11996 Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 

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. 

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 § 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 

§ 488.4(a)(1) and (2)) 

D. Proposal To Revise the AO Crosswalk 

Requirements at § 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 (§ 488.5(a)(4); 

§ 488.5(a)(4)(iii); § 488.5(a)(4)(v); 

§ 488.5(a)(4)(vii); § 488.5(a)(4)(xi); 

§ 488.5(a)(5); § 488.5(a)(6); § 488.5(a)(12); 

§ 488.5(a)(13)) 

G. Proposal To Require AOs To Provide 

CMS With Survey Findings 

(§ 488.5(a)(4)(viii)) 

H. Proposal To Require That AO Surveyors 

Must Take the CMS Online Surveyor 

Basic Training 

(§ 488.5(a)(8)(ii) 

I. Proposal To Establish Criteria for 

‘‘National in Scope’’ to § 488.1 

J. Proposal To Revise the Definition of 

‘‘Rate of Disparity’’ and To Use the 

Process and Outcome Disparity Rates as 

Performance Measures (§ 488.1) 

K. Proposal To Require AOs To Submit a 

Publicly Reportable Plan of Correction 

for Unacceptable Performance Measure 

Scores (§ 488.8(a)(2)) 

L. Proposal To Revise the AO Survey 

Validation Program (§ 489.9) 

M. Proposal To Revise the Psychiatric 

Hospital Survey Process 

N. Limitation on Terminated Deemed 

Providers/Suppliers Seeking Re-Entry 

Into Medicare/Medicaid (§ 489.57, 

§ 488.4(b) & § 488.5(a)(21)) 

O. Proposal for Technical Correction for 

End-Stage Renal Disease (ESRD) 

Facilities and Kidney Transplant 

Programs (§ 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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Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 11997 

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 Medicaidparticipating 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 CMSapproved 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 

• We propose at § 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.’’ 

• We propose to establish a new 

requirement at § 488.4(a)(1) that would 

require the AOs that accredit Medicarecertified 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). 

• We propose to add language at 

§ 488.4(a)(2) regarding use of a 

comparable survey process approved by 

CMS, as outlined and contemplated in 

§ 488.5. 

• We propose to add a new regulation 

at § 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 § 488.4(b)(2), we would 

require a terminated provider or 

supplier to meet all requirements set 

forth at § 489.57 before their new 

agreement for participation in the 

Medicare/Medicaid program can be 

approved. 

• We propose to require AOs to 

develop a crosswalk between their 

accreditation standards and the 

Medicare conditions, at proposed 

§ 488.5(a)(3). 

• We propose to revise the existing 

language at § 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. 

• We propose to strengthen the 

requirements at § 488.5(a)(4), 

§ 488.5(a)(4)(iii), § 488.5(a)(4)(v), 

§ 488.5(a)(4)(vii), § 488.5(a)(4)(xi), 

§ 488.5(a)(5) and § 488.5(a)(6) related to 

the comparability of survey processes as 

mentioned above. We also propose 

changes under § 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. 

• We propose at § 488.5(a)(8)(i) 

through § 488.5(a)(8)(iv) to require AOs 

that accredit Medicare-certified 

providers and suppliers have their 

surveyors complete the CMS online 

surveyor training. 

• We propose to add a requirement at 

§ 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. 

• We propose to also revise 

requirements under § 488.5(a)(12) 

related to the AO procedures for 

investigating and responding to 

complaints against accredited facilities. 

• We propose revisions to 

§ 488.5(a)(13) related to the AO’s 

accreditation status decision-making 


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11998 Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 

process, in order to strengthen the 

comparability of the survey processes. 

• We propose to add a new 

requirement at § 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. 

• We propose at § 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 § 488.5(a)(10)). 

• We propose at § 488.8(a)(2) to 

expand the types of validation activities 

included in the performance review. 

• We propose at § 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. 

• We propose at new subsection 

§ 488.8(i) to place restrictions on the feebased consulting services provided by 

AOs to the health care providers and 

suppliers they accredit. At § 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 § 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 

§ 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. 

• At § 488.8(i)(4), we set forth 

circumstances in which the restrictions 

to the provision of AO fee-based 

consulting services would not apply. 

• We propose at § 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. 

• We propose at § 488.8(i)(6) to 

impose penalties on AOs for the 

provision of prohibited fee-based 

consulting services. 

• We propose at § 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. 

• We propose at § 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. 

• We propose a new paragraph (z) at 

§ 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 § 489.57(b) 

noted below. 

• We propose to add a new paragraph 

(b) at § 489.57, to require that Medicarecertified 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 § 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 

§ 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 § 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. 

• We also propose to remove the 

reference at § 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. 

• 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 EndStage 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 


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1CMS Internet Only Manual, Pub. 100–07, 

available at https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/Internet-OnlyManuals-IOMs-Items/CMS1201984. 

2https://www.cms.gov/Medicare/ProviderEnrollment-and-Certification/SurveyCertification

GenInfo/Policy-and-Memos-to-States-and-Regions. 

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

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 Medicareparticipation 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 Medicarecertified 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 reapplication procedures set forth at 

§ 488.5 for Medicare-certified providers 

and suppliers task CMS with the 


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3The most recent Report to Congress may be 

accessed at: https://www.cms.gov/files/document/ 

qso-22-06-ao-clia.pdf. 

4https://www.cms.gov/Medicare/ProviderEnrollment-and-Certification/SurveyCertificatio

nGenInfo/Downloads/QSO-19-17-AO-CLIA.pdf. 

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. 

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 noncompliance 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 (§ 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 § 482.15(b)(3)) but complies 

with the remaining standards set forth at 

§ 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 § 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. 

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 


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5The Wall Street Journal, ‘‘Watchdog Awards 

Hospitals Seal of Approval Even After Problems 

Emerge’’ Stephanie Armour (September 8, 2017) 

https://www.wsj.com/articles/watchdog-awardshospitals-seal-of-approval-even-after-problemsemerge-1504889146. 

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 

§ 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. 

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: 

• Assistance for clinical and nonclinical leaders (including 

administrators) in understanding the 

AO and Medicare conditions for 

compliance; 

• 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; 

• Review of a facility’s processes, 

policies and functions; 

• Identification of and technical 

assistance for changing and sustaining 

areas in need of improvement; and, 

• 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 thirdparty 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 thirdparty 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 


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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. 

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 

§ 488.5(a), which sets out the required 

information to be submitted with an 

AO’s application. For example, 

§ 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 

§ 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: 

• 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? 

• Are there other entities that could 

provide this training besides the AOs? 

• Whether commenters perceive a 

conflict of interest in AOs providing feebased consultative services to the 

facilities they accredit. 

• 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. 

• What the appropriate consequences 

or impacts should be, if a conflict does 

exist. 

• 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. 

• Examples of positive and negative 

effects which may be as a result of a 

conflict of interest. 

• 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. 

• When and/or under what 

circumstances it would be appropriate 

for AOs to provide fee-based 

consultative services to the facilities 

which they accredit. 

• 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. 

• 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. 

• 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

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 feebased 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 


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7https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/Downloads/ 

som107c04pdf.pdf. 

8S. Armour, Hospital Watchdog Gives Seal of 

Approval, Even After Problems Emerge, Wall Street 

Journal, September 8, 2017. 

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 feebased 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, § 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. 

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.’’ 

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 


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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 noncertified 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 CMSapproved 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 § 488.1 

We propose to add a new definition 

of ‘‘unannounced survey’’ to § 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 § 488.5(a)(4)(i) 

and in our sub-regulatory guidance. 

This proposal clarifies and codifies 

existing requirements under 

§ 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 


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9https://www.cms.gov/Medicare/ProviderEnrollment-and-Certification/SurveyCertification

GenInfo/Policy-and-Memos-to-States-and-RegionsItems/CMS1223113. 

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). 

Therefore, in accordance with 

§ 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 § 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 § 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 § 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 

§ 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 § 488.8(i) and 

(j) noted below. Section 488.8(i) pertains 

to restrictions on certain fee-based 

consulting services provided by AOs, 

and § 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 § 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 § 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 § 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-inlaw, 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 § 488.1115. 

We further propose at 

§ 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 § 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 


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programs at § 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 § 488.1115(b). For additional 

discussion on the Hospice final rule see 

86 FR 62368. 

We are proposing changes to 

§ 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-ofinterest 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 

§ 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 

§ 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 

§ 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 

§ 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 § 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 feebased 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 Medicareparticipating health care facilities they 

accredit. When an AO provides feebased 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 noncompliance (for Medicare participation), 

and also charge for providing AO feebased 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 


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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 feebased 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 § 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 § 488.5(i) 

would still allow AOs to provide feebased 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 § 488.8(i)(1) that, 

unless excepted under proposed 

§ 488.8(i)(4), AOs and their associated 

consulting divisions or companies 

would be prohibited from providing feebased 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 

§ 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 

§ 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 feebased 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 feebased consulting prior to the initial 

survey, the AO would not know what 


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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 § 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 

§ 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 

§ 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 

§ 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 § 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 § 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 § 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 

§ 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 § 488.8(i)(4)(iii)); and 

(4) no-cost consulting or general 

education provided by the AO about 

their accreditation program (proposed 

§ 488.8(i)(4)(iv)). 

Proposed § 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 feebased 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, 


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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 noncost options available, and that the feebased consulting/education was 

reasonably expected to resolve the 

deficiencies identified in the compliant. 

Proposed § 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 counterproductive 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 noncompliance on a continual basis. 

Proposed § 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 feebased 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 § 488.8(i)(5) would require 

AOs to report information about the feebased consulting provided to the 

providers and suppliers they accredit to 

CMS. See section IV.B.4 for information 

about this proposed rule. 

Proposed § 488.8(i)(6) provides for 

penalties for AOs that provide fee-based 

consulting in violation of the 

restrictions set forth on proposed 

§ 488.8(i)(1) to § 488.8(i)(3). See section 

IV.B.5 of this proposed rule for a 

discussion of this proposed section. 

We propose at § 488.8(i)(7) that the 

requirements at § 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 § 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 

§§ 488.8(i)(1), 488.8(i)(2), and 

§ 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 FeeBased Consulting They Provide 

(Proposed § 488.8(i)(5)) 

We proposed at § 488.8(i)(1), 

§ 488.8(i)(2), and § 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 

§ 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 

§ 488.8(i)(5) that would require the AOs 


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that accredit Medicare-certified 

providers and suppliers to provide CMS 

with information regarding the feebased 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: 

• Whether the AO or an associated 

consulting division or company 

established by the AO provides feebased consulting services. 

• 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 feebased consulting services during the 

previous calendar year quarter. 

• The dates the AO fee-based 

consulting services were provided to 

each provider and supplier listed. 

• 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. 

• 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. 

• 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 § 488.5(i)(3) 

(Proposed § 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 

§ 488.8(i)(6) to implement penalties for 

the violation of the restrictions on AO 

fee-based consulting. 

We propose at § 488.8(i)(6)(i) that if an 

AO is found to be in violation of the 

restrictions set forth in paragraphs 

§ 488.8(i)(1), (2) and (3), CMS may 

initiate penalties against the AO. These 

penalties are set forth in proposed 

§ 488.8(i)(6)(i) and § 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 § 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 

§ 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 FeeBased Consulting Firewall Policies and 

Procedures (§ 488.8(j)) 

We propose at § 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 § 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 comingling 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 feebased 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 feebased 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 


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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 

§ 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 § 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 § 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 § 488.8(k)(1)(i)); (2) having 

input into the results of the survey and 

accreditation for that health care facility 

(proposed § 488.8(k)(1)(ii)); (3) having 

involvement with the pre- or postsurvey activities for that health care 

facility (proposed § 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 

§ 488.8(k)(iv)). Proposed 

§ 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 § 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-inlaw, 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 

§ 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 

§ 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’’, 


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10FY 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. 

we determine whether those standards 

meet or exceed ours. In accordance with 

§ 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 

§ 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: 

• 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. 

• 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 noncompliance 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 noncompliance 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 noncompliance 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. 

Therefore, under the statutory 

authority granted to us under section 

1865(a)(1) of the Act, we propose 

revisions at § 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 § 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 

§ 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 

§ 488.4(a)(1). This provision would 

require the AOs that accredit Medicarecertified 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 

§ 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 

§ 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 

§ 488.4(a)(1) and § 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 § 488.4(a)(1) and (a)(2) to 

§ 488.4(a)(3) and (a)(4). We also propose 


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Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 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 § 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 § 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 § 488.5(a)(3) 

As a result of our proposal at 

§ 488.4(a)(1) to require the AOs to 

incorporate the Medicare conditions (as 

defined in § 488.1) into their 

accreditation standards for their 

deeming programs, we would also 

modify the regulations at § 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 § 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 § 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 § 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 § 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: 

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. 


khammond on DSKJM1Z7X2PROD with PROPOSALS2EP15FE24.000</GPH>

CFR AO 

Citation Medicare conditions Language Standard AO Standards Language 

Number 

§ 482.ll(c) The hospital must assure that personnel XX.000 For hospitals under CMS deeming 

are licensed or meet other applicable authority: The hospital must assure that 

standards that are required by State or personnel are licensed or meet other 

local laws. applicable standards that are required by 

state or local laws. 
12014 Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 

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 

§ 488.26 and specified in the SOM. 

As part of the application process as 

set out at § 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 inperson 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 

§ 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 

§ 488.5 and § 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. 


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CFR AO 

Citation Medicare conditions Language Standard AO Standards Language 

Number 

§ 482.1 l(c) The hospital must assure that personnel XX.000 For hospitals under CMS deeming 

are licensed or meet other applicable authority: The hospital must assure that 

standards that are required by State or personnel are licensed or meet other 

local laws. applicable standards that are required by 

state or local laws. 

XX.001 Hospitals must verify credentials of all 

providers including all contracted staff 

or individuals under arrangement. The 

verification must be completed prior to 

the official hiring of the staff 
Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 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 § 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 

§ 488.8(h). The following concerns were 

noted during the survey observations for 

these 22 applications: 

• 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; 

• The AO’s failure to enforce the 

deadlines by which facilities must come 

into compliance after receiving adverse 

survey results; 

• 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 noncompliance at the condition-level; and 

• 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 § 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 (§ 488.5(a)(4); 

§ 488.5(a)(4)(iii); § 488.5(a)(4)(v); 

§ 488.5(a)(4)(vii); § 488.5(a)(4)(xi); 

§ 488.5(a)(5); § 488.5(a)(6); 

§ 488.5(a)(12); § 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 § 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 

§ 488.5(a)(4)(Description of Survey 

Process) 

At § 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 § 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 

§ 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 


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12016 Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 

which are leading to the disparity 

findings, as we have seen in our 

validation surveys. 

3. Proposed Revisions to § 488.5(a)(4)(v) 

(Survey Review Process) 

At § 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 § 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 § 488.5(a)(4)(vii) 

(Correction of Identified NonCompliance) 

At § 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 reapplications 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 § 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 

§ 488.5(a)(4)(xi) (AO Training and 

Education Programs) 

At § 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 § 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 § 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 § 488.5(a)(5) 

(Composition of Survey Team) 

At § 488.5(a)(5), we propose to add 

requirements which describe the AOs’ 


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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 offsite 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 nocompliance 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 providerbased 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 § 488.5(a)(6) 

(Adequate Number of Surveyors for Size 

of Facility) 

At § 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 reaccreditation 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 § 488.5(a)(12) 

(Complaint Survey Documentation 

Requirements) 

At § 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 

§ 488.5(a)(13) 

At § 488.5(a)(13), we propose to redesignate 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 


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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 noncompliance, 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 Medicarecertified 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 

(§ 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 

§ 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 § 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 §§ 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 § 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 § 488.7 requires that 

a Medicare participating provider or 

supplier, in accordance with § 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 § 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 

§ 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 § 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 selfpaced 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. 


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11https://qsep.cms.gov. 

12The most recent Report to Congress may be 

accessed at: https://www.cms.gov/files/document/ 

qso-22-06-ao-clia.pdf. 

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) . 

In addition to the recent hospice 

program surveyor training requirements, 

we propose to amend the provision at 

§ 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 

§ 488.5(a)(8) a description of the content 

and frequency of the organization’s inservice 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 

§ 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 NonLong-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 § 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 § 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 § 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 

§ 488.5(a)(8)(iv) that the provisions 

proposed at §§ 488.5(a)(8)(i) through 

(a)(8)(iv) would be applicable beginning 

1 year after the effective date of the final 

rule. 


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13CMS Organizational Chart, Page 17, Survey 

Operations Group https://www.cms.gov/AboutCMS/Agency-Information/CMSLeadership/ 

Downloads/CMS_Organizational_Chart.pdf. 

I. Proposal To Establish Criteria for 

‘‘National in Scope’’ (§ 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 § 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 § 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 

§ 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. 

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 § 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 

§ 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 § 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 (§ 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 


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sample of accredited facilities. Lookback 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 

§ 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 § 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 

§ 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). 

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. 


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Figure 1: 

r 

-

Number of 

observed survey 

process findings 

-

-
12022 Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 

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). 

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. 

BILLING CODE 4120–01–P 


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Figure 2: 

Ambulatory Surgery Center 8 19% 

Home Health Agency 3 1% 

Hospital 11 10% 

Psych Hospital 3 7% 

Hospice 1 NIA 

NOTE: Caution should be used in drawing broader inferences from the data in Figure 2 of this proposed 

rule because the sample size is very small. 

Figure 3: 

Number of AO 

surveys with missed 

comparable 

deficiencies 

+ -

-

Outcome 

Disparity 

Rate 
Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 12023 

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 


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Figure 4: 

60-Day Validation Sample Surveys 67 

SA Surveys with Condition Level Deficiencies 26 

AO Surveys with Missed Comparable Deficiencies 23 

Disparity Rate 34% 
12024 Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 

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 (§ 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 § 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 § 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 § 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 § 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 

§ 488.8(a)(4)(i)(A); (2) document the 

timeframe for implementation of the 

plan (proposed § 488.8(a)(4)(i)(B)); (3) 

plan for ongoing monitoring of the plan 

of correction toward achieving an 

acceptable level of performance 

(proposed § 488.8(a)(4)(i)(C); and, (4) 

identify the individual responsible for 

implementation and monitoring of the 

acceptable plan of correction 

(§ 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 

§ 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 

§ 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. 

BILLING CODE 4120–01–P 


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Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 12025 

14Section 125(b)(4) of Public Law 110–275 

(2008), which was subsequently revised to apply to 

all AOs. 

15Outpatient physical therapy and rural health 

clinics were not part of the validation sample. 

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 lookback 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 (§ 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: 

• Complaint surveys—focused 

surveys based on complaints, which, if 

substantiated, could indicate serious 

non-compliance with one or more 

Medicare conditions; and 

• 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 nonhospital validation surveys. (See Graph 

1.) 


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Figure 5: 

Overall Condition Citation Performance 

ASC- Patient's Rights 

• Nursing SeIVices ** • ASC - Governing Body and 

• Discharge Planning Management* 

• Patient's Rights • Physical Environment 

• Infection Control • ASC - Environment * 

• Medical record requirement for • ASC - Infection Control** 

psychiatric hospitals * • Medical record setVices * 

Organ, tissue and eye procurement 

• Emergency SeIVices** • ASC - Emergency Preparedness** 

• Medical Staff** • ASC-QAPI* 

• Emergency Preparedness** • Food and Dietetic SeIVices ** 

• Radiologic SeIVices** • Respiratory Care SeIVices ** 

• Utilization Review** 

* Includes condition citations matched from validation suIVeys only. 

** Includes condition-level citations matched from complaint suIVeys only. 
12026 Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 

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 nonhospital surveys totaling 358 surveys. 

2016: 119 hospital and 254 nonhospital surveys totaling 373 surveys. 

2017: 116 hospital and 244 nonhospital surveys totaling 360 surveys. 

2018: 128 hospital and 188 nonhospital surveys totaling 316 surveys. 

2019: 119 hospital and 196 nonhospital 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 


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Graph 1: Number of Sample Validation Surveys for Hospital and Non-Hospital Providers 

Performed from FY2007 to 2019 

400 

350 

~ 300 e 250 

Js 200 

.... 150 0 

·p 100 

,a 50 ;:= 

~ 0 

""' 0 

... 

<l) 

,Sl 

§ 

z 

400 

350 

~ 300 <l) 250 j 200 

;:::: 150 

.g 100 

:g 50 

~ 0 

FYs 

Hospital Non-Hospital 

~ •* ,,.* ""' 0 

... 

<l) 

r;::,◊ 'V ~◊ ~ ~ ,,.* 

~\, :,,,lo 

~ ~ 

~ FYs 

Hospital lilNon-Hospital 

• In FY 2010: The non-hospital total of 191 includes 72 mid-cycle ASC validation surveys. 

* *In FY 2011: The hospital total of 106 includes 33 mid-cycle L TCH validation surveys. 

***In FY 2015: The hospital total of 118 includes 16 psychiatric hospital validation surveys. 

 In FY 2016: The hospital total of 119 includes 21 psychiatric hospital validation surveys. 

** ***In FY 2017: The hospital total of 116 includes 21 psychiatric hospital validation surveys. 

******In FY 2018: The hospital total of 128 includes 21 psychiatric hospital validation surveys. 

*******In FY 2019: The hospital total of 119 includes 20 psychiatric hospital validation surveys. 

•* •* ,,.* 

•* •* •* ,f •* •* 

r;::,'\. ~ * 'V ~ r;::,fii 

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

• Hospitals: Three percent of deemed 

hospitals received a validation survey in 

FY 2019 (99 validation surveys 

conducted out of 3,332 deemed 

facilities). 

• Psychiatric Hospitals: Four percent 

of deemed psychiatric hospitals 

received a validation survey in FY 2019 

(20 validation surveys conducted out of 

466 deemed facilities). 

• CAHs: Three percent of deemed 

CAHs received a validation survey in 

FY 2019 (13 validation surveys 

conducted out of 449 deemed facilities). 

• HHAs: Two percent of deemed 

HHAs received a validation survey in 

FY 2019 (84 validation surveys 

conducted out of 4,034 deemed 

facilities). 

• Hospices: One percent of deemed 

hospices received a validation survey in 

FY 2019 (32 validation surveys 

conducted out of 2,458 deemed 

facilities). 

• 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: 

• Certain AOs have rigid survey 

schedules that prove to be burdensome 

to the SA observers while onsite. 

• 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. 

• Not all AOs survey offsite locations 

consistently for all portions of the 

survey. 

• Certain AO survey methodology 

favored a ‘‘yes/no,’’ ‘‘have/don’t have’’ 

format versus a more in-depth 

investigative approach. 

• 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 § 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 lookback 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 § 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-backvalidation 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 § 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 § 488.9(c) 

we propose the rules for look-back 

validation surveys. At § 488.9(d) we 

propose the rules for selection for lookback validation surveys. More 

specifically, proposed § 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 

§ 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 § 489.53 of this chapter.’’ 

At § 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 § 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 

§ 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 § 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 § 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 nonappealable administrative action. 


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12028 Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 

16Health Care Financing Administration was the 

former name for CMS, which was changed on June 

14, 2001. 

At proposed § 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 § 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 § 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 § 488.9(f)(3)). 

At § 488.9(g), we propose the 

consequences for non-compliance. At 

§ 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 § 488.10(d)) until the 

provider or supplier demonstrates 

compliance. At proposed § 488.9(g)(2), 

we propose that CMS may take actions 

for the deficiencies identified in the in 

accordance with § 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 § 488.24. At proposed 

§ 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 § 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: 

• It withdraws any prior refusal to 

authorize its AO to release a copy of the 

provider’s or supplier’s current 

accreditation survey (proposed 

§ 488.9(h)(1)). 

• It withdraws any prior refusal to 

allow a look-back or direct observation 

validation survey, if applicable 

(proposed § 488.9(h)(2)). 

• CMS finds that the provider or 

supplier meets all applicable Medicare 

CoP, CfC, conditions of certification, or 

requirements (proposed § 488.9(h)(3)). 

At proposed § 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 § 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 § 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 (boardcertified 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. 

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 § 482.60 through § 482.62. The 

special provisions at § 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 

§§ 482.1 through 482.23 and §§ 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 § 482.61; 

and (d) meet the staffing requirements 

specified in § 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 


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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 acutecare 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 

§ 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 § 488.8(b) by no later than 30- 

calendar days from CMS notice to the 

hospital AOs using the existing process 

described in § 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 (§ 489.57, 

§ 488.4(b) & § 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 reapproval to participate in Medicare/ 

Medicaid through an AO with a CMSapproved 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 


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12030 Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 

17S. 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. 

19S. Armour, Hospital Watchdog Gives Seal of 

Approval, Even After Problems Emerge, Wall Street 

Journal, September 8, 2017. 

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 § 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.17 18 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. 

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 

§ 488.4(b) (currently reserved). More 

specifically, proposed § 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 § 488.4(b), we also 

propose to add a new requirement at 

§ 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 Medicarecertified 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 noncompliant 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 § 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 

§ 489.57 before a new agreement for 

Medicare participation will be 

approved. We also propose a new 

paragraph at § 489.20(z) that 

reinstatement of a terminated provider 

or certified supplier agreement is 

subject to the proposed revision to 

§ 489.57. 

The introductory text to § 489.57 

states that when CMS has terminated a 

provider agreement under § 489.53, or 

by the OIG under § 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 § 489.57(a) and (b). We 

propose to redesignate § 489.57(a) and 

(b) as § 489.57(a)(1) and § 489.57(a)(2) 

without any change to the text. 

Redesignated § 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 

§ 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 § 489.57. Proposed 

§ 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 § 489.57(b)(1) through (b)(3). 

Proposed § 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 

§ 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 

§ 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. 


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Our intent for proposing the new 

requirements at § 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 § 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 § 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 § 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 (§ 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 § 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 

§ 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 

§ 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 


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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 § 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: 

• An AO may only re-submit an 

application for CMS re-review two 

additional times after CMS initially 

deems the application to be 

‘‘incomplete’’. 

• 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: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including 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. 


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Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 12033 

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 (§ 488.5(a)(10)) 

We proposed to modify § 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 feebased consulting services from its 

accreditation services; (2) policies and 

procedures for protecting the integrity of 

the AO’s accreditation program, 

including the requirements of 

§ 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 


khammond on DSKJM1Z7X2PROD with PROPOSALS2EP15FE24.009</GPH>

TABLE 1: U.S. Bureau of Labor Statistics 2021 Wages Rates 

Registered Nurse* 

Medical or Health Services 

Manager** 

Medical Secretaries*** 

General and Operations 

Managers  

Physicians** *** 

Radiologic Technologists****** 

Medical Records and Health 

Information Technicians******* 

Chief Executive Officer******** 

Health care Support 

Occupations********* 

29-1141 

11-9111 

43-6013 

11-1021 

29-1228 

29-2034 

29-2071 

11-1011 

31-0000 

* https://www.bls.gov/oes/current/oes291141.htin 

** https://www.bls.gov/oes/current/oes119111.htin 

*** https://www.bls.gov/oes/current/oes436013.htin 

  https://www.bls.gov/oes/current/oes111021.htin 

** *** https://www.bls.gov/oes/current/oes291228.htin 

****** https://www.bls.gov/oes/current/oes292034.htin 

******* https://www.bls.gov/oes/current/oes292071.htin 

******** https://www.bls.gov/oes/current/oesl 11011.htin 

********* https://www.bis.gov/oes/current/oes310000 .htin 

$39.78 

$57.61 

$19.11 

$60.45 

$105.22 

$31.97 

$23.21 

$102.41 

$16.02 

$39.78 $79.56 

$57.61 $115.22 

$19.11 $38.22 

$60.45 $120.90 

$105.22 $210.44 

$31.97 $63.94 

$23.21 $46.42 

$102.41 $204.82 

$16.02 $32.04 
12034 Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 

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 § 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 × 3 days = 24 hours 

per each person) + (24 hours per person 

× 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 

× 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 × $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 × $115.22). Finally, 

we estimate that the total burden costs 

related to the requirements for proposed 

§ 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 × 

$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 (§ 488.5(a)(22)) 

We propose to add a new paragraph 

(22) to § 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 × 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 

× 11 AOs). 

We estimate that the cost burden 

related to the work performed by the RN 

would be $1,909.44 (24 hours × $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 × $115.22). 

Finally, we estimate that the cost 

burden associated with the 

requirements for proposed § 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 × $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 

§ 488.8(i)(1) through (3)) 

In section IV.B.3 of this proposed 

rule, we propose restrictions on AO feebased consulting provided by 

accrediting organizations or their 

associated consulting divisions or 

companies. We believe the proposed 

regulations at § 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 × 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 × 4 AOs). 

The cost burden related to the work 

performed by the RN on this task would 

be $3,182.40 (40 hours × $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 × $115.22). 

Finally, we estimate that the annual 

cost burden per each AO related to the 


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requirements for proposed § 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 × 4 AOs). 

4. ICR Related to Proposed Requirement 

for Submission of Information About 

AO Fee-Based Consulting Services 

Provided (§ 488(i)(5)) 

We propose to add a requirement at 

§ 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 reaccreditation 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 § 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 × 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 × 8 hours × 3 days). The total 

annual time burden per each AO would 

be 96 hours (2 reports × 48 hours). 

There are four AOs that provide feebased 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 feebased 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 

× 4 AOs). The estimated total time 

burden across these 11 AOs would be 

384 hours (96 hours × 4 AOs). 

The cost burden related to the work 

performed by RNs on the team would be 

$1,909.44 (24 hours × $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 × $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 × 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 twothirds. 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 × 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 × $79.56). The total cost burden 

across the four AOs that provide feebased consulting would be $2,545.92 

($636.48 × 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 § 488.8(j)) 

We propose at § 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 feebased consulting services to the AO’s 

accreditation clients. 

This proposed requirement would 

only apply to the AOs that provide feeVerDate Sep<11>2014 19:58 Feb 14, 2024 Jkt 262001 PO 00000 Frm 00041 Fmt 4701 Sfmt 4702 E:\FR\FM\15FEP2.SGM 15FEP2

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12036 Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 

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 feebased 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 § 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 § 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 § 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. 


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TABLE 2: Example of Proposed Crosswalk 

CFR Medicare conditions Language AO AO Standards Language 

Citation Standard 

Number 

§482.B(h) Patient visitation rights. A hospital must XX.000 Same as CMS. 

have written policies and procedures Patient visitation rights. A hospital 

regarding the visitation rights of patients, must have written policies and 

including those setting forth any clinically procedures regarding the visitation 

necessary or reasonable restriction or rights of patients, including those 

limitation that the hospital may need to setting forth any clinically necessary 

place on such rights and the reasons for the or reasonable restriction or limitation 

clinical restriction or limitation. that the hospital may need to place 

on such rights and the reasons for the 

clinical restriction or limitation. 

XX.0001 Exceeds: The hospital must update 

these written policies on an annual 

basis with Governing body aooroval. 
Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 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 Medicarecertified providers and suppliers. There 

are 11 AOs that accredit Medicarecertified providers and suppliers. 

Therefore, the total time burden for this 

task would be 2,200 hours (200 hours × 

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 × $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 

× $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 × 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 × 

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 × 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 

§ 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 × 

24 programs). 

We estimate that the cost burden per 

each program would be $76.22 ($38.22 

× 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 × 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 × 

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 × 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 × 

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 × 

$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 × $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 × 14,904 

facilities). 

The burden associated with these 

requirements will be submitted to OMB 


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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 § 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 § 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 § 488.5(a)(4), § 488.5(a)(4)(iii), 

§ 488.5(a)(4)(v), and § 488.5(a)(4)(vii) 

The requirements under(§ 488.5(a)(4), 

§ 488.5(a)(4)(iii), § 488.5(a)(4)(v), and 

§ 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 § 488.5(a)(5), § 488.5(a)(6), 

and § 488.5(a)(12)). 

As described above related to the 

clarified and strengthened proposed 

requirements under § 488.5(a)(4), 

§ 488.5(a)(4)(iii), § 488.5(a)(4)(v), and 

§ 488.5(a)(4)(vii), we further propose to 

require additional information under 

§ 488.5(a)(5), § 488.5(a)(6), and 

§ 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 § 488.5(a)(13) 

The proposed requirements under 

§ 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 § 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 × 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 

× $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 × $32.04). 

We estimate that the cost burden for the 

work performed by the medical 

secretary would be $95.55 (2.5 hours × 

$38.22). We estimate that the cost 

burden for the work performed by the 

CEO would be $512.05 (2.5 hours × 

$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 × 11 AOs). 

4. ICR Associated With the Requirement 

That the AOs Prepare a Training for 

CMS About Its Revised Survey Process 

(Proposed § 488.5(a)(4)(xi)) 

The proposed requirement at 

§ 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 § 488.8(h). 

As the AOs currently have existing 

training for its surveyors on the survey 

process, we believe that the preparation 


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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 × 11 AOs). 

We estimate that the cost burden to 

each AO for the work performed by the 

RNs would be $3,978 ($79.56 × 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 × 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 × 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 × 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 § 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 § 488.8(b) 

The AOs would be required to 

resubmit their new survey processes 

and standards for a comparability 

review as required by § 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 § 488.4(a)(1) and 

§ 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 × 11 AOs). 

The total estimated cost burden for 

each AO is $3,057.60 (80 hours × 

$38.22). The total annual cost burden s 

is $33,633.60 ($3,057.60 × 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 × 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 onetime 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 § 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 

§ 488.1. 

D. ICR Related to Requirement That the 

AO Surveyors Take the CMS Online 

Surveyor Training 

We proposed at § 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 NonLong-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 × 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 


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surveyor training would be 28,875 hours 

(2,625 hours × 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 × $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 × $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 × 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 § 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 § 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 reapplication 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 × 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 × 

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 § 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 × 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) × $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. × 55 min. = $35.03 per 

55 min.) or ($3.185 × 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 § 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 × 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 × 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 × 11 AOs). 

We estimate that the cost burden to 

each AO for the completion of each POC 

would be $16,385.60 (80 hours × 

$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 × $204.82). We further estimate 

that the total annual cost burden across 

all 11 AOs that accredit Medicarecertified providers and suppliers for the 

completion of all POCs annually would 

be $22,169,716.80 ($2,015,428.80 × 11 

AOs). 


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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 § 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 § 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 × 8 hours × 6 liaison 

staff) for a total of 25,920 hours (144 

hours × 180 look-back validation 

surveys) across all programs that receive 

validation surveys. This figure assumes 

on average a look-back validation onsite 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 × 

$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 § 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 § 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 × 3 AOs). 

We estimate that the cost burden for 

the work performed by the RNs would 

be $11,934 ($79.56 × 150 hours), the 

CEO would be $9,216.90 ($204.82 × 45 

hours), the medical secretary would be 

$191.10 ($38.22 × 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 


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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 × 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 ReEnrollment and Certification in 

Medicare/Medicaid Programs 

We propose to add a new policy at 

§ 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 § 488.4(b)(2) that would require a 

terminated provider or supplier to have 

to meet all of the requirements of 

§ 489.57 before a new agreement with 

that provider or supplier into the 

Medicare program will be approved. 

In support of proposed § 488.4(b), we 

also propose to add a new requirement 

at § 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 

§ 489.57(b) that would require a 

terminated provider or supplier to meet 

the requirements set forth at 

§§ 489.57(b)(1) to (b)(3) before their new 

agreement for Medicare participation 

will be approved. 

Proposed new § 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 

§ 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 § 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 CMSapproved 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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TABLE 3: Summary of Cost Burden 

1. Requirement that the AOs provide • 48 hours per each AO • $4,674.72 per each AO for 1st report 

information about the fee-based consulting 

services they provide.(§ 488.5(a)(10)) • 528 hours across 11 AOs • $51,421.92 across all 11 AOs 

2. Requirement that AO surveyors submit • 48 hours per each AO • $4,674.72 per each AO 

conflict of interest declarations to CMS on 

an annual basis (§ 488.5(a)(22)) • 528 hours across 11 AOs • $51,421.92 across all 11 AOs 

3. Restrictions on AO fee-based consulting • 80 hours per each AO • $7,791.20 per each AO 

services (§ 488.8(i)) 

• 320 hours across 4 AOs that provide • $31,164.80 across the 4 AOs that 

fee-based consulting provide fee-based consulting. 

4. Submission about information about the • 96 hours per each of the 4 AOs that • $4,674.72 per each AO for 1st report 

fee-based consulting provided by the AO provide fee-based consulting for the 

1st year of annual reports • $18,698.88 across the all 4 AOs that 

provide fee-based consulting for 1st 

• 384 hours across the 4 AOs that report 

provide fee-based consulting for 1st set 

of annual reports • $636.48 per AO for the 2nd yearly 

reports & all subsequent yearly reports 

• 48 hours per each AO for 2nd yearly 

reports & all subsequent yearly reports • $2,545.92 across the all 4 AOs that 

provide fee-based consulting for the 

• 192 hours per each AO for 2nd year & znd yearly reports & all subsequent 

a11 subse uent 'earl orts 'earl rts 

5. Requirement that Accrediting Organization • O hours • $0 

Establish Fee-Based Consulting Firewall (The time burden associated with this (The cost burden associated with tlris 

Policies and Procedures (Proposed requirement is included with burden requirement is included with burden 

§ 488.8G)) calculation for proposed 488.8(i) calculation for proposed 488. 8(i) 

above) above) 

6. Requirement to Prevent Conflicts of Interest • 0 hours • $0 - because this should be a usual 

Caused By AO Surveyor Relationship with and customary practice of the AOs. 

A Health Care Facility Accredited by the 

AO (Proposed§ 488.8(k)) 
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B. Reguirement that the AO IncoIDQrate the • 200 hours per each AO • $7,726.68 pereachAO 

CMS standards to ensure imI!roved 

evaluation of AO uerformance • 2,200 hours across the 11 AO that • $84,993.48 

accredit Medicare-certified providers • across the 11 AOs that accredit 

1. Requirement that the AOs provide a & suppliers Medicare-certified providers & 

detailed crosswalk identifying suppliers$185,440.32 across 24 

equivalent standards accreditation programs 

2. Burden related to AO providing copies of • I-hour training per each health care • $76.22 per each accreditation program 

their revised accreditation standards to their facility personnel 

accredited providers and suppliers 

• $1,829.28 across all 24 accreditation 

• 2 hours per each accreditation programs 

program type 

• 48 hours across all 24 program types 

3. Burden to AO related to providing notice to • 0.25 hour per each facility • $9.55 per each facility 

the accredited pro,;ders and suppliers 

impacted • 3,726 hours across all 14,904 facilities • $142,333.20 across all 14,904 

facilities 

4. Burden to providers and suppliers related to • 2 hours across each facility • $200.46 per facility 

taking education about the AOs revised 

accreditation standards • 29,808 hours across all 14,904 • $2,987,655.84 across all 14,904 

facilities facilities 

C. Burden Related to Reguirement that AOs 

Must Use ComI!arable Smvey Processes to 

That Used by CMS and the SAs 

1. Burden associated with requirement that • O hours • $0 - because the AOs are already 

A Os must submit documentation about their required to submit this information 

survey processes as required by 

§ 488.5(a)(4), § 488.5(a)(4)(iii), 

§ 488.5(a)(4)(v), and§ 488.5(a)(4)(vii). 

2. Burden associated with new documentation 

requirements created by requirement that 

AOs must $0 - because the AOs are already use a comparable survey process O hours • • required to submit this infonnation (§ 488.5(a)(5), § 488.5(a)(6), and 

§ 488.5(a)(l2)) 

3. Burden Related to Documentation • 10 hours per each AO • $886.60 per each AO 

Requirements Imposed By Requirement 

that AOs Use Comparable Survey Process • 110 hours across the 11 AOs that • $9,752.60 across 11 AOs 

(§ 488.5(a)(l3) ICR Related to Requirement accredit Medicare-certified providers 

for AO to Submit Survey Findings/Reports) & suppliers 

4. Burden associated with the preparation of a • 55 hours per each AO • $4,169.10 per each AO 

presentation that AOs must prepare and 

provide to CMS to demonstrate how their • 605 hours across the 11 AOs that • $45,860.10 across 11 AOs 

survey processes are comparable to that of accredit Medicare-certified providers 

CMS & suppliers • $100,058 across all 24 accreditation 

program types 
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5. ICR Related to Requirement for AO to • 0 hours • $0 - because the AOs are already 

Submit Survey Findings/Reports required to do this. 

6. Burden Related to Submission of Revised • 80 hours per each accreditation • $3,057.60 per each accreditation 

Accreditation Standards and Survey program type program type 

Processes for review and approval by CMS 

as required by § 488.8(b) • 880 hours across the 11 AOs that • $33,633.60 across the 11 AOs that 

accredit Medicare-certified providers accredit Medicare-certified providers 

and suppliers and suppliers 

• 1,920 hours across the 24 • $73,382.40 across all 24 accreditation 

accreditation program types program types 

7. Burden Related to Addition of the • 0 hours • $0 

Dcfmition of"Unannounccd Surveys" 

D. ProUQsal to Reguire AO Surveyors to Take • 35 hours per each surveyor • $2,784.60 per each surveyor that takes 

CMS Online Surve:tor Training the training 

• 2,625 hours per 75 surveyors per each 

AO • $208.845 per AO per 75 surveyors 

• 28,875 hours (per 75 surveyors per • $2,297,295 across the 11 AOs that 

each AO) across the 11 AOs that accredit Medicare-certified providers 

accredit Medicare-certified providers & suppliers 

& suppliers 

E. Burden Related to Documentation • 0.66 hour every 4-6 years • $136.52 per each AO 

Reguircments for "National in Scoue 

• 7.33 hours across the 11 AOs that • $1,501.72 across the 11 AOs that 

1. Documentation requirement for "National accredit Medicare-certified providers accredit Medicare-certified providers 

in Scope" & suppliers & suppliers. 

2. ICR related to incorporation of the • 0.083 hourpereachAO • $3,185 per each AO 

"National in Scope" requirements into the 

AO's application • 0.91 hour across the 11 AOs that • $35.03 across the 11 AOs that accredit 

accredit Medicare-certified providers Medicare-certified providers & 

& suppliers suppliers 

F. Burden Related to AO Performance • 80 hours per each POC • $16,385.60 per each POC 

Measures, and Plans of Correction 

• 9,840 hours per each AO annually for • $2,015,428.80 per each AO for 

completion of 123 POCs per year completion of 123 POCs per year. 

• 108,240 hours annually across all 11 • $22,169,716.80 across all 11 AOs that 

A Os that accredit Medicare-certified accredit Medicare-certified providers 

roviders and su liers, andsu liers, 

G. Burden Related to Revision of the 

Definition of "Disuarity Rate" • O hours • $0 

H. Burden Reduction Associated with the • -144 hours per each validation survey • -$2,062,195.20 

Revised AO Validation Surv!;Y Progmm 

• -25,920 hours (144 hours x 180 lookback validation surveys) across all 

programs that receive validation 

surve s 
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BILLING CODE 4120–01–C 

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 


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J. 

1. ICR Associated With the Requirement lbat • 

The AOs Develop a Psychiatric Hospital 

Accreditation Program • 

2. ICR Associated With Accrediting Facilities • 

nnder the Revised Psychiatric Hospital 

Accreditation Pro 

Limitation on Deeming Qr!tion for • 

Terminated Providers 

\ 

200 hours per each AO • $21,342 per AO 

600 hours across the 3 AOs that would • 

need to modify their accreditation 

progrnms 

$64,026 across the 3 affected AOs 

0 hours • $0 

0 hours • $0 

67,334 total burden across all AOs/prograrn types /or accreditation programs 

$24,859,522 

$3,129,989 

$1,829 

$27,991,340 

-$2,062,195 

S25,929,145 
Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 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 § 488.5(a)(10)) 

We proposed to modify § 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 feebased consulting services from its 

accreditation services; (2) policies and 

procedures for protecting the integrity of 

the AO’s accreditation program, 

including the requirements of § 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 § 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 


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12048 Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 

a health services manager. We estimate 

that the total burden costs related to the 

requirements for proposed § 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 § 488.5(a)(22)) 

We proposed to add a new paragraph 

(a)(22) to § 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 § 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 

(§ 488.8(i)(1), § 488.8(i)(2), and 

§ 488.8(i)(4) 

In this proposed rule, we propose to 

modify the AO oversight regulations 

§ 488.8(i) by adding a new provision 

which would add restrictions on the feebased consulting services provided by 

the AOs to the same health care 

providers and suppliers they accredit 

for Medicare deeming purposes. 

At proposed § 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 § 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 reaccreditation 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 § 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 § 488.8(i)(4)(i) through 

§ 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 reaccreditation 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 feebased 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 § 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 § 488.8(i). First, the AOs would incur 

time and cost burden to the AOs related 

to having to make changes to their feebased 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 feebased 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 

§ 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-basedconsulting 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 


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20https://www.jcrinc.com/-/media/jcr/jcrdocuments/about-jcr/financial-statements/2021-jcrform-990-redacted-pdc.pdf. 

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 § 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 feebased 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 feebased 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 feebased consulting. 

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 

§ 488(i)(5)) 

We propose to add a requirement at 

§ 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 § 488.8(j)) 

At § 488.8(j) we proposed to require 

any AO that provides fee-based 

consulting services or its associated feebased 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 feebased consulting services to the AO’s 

accreditation clients. 

This proposed requirement would 

only apply to the AOs that provide feebased consulting and would require 


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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 

§ 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 § 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 (§ 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 § 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 § 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 § 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 onetime 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 

§ 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 

§ 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 noncompliance. 

(1) Impact Related to Documentation 

Associated With Requirements That 

AOs Use Comparable Survey Processes 

(§ 488.5(a)(4), § 488.5(a)(4)(iii), 

§ 488.5(a)(4)(v), and § 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 


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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 § 488.5(a)(4), 

§ 488.5(a)(4)(iii), § 488.5(a)(4)(v), and 

§ 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 

(§ 488.5(a)(4), § 488.5(a)(4)(iii), 

§ 488.5(a)(4)(v), and § 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 

(§ 488.5(a)(4)(xi)) 

The proposed requirements under 

§ 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 

(§ 488.5(a)(5), § 488.5(a)(6), and 

§ 488.5(a)(12)) 

Aforementioned in the Impact Related 

to Documentation Imposed by 

Requirements that AOs Use Comparable 

Survey Process (§ 488.5(a)(4), 

§ 488.5(a)(4)(iii), § 488.5(a)(4)(v), and 

§ 488.5(a)(4)(vii)), the proposed 

requirements under § 488.5(a)(5), 

§ 488.5(a)(6), and § 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 (§ 488.5(a)(13)) 

The requirements at § 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 

§ 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 § 488.8(b)(2). We 

anticipate the total financial impact 

associated with the requirement at 

§ 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 

§ 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 § 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. 


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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 NonLong-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 § 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 

§ 488.5(a)(1), the AO must provide 

documentation that demonstrates the 

organization meets the definition of a 

‘‘national accrediting organization’’ 

under § 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 × 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 


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usual and customary part of the existing 

validations program. Direct observation 

validation surveys are already being 

performed under current regulatory 

authority § 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 § 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 lookback 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 § 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 CMSapproved 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 onetime 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 

§ 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 CMSapproved 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 

§ 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 

§ 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 


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subsequently applies to re-enter 

Medicare and seek initial certification. 

We also proposed to add new 

requirement at § 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 § 489.57. 

In support of our proposal at 

§ 488.4(b), we also propose to add a new 

requirement at § 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 

§ 489.57 governs the process that 

terminated providers and suppliers 

must follow to be allowed to submit a 

new request for Medicare participation. 

Specifically, § 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 § 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 

§ 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 § 489.57(b)(1) to (b)(3) before their 

new agreement for Medicare 

participation could be approved. 

Proposed new § 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 

§ 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 

§ 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 CMSapproved 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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TABLE 4: Summary oflmpact 

A. Conflict of Interest Proposals: 

1. Restrictions on AO fee-based consulting sen,ices (§ 488.8(i)) 

2. Loss of revenue to A Os due to prohibition of fee-based consulting 

3. Requirement that the AOs provide information about the fee-based 

consulting services they provide(§ 488.5(a)(l0)) 

• $31,164.80 across all 11 AOs 

• $12,616,324 million dollars annually ( the AO that 

provides the most fee-based consulting services) 

• $100,000 to $500,000 annually for other AOs 

• $51,421.92 across all 11 AOs for 1st report 

4. Requirement that AO sUIVeyors submit conflict of interest declarations to • $51,421.92 across all l l AOs 

CMS on an annual basis(§ 488.5(a)(l0)) 

5. Requirement that Accrediting Organization Establish Fee-Based 

Consulting Firewall Policies and Procedures ((Proposed§ 488.8G)) 

6. Requirement to Prevent Conflicts of Interest Caused By AO SUIVeyor 

Relationship with A Health Care Facility Accredited by the AO 

(Proposed § 488.8(k)) 

B. Requirement that the AO Incorporate the Medicare standards to ensure 

improved evaluation of AO performance. 

1. Requirement that the AOs provide detailed crosswalks identifying 

equivalent standards 

• $0 

(The cost burden associated with this requirement 

is included with burden calculation for proposed 

§ 488.8(i) above) 

• $0 - because this should be a usual and customary 

practice of the A Os. 

• $84,993.48 across the 11 A Os that accredit 

Medicare-certified providers/suppliers. 
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2. Burden related to AO providing copies of their revised accreditation • $1,829.28 across all 24 accreditation programs. 

standards to their accredited providers and suppliers 

3. Burden to AO related to providing education to its accredited providers • $142,333.20 for all 14,904 facilities 

and suppliers about the new accreditation standards 

4. Burden to providers and suppliers related to ta1cing education about the • $2,987,655.84 across all facilities 

AOs revised accreditation standards 

C. Burden Related to R~uirement that AOs Must Use Com:(!arable Survex 

Processes 

1. Burden associated with requirement that A Os must submit • $0 - because the AOs are already required to 

documentation about their survey processes as required by submit this information 

(§ 488.5(a)(4), § 488.5(a)(4)(iii), § 488.5(a)(4)(v), and§ 488.5(a)(4)(vii)) 

2. Burden associated with new documentation requirements created by • $0 - because the AOs are already required to 

requirement that AOs must use a comparable survey process - submit this information 

(§ 488.5(a)(5), § 488.5(a)(6), and§ 488.5(a)(l2)) 

3. Burden Related to Documentation Requirements Imposed By • $9,752.60 across 11 AOs 

Requirement that AOs Use Comparable Survey Process - § 488.5(a)(l3) 

ICR Related to Requirement for AO to Submit Survey Findings/Reports 

4. Burden associated with the preparation of a presentation that A Os must • $45,860.10 across 11 AOs 

prepare and provide to CMS to demonstrate how their survey processes 

are comparable to that of CMS 

5. ICR Related to Requirement for AO to Submit Survey Findings/Reports • $0 - because the AOs are already required to do 

tlris. 

6. Burden Related to Submission of Revised Accreditation Standards and • $33,633.60 across the 11 AOs that accredit 

Survey Processes for review and approval by CMS as required by Medicare-certified providers and suppliers 

§ 488.8(b) 

7. Burden Related to the Addition of the Definition of "Unannounced" • $0 

D. Proposal to Require AO Surveyors to Take CMS Surveyor Training • $208.845 per each AO per 75 surveyors 

• $2,297,295 across 11 AOs 

E. National in Scope 

1. Burden Related to Documentation Requirements for "National in Scope" • $1,501.72 across 11 AOs 

2. Burden Related to Incorporation of the "National in Scope" • $35.03 across 11 AOs 

Requirements into tl1e AO's Application 

F. Burden Related to AO Performance Measures, and Plans of Correction • $2,015,428.80 per each AO per 123 POCs anually 

• $22,169,716.80 across 11 AOs anually 

G. Burden Related to Revision of the Definition of "Disparity Rate" • $0 
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21https://www.bls.gov/oes/current/ 

oes119111.htm. 

BILLING CODE 4120–01–C 

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 × 2 hours).21

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 feebased 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 feebased 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 lookback 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 


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H. Revised Validation Survey Program 

I. Accreditation of Psychiatric Hospitals 

J. Limitation on Deeming Option for Terminated Providers 

• -$2, 062, 195 .20 (burden reduction to 

providers/suppliers) 

• $64,026 across the three affected AOs 

• $0 
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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 

■ 1. The authority citation for part 488 

continues to read as follows: 

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

■ 2. Section 488.1 is amended by— 

■ a. Adding the definition of 

‘‘Geographic regions’’; 

■ b. Revising the definition of ‘‘National 

accrediting organization’’; 

■ c. Adding the definitions of ‘‘National 

in scope’’, ‘‘Outcome disparity rate’’ and 

‘‘Process disparity rate’’; 

■ d. Removing the definition of ‘‘Rate of 

disparity’’; and 

■ e. Adding the definition of 

‘‘Unannounced survey’’. 

The additions and revisions read as 

follows: 

§ 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 


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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. 

* * * * * 

■ 3. Revise § 488.4 to read as follows: 

§ 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 § 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 CMSapproved 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 

§ 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. 

■ 4. Section 488.5 is amended by— 

■ a. Revising paragraphs (a)(3), (4), (5), 

(6), (8), (10), (12) and (13); and 

■ b. Adding paragraphs (a)(21) and (22) 

The revisions and additions read as 

follows: 

§ 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 

§ 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 noncompliance 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 


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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, resurvey, 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 § 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 inservice 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 programspecific 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 § 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-inlaw, 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. 


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(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]. 

* * * * * 

■ 5. Section 488.8 is amended by— 

■ a. Revising paragraph (a)(2); and 

■ b. Adding new paragraphs (a)(4), (i), 

(j) and (k). 

The revision and additions read as 

follows: 

§ 488.8 Ongoing review of accrediting 

organizations. 

(a) * * * 

(2) Analysis of the results of the 

validation surveys under § 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 feebased 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 


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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 ‘‘reaccreditation 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 feebased 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 feebased 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 feebased 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 feebased 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 feebased 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 

§ 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 


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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-inlaw, daughter-in-law, brother-in-law, or 

sister-in-law; grandparent or grandchild; 

and spouse of a grandparent or 

grandchild. 

■ 6. Revise § 488.9 to read as follows: 

§ 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 lookback 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 § 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 noncompliance. (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 § 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 § 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 

§ 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 § 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 

■ 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). 

■ 8. Section 489.20 is amended by 

adding paragraph (z) to read as follows: 

§ 489.20 Basic commitments. 

* * * * * 

(z) In the case of a provider that has 

been involuntarily terminated by CMS 


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12064 Federal Register / Vol. 89, No. 32 / Thursday, February 15, 2024 / Proposed Rules 

under § 489.53, or by the OIG under 

§ 489.54, reinstatement of the provider 

agreement is subject to § 489.57(b). 

■ 9. Revise § 489.57 to read as follows: 

§ 489.57 Reinstatement after termination. 

When a provider agreement has been 

terminated by CMS under § 489.53, or 

by the OIG under § 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 § 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 


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