 
providers and suppliers for whom they conduct initial surveys.
(4) Impact Related to Proposed Requirement for Submission of 
Information About AO Fee-Based Consulting Services Provided (Proposed 
Sec.  488(i)(5))
    We propose to add a requirement at Sec.  488.8(i)(5) that would 
require the AOs to provide CMS with the following information about the 
fee-based consulting services they provide to CMS on a bi-annual basis: 
(1) whether the AO or an associated consulting division or company 
established by the AO provides fee-based consulting services; (2) a 
list which contains the names and CCN numbers of all health care 
providers and suppliers to which the AO or its associated consulting 
division or company has provided fee-based consulting services during 
the previous 6 months; (3) whether the AO has provided accreditation 
services to each health care provider or supplier on said list, and if 
so, the date the accreditation services were provided; and (4) a 
general description of the AO fee-based consulting services provided to 
each health care provider or supplier on said list. This proposed 
regulation further requires that statement containing the above-stated 
information must be submitted to CMS no later than 15 days after the 
end of each 6-month period.
    We estimate that the impact associated with this proposed 
requirement would include the time and costs associated with the 
gathering of the information necessary to prepare the required 
statement, the time required to prepare the statement and the time 
required to send the statement to CMS. This impact would occur on a bi-
annual basis, although, we believe that the burden would be greater for 
the preparation of the first report. Thereafter, the AOs would have 
already prepared and formatted this report and would simply have to 
update the information on a quarterly basis.
    We estimate that the total hourly time burden per each AO for these 
tasks would be 96 hours and the total estimated cost burden would be 
$4,674.72. The impact across the four AOs that provide fee-based 
consulting would be 96 hours and $18,698.88.
    We believe that the above stated burden would be incurred only the 
first time that the AO would be required to prepare the required 
statement and send it to CMS. We believe that after the AO has prepared 
their first report, they would have this report in an electronic format 
on their computers. Therefore, for the second and all subsequent 
reports, we estimate that the cost related to the preparation and 
submission of this report would be reduced by at least 25 percent.
    We estimate that the financial impact to each AO for preparation of 
the second or subsequent report would be $636.48 and to all AOs that 
provide fee-based consulting would be $2,545.92.
(5) Impact Related to Proposed Requirement That Accrediting 
Organization Establish Fee-Based Consulting Firewall Policies and 
Procedures (Proposed Sec.  488.8(j))
    At Sec.  488.8(j) we proposed to require any AO that provides fee-
based consulting services or its associated fee-based consulting 
division or company to have robust, written fee-based consulting 
firewall policies and procedures. We would require that these firewall 
polices and procedure at a minimum, include the following provisions: 
(1) the AO's fee-based consulting services must be provided by a 
separate division or company from the AO's accreditation division; (2) 
the AO's fee-based consulting division or separate company must 
maintain separate staff from that of the AO's accreditation divisions 
to ensure that the fee-based consulting division staff do not perform 
AO's accreditation division functions and that the AO's accreditation 
division staff do not perform fee-based consulting division functions; 
and, (3) the AO's accreditation staff and surveyors are prohibited from 
marketing the AO's fee-based consulting services to the AO's 
accreditation clients.
    This proposed requirement would only apply to the AOs that provide 
fee-based consulting and would require

[[Page 12050]]

these AOs that establish new fee-based consulting firewall policies or 
revise their policies and procedures to meet the proposed requirements.
    We believe that the burden associated with the revision of the AO's 
fee-based consulting policies and procedures would fall under the time 
and cost burden estimated in section VI.A.5 of this proposed rule. As 
such, we will not assess a separate burden here.
(6) Impact Related to Proposed Regulation To Prevent AO Owners, 
Surveyors or Other Employees That Have an Interest In or Relationship 
With a Health Care Facility Accredited by the AO From Participating in 
Survey Activities for That Facility (Proposed Sec.  488.8(k))
    We propose to avoid conflicts of interest related to employment 
relationships between AO surveyors and health care facilities that are 
accredited by the AO. At proposed Sec.  488.8(k) we would require the 
AO's to prohibit their owners, surveyors and other employees from doing 
the following: (1) participating in the survey of facilities with which 
they have a relationship; (2) having input into or influence the 
outcome of any survey performed for facilities with which they have a 
relationship; (3) having any involvement with the pre or post survey 
activities for the health care facilities with which they have a 
relationship; or, (4) having any contact with the records from the 
surveys for any health care facilities with which they have a 
relationship. We believe that this should already be a usual and 
customary practice of the AOs and therefore there should be no 
additional burden to the AOs to comply with the requirements of this 
section.
b. Impacts Associated With the Requirement That AOs Incorporate the 
Medicare Conditions (Sec.  488.4(a)(1))
(1) Impacts Associated With the Requirement That the AOs Provide 
Detailed Crosswalks Identifying the Incorporation of CMS Standards
    We propose at Sec.  488.4(a)(1) to require AOs to incorporate the 
CMS' health and safety standards. Currently, the AOs are required to 
provide a similar crosswalk under the existing process, CMS previously 
only required a ``comparable'' standard. Therefore, we propose to 
revise Sec.  488.5(a)(3) to require the AOs to submit ``A detailed 
crosswalk (in table format, as specified by CMS) that identifies each 
of the applicable Medicare conditions (as defined in Sec.  488.1) 
incorporating the language of CMS requirements and standards.''
    As a result of this proposal, AOs would need to recreate their AO 
standards to match CMS'. We also note that this proposal would require 
a one-time overhaul of AO standards and burden would be imposed for the 
first year following the effective date of this rule and not be a 
reoccurring annual burden. Incremental costs subsequent to changes 
would be minimal, as our proposal reflect current practice) with 
updates required to be reviewed and approved as outlined in existing 
Sec.  488.5).
    We anticipate the impact to AOs for the revision of their existing 
crosswalk and standards into the required format would be $159.12 per 
AO. We estimate that the total cost impact across the 11 AOs that 
accredit Medicare-certified providers and suppliers would be $84,993.48 
for one accreditation program each.
    However, the majority of our AOs have multiple accreditation 
programs, therefore this cost impact would increase based on the number 
of programs. CMS has 24 approved accreditation programs across the 11 
AOs that accredit Medicare-certified providers and suppliers. We 
estimate that the total financial impact across all of these 
accreditation programs would be $185,440.32.
(2) Impacts Related to AO Providing Notice of the Revised Accreditation 
Standards to Their Accredited Providers and Suppliers Via Their Website
    In addition to changing the survey standards as proposed under 
Sec.  488.4(a)(1), the AOs would be required to provide the newly 
revised AO standards to the facilities they accredit. There are 
approximately 14,904 accredited facilities across all program types. We 
believe that the majority of AOs have a website portal on which they 
make their standards available to their accredited providers and 
suppliers.
    We estimated that the total impact across the 11 AOs that accredit 
Medicare-certified providers and suppliers for providing notice of 
their revised accreditation standards on their website would be 
$1,829.28.
(3) Impact Related to Providing Notice of the Revised Accreditation 
Standards to the Accredited Providers and Suppliers via Email
    We also believe the AOs would provide notice of their revised 
accreditation standards to their accredited providers and suppliers 
directly via email. We believe this would be a group email that would 
be sent out via group text to all of the AOs accredited providers and 
suppliers. We estimate that it would take only 15 minutes to prepare 
this email and there are approximately 14,904 accredited providers and 
suppliers across all 11 AOs that accredit Medicare-certified providers 
and suppliers. Therefore, the total estimated financial impact across 
all these 11 AOs for providing notice of the AOs revised accreditation 
standards via email would $142,333.20.
(4) Impacts Related to Education of Providers and Suppliers Regarding 
New Standards
    We believe that the AOs that accredit Medicare-certified providers 
and suppliers would be required to provide education to their 
accredited providers and suppliers about their new Medicare 
accreditation standards, which must be revised to be the same as the 
CMS standards, or more stringent. We believe that this training would 
most likely be provided by webinar.
    There are approximately 14,904 deemed facilities. We estimate that 
the cost impact to each facility would be $200.46 ($79.56 per RN + 
$120.90 per general or services manager). We further estimate that the 
total annual cost burden across all 14,904 accredited facilities would 
be $2,987,655.84.
c. Impacts Associated With the Requirement That AOs Use a Survey 
Process That Is Comparable to That Used by CMS and the SAs
    We propose to require the AOs to use the strengthened and revised 
requirements for initial and renewal applications for deeming 
authority, which includes revisions specifically to the documentation 
submitted related to the AO survey processes and guidance and its 
comparability to those survey processes used by the SA. We also propose 
to require the AOs to state in their survey reports, to identify the 
specific Medicare condition that corresponds with each finding of non-
compliance.
(1) Impact Related to Documentation Associated With Requirements That 
AOs Use Comparable Survey Processes (Sec.  488.5(a)(4), Sec.  
488.5(a)(4)(iii), Sec.  488.5(a)(4)(v), and Sec.  488.5(a)(4)(vii))
    We believe that impact of the changes to the require specific 
information related AOs' survey processes; surveyor guidance and 
instructions; survey forms and survey review process would vary 
depending on the AO because there are three out of the eleven AOs that 
accredit Medicare-certified providers and suppliers that already use 
survey

[[Page 12051]]

processes and guidance that are very similar to that used by the SA. 
Therefore, the impact to these three AOs would be much less than the 
impact to the remaining AOs, which use a different survey process which 
are causing more concern related to the comparability of survey 
activities and the ability to maintain the integrity of the survey 
process. For the purposes of this impact analysis we have provided our 
estimates based on an AO that would require the most changes to their 
existing documentation provided to show AO comparability to CMS survey 
processes, guidance and documentation.
    The requirements under Sec.  488.5(a)(4), Sec.  488.5(a)(4)(iii), 
Sec.  488.5(a)(4)(v), and Sec.  488.5(a)(4)(vii)) would require AOs to 
ensure documentation submitted supported the already existing 
expectations under the regulatory requirements and only added 
additional clarity within these proposed provisions. Therefore, we 
estimate that there is no impact on each AO for providing these 
requirements, as further explained in section VI.C.1 of this proposed 
rule, that AOs Use Comparable Survey Process (Sec.  488.5(a)(4), Sec.  
488.5(a)(4)(iii), Sec.  488.5(a)(4)(v), and Sec.  488.5(a)(4)(vii)).
(2) Impact Related to Documentation Requirements Imposed by Requirement 
That AOs Submit a Training for CMS About Its Revised Survey Process 
(Sec.  488.5(a)(4)(xi))
    The proposed requirements under Sec.  488.5(a)(4)(xi) would require 
the development of a presentation, such as an abbreviated web-based 
training or related training materials, for CMS about the AOs revised 
survey processes, specifically highlighting areas which vary from the 
survey processes and activities used by the SA. We believe while this 
would require development of new material, the content of such material 
is already available and would be extrapolated from the AOs training to 
new surveyors.
    We believe that development of the training would be $4,169.10 per 
AO and $45,860.10 across all 11 AOs. However, we further determined 
that we would consider the total across all 24 accredited programs to 
be $100,058.40 as survey processes used by the AO may vary based on the 
provider or supplier.
(3) Impact Related to Documentation Related to Requirements That AOs 
Use Comparable Survey Process (Sec.  488.5(a)(5), Sec.  488.5(a)(6), 
and Sec.  488.5(a)(12))
    Aforementioned in the Impact Related to Documentation Imposed by 
Requirements that AOs Use Comparable Survey Process (Sec.  488.5(a)(4), 
Sec.  488.5(a)(4)(iii), Sec.  488.5(a)(4)(v), and Sec.  
488.5(a)(4)(vii)), the proposed requirements under Sec.  488.5(a)(5), 
Sec.  488.5(a)(6), and Sec.  488.5(a)(12) also clarify existing and 
longstanding standard practices on the survey processes and do not 
impose additional burden to the AOs. Therefore, we estimate these 
proposed requirements would have no financial impact on the AOs.
(4) Impact Related to Documentation Requirements Imposed by Requirement 
That AOs Use Comparable Survey Process (Sec.  488.5(a)(13))
    The requirements at Sec.  488.5(a)(13) currently require the AOs to 
have: (1) procedures for responding and investigating complaints and, 
(2) a process for decision-making as it relates to accrediting status. 
We propose to add two new requirements which would require the AO to 
provide CMS with its organizational policies and procedures related to 
the AOs notification procedures, including timeframes for notification, 
to CMS in regards to a facility which the AO accredits when the 
facility fails to meet accreditation standards or its accreditation 
status is affected, as well as its processes and timelines for 
notification to CMS when one of its accredited facilities withdraws 
from accreditation. We estimate the total burden to be $886.60 per AO 
or $9,752.60 across all 11 AOs.
    We estimate that the total financial impact for these tasks would 
be $109,650.20 across all 11 AOs and the 24 programs currently 
recognized under AO deeming authority.
(5) Impact Related to the Requirement for AO To Submit Survey Findings/
Reports
    As mentioned in the preamble, we also propose to require the AOs as 
part of their application under Sec.  488.5(a)(4)(viii) to acknowledge 
that it will submit any requested survey findings and reports, to 
include complaint survey reports to CMS for internal use.
    This requirement would not cause the AOs to incur any new 
additional burden as the submission of this information is already 
required by this regulation and is therefore is a usual and customary 
part requirement for initial and renewal applications. AOs are also 
already required to submit the deficiencies and facility non-compliance 
in a roll up format. Therefore, this proposed requirement for a full 
survey report would not cause any additional burden as CMS would not 
require a specific new entry or format and reduce time spent by the AO 
summarizing the survey activity.
(6) Impact Related to the Requirement That the AOs Submit Their Revised 
Accreditation Standards and Survey Processes to CMS for Review and 
Approval
    Finally, in addition to the burden estimates above, the AOs would 
be required to resubmit their new survey processes and standards for 
CMS review as required under Sec.  488.8(b)(2). We anticipate the total 
financial impact associated with the requirement at Sec.  488.8(b)(2) 
that an AO submit any proposed changes in its accreditation 
requirements or survey process to CMS for review and approval would be 
$3,057.60 per AO per accrediting program type. We estimate that the 
financial impact across the 11 AOs would be $33,633.60. Finally, we 
estimate that the total financial impact across the 24 accredited 
programs is estimated at $73,382.40.
    As mentioned within the preamble, the proposed changes would not 
implement a reoccuring annual burden, but rather have a one-time burden 
on the AOs until the survey processes and activities are aligned with 
our proposed changes. CMS would resume the current process for approval 
and re-approval of AOs and their accrediting programs as outlined 
within the new proposed Sec.  488.5.
    We do note, there is no direct burden associated with these changes 
to the deemed provider or supplier.
d. Impact Related to the Requirement That the AO Surveyors Take the CMS 
Online Surveyor Training
    We proposed at Sec.  488.5(a)(8), to add a new requirement that 
would require AO to state in their application for CMS approval, that 
AOs that who accredit Medicare-certified providers and suppliers must 
include a statement acknowledging that all AO surveyors have completed 
or will complete two CMS mandatory documentation courses and the 
relevant program specific CMS online trainings established for SA 
surveyors, initially, and thereafter.
    CMS provides a number of online surveyor training modules that are 
available to the SA surveyors. We proposed to require the AO surveyors 
to take this training in an attempt to decrease the historically high 
disparity rate between the AOs survey results and those of the 
validation surveys performed by the SA surveyors.
    There are a total of 163 online training programs that are 
available the SA surveyors on the CMS Quality, Safety and Education 
Portal (QSEP) website.

[[Page 12052]]

This website provides courses that are general in nature such as 
``Principles of Documentation for Non-Long Term Care'' and ``Basic 
Writing Skills for Surveyor Staff'', infection control, patient safety, 
Emergency Preparedness. The CMS QSEP website also offers courses 
related to specific health care settings such as hospitals, CAHs, ASCs, 
Laboratories, Community Mental Health Centers, EMTALA, Federally 
Qualified Health Centers (FQHCs), Home Health Agencies and OASIS, 
Hospices, Nursing Homes and the MDS, Outpatient Physical Therapy/
Outpatient Speech Therapy. These courses are self-paced and the person 
taking the course can take the courses over a period of time. The 
amount of time required to complete each of these training course 
varies depending on the pace at which the trainee completes the 
training. The basic surveyor training courses for specific programs 
range in time from 16-82 hours for completion. We estimate the average 
time it takes to take one of the basic surveyor courses is 27 hours. 
This could be more or less depending upon the specific program that AO 
surveyors need to take.
    We would require that each AO surveyor takes the 2 mandatory 
documentation courses (that is ``Principles of Documentation for Non-
Long-Term Care'' and ``Basic Writing Skills for Surveyor Staff'') and 
the basic surveyor course for the care setting for which they perform 
surveys. We further estimate that it would take approximately 4 hours 
to complete each of these courses, however, these courses are self-
paced and could take less or longer. Therefore, an AO surveyor would 
incur a time burden of approximately 35 hours for the completion of all 
of the required CMS surveyor training courses.
    Based upon this information we estimate that the financial impact 
to the AOs that accredit Medicare-certified providers and suppliers 
would $2,784.60 per each surveyor that completes the CMS online 
surveyor training.
    We are not able to accurately estimate to total time and cost 
burden to each AO for the wages incurred for the time spent by all 
surveyors from each AO to take the CMS online surveyor training 
courses, because we do not know exactly how many surveyors each AO has. 
However, if we estimate that each AO has 75 surveyors, the estimated 
financial impact to each AO associated with this requirement would be 
$208.845.
    As of February 4, 2020, there are currently 11 AOs that accredit 
Medicare-certified providers and suppliers. We estimate that the total 
estimated financial impact across these 11 AOs would be $2,297,295.
e. Impact Associated With the Establishment of a Definition for 
``National in Scope''
    As proposed under Sec.  488.1, we would require the AO to provide 
documentation for meeting the definition of ``national in scope'' 
within their initial and reapplication process. As currently required 
under Sec.  488.5(a)(1), the AO must provide documentation that 
demonstrates the organization meets the definition of a ``national 
accrediting organization'' under Sec.  488.1 as it relates to the 
accreditation program. Therefore, we estimate the burden on AOs to be 
minimal as they are already required to provide documentation to this 
effect. Therefore, we estimate the following:
(1) Impact Related to the Documentation Requirements for ``National in 
Scope''
    We anticipate that a CEO of an AO would compile and verify that the 
AO meets the proposed definition of ``national in scope''. According to 
the U.S. Bureau of Labor Statistics, the mean hourly wage for a CEO is 
$102.41. This wage adjusted for the employer's fringe benefits and 
overhead would be $204.82. (See Table 1 in section IV ``Collection of 
Information Requirements'' of this proposed rule.)
    CMS is not requiring to use a specific format for the documentation 
they submit to show that their accreditation program is national in 
scope. However, we suggest that the AO provides a list, which lists the 
accredited facilities and which would show the geographic locations for 
these accredited facilities. For existing CMS-approved AOs, the general 
re-application cycle is not to exceed 6 years. Therefore, we anticipate 
this below burden to apply every 4 to 6 years.
    We anticipate the compiling of this information would take 
approximately 40 minutes (0.66 hours). Currently, there are 11 approved 
AOs and we anticipate no more than two new AOs per year to apply for 
deeming authority. We estimate that the total financial impact to each 
AO for completion of this task would be $136.55 every 6 years ($204.82 
per hour x 0.66 hours). We further estimate that the financial impact 
across the 11 AOs that accredit Medicare-certified providers and 
suppliers would be $1,501.72.
(2) Impact Related to Incorporation of the ``National in Scope'' 
Requirements Into the AO's Application
    When preparing an initial application of CMS approval of its 
accreditation programs, an AO must include documentation that their 
accreditation programs meet the definition of ``national in scope.'' We 
anticipate that would be performed by a Medical Secretary with an 
hourly wage of $38.22 and would take 5 minutes (0.083 hour) to 
complete. We estimate that the financial impact for this requirement 
would be a $3.18.
    There are 11 AOs. We estimate that the total financial impact for 
this work across all AOs would be $35.03.
    We do note, there is no direct burden associated with these changes 
to the deemed provider or supplier.
f. Impact Associated With the Proposed Revision of the AO Performance 
Measures
    As proposed in this rule, we are requiring that AO submit a 
publicly reportable plan of correction for performance measure scores 
that are under an acceptable threshold for established performance.
    This is a new requirement and therefore would be a new burden for 
AOs to complete. The plan of correction must be completed and submitted 
to CMS within 10-business days follow the notification of the AO of 
their less than acceptable performance. The plan of correction must 
address the areas of improvement and the specific actions to be taken 
to improve those areas on a sustainable basis, the process for ongoing 
monitoring of progress of the toward acceptable performance, as well as 
the individuals responsible for overseeing the plan of correction and 
the anticipated implementation dates of the proposed actions.
    We estimate that it would take 80 hours for the AO staff to prepare 
each plan of correction. We believe that the financial impact to the AO 
for this task would be $15,395, based on the preparation of 123 plans 
of correction per year. We estimate the the total annual impact per 
each AO for the complation of 123 POCs per year would be $2,015,428.80 
per each AO for completion of 123 POCs per year. The total financial 
impact across all 11 AOs that accredit Medicare providers and suppliers 
would be $22,169,716.80.
g. Impact Associated With the Revision of the Definition of ``Disparity 
Rate''
    In the proposed definition of disparity rate there is no associated 
burden as look-behind validation surveys are a

[[Page 12053]]

usual and customary part of the existing validations program. Direct 
observation validation surveys are already being performed under 
current regulatory authority Sec.  488.8(a)(2) and have become a usual 
and customary part of the validation program. AO will continue to 
perform survey activities as required, the revised and expanded 
definition of disparity will impact data collection by CMS, but no 
additional burden to the AO or provider.
h. Impact for the Revision of the AO Validation Program
    In the proposed revision and expansion of Sec.  488.9, we propose 
to revise the validation program to include the additional component of 
a direct observation of the AO's survey process by the SA or CMS 
surveyors. There would be no associated impact to the AO or SA as a 
result of the additional validation method. Currently, CMS funds 
validation surveys. We do not anticipate additional costs. However, 
there are associated burden reductions to the provider community since 
half of the traditional validation survey will be replaced by direct 
observation validation surveys.
    We anticipate a burden reduction based on our proposed changes. The 
anticipated annual burden reduction to providers and suppliers is based 
on our FY 2019 look-behind validation survey data collection. In FY 
2019, we conducted approximately 315 surveys. The anticipated burden 
reduction with our new proposed changes are based on the look-behind 
validation surveys, which allows a reduction by at least 50 percent 
(180 look-back surveys) through replacing them with the direct 
observation validation survey. This burden reduction occurs because 
during direct observation surveys, the SA surveyors observe the AO 
surveyors during the performance of a reaccreditation survey instead of 
performing a separate validation survey within 60 days of the AO's 
reaccreditation survey. As only one survey is performed, the burden to 
providers and suppliers undergoing validation using the direct 
observation validation method is reduced by at least 50 percent. We 
determined that the use of the direct observation validation surveys 
would reduce the burden related to the look-back validation surveys to 
providers and supplier by at least 50 percent because with direct 
observation validation surveys, the SA surveyors observe the AO 
surveyors during the performance of their survey. This requires only 
one survey to be performed. Whereas, with 60-day look-back validation 
surveys, the SA surveyors perform a validation survey within 60 days of 
the AO's reaccreditation survey. This requires the provider or supplier 
selected for validation to undergo two surveys within a 60-day period. 
Half of the validation surveys to be performed with the revised 
validation program will use the direct observation method. Therefore, 
we estimate that provider/supplier burden would be reduced by 50 at 
least percent. We believe this, in turn, would reduce the financial 
impact of the validation program to provider and supplier burden or in 
other words result in a cost savings of $2,062,195.20.
i. Impact Associated With the Revision of the Psychiatric Hospital 
Accreditation Process
    As discussed in this proposed rule, we propose to require AOs which 
have a CMS-approved hospital accreditation program to expand their 
programs to include the three special conditions for psychiatric 
hospitals and provide CMS with a detailed crosswalk which identifies 
the inclusion of the psychiatric standards which meet or exceed CMS 
psychiatric Medicare conditions. While these AOs already have approved 
hospital programs, we note that this proposal would require a one-time 
overhaul of the hospital program standards to expand the program to 
include the psychiatric standards and burden would be imposed for the 
first year following the effective date of this rule and not be a 
reoccurring annual burden. Burden costs subsequent to changes would 
remain as current practice with updates required to be reviewed and 
approved as outlined in existing Sec.  488.5. As proposed in multiple 
sections of this proposed rule, we propose to require the AOs to use 
Medicare conditions, more comparable survey processes with the ability 
to delineate where they exceed and take the CMS online surveyor 
training courses. Therefore, we believe burden would be minimal and 
most of the burden would be in areas in which the AO would ``exceed'' 
Medicare requirements.
    Currently, there are four CMS-approved AOs which have established 
hospital accreditation programs. One of these four AOs which already 
has an established CMS-approved psychiatric accreditation program.
    We anticipate that this requirement be of moderate burden for AOs, 
however we anticipate the burden to be a one-time burden for 3 of 4 
hospital AOs. Once effective by the date of the final rule, or as 
specified by CMS, this would be part of the initial and renewal 
application process as defined in Sec.  488.5, therefore would not 
imposed annual reoccurring burden to any AOs initially applying or 
reapplying. We would expect that the AOs use the existing CFR language 
they are required to crosswalk currently in the regular hospital 
program and expand it to assign an AO standard number to the 
psychiatric standards with language which meets or exceeds the Medicare 
standards.
(1) Impact Associated With the Requirement That the AOs Develop a 
Psychiatric Hospital Accreditation Program
    We anticipate the burden for AOs to review and revise their 
existing hospital program crosswalk and standards to include the 
psychiatric standards would cause a financial impact to each affected 
AO in the amount of $21,342.
    There are currently three AOs which would need to revise their 
hospital programs to incorporate these standards. We estimate that the 
total financial impact across these 3 AOs would be $64,026.
(2) Impact Associated With Accrediting Facilities Under the Revised 
Psychiatric Hospital Accreditation Program
    As aforementioned, there are four existing AOs which have a CMS-
approved hospital accreditation program, however three of four AOs 
would need to resubmit their applications for CMS-approval based on the 
proposed provisions for the psychiatric standards as well as meeting 
the definition and criteria of national in scope. The scope of the CMS-
approved hospital programs would not change with this proposed 
expansion of the program to include the psychiatric special conditions. 
Once the hospital program is approved as national in scope, the 
addition of the three special conditions does not change the overall 
scope of the entire program. Therefore, we believe this burden would be 
incorporated into the burden required with the new proposed changes of 
this rule. Therefore, please see the impact section for comparability 
to the CMS survey processes as required by Sec.  488.4(a)(2).
j. Impact Associated With Limitations to Terminated Deemed Providers 
and Suppliers Seeking Re-Approval Into Medicare/Medicaid
    We proposed to add a new policy at Sec.  488.4(b) which would 
withdraw CMS recognition of the ``deeming authority'' accreditation of 
any Medicare certified provider or supplier that is terminated from the 
Medicare/Medicaid program, if such terminated provider/supplier

[[Page 12054]]

subsequently applies to re-enter Medicare and seek initial 
certification. We also proposed to add new requirement at Sec.  
488.4(b)(2) that would require that before a terminated provider or 
supplier would be eligible for participation in the Medicare program, 
they would have to meet all of the requirements of Sec.  489.57.
    In support of our proposal at Sec.  488.4(b), we also propose to 
add a new requirement at Sec.  488.5(a)(21) that would require AOs to 
provide, with their initial and renewal applications, a statement 
certifying that, in response to a written notice from CMS notifying the 
AO that one of its accredited providers or suppliers has been 
terminated from the Medicare/Medicaid program, the AO agrees to 
terminate or revoke its accreditation of the terminated provider or 
supplier within 5-business days from receipt of that written notice.
    Section 1865(c) of the Act states that if the Secretary finds that 
a provider or supplier has significant deficiencies, then it is no 
longer deemed to meet the requirements the entity has been treated as 
meeting pursuant to subsection (a)(1) for such period as may be 
prescribed in regulations. As further explained below, our proposed 
revised regulations at Sec.  489.57 governs the process that terminated 
providers and suppliers must follow to be allowed to submit a new 
request for Medicare participation. Specifically, Sec.  489.57, as 
revised, would require that when a provider agreement has been 
terminated by CMS or OIG, a new agreement with that provider would not 
be accepted unless CMS or the OIG finds the following: (1) that the 
reason for termination of the previous agreement has been removed and 
there was reasonable assurance that it would not recur; and (2) that 
the provider has fulfilled, or has made satisfactory arrangements to 
fulfill, all of the statutory and regulatory responsibilities of its 
previous agreement. Also, the terminated provider or supplier would 
have to meet the following requirements before a new agreement with 
that provider or supplier could be approved: (1) the terminated 
provider or supplier would have to submit to, and remain under, the 
exclusive oversight of the state survey agency for a reasonable 
assurance period of a length of time to be determined by CMS, for the 
purposes of the initial survey, certification and demonstration of 
compliance with the Medicare conditions; (2) the terminated provider or 
supplier would have to remain under the exclusive oversight of the SA 
until the SA or CMS certified that the provider or supplier was in 
compliance with all applicable Medicare conditions, and CMS approved 
the new agreement for participation in the Medicare/Medicaid program; 
and (3) during the time period in which a terminated provider or 
supplier was not certified to participate in the Medicare program, 
while the prospective provider or supplier was under the oversight of 
the SA, and while the new agreement for Medicare participation was 
pending, CMS could not deem the provider to have met CMS standards via 
accreditation until the SA determined that the applicable Medicare 
requirements have been met or exceeded, as described in Sec.  488.4.
    The intended purpose of these proposed new and revised regulations 
is to further clarify the existing process for terminated providers and 
suppliers and also prevent providers and suppliers that have been 
terminated from the Medicare/Medicaid program from mischaracterizing 
their continued AO accreditation as proof that they meet the Medicare 
standards and provide safe and effective care, when in fact they were 
terminated from the Medicare program for egregious deficiencies that 
had, in many instances, not been detected by the AO. Currently CMS does 
not have explicit regulatory authority to withdraw recognition of an 
AO's deeming accreditation when a provider or supplier has been 
terminated from the Medicare/Medicaid program. Nor does CMS currently 
have a regulation requiring AOs to withdraw or revoke their 
accreditation of providers or suppliers that have been terminated from 
the Medicare/Medicaid programs. These proposed new and revised 
regulations will provide this regulatory authority for CMS. We are also 
proposing additional requirements at Sec.  489.57(b) that would require 
that if a terminated provider or supplier filed a new application for 
participation in the Medicare/Medicaid program, said terminated 
provider or supplier would have to meet the requirements set forth at 
Sec.  489.57(b)(1) to (b)(3) before their new agreement for Medicare 
participation could be approved.
    Proposed new Sec.  489.57(b)(1) would require that a terminated 
provider or supplier be under the exclusive oversight of the SA for the 
purpose of the initial survey, certification and demonstration of 
compliance with the Medicare conditions. Proposed new Sec.  
489.57(b)(2) would require that the terminated provider or supplier 
seeking re-entry must remain under the exclusive oversight of the SA 
until the SA has certified its full compliance with all applicable 
Medicare conditions and the agreement for participation in the 
Medicare/Medicaid program has been approved. Finally, proposed new 
Sec.  489.57(b)(3) would require that during the time period in which 
the terminated provider or supplier was under the oversight of the SA 
and while the new agreement for Medicare participation was pending, CMS 
would not accept or recognize accreditation from a CMS-approved 
accrediting organization.
    We believe that there would be no additional cost or time burden 
associated with these proposed requirements because the terminated 
providers and suppliers would have to undergo periodic, unannounced 
surveys performed by the SA. If these providers and suppliers had not 
been terminated, they would have had to undergo surveys by the AO. 
Therefore, the provider or supplier would incur no additional time or 
cost burden related to the SA survey process. Also, there would be no 
increase in the time required for survey of these terminated providers 
or suppliers to become newly certified or participate in the Medicare 
program.
    Also, considering that as a result of the above-stated proposals, 
CMS would not recognize accreditation from an AO while a provider or 
supplier is terminated from the Medicare program, the AOs would be 
required to terminate or revoke accreditation for terminated providers 
and suppliers; and that during the time that a new agreement for 
Medicare participation is pending, the prospective Medicare provider or 
supplier would be under the exclusive oversight of the SA, they would 
not incur any fees for SA's services.
    In addition, terminated providers seeking re-entry into the 
Medicare/Medicaid program would be required to submit an initial 
enrollment application to CMS. The provider or supplier would not incur 
any new time or cost burden related to the preparation and submission 
of the application because the preparation and submission of this 
application is a usual and customary requirement for any entity seeking 
initial certification as a provider or supplier in the Medicare/
Medicaid program.

Summary of Financial Impact Caused by the Proposals in This Proposed 
Rule

    Table 4 summarizes the financial impact of the proposals that we 
are making in this proposed rule.
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3. Regulatory Review Cost Estimation
    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this proposed rule, we 
should estimate the cost associated with regulatory review. Due to the 
uncertainty involved with accurately quantifying the number of entities 
that will review the rule, we assume that the total number of unique 
commenters to the 2018 AO Conflict of Interest Request for Information 
(December 20, 2018, 83 FR 65331) will be the number of reviewers of 
this proposed rule. We acknowledge that this assumption may understate 
or overstate the costs of reviewing this rule. It is possible that not 
all commenters reviewed the 2018 AO Conflict of Interest Request for 
Information in detail, and it is also possible that some reviewers 
chose not to comment on the published rule. For these reasons we 
thought that the number of past commenters would be a fair estimate of 
the number of reviewers of this rule. We welcome any comments on the 
approach in estimating the number of entities which will review this 
proposed rule.
    We believe that persons reviewing this rule would consist of AO 
management staff, healthcare association management staff, and health 
care facility management staff. We believe all of these persons would 
have positions that fall under the U.S. Bureau of Labor Statistics job 
category of medical and health services manager. Assuming an average 
reading speed, we estimate that it would take approximately 2 hours for 
the staff to review this proposed rule. Using the wage information from 
the BLS for Medical and Health Service Managers (Code 11-9111), we 
estimate that the cost of reviewing this rule is $230.44 ($115.22 per 
hour x 2 hours).\21\
---------------------------------------------------------------------------

    \21\ https://www.bls.gov/oes/current/oes119111.htm.
---------------------------------------------------------------------------

D. Alternatives Considered

1. Proposed Changes to AO Fee-Based Consulting
    We considered proposing a complete ban on AO fee-based consulting 
because of the conflict of interest associated with the provisions of 
this service by the AOs to the health care providers and suppliers they 
accredit. However, we presume the financial impact to the AOs 
associated with a complete ban on fee-based consulting would be larger. 
For example, the AO that provides the most fee-based consulting 
realized over $50 million dollars annually from providing these 
services. A complete or almost complete ban on the provision of AO fee-
based consulting services would eliminate or severely limit this 
revenue source.
    Therefore, we decided to propose more limited restrictions on AO 
fee-based consulting services that would address the conflicts of 
interest.
2. Proposed Changes to the Validation Program
    We considered several alternatives for changes to the validation 
program. First, we considered making no changes to the validations 
program, which would mean that we would continue performing only look-
back surveys. We also considered performing only direct observation 
surveys. After considering the alternative, we decided to propose 
performing a combination of both look-back and direct observation 
surveys because this would result in a cost savings to providers and 
suppliers. If we were to continue the validation program as is, there 
would be no change in

[[Page 12058]]

provider burden. If we modify the validation program by performing only 
direct observation validation surveys, burden to providers and 
suppliers would be reduced significantly, however, the workload on the 
SAs would be increased significantly. The SAs have indicated during the 
pilot program that they would not be able to handle such an increased 
workload. Therefore by using the direct observation method for at least 
50 percent of the validation surveys performed annually this would 
provide a significant decrease in provider and supplier burden while 
placing a manageable and acceptable workload on the SAs.

E. Regulatory Flexibility Act (RFA)

    The RFA requires agencies to analyze options for regulatory relief 
of small entities. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
less than $8.0 million to $41.5 million in any 1 year. Individuals and 
states are not included in the definition of a small entity. We are not 
preparing an analysis for the RFA because we have determined, and the 
Secretary certifies, that this proposed rule would not have a 
significant economic impact on a substantial number of small entities. 
(See the Table 2 in section VI.B.1 of this proposed rule.)
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a metropolitan 
statistical area and has fewer than 100 beds. We are not preparing an 
analysis for section 1102(b) of the Act because we have determined, and 
the Secretary certifies, that this proposed rule would not have a 
significant impact on the operations of a substantial number of small 
rural hospitals.

F. Unfunded Mandates Reform Act (UMRA)

    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 spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2023, that 
threshold is approximately $177 million. This proposed rule would not 
impose a mandate that will result in the expenditure by State, local, 
and Tribal Governments, in the aggregate, or by the private sector, of 
more than $177 million in any 1 year.

G. 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.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on May 23, 2023.

List of Subjects

42 CFR Part 488

    Administrative practice and procedure, Health facilities, Medicare, 
Reporting and recordkeeping requirements.

42 CFR Part 489

    Health facilities, Medicare, and Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
and Medicaid Services proposes to amend 42 CFR chapter IV, as set forth 
below:

PART 488 SURVEY, CERTIFICATION, AND ENFORCEMENT PROCEDURES

0
1. The authority citation for part 488 continues to read as follows:

    Authority:  42 U.S.C. 1302; and 1395hh.

0
2. Section 488.1 is amended by--
0
a. Adding the definition of ``Geographic regions'';
0
b. Revising the definition of ``National accrediting organization'';
0
c. Adding the definitions of ``National in scope'', ``Outcome disparity 
rate'' and ``Process disparity rate'';
0
d. Removing the definition of ``Rate of disparity''; and
0
e. Adding the definition of ``Unannounced survey''.
    The additions and revisions read as follows:


Sec.  488.1   Definitions.

* * * * *
    Geographic regions--CMS uses specified geographic regions of the 
Unites States to measure whether an accrediting organization's 
accreditation program meets the definition of ``national in scope.'' 
For this purpose, the United States is divided into the following five 
geographic regions:
    (1) Northeast: Delaware, District of Columbia, Maryland, 
Pennsylvania, Virginia, West Virginia, New York, New Jersey, Puerto 
Rico, Virgin Islands, Connecticut, Maine, Massachusetts, New Hampshire, 
Rhode Island, and Vermont;
    (2) Southeast: Alabama, Florida, Georgia, Kentucky, Mississippi, 
North Carolina, South Carolina, and Tennessee;
    (3) Midwest: Illinois, Indiana, Michigan, Minnesota, Ohio, 
Wisconsin;
    (4) Central: Iowa, Kansas, Missouri, and Nebraska; Colorado, 
Montana, North Dakota, South Dakota, Utah, Wyoming;
    (5) South: Arkansas, Louisiana, New Mexico, Oklahoma, and Texas;
    (6) Western: American Samoa, Arizona, California, Hawaii, 
Commonwealth of the Northern Mariana Islands, Guam, Alaska, Idaho, 
Nevada, Oregon, Washington
* * * * *
    National accrediting organization means an accrediting organization 
that is national in scope and accredits provider or suppliers, under a 
specific accreditation program.
    National in scope means that the providers and suppliers accredited 
by an accrediting organization under a specific accreditation program, 
are widely located geographically across the United States. The 
requirement for ``national in scope'' has two components. First, the 
accrediting organization must have accredited at least five providers 
or suppliers under the accreditation program in question. Second, the 
five providers or suppliers accredited by the accrediting organization 
under that accreditation program must be geographically located in at 
least five out of the six geographic regions.
    Outcome disparity rate means the percentage of all look-back 
validation surveys for an accrediting organization's program for which 
the state survey agency finds noncompliance with one or more Medicare 
conditions and no comparable condition level deficiency was cited by 
the accrediting organization, where it is reasonable to conclude that 
the deficiencies were present at the time of the accrediting 
organization's most recent survey of that provider or supplier.
    Process disparity rate means, for a direct observation validation 
survey, the

[[Page 12059]]

difference between the observed survey process findings and the 
expected survey process findings expressed as a percentage.
* * * * *
    Unannounced survey means a survey that is conducted without any 
prior notice of any type, through any means of communication or forums, 
to the facility to be surveyed, and therefore, is unexpected to the 
facility until the arrival onsite by surveyors. This also means that 
the accrediting organizations must schedule their surveys so that the 
facility is unable to predict when they will be performed.
* * * * *
0
3. Revise Sec.  488.4 to read as follows:


Sec.  488.4   General rules for a CMS approved accreditation program 
for providers and suppliers.

    (a) The following requirements apply when a national accrediting 
organization has applied for CMS approval of a provider or supplier 
accreditation program and CMS has found that the program provides 
reasonable assurance to providers or suppliers accredited under the 
program:
    (1) The accrediting organizations that accredit Medicare-certified 
providers and suppliers shall incorporate the applicable Medicare 
conditions language as their minimum accreditation standards, which are 
applicable beginning [date 1 year after the effective date of the final 
rule].
    (2) The accrediting organizations that accredit Medicare-certified 
providers and suppliers shall use a survey process comparable to the 
processes set out in the State Operations Manual, or as issued via 
policy memorandums, and approved by CMS, as defined in Sec.  488.5, 
applicable beginning [date 1 year from the effective date of the final 
rule].
    (3) When a provider or supplier demonstrates full compliance with 
all of the accreditation program requirements of the accrediting 
organization's CMS-approved accreditation program, the accrediting 
organization may recommend that CMS grant deemed status to the provider 
or supplier.
    (4) CMS may deem the provider or supplier to be in compliance with 
the applicable Medicare conditions or requirements. The deemed status 
provider or supplier is subject to validation surveys as provided at 
Sec.  488.9.
    (b) The following requirements apply for termination of a 
provider's or supplier's Medicare participation agreement on CMS 
recognition of its accreditation provider by an Accrediting 
Organization:
    (1) If CMS terminates the participation agreement of a provider or 
supplier, CMS will no longer recognize or accept the accreditation 
provided by an accreditation organization to that provider or supplier 
as demonstrating that the Medicare requirements have been met by such 
provider or supplier; and,
    (2) If CMS terminates the participation agreement of a provider or 
supplier, the terminated provider or supplier must meet all 
requirements set forth at 42 CFR 489.57 before a new agreement with 
that provider or supplier for Medicare participation will be approved.
0
4. Section 488.5 is amended by--
0
a. Revising paragraphs (a)(3), (4), (5), (6), (8), (10), (12) and (13); 
and
0
b. Adding paragraphs (a)(21) and (22)
    The revisions and additions read as follows:


Sec.  488.5   Application and re-application procedures for national 
accrediting organizations. (a) * * *

    (3) A detailed crosswalk (in table format, as specified by CMS) 
that identifies each of the applicable Medicare conditions (as defined 
in Sec.  488.1) incorporating the language of the CMS requirements and 
standards, and those accreditation standards that exceed the CMS 
conditions. This requirement, as revised, shall become applicable 
beginning [DATE 1 YEAR AFTER THE EFFECTIVE DATE OF THE FINAL RULE].
    (4) A detailed description of the organization's survey process 
including, but not limited to, the core activities of the survey 
process such as, but not limited to, documentation supporting Pre 
Survey Preparation/Offsite Preparation, Entrance Interview/Activities, 
Information Gathering/Investigation, Analysis of Information, Exit 
Conference, Post Survey Activities/Statement of Deficiencies 
activities, to confirm that a provider or supplier meets or exceeds the 
Medicare program requirements, and maintains the integrity of the 
survey process, which is intended to be a non-biased evaluation of a 
facility's ability to provide safe care and protect the health and 
safety of patients. This description must include all of the following 
information:
    (i) Frequency of surveys performed and an agreement by the 
organization to re-survey every accredited provider or supplier, 
through unannounced surveys, no later than 36 months after the prior 
accreditation effective date, including an explanation of how the 
accrediting organization will maintain the schedule it proposes. If 
there is a statutorily mandated survey interval of less than 36 months, 
the organization must indicate how it will adhere to the statutory 
schedule.
    (ii) Documentation demonstrating the comparability of the 
organization's survey process and surveyor guidance to those required 
for state survey agencies conducting federal Medicare surveys for the 
same provider or supplier type, in accordance with the applicable 
requirements or conditions of participation or conditions for coverage 
or certification.
    (iii) Copies of the organization's survey forms, guidelines, and 
instructions to surveyors, including but not limited to specific 
processes of how surveyors' survey facilities for the core survey 
activities: Governing Body, Patient Rights, Emergency Preparedness, 
Quality Assessment and Performance Improvement, Medical Staff, Nursing 
Services, Medical Records Services, and Infection Control. This would 
also include interpretive guidelines and survey probes, including 
patient and staff interview questions, and processes used by surveyors 
when interviewing facilities for compliance based on each of the 
specific survey standards, comparable to those instructions required 
for state survey agencies.
    (iv) Documentation demonstrating that the organization's survey 
reports identify, for each finding of non-compliance with accreditation 
standards, the comparable Medicare CoP, CfC, conditions for 
certification, or requirements.
    (v) Description of the organization's accreditation survey review 
process, to include but not limited to processes for review of medical 
records, medical staff credentialing procedures based on services 
provided; staff record review to review for competency and personnel 
files; adequate number of patient observations; and confidential 
patient interviews and staff interviews.
    (vi) Description of the organization's procedures and timelines for 
notifying surveyed facilities of non-compliance with the accreditation 
program's standards.
    (vii) Description of the organization's procedures and timelines 
for monitoring the provider's or supplier's correction of identified 
non-compliance with the accreditation program's standards, including 
the deadlines for initial and reaccreditation surveys, accreditation 
decisions, as well as the investigative and organizational process 
which the accrediting organization uses to make these determinations.
    (viii) A statement acknowledging that, as a condition for CMS 
approval of a national accrediting organization's accreditation 
program, the organization

[[Page 12060]]

agrees to provide CMS with the following information as part of its 
initial and renewal applications and, upon request from CMS, and as 
part of the data submissions required under paragraph (a)(11)(ii) of 
this section:
    (A) a copy of all survey reports, including but not limited to, 
initial, re-survey, and complaint survey reports, and
    (B) any other information related to survey activities as CMS may 
require (including corrective action plans).
    (ix) A statement acknowledging that the accrediting organization 
will provide timely notification to CMS when an accreditation survey or 
complaint investigation identifies an immediate jeopardy as that term 
is defined at Sec.  498.3 of this chapter. Using the format specified 
by CMS, the accrediting organization must notify CMS within 2-business 
days from the date the accrediting organization identifies the 
immediate jeopardy.
    (x) For accrediting organizations applying for approval or re-
approval of CMS-approved hospice programs, a statement acknowledging 
that the accrediting organization (AO) will include a statement of 
deficiencies (that is, the Form CMS-2567 or a successor form) to 
document findings of the hospice Medicare conditions of participation 
in accordance with section 1822(a)(2)(A)(ii) of the Act and will submit 
such in a manner specified by CMS.
    (xi) Documentation summarizing the AOs staff training programs, 
whether web-based electronic or hard-copy materials, on how the AO 
provides training or education to surveyors on the AOs survey 
processes, and, where applicable, highlight differences from CMS survey 
processes.
    (xii) The requirements of paragraph (a)(4), shall become applicable 
beginning [DATE 1 YEAR AFTER THE EFFECTIVE DATE OF THE FINAL RULE].
    (5) Beginning [DATE 1 YEAR AFTER THE EFFECTIVE DATE OF THE FINAL 
RULE], the criteria the accrediting organization uses in determining 
the size and composition of the organization's survey teams for the 
type of provider or supplier to be accredited, these criteria at a 
minimum should address survey team size and composition based on:
    (i) The size of the facility to be surveyed, based on average daily 
census;
    (ii) The complexity of services offered, including outpatient 
services;
    (iii) The type of survey to be conducted;
    (iv) Whether the facility has special care units or off-site 
clinics or locations;
    (v) Whether the facility has a historical pattern of serious 
deficiencies or complaints; and
    (vi) Whether new surveyors are to accompany a team as part of their 
training.
    (6) Beginning [DATE 1 YEAR AFTER THE EFFECTIVE DATE OF THE FINAL 
RULE], the overall adequacy of the number of the organization's 
surveyors to ensure sufficient amount of time is allotted to complete 
all survey activities, including how the organization will increase the 
size of the survey staff to match growth in the number of accredited 
facilities while maintaining re-accreditation intervals for existing 
accredited facilities.
* * * * *
    (8) A description of the content and frequency of the 
organization's in-service training it provides to survey personnel, 
including the training materials provided, and, with respect to CMS 
training, a statement acknowledging that:
    (i) The accrediting organization will ensure all of its surveyors 
complete two mandatory CMS online documentation courses and the 
relevant program-specific CMS online basic surveyor training course 
(established for state survey agency surveyors), initially, and 
thereafter when updates are necessary;
    (ii) The required CMS online surveyor training will be completed by 
each existing surveyor before serving on a survey team (except as a 
trainee); and
    (iii) The accrediting organization must document in the staff 
personnel records for each surveyor, that the CMS online surveyor 
documentation and basic training courses were completed and the date of 
completion. The statement must acknowledge that the accrediting 
organization will maintain this documentation for no less than one 
accreditation cycle.
    (iv) These requirements shall become applicable beginning [DATE 1 
YEAR AFTER THE EFFECTIVE DATE OF THE FINAL RULE].
* * * * *
    (10) The organization's policies and procedures to avoid conflicts 
of interest, (as defined in paragraph (a)(10)(v) of this section) 
including the appearance of conflicts of interest, involving 
individuals who conduct surveys or participate in accreditation 
decisions. These policies and procedures will include the following:
    (i) The accrediting organization's policies and procedures for 
separation of its fee-based consulting services from its accreditation 
services;
    (ii) The accrediting organization's policies and procedures for 
protecting the integrity of the accrediting organization's 
accreditation program, including the requirements of Sec.  488.8(i) and 
(k),
    (iii) The accrediting organization's policies and procedures for 
the prevention and handling potential or actual conflicts of interest 
that could arise from situations in which an accrediting organization 
owner, surveyor, or other employee has an interest in or relationship 
with another state survey agency or health care facility to which the 
accrediting organization provides accreditation services. Such 
interests or relationships include but are not limited to:
    (A) Being employed as a state survey agency surveyor;
    (B) Being employed in a health care facility that is accredited by 
the accrediting organization;
    (C) Having an ownership, financial or investment interest in a 
health care facility that is accredited by the accrediting 
organization;
    (D) Serving as a director of or trustee for a health care facility 
that is accredited by the accrediting organization;
    (E) Serving on a utilization review committee of a health care 
facility that is accredited by the accrediting organization;
    (F) Accepting fees or payments from a health facility or group of 
health facilities that is/are accredited by the accrediting 
organization;
    (G) Accepting fees for personal services, contract services, 
referral services, or for furnishing supplies to a health care facility 
that is accredited by the accrediting organization;
    (H) Providing consulting services to a health care facility that 
the accrediting organization accredits;
    (I) Having members of their immediate family engaged in any of the 
above stated activities. The term ``immediate family member'' is 
defined as any person with which the accrediting organization owner(s), 
surveyors or other employees have a lineal or immediate familial or 
marital relationship, including a husband or wife, birth or adoptive 
parent, child, or sibling; stepparent, stepchild, stepbrother, or 
stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-law, 
brother-in-law, or sister-in-law; grandparent or grandchild; and spouse 
of a grandparent or grandchild.
    (J) Engaging in any activities during the course of the survey of 
the facility that would be or cause a conflict of interest.

[[Page 12061]]

    (iv) The accrediting organization's policies and procedures for 
notification of CMS when a conflict of interest is discovered.
    (v) For the purposes of this section, a conflict of interest exists 
when an accrediting organization, the accrediting organization's 
successors, transferees, or assigns, the accrediting organization 
owner(s), surveyors, or other employees, or the immediate family 
members of the accrediting organization owners(s), surveyors and other 
employees have an employment, business, financial or other type of 
interest in or relationship with a health care facility the accrediting 
organization accredits.
* * * * *
    (12) Beginning [DATE 1 YEAR AFTER THE EFFECTIVE DATE OF THE FINAL 
RULE], the organization's procedures for responding to, and 
investigating, complaints against accredited facilities, including 
policies and procedures regarding referrals to appropriate licensing 
bodies and ombudsman programs, when applicable. This would also 
include:
    (i) Accrediting organization's process for triaging and 
categorizing complaints about the surveyed facility;
    (ii) Timeframes for responding to complaints and a method to track 
and trend complaints received with respect to the accrediting 
organization's accredited facilities;
    (iii) Procedures and persons responsible for the review of plans of 
corrections and procedures for follow up if the plans of corrections 
are not adequate;
    (iv) Accrediting organization requirements for plans of corrections 
for standard level deficiencies;
    (v) Follow up survey procedures and monitoring of condition-level 
findings;
    (vi) Procedures for addressing immediate jeopardy deficiencies and,
    (vii) Sharing of previous deficiency findings or complaints with 
survey teams.
    (13) The organization's accreditation status decision-making 
process, including its policies and procedures for granting, 
withholding, or removing accreditation status for facilities that fail 
to meet the accrediting organization's standards or requirements, 
assignment of less than full accreditation status or other actions 
taken by the organization in response to non-compliance with its 
standards and requirements. The organization must furnish the 
following:
    (i) A description of all types and categories of accreditation 
decisions associated with the program for which approval is sought, 
including the duration of each.
    (ii) The accrediting organization's general notification procedures 
to notify CMS, including the timeframes for notification of any 
decision to revoke, withdraw, or revise the accreditation status of a 
specific deemed status provider or supplier. Such notification must be 
made within three business days from the date the organization takes an 
action.
    (iii) A statement acknowledging that the organization agrees to 
notify CMS (in a manner CMS specifies) of any decision to revoke, 
withdraw, or revise the accreditation status of a specific deemed 
status provider or supplier, within three business days from the date 
the organization takes an action.
    (iv) The organizations process for facilities that withdraw from 
accreditation, to include timeframes for notification to CMS and 
include the process for surveying facilities which may require an 
upcoming survey.
    (v) These requirements of this paragraph (a)(13) become applicable 
beginning [DATE 1 YEAR AFTER THE EFFECTIVE DATE OF THE FINAL RULE].
* * * * *
    (21) A statement certifying that, in response to a written notice 
from CMS notifying the organization that one of its accredited 
providers or suppliers has been terminated from the Medicare/Medicaid 
program, the accrediting organization agrees to terminate or revoke its 
accreditation of the terminated provider or supplier within 5-business 
days from receipt of said written notice, and not re-accredit the 
provider until CMS has approved the provider or supplier for 
participation in Medicare.
    (22) A declaration by each surveyor of any employment, business, 
financial or other interests in or relationships with a State Survey 
Agency or a health care facility the accrediting organization accredits 
as described in paragraph (a)(10)(iii) of this section, which must be 
updated on an annual basis and submitted to CMS no later than December 
31st each year. This provision will become applicable beginning [DATE 1 
YEAR AFTER THE EFFECTIVE DATE OF THE FINAL RULE].
* * * * *
0
5. Section 488.8 is amended by--
0
a. Revising paragraph (a)(2); and
0
b. Adding new paragraphs (a)(4), (i), (j) and (k).
    The revision and additions read as follows:


Sec.  488.8   Ongoing review of accrediting organizations.

    (a) * * *
    (2) Analysis of the results of the validation surveys under Sec.  
488.8(a)(4), including the outcome disparity rate as determined from 
look-back validation surveys, surveys from substantial allegations of 
noncompliance, and the process disparity rate as determined from direct 
observation validation surveys.
* * * * *
    (4) When an accrediting organization's performance measure scores 
as determined from look-back and direct observation validation surveys, 
reveal that the accrediting organization's accreditation survey 
activities do not meet an acceptable performance threshold established 
by CMS, the accrediting organization will be required to submit an 
acceptable plan of correction that meets the requirements set forth 
below:
    (i) The accrediting organization's acceptable plan of correction 
must be submitted to CMS for review within 10 business days of CMS 
notification of not meeting acceptable performance. An acceptable plan 
of correction must:
    (A) Document specific actions being taken by the accrediting 
organization to address improving performance.
    (B) Document the timeframe for implementation of this plan.
    (C) Plan for ongoing monitoring of the plan of correction toward 
achieving an acceptable level of performance.
    (D) Identify the individual responsible for implementation and 
monitoring of the acceptable plan of correction.
    (ii) Upon review and approval of the plan of correction, CMS will 
provide ongoing evaluation of the progress of plan implementation.
    (iii) The accrediting organization's plan of correction is subject 
to public reporting by CMS.
* * * * *
    (i) Restrictions on fee-based consulting provided by accrediting 
organizations or their fee-based consulting divisions or separate fee-
based business entities. (1) Except as provided in paragraph (i)(4) of 
this section, an accrediting organization or its fee-based consulting 
division or separate business entity (such as a company or corporation, 
that provides fee-based consulting), may not provide fee-based 
consulting services to any new health care provider or supplier before 
the initial accreditation survey has been completed. For purposes of 
this paragraph, the term ``initial survey'' means the first 
accreditation survey performed of a health care provider or supplier by 
an accrediting organization that has not previously received 
accreditation services from that

[[Page 12062]]

accrediting organization. If a health care provider or supplier is 
terminated or withdraws from the services of an accrediting 
organization and later retains the services of the same or a new 
accrediting organization, the first survey performed by the same or new 
accrediting organization of that health care provider or supplier would 
be considered an initial accreditation survey;
    (2) Except as provided in paragraph (i)(4) of this section, an 
accrediting organization, its fee-based consulting division or separate 
business entity, such as a company or corporation, that provides fee-
based consulting, may not provide fee-based consulting services to a 
health care provider or supplier the accrediting organization accredits 
within 12 months prior to the next scheduled re-accreditation survey of 
that provider or supplier. For purposes of this paragraph, the term 
``re-accreditation survey'' means the any subsequent accreditation 
surveys performed by the accrediting organization following the initial 
survey;
    (3) Except as provided in paragraph (i)(4), an accrediting 
organization, its fee-based consulting division, or separate business 
entity, such as company or corporation that provides fee-based 
consulting, may not provide fee-based consulting services to a health 
care provider or supplier, to which the accrediting organization 
provides accreditation services, in response to a complaint received by 
the accrediting organization regarding that provider or supplier.
    (4) An accrediting organization, its fee-based consulting division, 
or separate business entity, such as a company or corporation that 
provides fee-based consulting, may provide fee-based consulting to the 
health care providers and suppliers it accredits only under the 
following circumstances:
    (i) During the 24-month period after an initial or re-accreditation 
survey is performed.
    (ii) To address complaints received and investigated by the State 
Survey Agency regarding an accrediting organization's accredited 
provider or supplier in which one or more condition level or immediate 
jeopardy deficiencies are identified. Such fee-based consulting by an 
accrediting organization may occur only after the State Survey Agency 
complaint investigation and survey has been completed and must only 
address those issues identified by the complaint survey.
    (iii) Fee-based consulting services provided to health care 
providers or suppliers the accrediting organization does not accredit 
at the time the consulting services are furnished.
    (iv) Non fee-based consulting or general education provided by the 
accrediting organization about their accreditation program.
    (5) The accrediting organization must provide to CMS, on a biannual 
basis, a document which contains the following information:
    (i) Whether the accrediting organization or an associated 
consulting division or company established by the accrediting 
organization provides fee-based consulting services;
    (ii) The names and CCN numbers of all health care providers and 
suppliers to which the accrediting organization or its associated 
consulting division or company has provided fee-based consulting 
services during the previous 6-month period;
    (iii) The dates the fee-based consulting services were provided to 
each provider and supplier;
    (iv) Whether the accrediting organization has, at any time in the 
past provided, or is currently providing accreditation services to each 
health care provider or supplier listed in said document; and
    (v) For each health care provider and supplier listed in said 
document, the date of the most recent accreditation survey performed, 
and the date the next re-accreditation survey is due to be performed; 
and
    (vi) A description of the fee-based consulting services provided to 
each health care provider or supplier listed in said document.
    (6) If an accrediting organization provides fee-based consulting 
services to a health care provider or supplier it accredits, in 
violation of the restrictions set forth in paragraphs (i)(1), (2) and 
(3) of this section, CMS may take the following actions:
    (i) CMS may place the accrediting organization on a CMS approved 
accreditation program review in accordance with paragraph (c) of this 
section; or
    (ii) CMS may involuntarily terminate the CMS approval for the 
accreditation programs in accordance with paragraph (g) of this 
section.
    (7) The provisions at paragraph (i) of this section will become 
applicable beginning [DATE 1 YEAR FROM THE EFFECTIVE DATE OF THE 
FINAL].
    (j) Accrediting organization fee-based consulting firewall policies 
and procedures. (1) An accrediting organization, its fee-based 
consulting division, or separate business entity, such as a company or 
corporation that provides fee-based consulting services to the health 
care providers and suppliers the accrediting organization accredits, 
must have written fee-based consulting firewall policies and 
procedures, which, at a minimum, include the following provisions:
    (i) The accrediting organization's fee-based consulting services 
must be provided by a separate division of the accrediting organization 
or separate business entity, such as a company or corporation, that is 
separate from the accrediting organization's accreditation division;
    (ii) An accrediting organization's fee-based consulting division or 
separate business entity must maintain separate staff from that of the 
accrediting organization's accreditation divisions to ensure that the 
fee-based consulting division staff do not perform accrediting 
organization's accreditation division functions and that the 
accrediting organization's accreditation division staff do not perform 
fee-based consulting division functions; and
    (iii) An accrediting organization's accreditation staff and 
surveyors are prohibited from marketing the accrediting organization's 
fee-based consulting services to the accrediting organizations 
accreditation clients.
    (2) An accrediting organization that provides fee-based consulting 
must submit its written fee-based consulting firewall policies and 
procedures to CMS by a date specified by CMS and with each application 
submitted seeking renewal of the CMS approval for their accreditation 
programs.
    (k) Conflict of interest due to accrediting organization owner, 
surveyor or other accrediting organization employee relationship with a 
health care facility accredited by the accrediting organization. (1) If 
an accrediting organization owner, surveyor or other employee, 
currently or within the previous 2 years, has an interest in or 
relationship (as defined in Sec.  488.5(a)(10)(iii)(B) to 
488.5(a)(10)(iii)(J)) with a health care facility, accredited by the 
accrediting organization, the accrediting organization owner, surveyor 
or other employee shall not be permitted to:
    (i) Participate in the survey of that health care facility,
    (ii) Have input into the results of the survey and accreditation 
for that health care facility,
    (iii) Have involvement with the pre-or post-survey activities for 
that health care facility, or
    (iv) Have contact with or access to the records for the survey and 
accreditation of that health care facility.
    (2) For the purposes of this section, ``immediate family member'' 
is defined

[[Page 12063]]

as any person that has a lineal familial or marital relationship with 
the accrediting organization owner, surveyor or other employee. 
Immediate family members would include a husband or wife, birth or 
adoptive parent, child, or sibling; stepparent, stepchild, stepbrother, 
or stepsister; father-in-law, mother-in-law, son-in-law, daughter-in-
law, brother-in-law, or sister-in-law; grandparent or grandchild; and 
spouse of a grandparent or grandchild.
0
6. Revise Sec.  488.9 to read as follows:


Sec.  488.9   Validation surveys.

    (a) Basis for survey. CMS may require a survey of an accredited 
provider or supplier to validate the accrediting organization's CMS-
approved accreditation process. These surveys are conducted on a 
representative sample basis, or in response to substantial allegations 
of non-compliance.
    (1) For a representative sample, the survey may be comprehensive 
and address all Medicare conditions or requirements, or it may be 
focused on a specific condition(s) as determined by CMS.
    (2) For a substantial allegation of noncompliance, the SA surveys 
for any condition(s) or requirement(s) that CMS determines is related 
to the allegations.
    (b) Types of validation surveys. (1) Look-back Validation Surveys 
are performed by the state survey agency on a sample of health care 
facilities accredited by CMS approved accrediting organization that are 
scheduled for survey by the accrediting organization, and are performed 
within 60 days after the accrediting organization has performed its 
survey.
    (2) Direct observation validation surveys are performed on a sample 
of the accrediting organization's surveys and are performed 
concurrently by the accrediting organization and the state survey 
agency or CMS. The state survey agency or CMS surveyors are present to 
observe the accrediting organization's survey process.
    (c) Rules for state look-back validation surveys. (1) All look-back 
validation surveys will be unannounced to the accrediting organization 
and the facility being surveyed.
    (2) The look-back validation survey may address compliance with all 
Medicare conditions or requirements, or it may be focused on a specific 
condition(s) or requirement(s) as determined by CMS.
    (3) For a look-back validation survey that addresses a substantial 
allegation of non-compliance, the state survey agency surveys for any 
condition(s) or requirement(s) that CMS determines is related to the 
allegations.
    (d) Selection for look-back validation survey. (1) A provider or 
supplier selected for a look-back validation survey must cooperate with 
the state survey agency that performs the look-back validation survey.
    (2) If a provider or supplier selected for a look-back validation 
survey fails to cooperate with the state survey agency, it will no 
longer be deemed to meet the Medicare conditions or requirements, will 
be subject to a review in accordance with paragraph (a) of this 
section, and may be subject to termination of its provider agreement 
under Sec.  489.53 of this chapter.
    (e) Rules for direct observation validation surveys. (1) All direct 
observation validation surveys will be unannounced to the accrediting 
organization and the facility being surveyed.
    (2) The state survey agency or CMS surveyors will generally be 
assigned to the accrediting organization surveyors on a 1:1 basis, 
matching the experience of the accreditation surveyor where possible, 
and using the CMS approved standards and processes to determine 
compliance with the Medicare conditions.
    (3) The state survey agency or CMS surveyors will observe the 
accrediting organization survey in accordance with CMS established 
policies and procedures and will report the findings directly to CMS.
    (4) Where the state survey agency or CMS surveyors disagree with 
the findings of the accrediting organization surveyors, and these 
differences cannot be reconciled, CMS will render a final decision. 
Such decision would not be appealable under part 498 of this chapter.
    (f) Provider or supplier not in compliance. A provider or supplier 
will be deemed non-compliant with the validation process, in accordance 
with this section, if any of the following conditions are present:
    (1) The provider or supplier refuses to authorize its accrediting 
organization to release a copy of their current accreditation survey to 
CMS;
    (2) The provider or supplier refuses to allow a validation survey 
(for either look-back or direct observation validation surveys); or,
    (3) CMS finds that the provider or supplier does not meet the 
applicable Medicare Conditions of Participation, Conditions for 
Coverage, conditions of certification, or requirements.
    (g) Consequences for a finding of non-compliance. (1) If a CMS 
validation look-back or direct observation validation survey results in 
a finding that the provider or supplier is out of compliance with one 
or more Medicare conditions or requirements, deemed status may be 
removed by CMS and the provider or supplier will be subject to ongoing 
review by the state survey agency (in accordance with Sec.  488.10(d)) 
until the provider or supplier demonstrates compliance.
    (2) CMS may take actions for the deficiencies identified in the 
look-back validation survey or direct observation survey in accordance 
with Sec.  488.24, or may first direct the state survey agency to, or 
CMS may, conduct another survey of the provider's or supplier's 
compliance with specified Medicare conditions or requirements before 
taking the enforcement actions provided for at Sec.  488.24.
    (3) If CMS determines that a provider or supplier is not in 
compliance with applicable Medicare conditions or requirements, they 
may be subject to termination of their provider agreement with CMS 
under Sec.  489.53 of this chapter and any other applicable 
intermediate sanctions and remedies.
    (h) Re-instating deemed status. An accredited provider or supplier 
will be deemed to meet the applicable Medicare conditions or 
requirements in accordance with this section, if the following 
requirements are met, as applicable:
    (1) It withdraws any prior refusal to authorize its accrediting 
organization to release a copy of the provider's or supplier's current 
accreditation survey.
    (2) It withdraws any prior refusal to allow a look-back or direct 
observation validation survey, if applicable.
    (3) CMS finds that the provider or supplier meets all applicable 
Medicare Conditions of Participation, Conditions for Coverage, 
conditions of certification, or other requirements.
    (i) Impact of adverse actions. The existence of any performance 
review, comparability review, deemed status review, probationary 
period, or any other action by CMS, does not affect or limit conducting 
any validation survey.

PART 489--PROVIDER AGREEMENTS AND SUPPLIER APPROVAL

0
7. The authority citation for part 489 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1395i-3, 1395x, 1395aa(m), 1395cc, 
1395ff, and 1395(hh).

0
8. Section 489.20 is amended by adding paragraph (z) to read as 
follows:


Sec.  489.20   Basic commitments.

* * * * *
    (z) In the case of a provider that has been involuntarily 
terminated by CMS

[[Page 12064]]

under Sec.  489.53, or by the OIG under Sec.  489.54, reinstatement of 
the provider agreement is subject to Sec.  489.57(b).
0
9. Revise Sec.  489.57 to read as follows:


Sec.  489.57   Reinstatement after termination.

    When a provider agreement has been terminated by CMS under Sec.  
489.53, or by the OIG under Sec.  489.54, a new agreement with that 
provider will not be accepted unless:
    (a) CMS or the OIG, as appropriate, finds--
    (1) That the reason for termination of the previous agreement has 
been removed and
    there is reasonable assurance that it will not recur; and
    (2) That the provider has fulfilled, or has made satisfactory 
arrangements to fulfill, all of the statutory and regulatory 
responsibilities of its previous agreement.
    (b) The terminated provider or supplier that had deemed status 
meets the following requirements before a new agreement with that 
provider or supplier may be approved:
    (1) The terminated provider or supplier must become and remain 
under the exclusive oversight of the state survey agency for a 
reasonable assurance period of a length of time to be determined by 
CMS, for the purposes of the initial survey, certification and 
demonstration of compliance with the Medicare conditions.
    (2) The terminated provider or supplier must remain under the 
exclusive oversight of the state survey agency until the state survey 
agency or CMS has certified that the provider or supplier is in 
compliance with all applicable Medicare conditions and the agreement 
for participation in the Medicare/Medicaid program has been approved.
    (3) During the time period in which a terminated provider or 
supplier is not certified to participate in the Medicare program, while 
the prospective provider or supplier is under the oversight of the 
state survey agency, and while the new agreement for Medicare 
participation is pending, CMS will not accept or recognize deeming 
accreditation from a CMS-approved accrediting organization until the 
applicable Medicare requirements have been met or exceeded, as 
described in Sec.  488.4 of this chapter.

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-02137 Filed 2-8-24; 4:15 pm]
BILLING CODE 4120-01-P