[Federal Register Volume 63, Number 106 (Wednesday, June 3, 1998)]
[Proposed Rules]
[Pages 30166-30173]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-14798]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

 42 CFR Chapter IV

[HCFA-3250-NOI]
RIN 0938-AI92


Medicare Program; Coverage and Administrative Policies for 
Clinical Diagnostic Laboratory Tests; Intent to Form Negotiated 
Rulemaking Committee

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Notice of Intent to Form Negotiated Rulemaking Committee and 
Notice of Meetings.

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SUMMARY: The Balanced Budget Act of 1997 requires the Secretary to 
establish a Negotiated Rulemaking Committee under the Negotiated 
Rulemaking Act and the Federal Advisory Committee Act. The Negotiated 
Rulemaking Committee's (the Committee) purpose will be to negotiate 
national coverage and administrative policies for clinical diagnostic 
laboratory tests under Part B of the Medicare program as required by 
the Balanced Budget Act of 1997 (BBA). The Committee will consist of 
representatives of interested parties that are likely to be 
significantly affected by the proposed rule. The Committee will be 
assisted by a neutral facilitator.
    The BBA outlines the scope of issues to be negotiated by the 
Committee. We specifically request pubic comment as to whether we have 
identified the interests that will be affected by key issues listed 
below.

DATES: Comments and requests for representation or for membership on 
the

[[Page 30167]]

Committee will be considered if we receive them at the appropriate 
address provided below, no later than 5 p.m. on July 6, 1998.
    The first meeting will be held at Turf Valley Hotel in Ellicott 
City (Baltimore) at 9 a.m. on July 13, 14, and 15, 1998; (410) 465-
1500.

ADDRESSES: Mail written comments and requests for representation or for 
membership on the Committee, or nominations of another person for 
membership on the Committee (1 original and 3 copies) to the following 
address: Health Care Financing Administration, Department of health and 
Human Services, Attention: HCFA-3250-N, P.O. Box 26688, Baltimore, MD 
21207-5187.
    Mail a separate copy of written comments to the following address: 
Grant Bagley, M.D., Director, Coverage and Analysis Group, Office of 
Clinical Standards and Quality, Mail Stop S3-02-01, Health Care 
Financing Administration, 7500 Security Blvd., Baltimore, Maryland 
21244-1850.
    If you prefer, you may deliver your written comments, applications, 
or nominations (1 original and 3 copies) to one of the following 
addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW, 
Washington, DC 20201, or
Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-1850.

    For information on electronic filing, see SUPPLEMENTARY 
INFORMATION.

FOR FURTHER INFORMATION CONTACT:
Grant Bagley, M.D., (410) 786-7176, or Jackie Sheridan (410) 786-4635, 
for general issues related to clinical diagnostic Laboratory tests. 
Judy Ballard, (202) 690-7419, or Nancy Rubenstein, (202) 690-8246, 
Conveners.

SUPPLEMENTARY INFORMATION: Comments may also be submitted 
electronically to the following e-mail address: (filecode 
hcfa3250noi)hcfa.gov. E-mail comments must include the full name and 
address of the sender, and must be submitted to the referenced address 
in order to be considered. All comments must be incorporated in the e-
mail message because we may not be able to access attachments. 
Electronically submitted comment will be available for public 
inspection at the Independence Avenue address, below. Because of 
staffing and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission. In commenting, please refer to file code 
HCFA-3250-NOI. Comments received timely will be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, in Room 309-G of the 
Department's offices at 300 Independence Avenue, SW, Washington, DC., 
on Monday through Friday of each week from 8:30 a.m. to 5 p.m. (phone: 
(202) 690-7890).
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and modem to call

I. Balanced Budget Act of 1997

    Section 4554(b)(1) of the Balanced Budget Act of 1997 (BBA), Public 
Law 105-33, mandates adoption, by January 1, 1999, of national coverage 
and administrative policies for clinical diagnostic laboratory tests 
under Part B of title XVIII of the Social Security Act using negotiated 
rulemaking. Section 4554(b)(2) provides that these national policies 
must be ``designed to promote program integrity and national uniformity 
and simplify administrative requirements with respect to clinical 
diagnostic laboratory tests'' payable under Part B in connection with 
the following:
    <bullet> Beneficiary information required to be submitted with each 
claim or order for laboratory tests;
    <bullet> The medical conditions for which a laboratory test is 
reasonable and necessary;
    <bullet> The appropriate use of procedure codes in billing for a 
laboratory test, including the unbundling of laboratory services;
    <bullet> The medical documentation that is required by a Medicare 
contractor at the time a claim is submitted for a laboratory test;
    <bullet> Recordkeeping requirements in addition to any information 
required to be submitted with a claim, including physicians' 
obligations regarding such requirements;
    <bullet> Procedures for filing claims and for providing remittances 
by electronic media; and
    <bullet> Limitation on frequency of coverage for the same tests 
performed on the same individual.
    <bullet> The legislative history of BBA suggests that section 4554 
was enacted in response to variations among carriers' requirements for 
laboratories filing claims for payment.

II. Negotiated Rulemaking Process

    Section 4554 of the BBA provides that these negotiations take place 
within the framework of the Negotiated Rulemaking Act (Pub. L. 101-648, 
5 U.S.C. 561-570). Under the Negotiated Rulemaking Act, the head of an 
agency generally must consider whether--
    <bullet> There is a need for a rule;
    <bullet> There are a limited number of identifiable interests that 
will be significantly affected by the rule;
    <bullet> There is a reasonable likelihood that a committee can be 
convened with a balanced representation of persons who--
    + Can adequately represent the interests identified; and
    + Are willing to negotiate in good faith to reach a consensus on 
the proposed rule;
    <bullet> There is a reasonable likelihood that a committee will 
reach a consensus on the proposed rule within a fixed period of time;
    <bullet> The negotiated rulemaking procedure will not unreasonably 
delay the notice of proposed rulemaking and the issuance of a final 
rule;
    <bullet> The agency has adequate resources and is willing to commit 
such resources, including technical assistance, to the Committee; and
    <bullet> The agency, to the maximum extent possible, consistent 
with the legal obligations of the agency, will use the consensus of the 
Committee with respect to the proposed rule as the basis for the rule 
proposed by the agency for notice and comment.
    Negotiations are conducted by a Committee chartered under the 
Federal Advisory Committee Act (FACA) (5 U.S.C. App. 2). The Committee 
includes

[[Page 30168]]

an agency representative and is assisted by a neutral facilitator. The 
goal of the Committee is to reach consensus on the language or content 
of a rule. If consensus is reached, it is used as the basis of the 
agency's proposal. The process does not affect otherwise applicable 
procedural requirements of the FACA, the Administrative Procedure Act, 
and other statutes.
    The Negotiated Rulemaking Act permits (but does not require) an 
agency to use the services of an impartial convener to assist the 
agency in identifying interests that will be significantly affected by 
the proposed rule, including residents of rural areas, and conducting 
discussions with persons representing the identified interests to 
ascertain whether the establishment of a negotiated rulemaking 
committee is feasible and appropriate in the particular rulemaking. At 
the agency's request, the convener also ascertains the names of persons 
who are willing and qualified to represent interests that will be 
significantly affected by the rule. The agency may also ask the 
convener to recommend a process for the negotiations. The convener 
submits a written report, which is available to the public. Pursuant to 
this procedure authorized by the Negotiated Rulemaking Act, we asked 
Judy Ballard and Nancy Rubenstein, who are with the Departmental 
Appeals Board (DAB) to act as convener for the negotiated rulemaking on 
laboratory policies. Over the last several months, they met with a wide 
range of organizations that were identified as having a possible 
interest in this negotiated rulemaking. They submitted to HCFA a report 
based on those convening interviews, which serves as a basis for this 
notice. This report lists the proposed representatives on the 
Committee. The convening report is a public document and may be found 
on the HCFA Internet website at http://www.hcfa.gov/quality/qlty-8a.

III. Subject and Scope of the Rule

A. General

    During the convening process, a number of issues were presented by 
the interested parties for negotiations as described below. We believe 
it is important to have an opportunity to engage in discussions with 
the interested parties on the issues that were presented. Many of these 
issues need clarification and a common understanding before regulations 
can be developed. We believe it is important that the Committee 
meetings include ample opportunity for such clarifications.
    Many of the issues raised by identified interested parties were 
based on the current laboratory coverage policies and claims processing 
systems. It is important to take into consideration how these current 
processes have been affected by the changes mandated by other 
subsections of section 4554 of the BBA. This provision of the law 
likely will mitigate some of the problems identified. For example, the 
law permits a carrier to develop and implement interim policies for 
laboratory services when there is a demonstrated need for a policy due 
to aberrant utilization or provision of unnecessary tests. The law 
provides that interim national policies developed by carriers are 
effective for no more than two years when no national policies exist, 
and provides an opportunity for public participation in the biennial 
review of national policies.
    As outlined in section 4554(b) of the BBA, the scope of the rule 
will be the development of coverage and administrative policies for 
clinical laboratory services that are designed to promote program 
integrity and national uniformity while simplifying administrative 
requirements. Consensus related to administrative simplification for 
laboratory services must comply with the limitations imposed by the 
administrative simplification provisions in section 261 of the Health 
Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA 
requires the Secretary to establish standards and requirements for the 
electronic transmission of claims and other information that will be 
used throughout the health insurance industry.
    Given that there are limited time and resources for these 
negotiations, it is critical that a process for coverage policy 
concerning laboratory tests be developed. Clearly, time constraints may 
prevent the development of test-specific policies for all laboratory 
tests. HCFA, therefore, proposes that the Committee negotiate a process 
for coverage and administration capable of uniform application 
throughout the country that takes into account the statutory boundaries 
within which HCFA must administer the Medicare program.
    Many of the issues identified during the convening interviews 
related to administrative policies associated with claims submission, 
documentation, and recordkeeping. These administrative issues will be 
negotiated to the extent that they are within the framework of section 
4554(b) of the BBA as discussed below.

B. Issues and Questions to be Resolved

1. Beneficiary Information on Claims
    Under current Medicare policy, laboratory tests furnished in 
physicians' offices and by independent laboratories are reported on a 
HCFA-1500, while hospital laboratory services are reported on a UB-92 
form. Virtually all claims from independent clinical laboratories, 
hospital laboratories, and a substantial number of claims for 
laboratory services performed in physician office laboratories are 
submitted using electronic versions of these forms.
    During the convening process, interested parties raised issues 
regarding application of general Medicare coverage and administrative 
policies to the laboratory industry. Two specific issues interviewees 
wished to negotiate concerned the documentation necessary to 
substantiate that skilled nursing care patients were in beds certified 
as skilled nursing facilities for Medicare purposes (and consequently, 
subject to rebundling), and the use of the standard form HCFA-1500 for 
submitting Medicare claims for laboratory services. To the extent that 
these issues are directly related to the categories of items delineated 
in section 4554(b)(2) of the BBA, they are within the scope of the 
negotiations. Thus, the applicability of general Medicare policies 
regarding beneficiary information required on claims for laboratory 
services is within the framework of these negotiations.
2. Medical Conditions for Which a Laboratory Test is Covered
    Section 4554 of the BBA mandates that HCFA use the negotiated 
rulemaking process to develop national coverage and administrative 
policies for clinical diagnostic laboratory tests under Medicare Part 
B. While HCFA and the clinical laboratory industry understand and 
support the need for national uniformity in terms of policy, both 
recognize the practical difficulty of addressing and developing 
coverage policies for all laboratory tests within the time provided in 
the negotiated rulemaking process. As a result, the Committee will 
focus on negotiating the medical conditions for which specific tests 
are covered for a subset of tests that have been identified as 
priorities by the Committee members after the process for making this 
determination has been negotiated.
    In the interest of expediting this phase in the negotiation 
process, HCFA proposes that the facilitator work with Committee members 
prior to the first meeting to develop a recommended list of tests that 
will be specifically discussed during the negotiations. We

[[Page 30169]]

expect that those tests designated as priorities by the Committee will 
likely fulfill at least one of the following criteria:
    <bullet> It is subject to wide divergence in coverage among local 
Medicare carriers,
    <bullet> It is a high-volume test, or
    <bullet> Its medical utility or clinical effectiveness is 
considered controversial.
    The Committee will negotiate and reach consensus on a list of 
priority tests. Using a process developed by the Committee, the 
Committee will then negotiate and attempt to reach consensus on the 
medical condition for which these specific tests will be covered.
3. Use of Appropriate Procedure Codes in Billing
    Laboratory services are reported to HCFA using the HCFA Common 
Procedure Coding System (HCPCS). A major component of this system is 
the American Medical Association's Current Procedural Terminology 
(CPT). In addition, HCFA requires diagnosis reporting on all claims. 
Diagnosis is coded using the International Classification of Diseases, 
Ninth Edition, Clinical Modification (ICD-9-CM).
    Medicare contractors that process claims are charged with the 
development of local medical review policies to apply safeguards 
against inappropriate expenditures of program funds. Local policies are 
a means of applying local coverage decisions where national policies do 
not exist. Unlike most national coverage policies, which are generally 
narrative statements, nearly all local medical review policies are at 
the code-specific level.
    We recognize that the level of understanding of coding conventions 
is not uniform among the laboratory industry, community physicians 
ordering clinical diagnostic testing, and our contractors. Clearly, 
there is some confusion and misunderstanding among the parties with 
regard to application of the coding guidelines to specific 
circumstances. For example, during convening, interviewees reported 
that historically there have been problems with coding multichannel 
automated testing.
    This is an issue of application of general Medicare policies to the 
laboratory industry. HCFA believes that it is appropriate for the 
Committee to discuss specific coding guidelines to seek clarification 
as part of the development of specific national coverage and 
administrative policies for laboratory tests identified as priorities. 
Thus, for example, it may be appropriate for the Committee to negotiate 
policies for automated multichannel testing, including clarification of 
coding guidelines. To the extent that coding issues are related to the 
coverage policies under discussion, they are within the scope of the 
negotiations.
4. Medical Documentation Required with Claim
    During the convening interviews, interested parties identified 
issues with respect to the medical documentation required on a claim. 
One issue dealt with the documentation the physician should submit to 
the laboratory in order for the laboratory to submit the claim. Another 
issue concerned assuring consistent action by the contractors when the 
documentation submitted with the claims is insufficient.
    We believe the first issue of medical documentation requirements 
would be an inherent part of the negotiations of individual coverage 
policies. That is, if the Committee determines that coverage policy for 
a given tests should be developed on a diagnosis code-specific level, 
then reporting of the diagnosis code would be required for that policy. 
In other situations, the Committee could determine that a code was not 
satisfactorily specific for the coverage policy, so alternative 
documentation may be required. The Committee may also determine that 
coverage policy should be established more broadly using a narrative 
format rather than a detailed policy developed on a code-specific 
level. Clearly, this issue will be discussed in depth as part of the 
negotiations on the national coverage policies.
    The second issue concerning contractor actions in response to 
insufficient documentation was suggested as an issue for negotiation. A 
broad view of the language of section 4554(b) of the BBA places this 
issue within the scope of the negotiations. Therefore, we are willing 
to have this matter brought before the Committee for discussion.
5. Recordkeeping Requirements in Addition to Claims Information
    During the convening interviews, the issue of recordkeeping and 
retention by laboratories and physicians who order laboratory tests was 
raised. We believe that it is appropriate to negotiate with respect to 
the types of records that should be maintained, who bears 
responsibility for maintaining documentation, and the period of time 
that records should be stored. In this regard, we are currently working 
under an initiative to reduce paperwork burden on the public, including 
clinical laboratories. We share the sentiment expressed by many 
interested parties that the recordkeeping requirements should be 
nationally uniform, simple, consistent with patient confidentiality 
requirements, and that a balance should be developed between program 
integrity concerns and the burden placed on the provider.
6. Procedures for Filing Claims and Providing Remittances 
Electronically
    Electronic claims submission is within the scope of these 
negotiations as outlined by section 4554(b)(2) of the BBA. Consensus 
related to administrative simplification must comply with section 261 
of HIPAA. Two specific issues were presented in regard to this topic. 
First, interested parties have voiced concern about the lack of 
uniformity among the carriers in the way claims are reviewed. For 
example, there is variation in how many and in what order the ICD-9-CM 
diagnosis codes are reviewed to determine if they justify medical 
necessity. Second, there is a concern that there may be a future 
requirement for electronic filing of claims. While cost laboratories 
already file claims electronically, small laboratories, including 
physician office laboratories, are concerned that such electronic 
filing may become mandatory in the future and would be burdensome.
    With regard to the lack of uniformity in the way in which carrier 
systems review claims, we acknowledge that differences exist in the way 
contractor systems analyze claims and that these differences do result 
in inconsistencies that are particularly problematic for the Laboratory 
industry. We note that the two events will significantly improve this 
situation over the next several years. First, under section 4554(b), we 
will be implementing new national laboratory coverage and 
administrative policies that will be negotiated by this Committee. 
Second, Medicare contractors will be moving to a single standard 
carrier claims processing system and a single standard fiscal 
intermediary claims processing system over the next several years. It 
is our intention that modifications to the local standard systems will 
be minimal and based on need. Use of uniform claims processing systems 
will significantly increase the uniformity in claims review.
    Labroatories within a carrier jurisdiction will be informed of the 
transition as it becomes imminent in the area so that they can prepare 
for the change. HCFA believes that it is important for the interested 
parties to be well informed about the transition. We

[[Page 30170]]

appreciate the opportunity to discuss this further with the interested 
parties.
    It should be noted that there have been several legislative 
proposals over recent years that would require electronic claims filing 
or provide for a service fee for processing of paper claims. However, 
we are not adverse to discussing the possibility of administrative 
policies related to mandatory electronic claims filing.
7. Limitations on Frequency of Coverage
    Several of the interested parties raised the issue of disclosure of 
utilization parameters used as a trigger to perform medical review as a 
topic for negotiation. They believe that some contractors are using 
utilization parameters as a frequency limit on coverage, which makes 
them de facto coverage policies and subject to negotiations. They noted 
the lack of uniformity among the contractors complicates this issue 
further because providers may be submitting claims to more than one 
contractor and have no assurances that these claims will be similarly 
reviewed. A test that may be paid by one contractor may not be paid by 
another.
    We recognize that differences among Medicare contractors in 
frequency limits on coverage pose difficulties, especially for large 
national laboratories that deal with a variety of Medicare contractors. 
We expect that frequency limits as they apply to coverage policies will 
be negotiated by the interested parties as part of the discussions.
    It should be noted that the Department of Health and Human 
Services, which includes HCFA and the Office of the Inspector General 
(OIG), has concerns related to disclosure of utilization parameters and 
its impact on our ability to assure program integrity and manage 
program expenditures. Nonetheless, we acknowledge that section 
4554(b)(2) of the BBA does require negotiations related to frequency 
limitations. We appreciate the opportunity to discuss alternatives for 
meeting the needs of the program to assure program integrity while also 
addressing the industry's concerns.
    Moreover, section 4554(b)(4) provides: ``the Secretary shall permit 
any carrier to develop and implement interim policies of the type 
described in paragraph (1) [coverage and administrative polices under 
negotiation], in accordance with guidelines established by the 
Secretary, in cases in which a uniform national policy has not been 
established under this subsection and there is a need for a policy to 
respond to aberrant utilization or provision of unnecessary tests.''

C. Other Issues and Questions

    Section 4554(b)(2) of the BBA and the Negotiated Rulemaking Act 
provide the framework for determining the scope of issues to be 
negotiated. Issues that are not included within the seven issues 
directly specified in section 4554(b)(2), such as Food and Drug 
Administration (FDA) approval of laboratory tests, Medicare payment 
policies, and Clinical Laboratory Improvement Act (CLIA) matters are 
not within the scope of these negotiations. Based on a review of the 
BBA and the Negotiated Rulemaking Act, we have concluded that the 
following issues specifically raised in the convening report are not 
within the scope of the negotiated rulemaking mandated by Congress, and 
thus will not be subject to negotiations by the Committee.
1. Use of Requisition Forms
    During the convening interviews, some of the interested parties 
raised the issue of a standard requisition form for ordering laboratory 
services as a means of standardizing information exchange. If the 
laboratory community believes that standardized requisition forms are 
needed, HCFA would appreciate the opportunity to provide input in 
developing these forms to assure that the information collected on the 
standard requisitions meets all the Medicare claim requirements.
    However, we believe that the Medicare program's interest is limited 
to information necessary to allow a determination regarding Medicare 
benefits and does not extend to how information is exchanged among 
providers, physicians and suppliers.
2. Enforcement of Physician Reporting
    The interested parties suggested discussing sanctions or other 
enforcement mechanisms for physicians who do not provide the required 
documentation to the laboratory. We do not believe this is within the 
areas authorized for rulemaking outlined under section 4554 (b)(2) of 
the BBA. Moreover, we do not believe the law authorizes such 
enforcement. That is, section 4317 of the BBA requires physicians and 
other practitioners to include diagnostic information with their 
laboratory orders when such information is required by HCFA or a 
contractor in order for the laboratory performing the test to get paid. 
However, the statute does not expressly authorize sanctions for 
violations of this requirements. Further, HCFA does not have the 
resources to monitor and develop the necessary record to pursue 
sanctions or other disciplinary mechanisms.
3. Advance Beneficiary Notice
    When a determination is made under section 1862(a)(1) that a 
service is not reasonable or necessary, a beneficiary may have 
liability waived under section 1879 of the Social Security Act. The 
beneficiary will be liable, however, if he or she has received written 
notice of noncoverage in advance of receiving the service. These 
provisions are already in regulations at 42 CFR 411.404. The written 
notice is called advance beneficiary notice (ABN).
    Interested parties to these negotiations told the convener that 
there is a wide divergence in practices regarding when ABNs are 
obtained for noncovered laboratory services. Moreover, since 
laboratories seldom have direct patient contact, they have little to no 
control over the information that is provided to the beneficiary.
    Although we are also concerned about this issue, we do not believe 
that the policies related to ABNs are within the scope of these 
negotiations. It does not appear related to the provisions identified 
in Section 4554(b)(2) of the BBA. However, we understand there appears 
to be significant confusion related to the ABN policies. We agree that 
it would be beneficial to the negotiations to provide time for 
clarification of these policies and discuss their applicability to the 
laboratory industry. As a result, we would be agreeable to a discussion 
on ABNs if the Committee requests it.
4. Elimination of Local Coverage Policy
    Most of the interested parties contacted raised the issue of 
consistency in local coverage policies for laboratory services as an 
area for negotiation. Some strongly believe that local policies should 
not be permitted as they are inconsistent with the goal of promoting 
national uniformity. Other interested parties believe there may be 
local practice patterns or other conditions that would justify 
differences in evaluating medical necessity.
    Section 4554(b) clearly authorizes local coverage policies as 
necessary to assure program integrity. Specifically, section 4554(b)(4) 
states: ``After the date the Secretary first implements such national 
policies, the Secretary shall permit any carrier to develop and 
implement interim policies * * *, in cases in which a uniform national 
policy has not been established under this subsection and there is a 
demonstrated need for a policy to

[[Page 30171]]

respond to aberrant utilization or provision of unnecessary tests.''
    Since the statute clearly authorizes local policies when there is a 
demonstrated need to respond to aberrant utilization or the provision 
of unnecessary tests, we believe it would be inappropriate to open the 
issue of eliminating local policies to negotiation.
    We are confident that the policies resulting from these 
negotiations and the provisions in section 4554(b) of the BBA will be 
extremely beneficial in mitigating the inconsistencies in laboratory 
coverage policies throughout the country. Since one of the likely 
criteria for prioritization of laboratory tests for discussion is the 
extent of national inconsistency, we believe that the negotiation on 
specific laboratory tests will likely address tests where there is 
currently the greatest variation in coverage among local carriers. 
However, we also believe the statute is clear in its intent to provide 
the authority for carriers to institute local policies in areas where 
there is demonstrated need to respond to potential abuse.
5. Screening Tests
    Section 1862(a)(7) of the Act prohibits payment for routine 
physical checkups. In addition, section 1862(a)(1)(A) of the Act 
prohibits payment for services that are not reasonable and necessary 
for the treatment of illness or injury. HCFA has interpreted these 
provisions as supporting the exclusion of coverage for general 
screening services under the Medicare program. Historically, HCFA has 
interpreted ``screening'' as those services furnished in the absence of 
signs or symptoms indicating potential illness or injury. We believe 
the Congress' actions in adding coverage of specific screening 
services, such as pap smears, mammography, colorectal screening, 
through legislation rather than extending coverage to all screening 
services, supports its continuing intent to exclude other screening 
services from Medicare coverage.
    Several of the interested parties reported during the convening 
process that HCFA's policy on what constitutes screening is unclear and 
misunderstood. For example, one representative suggested distinguishing 
screening tests from those tests used to establish a baseline value, 
tests for a population that is susceptible to a particular condition, 
tests used to rule out a condition, and tests used to monitor 
medication. Other representatives cited coding conventions and testing 
results as complicating issues.
    HCFA acknowledges that there has been confusion and inconsistency 
among the contractors in interpreting the policy regarding screening 
testing. For example, baseline testing is not considered screening 
where an illness or injury is identified and baseline testing is 
necessary prior to initiation of therapy to monitor the effectiveness 
of the treatment. Similarly, testing used for monitoring the 
effectiveness of a medication that the patient is taking would not be 
considered screening.
    The issue of interpretive guidelines for screening services 
involves a broader consistency of the medical community than the 
interested parties identified for this clinical laboratory negotiated 
rulemaking. For example, radiologists may be affected by any provision 
that would be negotiated regarding screening tests, yet not have a 
sufficient interest in this rulemaking proceeding to be included on 
this Committee. We believe that it would be inappropriate to engage in 
negotiation without the participation of all parties that would be 
significantly affected. Given that the Committee for this negotiated 
rulemaking does not include the full complement of interested parties 
for development of a rule related to screening services and that this 
item is not within the guidelines explicit in section 4554(b)(2) of the 
BBA, we do not believe that screening services should be included 
within the scope of the negotiations.
    In determining that the general interpretation of screening 
services is not within the scope of these negotiations, we do not 
intend to preclude the development of individual laboratory coverage 
policies related to specific screening testing. If the Committee 
decides to develop laboratory coverage policy that distinguishes 
between screening and diagnostic uses of a specific test, that action 
would be within the scope of these negotiations.

IV. Affected Interests and Potential Participants

    In addition to our participation on the Committee, the Conveners 
have proposed and we agree to accept representatives from the following 
organizations as negotiation participants, some of which are coalitions 
of two or more groups:

<bullet> American Association of Bioanalysts
<bullet> American Association for Clinical Chemistry
<bullet> American Association of Retired Persons
<bullet> American Clinical Laboratory Association
<bullet> American Health Information Management Association
<bullet> American Medical Association
<bullet> American Medical Group Association
<bullet> American Society of Clinical Pathologists
<bullet> American Society of Internal Medicine
<bullet> College of American Pathologists
<bullet> Clinical Laboratory Management Association
<bullet> Health Industry Manufacturers Association
<bullet> Medical Group Management Association
<bullet> National Medical Association

    We have determined that various types of laboratories, laboratory 
managers, physicians, and Medicare beneficiaries are likely to be 
significantly affected by the rule. These groups would be significantly 
and directly affected by coverage policies for clinical diagnostic 
laboratory tests, as well as by documentation and administrative 
policies for such tests. Group practices would be affected both because 
they operate laboratories and because they would be subject to any 
physician documentation or recordkeeping requirements imposed. Coding 
and recordkeeping issues also affect medical record specialists. 
Finally, to the extent that coverage of new tests will be affected by 
this rule to be negotiated, manufacturers of clinical diagnostic 
laboratory tests are like to be significantly affected.
    We would also like to note that Medicare contractors, which are 
those entities that adjudicate claims in local regions, will provide 
technical information to the negotiator representing HCFA. Since we 
consider the contractors to be agents of HCFA, we believe that they are 
most efficiently and effectively utilized in this manner rather than as 
negotiators in the process.
    This document gives notice of this process to other potential 
participants and affords them the opportunity to request that they be 
considered for membership on the Committee. Persons who will be 
significantly affected by this rule may apply for or nominate another 
person for membership on the Committee to represent such interests by 
submitting comments to this notice. Any application or nomination must 
include:
    <bullet> The name of the applicant or nominee and a description of 
the interests such person represents;
    <bullet> Evidence that the applicant or nominee is authorized to 
represent parties related to the interests the person proposes to 
represent;
    <bullet> A written commitment that the applicant or nominee will 
actively participate in the negotiations in good faith; and
    <bullet> The reasons that the applicant or nominee believe that 
their interests are

[[Page 30172]]

sufficiently different from the persons or entities listed above so as 
not to be adequately represented on the Committee as currently 
proposed.
    Individuals representing the proposed organizations and health 
industry sectors should have practical experience, be recognized in 
their particular community, have the ability to engage in negotiations 
that lead to consensus, and be able to fully represent the views of the 
interests they represent. We reserve the right to refuse 
representatives who do no possess these characteristics. Given the 
limited time frame for the development of this rule, we expect that the 
negotiations will be intensive. Representatives must be prepared and 
committed to fully participate in the negotiations in an attempt to 
reach consensus on the issues discussed. We are establishing an 
Internet site on our home page (http://www.hcfa.gov/quality), which 
will carry the names of Committee members as well as other meeting 
information. We invite public comment on this list of negotiation 
participants.
    The intent in establishing the Committee is that all interests are 
represented, not necessarily all parties. We believe this proposed list 
of participants represents all interests associated with adoption of 
national coverage and administrative policies for clinical diagnostic 
laboratory tests. In determining whether a party had a significant 
interest and was represented, we considered groups who have and will 
continue to actively represent the main provider groups, Lastly, while 
we are obligated to assure that all interests that are significantly 
affected are adequately represented, it is critical to the Committee's 
success that it be kept to a manageable size, particularly because of 
the short time frame in which the Committee must complete its task.

V. Schedule for the Negotiations

    We have set a deadline of six months beginning with the date of the 
first meeting for the Committee to complete work on the proposed rule.
    The first meeting of the negotiated rulemaking Committee is 
scheduled for July 13, 14, and 15, 1998, at Turf Valley Hotel in 
Ellicott City (Baltimore) beginning at 9 a.m. The purpose of this 
meeting will be to discuss in detail how the negotiations will proceed 
and how the Committee will function. The Committee will agree to ground 
rules for Committee operations, will determine how best to address the 
principal issues, and, if time permits, will begin to address those 
issues.
    A second meeting is scheduled for July 28, 29, and 30, 1998 at the 
Turf Valley Hotel in Ellicott City (Baltimore). Again, the meetings 
will begin at 9 a.m. We expect that by this meeting the Committee can 
complete action on any procedural matters remaining from the 
organizational meeting and either begin or continue to address the 
issues. Six subsequent meetings will be held as follows: August 25, 26, 
and 27 at the Phoenix Park Hotel in Washington, DC (1-800-824-5419); 
September 14, 15, and 16 in Washington, DC; October 6, 7, and 8 at the 
Turf Valley Hotel in Ellicott City (Baltimore); October 26, 27, and 28 
at the Turf Valley Hotel in Ellicott City; November 18, 19, and 20 at 
the Phoenix Park Hotel in Washington, DC and December 8, 9, and 10 at 
the Phoenix Part Hotel in Washington, DC.
    All meetings will begin at 9 a.m. and end at approximately 5 p.m. 
During these meetings, the Committee will continue to address the 
issues within the scope of the negotiations as described in this 
document. More detailed agenda for each meeting will be available on 
the HCFA Internet Home Page (http://www.hcfa.gov/quality/qlty-8a) 
preceding each meeting date.

VI. Formation of the Negotiating Committee

A. Procedure for Establishing an Advisory Committee

    As a general rule, an agency of the Federal Government is required 
to comply with the requirements of FACA when it establishes or uses a 
group that includes non-Federal members as a source of advice. Under 
FACA, an advisory committee begins negotiations only after it is 
chartered. This process is underway.

B. Participants

    The number of participants in the group is estimated to be 15 and 
should not exceed 25 participants. A number larger than this could make 
it difficult to conduct effective negotiations within the timeframe 
required by the statute. One purpose of this notice is to determine 
whether the proposed rule would significantly affect interests not 
adequately represented by the proposed participants. We do not believe 
that each potentially affected organization or individual must 
necessarily have its own representative. However, each interest must be 
adequately represented. Moreover, the group as a whole should reflect a 
proper balance of mix of interests.

C. Requests for Representation

    If, in response to this notice, an additional individual or 
representative of an interest requests membership or representation on 
the Committee, we will determine, in consultation with the conveners, 
whether that individual or representative should be added to the 
Committee. We will make that decision based on whether the individual 
or interest--
    <bullet> Would be significantly affected by the rule, and
    <bullet> Is already adequately represented in the negotiating 
group.

D. Establishing the Committee

    After reviewing any comments on this Notice and any requests, 
applications or nominations for representation, we will take the final 
steps to form the Committee.

VII. Negotiation Procedures

    The following procedures and guidelines will apply to the 
Committee, unless they are modified as a result of comments received on 
this notice or during the negotiating process.

A. Facilitator

    We will use a neutral facilitator. The facilitator will not be 
involved with the substantive development or enforcement of the 
regulation. The facilitator's role will be to--
    <bullet> Chair negotiating sessions in an impartial manner;
    <bullet> Help the negotiation process run smoothly;
    <bullet> Help participants define issues and reach consensus; and
    <bullet> Manage the keeping of the Committee's minutes and records.
    We propose to use Judy Ballard and Nancy Rubenstein of the HHS 
Departmental Appeals Board as the facilitators.

B. Good Faith Negotiations

    Participants must be willing to negotiate in good faith and be 
authorized to do so. We believe this may best be accomplished by 
selecting senior officials as participants. We believe senior officials 
are best suited to represent the interests and viewpoints of their 
organizations. This applies to us as well, and we are designating Grant 
Bagley, M.D., Director of the Coverage and Analysis Group, in our 
Office of Clinical Standards and Quality to represent HCFA.

C. Administrative Support

    We will supply logistical, administrative, and management support. 
We will provide technical support to the Committee in gathering

[[Page 30173]]

and analyzing additional data or information as needed.

D. Meetings

    Meetings will be held in the Baltimore/Washington area at either 
the Phoenix Park Hotel in Washington, DC, or at the Turf Valley Hotel 
in Ellicott City (Baltimore area) on the dates noted above. More 
detailed agenda for each meeting will be publicly available on the HCFA 
Home Page of the Internet (http://www.HCFA.gov/quality/qlty-8a). Unless 
announced otherwise, meetings are open to the public.

E. Committee Procedures

    Under the general guidance and direction of the facilitator, and 
subject to any applicable legal requirements, the members will 
establish the detailed procedures for Committee meetings that they 
consider most appropriate.

F. Defining Consensus

    The goal of the negotiating process is consensus. Under the 
Negotiated Rulemaking Act, consensus generally means that each interest 
concurs in the result unless the term is defined otherwise by the 
Committee. We expect the participants to fashion their working 
definition of this term.

G. Failure of Advisory Committee to Reach Consensus

    If the Committee fails to reach consensus, the Committee may 
transmit a report specifying any areas on which consensus was reached, 
and may include in the report any information, recommendations, or 
other materials that it considers appropriate. Additionally, any 
Committee member may include such information in an addendum to a 
report.
    If any Committee member withdraws, the remaining Committee members 
will evaluate whether the Committee should continue.

H. Record of Meetings

    In accordance with FACA's requirements, minutes of all committee 
meetings will be kept. The minutes will be placed in the public 
rulemaking record and Internet site on our home page.

I. Other Information

    In accordance with the provisions of Executive Order 12866 this 
notice was reviewed by the Office of Management and Budget.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance)

    Dated: May 1, 1998.
Nancy-Ann Min DeParle,
Deputy Administrator, Health Care Financing Administration.

    Approved: May 28, 1998.
Donna E. Shalala,
Secretary.
[FR Doc. 98-14798 Filed 6-2-98; 8:45 am]
BILLING CODE 4120-01-M