62976 Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / Proposed Rules

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

42 CFR Part 124

RIN 0906–AA52

Compliance Alternatives for Provision

of Uncompensated Services

AGENCY: Health Resources and Services

Administration, HHS.

ACTION: Proposed rules.

SUMMARY: The rules proposed below

would revise a compliance alternative

applicable to health care facilities with

Hill-Burton uncompensated services

obligations. The revised compliance

alternative would provide a more

flexible compliance standard for

facilities that principally serve

nonpaying patient populations by

reducing the amount of time needed to

qualify for certification under the

alternative and by providing for a

provisional certification, where a

facility is unable to qualify for full

certification. The rules proposed below

would also provide a compliance

alternative for obligated facilities with

histories of uncompensated services

deficits, to enable them to make up the

deficits on a timely basis. These

revisions would have the effect of

making it easier for facilities with

uncompensated services obligations to

meet those obligations, while still

ensuring the availability of

uncompensated services to persons

unable to pay.

DATES: To be considered, the agency

must receive comments on this

proposed rule on or before December 18,

2000.

ADDRESSES: Submit comments in

writing to Division of Facilities

Compliance and Recovery, Office of

Special Programs, Health Resources and

Services Administration, 5600 Fishers

Lane, Room 10C–16, Rockville, MD

20857 or submit comments by fax to

301–443–0619.

FOR FURTHER INFORMATION CONTACT: Mr.

Eulas Dortch, 301–443–5656.

SUPPLEMENTARY INFORMATION: The

Secretary of Health and Human Services

proposes below to revise certain

requirements relating to the compliance

by health care facilities that received

assistance under Title VI or Title XVI of

the Public Health Service Act, 42 U.S.C.

291, et seq., and 42 U.S.C. 300q, et seq.

with their assurance, given as a

condition of such assistance, that they

would provide a reasonable volume of

services to persons unable to pay

therefor. The regulations establishing

the requirements for complying with

this assurance, which is commonly

known as the ‘‘uncompensated

services’’ assurance, are codified at 42

CFR Part 124, Subpart F. The rules

proposed below would revise one of

several current compliance alternatives,

to decrease the number of years needed

to qualify for the alternative and to

permit qualification on a provisional

basis. The rules proposed below would

also add another compliance alternative,

designed for otherwise compliant Title

VI-assisted facilities that are in chronic

deficit in meeting their uncompensated

services obligations.

I. Background

The Hill-Burton uncompensated

services regulations date, in their

present form, back to 1979, when

regulations containing the basic

components of the present regulations

were promulgated. The 1979 regulations

for the first time established a purely

quantitative measure of the statutory

‘‘reasonable volume of services’; this

quantitative measure was a total’’

obligation measured in dollars, broken

down into annual compliance levels.

They also provided that a facility that

failed to provide in a given year

uncompensated services in an amount

sufficient to meet its annual compliance

level would have a ‘‘deficit,’’ which it

would have to make up in subsequent

years. If not made up, the deficit (along

with any additional deficits in later

years) would accumulate, and be

adjusted by any increases in the medical

Consumer Price Index (CPI). See,

§ 124.503(b)(3).

In the years since 1979, the

regulations have been amended several

times—in 1986, 1987, 1994, and 1995.

Aside from the amendment of the basic

regulatory structure effected by the 1987

amendment, the rest of the amendments

were directed at creating various

alternative methods by which facilities

could comply with their obligation to

provide a reasonable volume of

uncompensated services to persons

unable to pay. These various

‘‘compliance alternatives’’ appear at

§§ 124.513–124.516 of Subpart F.

Although each of the compliance

alternatives is addressed to different

types of facilities, all of the facilities

that qualify for the compliance

alternatives share the same basic

characteristics: they provide significant

amounts of free or below cost care to

persons unable to pay for that care, but,

for various reasons, are unable to

receive sufficient credit for the care they

provide to meet their Hill-Burton

uncompensated services obligations

under the compliance standards

codified at 42 CFR §§ 124.501–124.512.

As a consequence, prior to the adoption

of the compliance alternatives set out at

§§ 124.513–124.516, these types of

facilities were generally running

uncompensated services deficits,

despite providing substantial services

on a free or below-cost basis to poor

individuals. The compliance

alternatives were adopted to address

this anomaly.

Over the years since 1979, the number

of facilities with outstanding HillBurton uncompensated services

obligations has shrunk from

approximately 5,000 in 1979 to the

present level of approximately 850.

Thus, approximately 4,150 Hill-Burton

assisted facilities have fulfilled their

obligation, provided as a condition of

the federal assistance received, to

provide a ‘‘reasonable volume of

uncompensated services to persons

unable to pay therefor.’’ However, a

number of the remaining Hill-Burton

obligated facilities operate compliant,

fully expanded uncompensated services

programs but fail to receive sufficient

uncompensated services requests to

satisfy their annual dollar obligations.

(‘‘Fully expanded’’ means that the

facilities make available on request, all

of their services at no charge to persons

unable to pay up to the limit of Category

B eligibility (for facilities other than

nursing homes) or Category C eligibility

(for nursing homes).) Thus, they run

Hill-Burton deficits on a chronic basis,

and those deficits are adjusted upwards

by the percentage change in the medical

CPI, pursuant to § 124.503(b)(3). The

Department believes that many of these

facilities may never be able to make up

their deficits under the present

requirements.

A few statistics indicate the

dimensions of the problem. As of the

end of 1998, of the 424 Hill-Burton

facilities in deficit, 226 had operated a

fully expanded, compliant program for

at least a year. Of these 226 facilities,

117 (52 percent, or 28 percent of the

total number of facilities in deficit) had

operated a fully expanded program for

the last three years, and, despite

providing over $73 million in

uncompensated services in that period,

saw their collective deficit increase from

$178,724,130 to $180,748,408—an

increase of one percent—in the same

period. Of these 226 facilities, 64

facilities (28 percent, or 15 percent of

the total in deficit) operated fully

expanded programs for the last two

years, and, despite providing over $36

million in uncompensated services in

that period, saw their collective deficit

decrease only $10.8 million, or 13

percent for that period, while in 33 of

the 64 facilities, the deficits increased.

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Of the 226 facilities, 45 facilities (20

percent, or 11 percent of the total in

deficit) operated fully expanded

programs in the last year and, despite

providing over $9.8 million in

uncompensated services in that period,

saw their collective deficit increase from

$57,374,195 to $61,739,838—an

increase of 7.6 percent—in that period.

It is projected that, because of the

increasing deficits a number of these

facilities are experiencing, 81 facilities

will have at least another 20 years under

obligation, and 53 of these 81 will have

obligations extending for the next 100

years.

II. Proposed Rules

The rules proposed below share the

objective of the prior compliance

alternatives. Like those compliance

alternatives, the rules proposed below

have the goal of enabling facilities,

which, by the nature of their operations

have great difficulty or find it

impossible to meet the dollar volume

requirements of the general regulations

but nonetheless provide significant

uncompensated services to persons

unable to pay, to comply with and

complete their uncompensated services

obligations. A corollary goal of this

objective is the reduction or elimination

of the uncompensated services deficits

of such facilities.

In the case of the proposed

amendment to § 124.516, the so-called

‘‘charitable facility’’ compliance

alternative, the proposed rule would

permit a provisional certification, to

make it easier for facilities to qualify for

the alternative. See, proposed

§ 124.516(d). Facilities could be

provisionally certified, with credit

toward their obligation earned during

the period of provisional certification if

they met the conditions of the

provisional certification and with no

credit earned if they failed to meet the

conditions of the provisional

certification. See, proposed

§ 124.516(e)(2). The proposed

amendment to § 124.516 thus would

enable facilities whose operations in

fact qualify them for the charitable

facility alternative to start earning credit

under that alternative at the earliest

possible date, instead of requiring a

three-year track record, which is

required under the alternative in its

present form.

In the case of the proposed new

compliance alternative set out at

proposed § 124.517, the proposed rule

would provide a means by which

facilities in deficit, which remain in

deficit despite running procedurally

compliant uncompensated services

programs, could eliminate their deficits

and complete their obligations in a

reasonable time frame. The compliance

alternative at proposed § 124.517 is

available to facilities that do not restrict

the availability of uncompensated

services to their patient population in

any way—i.e., they do not restrict the

type of services of the facility available

on an uncompensated basis, and they do

not restrict eligibility for those

uncompensated services (for example,

by limiting uncompensated services to

Category A individuals only, or by

charging Category B or, for nursing

homes, Category C individuals). In

addition, those facilities must comply

with the procedural requirements of the

standard regulations with respect to

notice, eligibility determinations,

recordkeeping requirements, and so on.

Also, these facilities provide broad

notice of their program to provide

services to the poor by:

1. Posting Federally supplied HillBurton signs, in prescribed locations,

that describe the facilities’ obligation to

provide uncompensated services to the

poor and specify where to file

complaints;

2. Publishing notice of their Federal

obligation in local newspapers,

describing their allocation plan which

includes all of their services to eligible

persons requesting uncompensated

services with incomes up to twice the

poverty guidelines, in the case of

hospitals, and up to triple the poverty

guidelines for nursing homes;

3. Distributing, to each person coming

to the facilities for services, specific

written notification of the Hill-Burton

obligation, including the allocation

plan, income eligibility criteria,

timeframes for facilities to make

determinations of patients’ Hill-Burton

eligibility, and where to make

application for Hill-Burton assistance.

Thus, it is clear that Hill-Burton

facilities qualifying for the proposed

alternative are unique from other

facilities located in their areas.

Although the non-Hill-Burton facilities

may provide charity care, their

programs tend not to be publically

visible and often are mere writeoffs to

charity after they have exhausted efforts

to collect payments from the patients.

Where a facility fails to meet its

annual compliance level despite the

existence of an unrestricted program,

the Secretary believes that there is clear

evidence that there is insufficient

demand for the uncompensated services

offered and that the facility should not

have to incur a deficit due to a failure

of demand. The proposed compliance

alternative addresses this issue. In

addition, we believe that the

compliance alternative will provide a

mechanism that will facilitate the goal

of making up large deficits. The sheer

size of a number of deficits leads to a

level of discouragement that can affect

a facility’s performance. Where this has

happened, the existence of the deficit

has the perverse effect of harming,

rather than helping, the pool of eligible

individuals such facilities serve. The

compliance alternative should

encourage facilities with chronic

deficits to reopen their uncompensated

services programs and complete their

obligations. This expansion would

result in more uncompensated services

provided to persons unable to pay. For

example, based on the most recent data

available at the time the NPRM was

developed, hospitals which began

operating fully expanded programs in

fiscal year 1997 provided an average of

22 percent more uncompensated

services than in the previous year under

a limited program. Despite the increase

in services, their average Hill-Burton

deficit increased by 6 percent due to the

effect of the CPI adjustment applied to

large deficits. Nursing homes which

began operating fully expanded

programs in fiscal year 1997 provided

an average of 39 percent more

uncompensated services than in the

previous year. Despite the increase in

services, their average Hill-Burton

deficit increased by 16 percent, also

because of the CPI adjustment.

Thus, while the NPRM would likely

result in more facilities operating fully

expanded programs, the greater benefit

is that more uncompensated services

will be provided during their periods of

obligation.

Approximately 188 hospitals

nationwide could qualify for the

proposed alternative once they begin to

implement compliant and fully

expanded uncompensated services

programs. Significant is the fact that

only four States have more than eight

potentially qualifying facilities: New

York, 32; Pennsylvania, 22; Wisconsin,

13; and Michigan, 12. Within the State

of New York, 21 of the 32 facilities are

the sole hospital care provider within

their municipality. In Pennsylvania, this

is true for 13 of the 27 facilities; in

Wisconsin, 12 of the 13 facilities; and in

Michigan, 10 of the 12 facilities. This

means that these facilities are not

meeting their uncompensated services

obligations because there are not enough

Hill-Burton eligible people in their

communities. They are not shifting the

burden of caring for the poor to other

facilities since in most cases the HillBurton obligated facilities are the only

community providers.

The proposed alternative could

impact as many as 121 nursing homes

62978 Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / Proposed Rules

nationwide once they all begin to

implement compliant and fully

expanded uncompensated services

programs. Significant is the fact that

only two States, Michigan with 20

facilities and Ohio, with 15 facilities,

have more than seven qualifying

nursing homes. Thirty States have three

or fewer facilities, with 15 of the States

having no facilities. Further, the typical

nursing home has 75–90 percent of its

patients covered by Medicaid and

Medicare, leaving few and sometimes

no Hill-Burton eligible patients for

credit against their obligations.

For these reasons, we conclude that

where a Hill-Burton facility has a record

of operating a visible, compliant, and

fully expanded uncompensated services

program, its uncompensated services

deficit is due to a lack of community

need.

Proposed § 124.517 provides that an

existing deficit may be made up by

converting the deficit to years and

providing uncompensated services in

compliance with the compliance

alternative for the additional period of

time so calculated. See, proposed

§ 124.517(d). The concept underlying

the method proposed is to determine,

for years prior to the first year in which

the facility operated a compliant, fully

expanded program, what percentage the

facility’s deficit is of its total obligation

and then to multiply the facility’s total

period of obligation by that percentage

to determine how many years of service

that deficit represents; from that point,

the years in compliance with the

alternative are subtracted from the

deficit years to determine how many

years and days of obligation would

remain under the alternative. The

following examples illustrate how this

deficit-to-years conversion would work.

Example A: Facility Where 20-Year

Statutory Period Has Ended

Assumed facts: (1) Fiscal year-end

date: December 31; (2) 20-year end date:

April 1, 1987; (3) year or years in which

facility operated a fully expanded,

compliant program: 1 (1998); (4) years

in period of obligation: 7 years, 91 days

(7.249 years); (5) total compliance level

obligation in 1997 dollars: $356,684; (6)

total outstanding deficit through 1997:

$160,116.

Calculation: (1) Divide the total

deficit, prior to ‘‘alternative years’’ by

the total obligation: $160,116/$356,684

= .45 (percentage of deficit); (2) multiply

the percentage of deficit by the years in

the period of obligation: .45 × 7.249 =

3.26 (number of deficit years, under the

alternative); (3) subtract the number of

compliant, fully expanded years: 3.26

years—1 year = 2.26 years (number of

years to be made up under the

alternative); (4) multiply the fractional

part of the year by 365: .26 × 365 = 95

(fraction converted to days); (5) add the

whole years to the number of days

under obligation: 2 years + 95 days = 2

years, 95 days (period of time under

compliance alternative for complete

deficit make-up); (6) add the years and

days to the end of the last fiscal year for

which the facility operated a fully

expanded program: December 31, 1998

+ 2 years, 95 days = April 5, 2001.

Example B: Facility Where the 20-

Year Statutory Period Has Not Yet

Ended

Assumed facts: (1) Fiscal year-end

date: December 31; (2) 20-year end date:

April 1, 2000; (3) year or years in which

facility operated a fully expanded,

compliant program: 2 (1998 and 1999);

(4) years in period of obligation through

1997: 18 years; (5) total compliance

level obligation in 1997 dollars:

$356,684; (6) total outstanding deficit

through 1997: $160,116.

Calculation: (1) Divide the total deficit

by the total obligation through fiscal

year 1997: $160,116/$356,684 = .45

(percentage of deficit); (2) multiply the

percentage of deficit by the years in

period of obligation through fiscal year

1997: .45 × 18 = 8.1 (number of deficit

years, under the alternative); (3) subtract

the number of compliant, fully

expanded years: 8.1 years—2 years = 6.1

years (number of years to be made up

under the alternative); (4) multiply the

fractional part of the year by 365: .1 ×

365 = 37 (the number of days to be

added to the whole years); (5) add the

whole years to the number of days

under obligation: 6 years + 37 days = 6

years, 37 days; (6) add the years and

days to the 20-year end date: April 1,

2000 + 6 years, 37 days = May 8, 2006.

Comments are invited on the above

methodology and criteria.

In addition to the foregoing, various

technical and conforming changes to the

existing Subpart F are proposed.

III. Summary of Supporting Analyses

Executive Order 12866

Executive Order 12866 requires that

all regulations reflect consideration of

alternatives, costs, benefits, incentives,

equity, and available information.

Regulations must meet certain

standards, such as avoiding unnecessary

burden. Regulations which are

‘‘significant’’ because of cost, adverse

effects on the economy, inconsistency

with other agency actions, budgetary

impact, or novel legal or policy issues

require special analysis. The

Department has determined that this

rule will not have an annual effect on

the economy of $100 million or more,

and does not otherwise meet the

definition of a ‘‘significant’’ rule under

Executive Order 12866.

The Regulatory Flexibility Act

The Regulatory Flexibility Act

requires that agencies analyze regulatory

proposals to determine whether they

create a significant impact on a

substantial number of small entities. As

the total universe of facilities with

outstanding Hill-Burton obligations is

small (approximately 850 facilities) and

approximately half of these are

presently either without deficit or have

elected to comply with their

uncompensated services obligations

through other compliance options, it is

not anticipated that the proposal will

affect a substantial number of small

entities, within the meaning of the Act.

Moreover, the impact of the proposed

rules should be positive, as they would

lessen the burden of compliance on

those facilities that would elect to

utilize either of the proposed

compliance options. Accordingly, the

Secretary certifies that the rules

proposed below would not create a

significant impact on a substantial

number of small entities.

Paperwork Reduction Act

The proposed unrestricted availability

compliance alternative for Title VI

facilities rules do not contain any

information collection requirements

subject to OMB review under the

Paperwork Reduction Act of 1995. The

proposed amendment to the charitable

facility compliance alternative rule

contains information collections which

are subject to review by the Office of

Management and Budget (OMB) under

the Paperwork Reduction Act of 1995.

The underlying purpose of this rule is

to decrease recordkeeping, reporting,

and notification burden for the

charitable facilities not already certified

under the alternative. Facilities

receiving prospective certification under

the charitable facility compliance

alternative will no longer be required to

maintain extensive records on

uncompensated services (§ 124.510(a)),

but instead will have to maintain only

records which document its eligibility

for the compliance alternative

(§ 124.510(b)). These documents are

ordinarily retained by the facilities so

the recordkeeping requirement imposes

no additional burden. This change is

expected to reduce the recordkeeping

burden by 75 hours per facility per year.

Similarly, reporting burden will be

reduced. Charitable facilities will be

required to apply once for the

certification (§ 124.516(c)), and

Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / Proposed Rules 62979

thereafter will need only to certify their

continued eligibility annually

(§ 124.509(b)). Currently, facilities in

deficit status, which include charitable

facilities obligated under the general

rule, must file a report each year which

documents the amount of

uncompensated care provided

(§ 124.509(a)). This change in reporting

requirements is expected to reduce the

reporting burden by 6 hours per facility

in the first year, and by 13.5 hours per

facility in subsequent years.

Finally, notification/disclosure

burden will be eliminated, because the

facilities will no longer be required to:

(1) Publish a notice each year of the

availability of uncompensated services

(§ 124.504(a)); (2) provide individual

written notices to each person seeking

service in the facility (§ 124.504(c)); or

(3) provide a determination of eligibility

to each person applying for

uncompensated service (§ 124.507).

These changes are expected to reduce

the notification burden by 380 hours per

facility per year.

All sections of the regulations that

contain reporting, recordkeeping, or

notification/disclosure requirements

previously have been approved by OMB

under the Paperwork Reduction Act

(OMB #0915–0077). The public is

invited to provide comments on this

information collection requirement so

that the Department of Health and

Human Services may:

(1) Evaluate whether the proposed

collections of information are necessary

for the proper performance of the

functions of the agency, including

whether the information will have

practical utility;

(2) Evaluate the accuracy of the

agency’s estimates of the burdens of the

collections of information, including the

validity of the methodology and

assumptions used;

(3) Enhance the quality, utility and

clarity of the information to be

collected; and

(4) Minimize the burden of the

collections of information on those who

are to respond, including through the

use of appropriate automated,

electronic, mechanical, or other

technological collection techniques or

other forms of information technology,

e.g., permitting electronic submission of

responses. Written comments should be

sent to Mr. Eulas Dortch, Director,

Division of Facilities Compliance and

Recovery, Office of Special Programs,

Health Resources and Services

Administration, 5600 Fishers Lane,

Room 10C–16, Rockville, MD 20857.

The title, description, and respondent

description of the information

collections are available from Mr.

Dortch with an estimate of the annual

reporting and recordkeeping burden.

Included in the estimate is the time

for reviewing instructions, searching

existing data sources, gathering and

maintaining the data needed, and

completing and reviewing the collection

of information.

Unfunded Mandates Reform Act

The proposed rules contain no

Federal mandates for State, local, or

tribal governments or the private sector.

Executive Order 13132

The proposed rules have no impact on

federalism as set forth in Executive

Order 13132, which became effective on

November 8, 1999, replacing Executive

Order 12612.

Environmental Impact Statement

The proposed rules have no impact on

the quality of the human environment

and, therefore, an Environmental Impact

Statement is not required.

List of Subjects in 42 CFR Part 124

Grant programs—health, Health care,

Health facilities, Loan programs—

health, Low income persons, Reporting

and recordkeeping requirements.

Dated: November 29, 1999.

Claude Earl Fox,

Administrator, Health Resources and Services

Administration.

Approved: June 29, 2000.

Donna E. Shalala,

Secretary.

For the reasons set out in the

preamble, it is proposed to amend part

124 of title 42, Code of Federal

Regulations, as follows:

PART 124—MEDICAL FACILITY

CONSTRUCTION AND

MODERNIZATION

1. Revise the authority citation for

part 124 to read as follows:

Authority: 42 U.S.C. 216, 300r, 300s,

unless otherwise noted.

Subpart F—Reasonable Volume of

Uncompensated Services to Persons

Unable to Pay

2. Revise the first sentence of

§ 124.503(c)(1) to read as follows:

§ 124.503 Compliance level.

* * * * *

(c) * * * (1) Except for facilities

certified under § 124.513, § 124.514,

§ 124.515, § 124.516, or § 124.517, if a

facility provides in a fiscal year

uncompensated services in an amount

exceeding its annual compliance level,

it may apply the amount of excess to

reduce its annual compliance level in

any subsequent fiscal year. * * *

* * * * *

3. Revise the heading and

introductory text of paragraph (a) of

§ 124.508 to read as follows:

§ 124.508 Cessation of uncompensated

services.

(a) Facilities not certified under

§ 124.513, § 124.514, § 124.515,

§ 124.516, or § 124.517. Where a facility,

other than a facility certified under

§ 124.513, § 124.514, § 124.515,

§ 124.516, or § 124.517, has maintained

the records required by § 124.510(a) and

determines based thereon that it has met

its annual compliance level for the fiscal

year or the appropriate level for the

period specified in its allocation plan, it

may, for the remainder of that year or

period:

* * * * *

4. Revise the heading of paragraph (a)

and add paragraph (e) to § 124.509 to

read as follows:

§ 124.509 Reporting requirements.

(a) Facilities not certified under

§ 124.513, § 124.514, § 124.515,

§ 124.516, or § 124.517. ***

* * * * *

(e) Facilities certified under § 124.517.

If a facility certified under § 124.517

ceases to provide uncompensated

services consistent with its certification

under that section because of financial

inability, it shall report such cessation

to the Secretary within 90 days of the

cessation and provide any

documentation or information relating

to the provision or cessation of

uncompensated services that the

Secretary may require.

* * * * *

5. Revise the heading of paragraph (a)

and the heading and the first sentence

of paragraph (b) of § 124.510 to read as

follows:

§ 124.510 Record maintenance

requirements.

(a) Facilities not certified under

§ 124.513, § 124.514, § 124.515.

§ 124.516, or § 124.517. * * *

* * * * *

(b) Facilities certified under § 124.513,

§ 124.514, § 124.516, or § 124.517. A

facility certified under § 124.513,

§ 124.514, § 124.516, or § 124.517 shall

retain, make available for public

inspection consistent with personal

privacy, and provide to the Secretary on

request any records necessary to

document compliance with the

applicable requirements of this subpart

in any fiscal year, including those

documents provided to the Secretary

62980 Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / Proposed Rules

under § 124.513(c), § 124.514(c),

§ 124.516(c), or § 124.517(b), as

applicable. * * *

* * * * *

6. Revise the first sentence of

paragraph (a)(3) and paragraph

(b)(1)(iii)(C) of § 124.511 to read as

follows:

§ 124.511 Investigation and determination

of compliance.

(a) * * *

(3) When the Secretary investigates a

facility, the facility, including a facility

certified under § 124.513, § 124.514,

§ 124.515, § 124.516, or § 124.517, shall

provide to the Secretary on request any

documents, records and other

information concerning its operation

that relate to the requirements of this

subpart. * * *

* * * * *

(b) * * *

(1) * * *

(iii) * * *

(C) The facility had procedures in

place that complied with the

requirements of § 124.504(c), § 124.505,

§ 124.507, § 124.509, 125.510,

§ 124.513(b)(2), § 124.514(b)(2),

§ 124.515, § 124.516(b)(1) or (b)(2), as

applicable, or § 124.517(b), and

systematically and correctly followed

such procedures.

* * * * *

7. Revise the introductory text of

paragraph (b) and paragraph (c)(1) of

§ 124.512 to read as follows:

§ 124.512 Enforcement.

* * * * *

(b) A facility, including a facility

certified under § 124.513, § 124.514,

§ 124.516, or § 124.517, that has denied

uncompensated services to any person

because it failed to comply with the

requirements of this subpart will not be

in compliance with its assurance until

it takes whatever steps are necessary to

remedy fully the noncompliance,

including:

* * * * *

(c) * * *

(1) Have a system for providing notice

to eligible persons as required by

§ 124.504(c), § 124.513(b)(2),

§ 124.514(b)(2), § 124.516 (b)(2)(ii)(A), or

§ 124.517(b)(2), as applicable;

* * * * *

8. Revise § 124.516 to read as follows:

§ 124.516 Charitable facility compliance

alternative.

(a) Effect of certification. The

Secretary may certify as a ‘‘charitable

facility’’ a facility which meets the

applicable requirements of this section.

A facility which is certified or

provisionally certified as a charitable

facility is not required to comply with

this subpart except as provided in this

section.

(b) Methods of qualification for

certification or provisional certification.

(1) A facility may qualify for

certification under this section if it

meets the criteria of paragraph (c)(1) or

paragraph (c)(2) of this section.

(2) A facility may qualify for a

provisional certification under this

section if it provides an assurance that

meets the requirements of paragraph

(d)(2) of this section.

(c) Criteria for certification under

paragraph (b)(1) of this section. A

facility may qualify for certification

under paragraph (b)(1) of this section if

it met the criteria of either paragraph

(c)(1) or paragraph (c)(2) of this section

for the fiscal year preceding the request

for certification. A facility that seeks

certification under paragraph (c)(2) of

this section must also meet the

requirements of paragraph (c)(2)(i) or

paragraph (c)(2)(ii) of this section during

each year of certification.

(1)(i) For facilities that are nursing

homes. It received no monies directly

from patients with incomes up to triple

the current poverty line issued by the

Secretary pursuant to 42 U.S.C. 9902,

exclusive of amounts charged or

received for purposes of claiming

reimbursement under third party

insurance or governmental programs,

such as Medicaid or Medicare

deductible or co-insurance amounts.

(ii) For all other facilities. It received

no monies directly from patients with

incomes up to double the current

poverty line issued by the Secretary

pursuant to 42 U.S.C. 9902, exclusive of

amounts charged or received for

purposes of claiming reimbursement

under third party insurance or

governmental programs, such as

Medicaid or Medicare deductible or

coinsurance amounts.

(2) It received at least 10 percent of its

total operating revenue (net patient

revenue plus other operating revenue,

exclusive of any amounts received, or if

not received, claimed, as reimbursement

under Medicaid or Medicare) from

philanthropic sources to cover operating

deficits attributable to the provision of

discounted services. Philanthropic

sources include private trusts,

foundations, churches, charitable

organizations, state and/or local

funding, and individual donors; and

either—

(i) Provides health services without

charge or at a substantially reduced rate

(exclusive of amounts charged or

received for purposes of claiming

reimbursement under third party

insurance or governmental programs,

such as Medicaid or Medicare

deductible or coinsurance amounts) to

persons who are determined by the

facility to qualify for such reduced

charges under a program of discounted

health services. A ‘‘program of

discounted health services’’ must

provide for financial and other objective

eligibility criteria and procedures,

including notice prior to nonemergency

service, that assure effective opportunity

for all persons to apply for and obtain

a determination of eligibility for such

services, including a determination

prior to service where requested; or

(ii) Makes all services of the facility

available to all persons at no more than

a nominal charge, exclusive of amounts

charged or received for purposes of

claiming reimbursement under third

party insurance or governmental

programs, such as Medicaid or Medicare

deductible or coinsurance amounts.

(d) Procedures for certification—(1)

Certification under paragraph (b)(1) of

this section. To be certified under

paragraph (b)(1) of this section, a facility

must submit to the Secretary, in

addition to other materials that the

Secretary may from time to time require,

copies of the following:

(i) An audited financial statement for

the fiscal year preceding the request or

other documents prescribed by the

Secretary, sufficient to show that the

facility meets the criteria of paragraph

(c)(1) or (c)(2) of this section, as

applicable;

(ii) Where a facility claims

qualification under paragraph (c)(2)(i) of

this section, a complete description, and

documentation where requested, of its

program of discounted health services,

including charging and collection

policies of the facility, and eligibility

criteria and notice and determination

procedures used under its program(s) of

discounted health services;

(iii) Where the facility claims

qualification under paragraph (c)(1) or

paragraph (c)(2)(ii) of this section, a

complete description, and

documentation where requested, of its

admission, charging, and collection

policies.

(2) Provisional certification under

paragraph (b)(2) of this section. (i) In

order to receive a provisional

certification under paragraph (b)(2) of

this section, prior to the beginning of

the fiscal year for which provisional

certification will be sought, the facility

must submit to the Secretary an

assurance, together with such

documentation and in such form and

manner as the Secretary may require,

that it will operate during the fiscal year

Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / Proposed Rules 62981

a program that qualifies for certification

under paragraph (b)(1) of this section.

(ii) No later than 90 days following

the end of the fiscal year in which a

facility has operated a provisionally

certified program, the facility must

submit to the Secretary, the

documentation required, as applicable,

under paragraph (d)(1) of this section.

(e) Period of effectiveness—(1)

Certification under paragraph (b)(1) of

this section. A certification by the

Secretary under paragraph (b)(1) of this

section remains in effect until

withdrawn. The Secretary may disallow

credit under this subpart when the

Secretary determines that there has been

a material change in any factor upon

which certification was based or

substantial noncompliance with this

section. The Secretary may withdraw

certification where the change or

noncompliance has not been, in the

Secretary’s judgment, adequately

remedied or otherwise continues.

(2) Provisional certification under

paragraph (b)(2) of this section. Where

the Secretary is satisfied, based on the

documentation submitted by the facility

in accordance with paragraph (d)(2)(ii)

of this section and any other

information available to the Secretary,

that the facility has complied with the

terms of its provisional certification

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

the Secretary shall certify the facility

under paragraph (b)(1) of this section. If

the Secretary finds that the facility has

not complied with the terms of its

provisional certification under

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

facility will receive no credit towards its

uncompensated services obligation

during the fiscal year of provisional

certification.

(f) Deficits—(1) Title VI-assisted

facilities—(i) Title VI-assisted facilities

with assessed deficits. Where a facility

assisted under title VI of the Act has

been assessed as having a deficit under

§ 124.503(b) that has not been made up

prior to certification under paragraph

(b)(1) of this section, the facility may

make up that deficit by either—

(A) Demonstrating to the Secretary’s

satisfaction that it met the applicable

requirements of paragraph (c) of this

section for each year in which a deficit

was assessed; or

(B) Providing an additional period of

service under this section on the basis

of one year (or portion of a year) of

certification for each year (or portion of

a year) of deficit assessed. The period of

obligation applicable to the facility

under § 124.501(b) shall be extended

until the deficit is made up in

accordance with the preceding sentence.

(ii) Title VI-assisted facilities with

unassessed deficits. Where any period

of compliance under this subpart of a

facility assisted under title VI of the Act

has not been assessed, the facility will

be presumed to have no allowable credit

for the unassessed period. The facility

may either—

(A) Make up such deficit in

accordance with paragraph (f)(1)(i) of

this section; or

(B) Submit an independent certified

audit, conducted in accordance with

procedures specified by the Secretary, of

the facility’s records maintained

pursuant to § 124.510. If the audit

establishes to the Secretary’s satisfaction

that no, or a lesser, deficit exists for the

period in question, the facility will

receive credit for the period so justified.

Any deficit which the Secretary

determines still remains must be made

up in accordance with paragraph

(f)(1)(i)(B) of this section.

(2) Title XVI-assisted facilities—(i)

Title XVI-assisted facilities with

assessed deficits. A facility assisted

under title XVI of the Act which has an

assessed deficit which was not made up

prior to certification under paragraph

(b)(1) of this section shall make up that

deficit in accordance with paragraph

(f)(1)(i) of this section. If it cannot make

the showing required by that paragraph,

it shall make up the deficit when its

certification under paragraph (b)(1) of

this section is withdrawn.

(ii) Title XVI-assisted facilities with

unassessed deficits. Where any period

of compliance under this subpart of a

facility assisted under title XVI of the

Act has not been assessed, the facility

will be presumed to have no allowable

credit for the unassessed period. The

facility may either—

(A) Make up such deficit in

accordance with paragraph (f)(1)(i) of

this section; or

(B) Submit an independent certified

audit, conducted in accordance with

procedures specified by the Secretary, of

the facility’s records maintained

pursuant to § 124.510. If the audit

establishes to the Secretary’s satisfaction

that no, or a lesser, deficit exists for the

period in question, the facility will

receive credit for the period so justified.

Any deficit which the Secretary

determines still remains must be made

up in accordance with paragraph (f)(2)(i)

of this section.

§ 124.517 [Redesignated as § 124.518]

9. Redesignate § 124.517 as § 124.518

of subpart F.

10. Add a new § 124.517, to read as

follows:

§ 124.517 Unrestricted availability

compliance alternative for Title VI-assisted

facilities.

(a) Effect of certification. The

Secretary may certify a Title VI-assisted

facility which meets the requirements of

paragraph (b) of this section and the

applicable requirements of this subpart

as an unrestricted availability facility. A

facility which is so certified is not

required to comply with the

requirements of this subpart, except as

provided in this section or elsewhere in

this subpart.

(b) Criteria for qualification. A facility

may qualify for certification under this

section if, for any fiscal year for which

certification is sought, it meets the

following criteria:

(1) It makes all services of the facility

available without charge to all persons

requesting uncompensated services

from the facility who are eligible under

§ 124.505, including all persons coming

within Category B and, if applicable,

Category C.

(2) It complies with the notice and

allocation plan requirements of

§§ 124.504 and 124.506, except that all

notices published or provided must

describe an allocation plan and program

consistent with paragraph (b)(1) of this

section.

(3) It makes written determinations in

accordance with § 124.507, except that

all favorable determinations must

indicate that the facility will provide

uncompensated services at no charge.

(4) It provides uncompensated

services consistent with the

requirements of this section for the

entire fiscal year for which certification

is sought, except that a facility may

cease providing such services and still

receive credit, calculated in accordance

with paragraph (d) of this section,

where—

(i) The facility has completed its total

uncompensated services obligation,

including making up any deficit; or

(ii) The facility determines, and

submits documentation which the

Secretary finds, taking into account the

factors identified in § 124.511(c),

sufficient to establish that it is

financially unable to continue to meet

the requirements of this section for the

remainder of the fiscal year.

(c) Period of effectiveness. A

certification by the Secretary under this

section remains in effect until

withdrawn. The Secretary may

withdraw certification under this

section where the Secretary determines

the facility is in substantial

noncompliance with the requirements

of paragraph (b) of this section and has

not adequately remedied or otherwise

continues such noncompliance. Where

62982 Federal Register / Vol. 65, No. 203 / Thursday, October 19, 2000 / Proposed Rules

the Secretary withdraws certification for

part or all of a fiscal year or years, no

credit may be granted for the period of

unremedied substantial noncompliance.

(d) Deficits. (1) Where a Title VIassisted facility has been assessed as

having a deficit under § 124.503(b) that

has not been made up prior to

certification under this section, the

facility may make up the deficit by

providing uncompensated services in

accordance with this section. The

facility shall receive credit towards its

deficit on the basis of one year, or part

thereof, of credit towards each ‘‘deficit

year’’ for each year, or part thereof, of

operation in compliance with this

section and the applicable requirements

of this subpart.

(2) The number of ‘‘deficit years’’ of

a facility shall be calculated using a

methodology as determined by the

Secretary. The calculation shall

consider the ratio of a facility’s deficit

to its obligation for years not fully

expanded, and shall provide a facility

full credit for fully expanded compliant

years.

[FR Doc. 00–26738 Filed 10–18–00; 8:45 am]

BILLING CODE 4160–15–P