41170 Federal Register / Vol. 63, No. 147, Friday, July 31, 1998 /Rules and Regulations

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 441 and 489

[HCFA–1152–2–F]

RIN 0938–AJ08

Medicare and Medicaid Programs;

Surety Bond Requirements for Home

Health Agencies

AGENCY: Health Care Financing

Administration (HCFA), HHS.

ACTION: Final rule.

SUMMARY: This final rule revised

Medicare and Medicaid regulations

concerning surety bond requirements

published in the Federal Register (63

FR 29648) on June 1, 1998. Those

regulations specified submission

compliance dates for all home health

agencies (HHAs) to furnish a surety

bond to HCFA and/or to the State

Medicaid agency. This rule removes

those submission compliance dates.

EFFECTIVE DATE: This final rule is

effective on July 31, 1998.

FOR FURTHER INFORMATION CONTACT:

Ralph Goldberg, (410) 786–4870

(Medicare Provisions. Mary Linda

Morgan, (410) 786–2011 (Medicare

Provisions.

SUPPLEMENTARY INFORMATION:

I. Background

The Balanced Budget Act of 1997

(BBA ’97) requires each home health

agency (HHA) to secure a surety bond in

an amount of at least $50,000 in order

to participate in either the Medicare or

the Medicaid program. This requirement

applies to all participating Medicare and

Medicaid HHAs, regardless of the date

their participation began. We published

a final rule in the Federal Register on

January 5, 1998 (63 FR 292–355) to

implement the surety bond

requirements.

Generally, that rule requires each

HHA participating in Medicare to obtain

from an authorized Surety and then to

furnish to the fiscal intermediary a

surety bond in an amount that is the

greater of $50,000 or 15 percent of the

annual amount paid to the HHA by the

Medicare program, as such annual

amount appears in the HHA’s most

recently accepted cost report.

The rule also prohibits payment to a

State for home health services furnished

to Medicaid recipients unless the HHA

has furnished the Medicaid State agency

with a surety bond similar to one that

meets Medicare requirements. The

amount of the Medicaid surety bond

would be the greater of $50,000 or 15

percent of the annual amount paid to

the HHA by the Medicaid State agency

for home health services.

As a result of technical issues

concerning potential Surety liability

raised by representatives of both the

Surety and HHA industries after the

publication of the January 5, 1998 final

rule, we published a notice in the

Federal Register on March 4, 1998 (63

FR 10732). That notice advised the

public that we intended to make

technical revisions to the January 5,

1998 final rule. In another final rule also

published in the March 4, 1998 Federal

Register (63 FR 10730), we removed the

February 27, 1998 bond submission

compliance date, and announced that

we intended to establish a new

submission compliance date that would

be a date 60 days after the publication

of a subsequent final rule.

On June 1, 1998, an additional final

rule was published in the Federal

Register (63 FR 29648), that addressed

all of the technical changes announced

in the March 4, 1998 notice and revised

certain sections of the January 5, 1998

final rule. That rule also established that

the initial submission of a surety bond

for Medicare is July 31, 1998 and for

Medicaid by a date specified by each

Medicaid State agency but no later than

September 29, 1998.

Because of significant concerns

expressed by the United States Congress

and HHAs, and notification that the

General Accounting Office (GAO) is

investigating issues surrounding the

surety bond requirement we will

suspend the compliance date until we

evaluate the GAO report.

Although the surety bond

requirements remain in effect, the

practical effect of this document is to

absolve participating HHAs from having

to show compliance with the

requirements until 60 days following

publication of a new final rule but no

earlier than February 15, 1999.

II. Provisions of this Final Rule

This rule removes the submission

compliance dates that specify when

participating HHAs must submit a

surety bond in both the Medicare and

Medicaid programs.

III. Waiver of Proposed Rulemaking

We ordinarily publish a notice of

proposed rulemaking in the Federal

Register and invite prior public

comment on proposed rules. The notice

of proposed rulemaking can be waived,

however, if an agency finds good cause

that notice-and-comment procedure is

impracticable, unnecessary, or contrary

to the public interest and incorporates a

statement of the finding and its reasons

in the rule issued. We find good cause

to waive the notice-and-comment

procedure because it is impracticable to

employ notice and comment procedures

and issue a final rule on or before the

earliest date currently required for

HHAs to comply with surety bond

submission (July 31, 1998). For this

reason, we find good cause to waive

notice-and-comment and to issue this

final rule.

IV. Waiver of 30-Day Delay in Effective

Date

We ordinarily make the effective date

of a final rule at least 30 days after the

publication of the rule in the Federal

Register. However, this 30-day delay

can be waived if an agency finds good

cause for making the effective date of

the rule earlier than 30 days after the

publication of the rule. For the same

reason discussed in section III. above we

find it would be impracticable to delay

the effective date of this rule. Therefore,

we find good cause to waive the 30-day

delay in the effective date for this rule

and have made the effective date the

date of publication in the Federal

Register.

V. OMB Review

In accordance with the provisions of

E.O. 12866, this document was

reviewed by the Office of Management

and Budget.

List of Subjects

42 CFR Part 441

Family planning, Grant programs—

health, Infants and children, Medicaid,

Penalties, Reporting and recordkeeping

requirements.

42 CFR Part 489

Health facilities, Medicare, Reporting

and recordkeeping requirements.

42 CFR Chapter IV is amended as set

forth below:

PART 441—SERVICES:

REQUIREMENTS AND LIMITS

APPLICABLE TO SPECIFIC SERVICES

A. Part 441 is amended as follows:

1. The authority citation for part 441

continues to read as follows:

Authority: Sec. 1102 of the Social Security

Act (42 U.S.C. 1302).

2. In § 441.16 the heading of

paragraph (i) and paragraph (i)(1) are

revised to read as follows: § 441.16

Home health agency requirements for

surety bonds; Prohibition on FFP.

* * * * *

(i) Term and type of bond. (1) Initial

term: Each participating HHA that is not
Federal Register / Vol. 63, No. 147, Friday, July 31, 1998 /Rules and Regulations 41171

exempted by paragraph (d) of this

section must submit to the State

Medicaid agency a surety bond for a

term beginning January 1, 1998. If an

annual bond is submitted for the initial

term it must be effective for an annual

period specified by the State Medicaid

agency.

* * * * *

PART 489—PROVIDER AGREEMENTS

AND SUPPLIER APPROVALS

B. Part 489 is amended as follows:

1. The authority citation for part 489

continues to read as follows:

Authority: Secs. 1102 and 1871 of the

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

1395hh).

2. in § 489.67 the heading and

paragraph (a) are revised to read as

follows:

§ 489.67 Term and type of bond.

(a) Each participating HHA that does

not meet the criteria for waiver under

§ 489.62 must submit to HCFA in a form

as HCFA may specify, a surety bond for

a term beginning January 1, 1998. If an

annual bond is submitted for the initial

term, it must be effective through the

end of the HHA’s current fiscal year.

* * * * *

(Authority: Secs. 1102 and 1871 of the Social

Security Act (42 U.S.C. 1302 and 1395hh)).

(Catalog of Federal Domestic Assistance

Program No. 93.774, Medicare—

Supplementary Medical Insurance Programs,

and Program No. 93.778, Medical Assistance

Program).

Dated July 27, 1998.

Nancy-Ann Min DePearle,

Administrator, Health Care Financing

Administration.

Dated July 28, 1998.

Donna E. Shalala,

Secretary.

[FR Doc. 98–20628 Filed 7–29–98; 1:38 pm]

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