[Federal Register Volume 61, Number 86 (Thursday, May 2, 1996)]
[Rules and Regulations]
[Pages 19722-19760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10901]




[[Page 19721]]


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Part IV





Department of Health and Human Services





_______________________________________________________________________



Health Care Financing Administration



_______________________________________________________________________



42 CFR Parts 405 and 486



Medicare and Medicaid Programs; Conditions of Coverage for Organ 
Procurement Organizations (OPOs); Final Rule

Federal Register / Vol. 61, No. 86 / Thursday, May 2, 1996 / Rules 
and Regulations

[[Page 19722]]



DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 405 and 486

[BPD-646-FC]
RIN 0938-AE48


Medicare and Medicaid Programs; Conditions of Coverage for Organ 
Procurement Organizations (OPOs)

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

ACTION: Final rule with comment period.

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

SUMMARY: This final rule with comment period sets forth changes to the 
conditions of coverage for organ procurement organizations (OPOs). It 
provides for exceptions to the OPO qualification and performance 
standards under certain circumstances, revises the methodology for 
counting organs, and extends the period for interim OPO designations 
and notification of termination. It also adds new regulations relating 
to hospitals that change OPO designations when there is a change in the 
OPO service area.
    This final rule with comment period modifies conditions of coverage 
previously set forth in an interim final rule. These changes are being 
made in response to public comments received on that interim rule. New 
regulations contained in this final rule implement provisions of the 
Social Security Act Amendments of 1994.

DATES: Effective date: This final rule is effective May 31, 1996.
    Comment date: Written comments on the definition of ``donor'' 
(Section VI of the preamble) or the hospital waiver process (XI of the 
preamble) will be considered if we receive them at the appropriate 
address, as provided below, no later than 5 p.m. on July 1, 1996.

ADDRESSES: Mail written comments (One original and three copies) to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: BPD-646-FC, P.O. Box 7518, 
Baltimore, MD 21207-0518.
    If you prefer, you may deliver your written comments (one original 
and three copies) to one of the following addresses: Room 309-G, Hubert 
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC or 
Room C5-09-26, 7500 Security Boulevard, Baltimore, MD.
    Due to staffing and resource limitations, we cannot accept comments 
by facsimile (FAX) transmission. In commenting, please refer to file 
code BPD-646-FC. 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 200 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).
    See section XV of this preamble for special instructions regarding 
the submission of comments and recommendations regarding the 
information collection requirements contained in these regulations.

FOR FURTHER INFORMATION CONTACT: Jackie Sheridan, (410) 786-4635.

SUPPLEMENTARY INFORMATION:

I. Background

A. Legislative History

    Medicare coverage of services furnished to individuals with end-
stage renal disease who require dialysis or kidney transplantation is 
authorized under section 1881 of the Social Security Act (the Act). 
Medicare also covers certain other organ transplants that HCFA has 
determined are ``reasonable and necessary'' under section 1862 of the 
Act, and pays for those transplants and related organ procurement 
services.
    Under the Medicaid program, payment is made for ``medical 
assistance'' as defined in section 1905(a) of the Act and in our 
regulations at 42 CFR Part 440. Each State has a considerable degree of 
flexibility to supplement Medicaid-required services with optional 
services the State elects in its State plan. States must pay Medicare 
coinsurance and deductible amounts for transplant services for 
``qualified Medicare beneficiaries,'' and must pay for transplant 
services to individuals under the age of 21 who receive early and 
periodic screening, diagnostic, and treatment services. In addition, 
States may pay for other transplant services based on written standards 
which provide that similarly situated individuals are treated alike.
    Payment may be made under the Medicare and Medicaid programs for 
organ procurement costs attributable to payments to an organ 
procurement organization (OPO) only if the organization has been 
designated by the Secretary as meeting the conditions for coverage as 
an OPO. OPOs are generally paid indirectly for organ procurement costs. 
Usually, the transplanting hospital pays those costs to the OPO and 
claims them on its cost report. An OPO, however, does have to file a 
cost report with us at the end of its fiscal year. At that time, we 
settle any overpayments or underpayments with the OPO.
    Section 1138(b) of the Act sets forth the statutory qualifications 
and requirements that an OPO must meet for coverage of the costs of its 
services in procuring organs for hospitals under the Medicare and 
Medicaid programs.
    Title IV of the Health Omnibus Programs Extension Act of 1988 
(Public Law 100-607) contained the Transplant Amendments Act of 1988. 
This Act contained amendments to section 371 of the Public Health 
Service Act (PHS Act) (42 U.S.C. 273), which defines OPOs. 
Specifically, section 402(c)(1)(A) of Public Law 100-607 amended 
section 371(b)(1)(E) of the PHS Act by revising the definition of 
``service area'' that must be encompassed by an OPO. Public Law 101-
274, enacted on April 23, 1990, postponed until January 1, 1992, the 
effective date of section 402(c)(1)(A) of Public Law 100-607. 
Additional legislation regarding the definition of a service area was 
included in the Transplant Amendments Act of 1990 (Public Law 101-616). 
The details of these provisions are discussed under section II 
``Service Area'' of this preamble.
    Section 201(d)(1) of Public Law 101-616 redesignated section 
371(b)(2) of the PHS Act as section 371(b)(3). That section sets forth 
the functions of an OPO. However, the Congress did not amend two 
textual references in section 371(b)(1) to the OPO functions formerly 
specified in paragraph (2). Since that was clearly an oversight and 
failure to read the section 371(b)(1) text as if those ``paragraph 
(2)'' references had been changed to ``paragraph (3)'' would make part 
of the statute meaningless, we are using the corrected references in 
this document.
    Additional legislation regarding OPOs was included in section 155 
of the Social Security Amendments of 1994 (Public Law 103-432, enacted 
on October 31, 1994). This legislation amended section 1138(a)(1) of 
the Act to require a hospital to have an agreement for notification of 
potential organ donation only with the OPO designated for the area in 
which the hospital is located. Because this legislation was passed 
after our issuance of proposed and interim final rules in 1991 and 1994 
respectively to implement statutory provisions, we did not include any 
revisions regarding this subject in those publications. We are, 
however, including revisions to the regulations in this final rule to 
reflect the provisions of Public Law 103-432. These

[[Page 19723]]

provisions are discussed under section XI. ``Waiver of Service Area 
Designations'' of this preamble.

B. Regulations

    Regulations regarding organ procurement are currently found at 42 
CFR part 486 (``Conditions for Coverage of Specialized Services 
Furnished by Suppliers'') under subpart G (``Conditions of Coverage: 
Organ Procurement Organizations''). The existing regulations were 
recently redesignated from subpart D of 42 CFR Part 485 in a final rule 
with comment period published in the Federal Register on September 29, 
1995 (60 FR 50446). For the benefit of the reader, we are including a 
redesignation table. All succeeding regulations references will be to 
the redesignated sections. Throughout this preamble, we generally use 
the new section numbers in our discussion of specific sections. In some 
cases, we use both the old and the new section numbers for ease of 
reference.

------------------------------------------------------------------------
 Old section (subpart D of part 485   New section (subpart G of part 486
------------------------------------------------------------------------
485.301............................                  486.301            
485.302............................                  486.302            
485.303............................                  486.304            
485.304............................                  486.306            
485.305............................                  486.308            
485.306............................                  486.310            
485.307............................                  486.314            
485.308............................                  486.316            
485.309............................                  486.318            
485.311............................                  486.325            
------------------------------------------------------------------------

    On June 21, 1991, we published a Notice of Proposed Rulemaking in 
the Federal Register (56 FR 28513). In it, we proposed to implement 
section 402 of Public Law 100-607 and section 201 of Public Law 101-616 
by amending certain sections of 42 CFR part 482, which set forth the 
Medicare conditions of participation for hospitals, and subpart D of 42 
CFR part 485, which, at that time, set forth the Medicare and Medicaid 
conditions of coverage for OPOs.
    In addition to the provisions necessary to implement these laws, we 
proposed some other revisions to the existing regulations. These 
additional regulations were derived from our experience in 
administering the OPO program and not related to legislation. The most 
noteworthy of these latter provisions dealt with change of ownership of 
an OPO and with termination of participation in the Medicare and 
Medicaid.
    These proposed regulations were updated, revised, and adopted in an 
interim final rule with comment period issued on September 8, 1994 (59 
FR 46513). Provisions in the interim final rule which contained changes 
based on public comments included:
    <bullet> Participation in the Organ Procurement and Transplantation 
Network (OPTN) as one of the Medicare conditions of participation for 
hospitals.
    <bullet> Certification requirements for an OPO.
    <bullet> Requirements for an OPO service area.
    <bullet> Requirements that an OPO obtain HCFA approval before 
entering into any change of ownership, merger, consolidation, or change 
in its service area.
    <bullet> Medicare payment provisions.
    <bullet> OPO performance standards.
    We have included detailed information regarding the provisions of 
the proposed and interim final rule with comment period as background 
in the discussion of individual topics.
    We received 33 timely items of correspondence in response to the 
September 8, 1994, interim final rule with comment period. This final 
rule with comment period responds to the comments we received on the 
interim final rule with comment period. It also contains revisions to 
the regulations to implement provisions of the Social Security Act 
Amendments of 1994 (Public Law 103-432). These changes to the 
conditions of coverage for OPOs (42 CFR Part 486) are discussed below.

II. Service Area (Sec. 486.307)

A. Background

    Before enactment of Public Law 100-607, the PHS Act provided that, 
unless an OPO service area comprised an entire State, it had to be of 
sufficient size to include ``at least 50 potential organ donors'' each 
year.
    Section 402(c)(1)(A) of Public Law 100-607 amended section 
371(b)(1)(E) of the PHS Act to require the service area to be large 
enough that the OPO ``can reasonably expect to procure organs from not 
less than 50 donors each year.''
    We determined that this change would have resulted in a substantial 
number of existing OPOs failing to qualify for redesignation, because 
we interpreted the requirement that the OPO ``can reasonably expect to 
procure organs from not less than 50 donors'' to be more stringent than 
the requirement that the service area include ``at least 50 potential 
organ donors.'' According to a Departmental study cited in the Report 
of the Committee on Energy and Commerce on a precursor to the 1988 
legislative amendments to the Transplant Amendments Act of 1987 (H.R. 
Rep. No. 383, 100th Cong., 1st Sess. 5-6 (1987)), the average OPO was, 
at the time of the report, procuring organs from only 44 donors per 
year. (Because more than one organ may be obtained from a donor, the 
average number of organs obtained per OPO per year was about 110.) 
Currently, the average number of donors per OPO is 77, resulting in an 
average of 279 organs per OPO.
    Most of the designated OPOs were scheduled for redesignation 
beginning in March 1990 and would have been required to meet the new 
requirement imposed by Public Law 100-607. Information obtained from 
many representatives of organ procurement organizations (OPOs) revealed 
that almost one-half of the OPOs would not have been able to meet the 
new requirement. Some organ procurement and transplantation experts 
believed that many of the OPOs that did not have a realistic 
expectation of procuring organs from at least 50 donors were 
nonetheless effective and efficient entities. Consequently, the 
Department and other interested parties sought statutory relief to 
avoid disruption to the nation's organ procurement system.
    On April 23, 1990, Public Law 101-274 was passed. It postponed 
until January 1, 1992, the effective date of section 402(c)(1)(A) of 
Public Law 100-607, which changed the definition of ``service area.'' 
Therefore, the ``at least 50 potential donors'' requirement would have 
remained in full force and effect until that date. However, Public Law 
101-616 further amended section 371(b)(1)(E) of the PHS Act to require 
an OPO to have a defined service area that (1) is of sufficient size to 
assure maximum effectiveness in the procurement and equitable 
distribution of organs, and (2) either includes an entire Metropolitan 
Statistical Area (MSA) or does not include any part of the area. 
Section 201(d)(2) of Public Law 101-616 required the Secretary to 
publish a proposed definition of ``service area'' by February 14, 1991, 
and final regulations defining ``service area'' by November 16, 1991.
    In the June, 1991 proposed rule, we specified in Sec. 485.304(d) 
that an OPO cover a service area ``* * * of sufficient size to assure 
maximum effectiveness in the procurement and equitable distribution of 
organs and that either includes an entire metropolitan statistical area 
as specified by the Office of Management and Budget or does not include 
any part of such area  * * * *''.
    In the September 1994 interim final rule, we revised proposed 
Sec. 485.304(d) (now Sec. 486.306(d)) to provide that, for designations 
in 1996 and thereafter, an

[[Page 19724]]

OPO's service area must include an entire State or the OPO must procure 
organs from an average of at least 24 donors per calendar year in the 2 
years before the year of designation. We provided that an OPO operating 
in a noncontiguous U.S. State, a U.S. Territory, or a U.S. 
Commonwealth, such as Hawaii or Puerto Rico, was subject to a 
specified, alternative standard beginning January 1, 1996. We also 
provided that if an entity has not previously operated as a Medicare-
certified OPO, it must demonstrate that it can procure organs from at 
least 50 potential donors per calendar year.

B. Public Comments and Our Responses

    Comment: One commenter suggested that we require that every 
transplant center have a working relationship with an OPO.
    Response: Existing law and regulations already require this 
relationship. Sections 1138(a)((1)(C) and 1138(a)(3) of the Act require 
that a hospital have an agreement, as described in section 371(b)(3)(A) 
of the PHS Act, with its designated OPO if it is to participate in the 
organ procurement program. Medicare regulations at 42 CFR 405.2163 
require that every renal transplant center ``* * * participates in a 
patient registry program with an OPO designated or redesignated under 
Part 485, Subpart D * * * ''. (We are changing this reference to Part 
486, Subpart G in this final rule with comment period to reflect the 
redesignation). In addition, we have published in the Federal Register 
notices containing the Medicare coverage criteria for heart (52 FR 
10935, April 6, 1987), liver (56 FR 15006, April 12, 1991), and lung 
(60 FR 6537, February 2, 1995) transplantations. Each of these notices 
requires that a hospital submit documentation demonstrating the 
hospital's agreement with a Medicare-certified OPO as one of the 
conditions necessary for Medicare approval as a facility for which 
respective organ transplantation may be covered. We believe that these 
requirements meet the commenter's suggestion.
    Comment: One commenter suggested that more consideration be given 
to regional MSAs than to State boundaries. The commenter believed the 
current policy results in poor service to remote areas.
    Response: It is not clear to us how the current policy would 
inappropriately effect organ distribution to remote areas. We believe, 
however, that the law is clear regarding the MSAs and provides little 
latitude for alternative interpretation. Section 371(b)(1)(E) of the 
PHS Act provides that an OPO ``* * * has a defined service area that is 
of sufficient size to assure maximum effectiveness in the procurement 
and equitable distribution of organs, and that either includes an 
entire MSA (as specified by the Director of the Office of Management 
and Budget) or does not include any part of the area.'' Thus, we have 
no authority to split MSAs in designating OPO service areas. Other than 
repeating this statutory language, our Medicare regulations do not 
address MSAs.
    As a matter of practice, we designate OPO service areas on a county 
specific basis. An OPO's service area will include all of the counties 
within the MSA and as many other counties as it desires and is awarded 
based on the criteria in Sec. 485.308 (now redesignated as 
Sec. 486.316). We note that all counties that contain a hospital are 
assigned to one of the designated OPOs. In addition, in principle, we 
believe that organ donation is most likely to be enhanced where there 
is a willing and cooperative arrangement between the hospital and the 
OPO. Therefore, we believe that it could be potentially deleterious 
rather than helpful to force hospitals in counties that are not 
officially part of an MSA to be served by the OPO servicing the MSA. 
However, if the parties agree that designation of a regional MSA would 
be helpful, we would not preclude such designations.
    Comment: One commenter noted that current terminology used by the 
Office of Management and Budget (OMB) refers to ``Metropolitan Area'' 
(MA) rather than MSA as the general term describing urban 
classifications. Within MAs, there are several categories: MSA, 
Consolidated MSAs (CMSAs), Primary MSAs (PMSAs), and New England County 
Metropolitan Areas (NECMAs). The commenter requested clarification as 
to which MA categories are applicable to the OPO regulations.
    Response: For purposes of the OPO regulations, MSAs encompass the 
current MA categories of MSA, PMSA, and NECMA. A CMSA is comprised of a 
number of PMSAs that are considered separately for purposes of defining 
OPO service areas. In New England, we use NECMAs rather than MSAs and 
PMSAs which are based on townships rather than county areas. Since OPO 
service areas are defined based on counties, we believe it is more 
appropriate to use the county equivalent MA designations in New England 
(that is, NECMAs). The law clearly states that we may not divide an MSA 
into the service areas of multiple OPOs. If an OPO's service area 
includes any part of an MSA, PMSA, or NECMA, it must include the entire 
area.
    Comment: One commenter noted that a newly established OPO could 
qualify based on a determination that it has the potential to procure 
organs from at least 50 potential donors. The commenter requested 
clarification as to how the organization would demonstrate this fact. 
The commenter also noted that currently OPOs convert fewer than 50 
percent of the potential donors to actual donors. Therefore, it is 
unlikely that an organization with only a 50-donor potential can meet 
the 24-donor criterion.
    Response: The current criterion for qualification as an OPO 
servicing an area of fewer than 2.5 million people is that the 
organization demonstrate that it has the potential to procure organs 
from 50 donors. Thus, the criterion we have established for newly 
functioning OPOs is identical to that currently applied to the existing 
OPOs. We have historically not prescribed how an OPO must demonstrate 
this standard is met. Rather, when making such a determination, we have 
accepted the information submitted by the OPO, evaluated it, and 
requested clarification if necessary. We believe it is appropriate to 
hold newly established OPOs to the condition in place for existing 
OPOs. Thus, we do not intend to specify how such a standard is to be 
met. We will continue to allow flexibility for the OPO to come forward 
with reasonable information to demonstrate its position.
    We do, however, intend to take a more rigorous look at the 
information than we have previously. Newly established OPOs need to 
qualify at the end of a 2-year period based on one of the other 
criteria. In most cases, this criterion will be an average 24 donors 
per year over a 2-year period. We believe it would be disruptive to the 
organ procurement industry to allow OPOs to enter the arena only to 
exit 2 years later if they cannot meet the qualification criteria. 
Consequently, we expect OPOs to act responsibly and to have a specific 
plan for achieving the long-term qualification criteria.
    Comment: Several commenters expressed concern about the 24-donor 
rule. For the most part, these commenters believed that some very small 
OPOs are performing efficiently as is evidenced by the fact that they 
meet the performance criteria. The commenters believed that the 24-
donor criteria is not an appropriate measure of performance. They 
recommended that no size limitations be part of the qualification 
criteria for designation as a Medicare-approved OPO.
    One commenter believed that we should continue to permit an OPO 
that meets the performance criterion to

[[Page 19725]]

qualify if it has an alternative local unit (ALU) to address the 
equitable distribution issue. An ALU is an area developed by the OPO 
and approved by the OPTN contractor as an alternative area as an aid to 
equitable distribution. An ALU may be treated as a substitute for the 
OPO's service area in the allocation scheme. The commenter, from a very 
small OPO that is one of three OPOs operating in a single medium-size 
State, believed that HCFA should continue to permit an OPO that meets 
the performance criterion to qualify if it has an ALU to address the 
equitable distribution issue. In the commenter's State, the three OPOs 
share certain matched organs on a broader scale than they would if the 
ALU were not in place, but the majority of organs are allocated 
locally. The commenter believed that the regulations should be modified 
to provide for an exception criterion that would allow this small OPO 
to continue to qualify.
    Response: The qualification criteria are intended to implement 
section 371 of the PHS Act. Section 371(b)(1)(E) of the PHS Act 
provides that an OPO must have a defined service area that ``* * * is 
of sufficient size to assure maximum effectiveness in the procurement 
and equitable distribution of organs  * * *.'' We believe the use of 
the explicit words ``of sufficient size'' in the statutory language is 
a clear expression that the Congress intended the Secretary to 
establish some measures of size in response to this mandate in the law.
    Further, when we look at the legislative history, we believe that 
the Congress intended that the service area size criterion be rigorous. 
Section 371 initially set the qualification criterion at 50 potential 
donors. However, the Congress recognized that this criterion was too 
lax. The Congress subsequently modified section 371(b)(1)(E) in section 
402 of Public Law 100-607 to require the service area to be large 
enough that the OPO ``* * * can reasonably expect to procure organs 
from not less than 50 donors each year''.
    When this legislation was enacted, we recognized that setting the 
qualification standard at this level at that time would have resulted 
in decertification of approximately one-half of the OPOs approved by 
Medicare. Consequently, we sought legislative relief from the statutory 
standard. The Congress responded to our request with Public Law 101-
616.
    We acknowledge that the fact that an OPO procures 24 donors per 
year is not in and of itself assurance of ``maximum effectiveness'' in 
organ procurement. We believe, however, that this criterion certainly 
contributes to the retention of OPOs that are more likely to be 
effective in organ procurement. This is true particularly for OPOs with 
service areas that have populations under 1.5 million. We do not 
believe that it is productive and cost effective to continue to retain 
several OPOs operating within a single, often small, State. In these 
cases, often too much time and effort are spent in competition with the 
neighboring OPO rather than in organ outreach. Generally, a merger of a 
number of small competing OPOs is cost effective because it results in 
shared overhead, shared optimal practices, and a higher ratio of organs 
to fixed operating costs.
    Our decision to proceed with the 24-donor rule, however, is not 
solely based on the maximum effectiveness portion of the statutory 
language. The law also specifically requires that service area 
designations be sufficiently large to ensure equitable distribution of 
organs. Organs available for transplant are a scarce resource. There 
are many more people on the transplant waiting list than there are 
available organs. Both the Congress and this Administration support 
transplant policies that contribute to the equitable distribution of 
organs. We believe a proliferation of a large number of very small OPOs 
does not contribute to this goal. The organ allocation policies give 
priority, in most cases, to distribution of organs within the service 
area. Consequently, OPOs must give first priority to keeping organs 
procured within their service areas for transplant rather than 
dispersing them to a larger area. The existence of a substantial number 
of small OPOs could be disruptive to an effective large organ 
allocation system because each of these OPOs would be keeping organs 
for transplant within its own small service area.
    For example, a small hospital-based OPO may have only a single 
transplant center (itself) within its service area. In most cases, all 
the organs procured in the service area are then transplanted to 
patients on the waiting list at the transplant center instead of being 
allocated to patients on a regional or national basis. The OPO, in 
accordance with the national allocation rules, is transplanting the 
procured organs to the highest-ranking appropriate patients in the 
local area. These patients may have been on the waiting list a very 
short time. Equally appropriate patients in the region who have been 
waiting a much longer period of time would not receive the organs 
because they are outside the local area. Since the OPO is servicing 
only itself, it has an incentive to be a high-performing OPO. The 
patients at this center have a shorter wait time.
    However, in a neighboring town that is part of a larger OPO service 
area, there may be several hospitals that must share the organs 
procured from an OPO that is as effective in procuring organs as the 
small OPO. Because this OPO must share organs among several transplant 
centers, patients in these centers must wait considerably longer for 
the needed lifesaving organs. As a result, there is significant 
disparity among the transplant center waiting times. In various 
hearings on organ transplantation over the years the Congress has 
expressed concern about the disparity in waiting times for organ 
transplantation among various geographic areas. Many members of the 
Congress have expressed a strong desire to move toward a national 
allocation methodology to mitigate this condition. We believe that the 
definition of service area in the statute that addresses the idea that 
an OPO's service area be of sufficient size to assure equitable 
distribution is direction to the Secretary to not only look at OPO 
performance or effectiveness but to also consider the impact of service 
area size on organ distribution since very small OPO service areas tend 
to result in disproportionately short waits in some areas and 
disproportionately long waits in other areas. We conclude that a 
proliferation of very small OPOs may not be consistent with an 
equitable distribution system as required in the statute.
    While we acknowledge the existence of an ALU for the purpose of 
organ distribution may potentially mitigate some of the concern 
regarding equitable distribution, we believe that there are other 
values associated with establishing OPO minimal service area size that 
cause us to continue to support this position. There are many benefits 
of the consolidation of OPOs, such as the sharing of best practices, 
shared overhead, expediency in reacting to emergency situations, 
consistent procurement and transplant practices, and promotion of 
equitable treatment. We find no benefit to the program or the American 
public in retaining very small OPOs under a system of exceptions when 
there is no potential that these OPOs would ever meet the size 
criterion.
    On the other hand, we have not arbitrarily set up criteria that 
restrict OPOs to a certain size or population base. We recognize that 
small OPOs can be very effective in procuring and distributing organs 
despite serving a small population area in certain circumstances. OPOs 
may qualify if they service an entire State, regardless of the 
population or the number of donors

[[Page 19726]]

available. Similarly, we have established special qualifying criteria 
for OPOs servicing areas that are not contiguous to the rest of the 
nation. OPOs servicing Hawaii, Alaska, and U.S. territories must meet 
alternative criteria as discussed below.
    We also point out that the criterion is applied based on a 2-year 
average. Thus, if an OPO fails to meet the criterion in one year due to 
uncontrollable or unforeseen circumstances, it will have an opportunity 
to make up for lost donors in the following period. Since this is a 
static number, OPOs will be able to continually monitor themselves 
against this criterion and take corrective actions as necessary to 
improve.
    In evaluating the impact of this criterion on the existing OPOs 
using historical data, we are comfortable that the criterion will not 
have a major adverse impact on the existing OPOs.
    Based on 1994/1995 data, three OPOs that would have met the 
performance criterion if it had existed in that period would not have 
met the 24-donors per year criterion. However, one of these OPOs would 
have qualified under the statewide criterion. The remaining two OPOs 
are small organizations located in States with alternative, OPOs. We 
believe alternative, high-performing OPOs could service the respective 
areas adequately, while providing for a broader allocation area that is 
likely to promote more equity in organ distribution. Consequently, we 
continue to believe that the 24-donor rule is appropriate as one of the 
qualification criteria.
    In response to the comment that the 24-donor rule is not an 
appropriate measure of performance, we have reviewed this requirement. 
We agree that the 24-donor rule is not a measure of performance but a 
measure of service area size. Furthermore, it is redundant to maintain 
this requirement as both a performance and a qualification criterion. 
All OPOs must meet all of the qualification criteria to be recertified. 
It serves no purpose to place the requirement in two separate sections. 
Therefore, we are deleting Sec. 486.310(b)(2) (formerly 
Sec. 485.306(b)(2)) from this final rule with comment period.
    Comment: Some commenters noted that this same criterion was both a 
qualification standard and a performance standard. The performance 
standard is one that is subject to a corrective action plan. However, 
it was not clear whether the qualification criterion is subject to 
corrective action.
    Response: As noted above, we are deleting the 24-donor rule as a 
performance criterion. Nonetheless, we think the commenters' concern 
that there is no provision for exception to the qualification criteria 
is important.
    The law specifically requires that an OPO be of sufficient size to 
assure maximum effectiveness in the procurement and equitable 
distribution of organs. As discussed above, we do not believe it is in 
the best interests of the program or the public to establish an 
exception system for very small OPOs that historically do not possess 
the base to achieve 24 donors. Even though such a small OPO may be 
performing adequately based on its population base, we are concerned 
that the proliferation of extremely small service areas runs counter to 
the objectives of an equitable national organ allocation system.
    However, we recognize that an OPO may experience unforeseen 
circumstances beyond its control that result in the OPO failing to meet 
the qualification criterion during a single recertification period. 
Consequently, we are adding a new Sec. 486.307(d)(3) to provide for an 
exception process.
    This exception process is explicitly limited to those OPOs that 
have historically met the criteria and that have a specific plan to 
achieve 24 donors per year in the future. We are also allowing a one-
time exception for the transitional period. This exception allows an 
OPO that meets the performance standards in Sec. 486.310 to continue 
Medicare and Medicaid participation for 2 years while it puts in place 
a plan to achieve 24 donors per year in the future. (See Section X of 
this preamble)
    To receive the exception, an OPO must file its request with HCFA at 
least 15 days before its recertification date. The request must be in 
narrative form. If the exception is based on unusual circumstances the 
narrative must explain in detail the unusual circumstances that 
contributed to the OPOs failure to procure 24 donors per year. The 
exception request must also include data regarding the number of donors 
per year for the 5 years immediately preceding the present designation 
period. For example, if an OPO fails to meet the qualification standard 
for the 1996 designation period and it requests an exception, it must 
submit data, by year, for donors procured from 1991 through 1995. The 
exception request must also detail the specific actions the OPO intends 
to take to increase organ donors to 24 per year. Detailed instructions 
concerning the exception process and the corrective action will be 
included in the manual instructions.
    Comment: One commenter wrote encouraging us to view the 
qualification criteria as bare minimum which should not be weakened for 
any reason. The commenter was concerned with the discrepancy between 
the qualification standards for new OPOs and currently existing OPOs.
    Response: We appreciate support for the qualification standards 
adopted. As noted above, we believe it is important to maintain high 
standards to encourage OPOs to make every effort to procure all 
available organs. However, we are not aware of any means to avoid a 
discrepancy in standards between new and existing OPOs. That is, a new 
OPO will not have actual data on any objective measure of organ 
recovery or transplant rates. Consequently, we have no alternative than 
to use a measure of potential procurement for the initial designation.
    On the other hand, if an OPO is not recovering the potential 
organs, despite the fact that the area is large enough to support 
minimum recovery level, we believe it would be irresponsible to 
continue to allow that OPO to service the area. Thus, while there may 
be some discussion as to what exactly is the most appropriate 
qualification standard for existing OPOs, we believe that there should 
be no alternative to setting the standard using actual experience 
measures as opposed to potential. Since it is impossible to use actual 
data for new OPOs and we are wedded to using actual data for existing 
OPOs, there appears to be no alternative but to use different standards 
for new and existing OPOs.
    However, from the context of the comment, it appears that the 
commenter believes the standard for new OPOs, which uses potential 
recoveries, is more difficult than the standard for existing OPOs. We 
point out that while the number of potential donors for new OPOs is 
higher than the number of actual donors for existing OPOs, we do not 
believe the standard for new OPOs is more rigorous. We have been told 
by some OPOs that the average conversion rate of potential organs is 
approaching 3 to 1. This means that to achieve the standard for 
existing OPOs of 24 donors, a new OPO should have an area big enough to 
have close to 72 potential donors.
    We did not use the 72-donor criterion for several reasons. First, 
we believe it is inappropriate to hold new OPOs to a different initial 
standard than that which had to be met by their competitors when they 
first entered the program. Second, we believe that new OPOs deserve the 
benefit of the doubt in achieving a conversion rate that is above the 
national average. That is, a new OPO may have only 50 potential

[[Page 19727]]

donors, but because of effective practices is able to achieve a 
conversion rate of 2 to 1, and thus would continue to meet the 
qualification criterion at recertification time.
    Comment: One commenter noted that not all OPO service areas are 
contiguous territories. The commenter requested that HCFA prohibit OPOs 
from developing noncontiguous areas, citing difficulty in organ 
allocation when service areas are separated.
    Response: The commenter did not present any data or examples 
demonstrating that noncontiguous areas are problematic. Further, the 
issue of noncontiguous service areas has not presented a significant 
problem for organ allocation or procurement to the best of our 
knowledge. Most OPOs that have noncontiguous service areas have 
established field offices in each territory. Often, they have secured 
approval for alternative allocation policies for each portion of the 
service area. While there may be some administrative complexities 
associated with noncontiguous areas, this concept has appeared to work 
very well. We find no reason to prohibit the practice in the future.

C. Provisions of This Final Rule With Comment Period

    We are making the following changes to the interim final rule.
    <bullet> We are revising Sec. 486.306(d). We are retaining the 
general requirements for documentation of service area in paragraph (d) 
and moving the specific detailed requirements in that paragraph to new 
Sec. 486.307 OPO service area requirements and documentation and 
including a cross-reference to Sec. 486.307 in Sec. 486.306(d). We are 
making this change as a technical change to allow for a better 
organization and readability of the regulations.
    <bullet> We are adding Sec. 486.307(d)(3) to provide for an 
exception process when an OPO experiences unforeseen circumstances 
beyond its control that result in the OPO failing to meet the 
qualification criterion during a single certification period. To 
qualify for an exception, the OPO must demonstrate that (1) it failed 
to meet the 24-donor criterion due to unusual circumstances beyond its 
control, (2) it has historically maintained a service area sufficient 
to assure effective procurement and equitable distribution (that is, it 
has historically achieved 24 donors per year), and (3) it has a 
specific plan to achieve 24 donors per year in the future.
    <bullet> We are deleting Sec. 486.310(b)(2) (formerly 
Sec. 485.306(b)(2)). This paragraph contains the 24-donor rule as a 
measure of performance. As noted above, we are keeping this measure as 
a qualification criterion.
    <bullet> Although we did not receive a comment to this effect, we 
are redesignating Sec. 486.310(a)(3) (formerly Sec. 485.306(a)(3)), 
that requires OPOs to enter into a working relationship with any 
hospital or transplant center in the OPO's service area that requests a 
working relationship, as Sec. 486.304(b)(8). We believe that this 
requirement is more appropriately considered as a qualification 
standard for OPOs rather than as a performance standard.

III. Composition of the Board of Directors of an OPO 
(Sec. 486.306(f))

A. Background

    Section 485.304(f) (redesignated as Sec. 486.306(f)) requires that 
as one of the conditions for qualification as an OPO under the Medicare 
and Medicaid programs, an OPO must have a board of directors or an 
advisory board that has the authority to recommend policies relating to 
the donation, procurement, and distribution of organs. That section 
also specifies that the board must include members with various 
backgrounds and areas of interest. In the proposed rule, we included a 
revision to Sec. 485.304(f)(3) (now Sec. 486.306(f)(3)) to allow either 
a physician or an individual with a doctorate degree in a biological 
science with knowledge, experience, or skill in the field of 
histocompatibility to serve on an OPO board of directors or advisory 
board. In the interim final rule, we changed the requirement from ``a 
physician with knowledge, experience, or skills in the field of human 
histocompatibility'' to ``a physician with knowledge, experience or 
skill in human histocompatibility, or an individual with a doctorate 
degree in a biological science and with knowledge, experience, or 
skills in the field of human histocompatibility.''
    In addition to this requirement, Sec. 486.306(f) specifies that the 
board must also consist of:
    <bullet> Members who represent hospital administrators, tissue 
banks, voluntary health associations in its service area, or emergency 
room personnel.
    <bullet> Members who represent the public residing in that area.
    <bullet> A neurosurgeon or another physician with knowledge or 
skills in the field of neurology; and
    <bullet> A transplant surgeon from each transplant center in its 
service area with which the OPO has an arrangement to coordinate its 
activities.
    While an OPO may have more than one board, the membership 
composition specified in Sec. 486.306(f) must exist on a single board.

B. Public Comments and Our Responses

    Comment: Several commenters questioned the composition of the 
policy board. Some commenters expressed concern with the involvement of 
a transplant surgeon from each transplant center. They interpreted the 
regulation as requiring that each transplant surgeon from each center 
be placed on the board. They commented that this provision would 
produce very large and costly boards and would give transplant surgeons 
control.
    Response: The commenters misinterpreted the regulation. We are not 
requiring that each transplant surgeon be included on the OPO policy 
board. Rather, we are including in the regulations the statutory 
requirement contained in section 371(b)(1)(G)(i)(V) of the PHS Act. 
This section requires that there be one transplant surgeon from each 
transplant center within the OPO service area included on the policy 
board.
    We agree with the commenter that to include all transplant surgeons 
would be inappropriate. Such a situation would give transplant surgeons 
a disproportionate influence over OPO policies. We did not intend to 
require the inclusion of every transplant surgeon. In fact, we read the 
statute as prohibiting this composition. That is, we believe the 
statute does not provide the OPO an opportunity to alter the 
composition of the board from that provided in the law. Section 
371(b)(1)(G)(i) of the PHS Act states clearly that the board ``is 
composed of * * * from each transplant center * * * a member who is a 
surgeon * * *.'' We believe the use of the article ``a'' to modify 
transplant surgeon members, expresses the will of the Congress that the 
board be composed using only a single transplant surgeon from each 
transplant center within the service area. The statute does not say 
that the board must include at least the following members. Rather it 
clearly states that the board is composed as directed. Thus, OPOs may 
not add additional members to the policy board other than those 
specified in Sec. 486.306(f). We are modifying this section to specify 
that the board must ``be composed of'', rather than say ``include'' to 
clarify this provision.
    Comment: Another commenter recommended that Sec. 486.306(f) be 
modified to include only a single representative from one of the 
disciplines from each transplant center on the policy board. The 
commenter was concerned that the current regulation gives surgeons a 
disproportionate influence on the board

[[Page 19728]]

or requires very large boards to balance their influence.
    Response: As noted above, the statute is very clear in describing 
the composition of the policy board. To alter the composition would 
require a change in the law. However, we are not convinced that the 
composition mandated in the law is problematic in most cases.
    The law requires both a neurologist and a histocompatibility expert 
on the board. In addition, it requires an unspecified number of other 
people that may be included; for example, representatives of hospital 
administrators, intensive care and emergency room personnel, tissue 
banks, voluntary health associations, and members of the public. 
Although the law does not specify the number of these representatives, 
it is clear that there must be multiple representatives through the use 
of the plural of the word ``members'' in sections 371(b)(1)(G)(i) (I) 
and (II) of the PHS Act. In all but a few extremely large urban OPO 
service areas, using only the minimum representation from these other 
categories will result in a fairly small and balanced policy board.
    We acknowledge that there will be isolated cases where the 
requirement for a surgeon from each transplant center may be 
problematic. For example, we are aware of one OPO that services 17 
transplant centers. The inclusion of 17 transplant surgeons will result 
in a very large and potentially difficult policy board. Therefore, we 
are considering recommending a statutory change to the Congress 
regarding the law governing OPO board composition. In the meantime, the 
boards must be composed as directed in the law.
    Comment: Other commenters recommended that OPOs be allowed to 
establish committees, such as a quality of organs recovered committee 
or a medical committee, in lieu of full representation on the policy 
board by all surgeons. Still other commenters expressed support for 
inclusion of one transplant physician from each transplant center on 
the policy board.
    Response: As noted above, the composition of the board is explicit 
in the statute. We do not have the authority to condone alternative 
governing strategies. We will consider developing a recommendation for 
statutory change in this regard. However, we believe that the statute 
would not prohibit OPOs from establishing the committees that have been 
suggested. Such committees could advise the board and may be very 
helpful in developing the OPO's policies and influencing its practices. 
We strongly encourage OPOs to seek opinions from their customers and 
others affected by their decisions. The only problem we find with the 
commenter's recommendation is that such committees cannot be used in 
lieu of full representation.
    Comment: One commenter suggested that Sec. 485.304(f)(3) (now 
Sec. 486.306(f)(3)) relating to histocompatibility representation on 
the board be broadened further to include a doctorate level individual 
in bioethics or a nursing specialty.
    Response: We are not certain if the commenter intended that the 
histocompatibility requirement be met by someone with bioethic or 
nursing doctorate level education or that such individuals be added in 
addition to the histocompatibility person. We believe that the 
histocompatibility requirement is extremely important to the policy 
board composition. Histocompatibility testing is paramount in 
discussing policies related to equitable distribution of organs. We 
believe that the histocompatibility representative on the policy board 
must be someone with a medical degree or a biological science degree 
with experience in human histocompatibility.
    The requirement included in Sec. 486.306(f)(3) is a reiteration of 
the requirement in the statute. The current law does not authorize 
alternative education for this requirement. However, the current 
regulations do not prohibit an OPO from including someone with a 
doctorate level education in nursing or bioethics on the board. The 
statute does not provide specific direction as to the education or 
number of representatives from hospitals and the public. An OPO could 
certainly choose to include a person with advanced nursing and 
bioethics training, or both, as one of these board representatives.
    Comment: One commenter recommended that the OPO boards be comprised 
of not more than 50-percent representation from transplant centers.
    Response: As noted above, we have described the composition of the 
OPO boards in this regulation in accordance with section 371 of the PHS 
Act. We note that the law does not prescribe the number or skills mix 
of representatives from hospitals or the public. We expect that, given 
that the boards must include a transplant surgeon from each transplant 
center, in most cases the transplant centers will be heavily 
represented on the boards.
    We believe, however, that it is unnecessary and inappropriate to 
dictate the percentage of transplant center representatives on the 
board. We believe that each OPO is best equipped to determine the needs 
of its operation and the community. Given the number of transplant 
centers in the OPO's service area, such a requirement could result in 
extremely large boards which could be costly to the OPO and, 
consequently, the Medicare and Medicaid programs. Further, we do not 
believe that the statute supports such a requirement because the law 
was deliberately vague in its use of the term ``representatives'' as 
opposed to use of limiting article ``a'' in the requirements regarding 
members of the board.
    However, given the rigorous performance standards that OPOs must 
meet, we expect that each OPO will ensure as broad a representation as 
practicable in setting up its policy board. We expect that it would 
want to seek out increased involvement with donor hospitals and public 
representatives to achieve innovative strategies to increase donation 
rates. OPOs that fail to modify their boards to achieve a balance in 
representation from the donor community and the transplant community 
are likely to feel the consequences in failure to meet performance 
standards. Thus, although we are not specifying the percentage of 
representatives, we are holding OPOs accountable for appropriate 
decisions.

C. Provisions of this Final Rule With Comment Period

    We are clarifying Sec. 486.306(f) by revising the language 
describing the OPO board. The revised language, ``the advisory board 
must be composed of the following,'' more clearly indicates that there 
is no discretion to add or remove skills to the mix on the board.

IV. Equitable Distribution of Organs (Sec. 486.306(i))

A. Background

    In a proposed revision to Sec. 485.304(i) (now Sec. 486.306(i)), we 
specified that an OPO must have a system to allocate donated organs 
equitably among transplant centers and patients according to 
established medical criteria. This revision was made to include the 
word ``equitably'' in the previously existing requirement. In the 
interim final rule with comment period, we changed the requirement to 
eliminate the allocation of organs among ``centers'' and to specify the 
medical criteria that the system must operate under; that is, they must 
be consistent with Centers for Disease Control and Prevention (CDC) 
standards and with OPTN rules. We made the former change to be 
consistent with section 371(b)(3)(E) of the PHS Act.

[[Page 19729]]

B. Public Comments and Our Responses

    Comment: One commenter believed there was now an absence of a 
requirement for OPOs to equitably distribute organs. Another commenter 
recommended that there be a follow-up mechanism to ensure that OPOs use 
a system to allocate organs according to established medical criteria.
    Response: The regulations at Sec. 486.306(i) require OPOs to have a 
system to equitably allocate donated organs among transplant patients 
that is consistent with the CDC and the OPTN rules. We made the change 
in the interim final rule to specifically add the word ``equitably'' to 
the distribution requirement. Currently, the OPTN develops a national 
organ allocation system. The system is developed by the membership and 
is medically based.
    Although we are aware of isolated instances of OPOs using 
allocation systems that do not comport with the national OPTN rules, we 
do not believe that this situation is widespread. Consequently, we 
believe it is unnecessary to establish a formal mechanism to evaluate 
OPO allocation methodologies at this time. However, we invite the 
public to advise the Department of incidents of organ allocation that 
fall outside the established system. Incidents should be reported to 
Judith B. Braslow, Director, Division of Organ Transplantation, Room 7-
18, 5600 Fishers Lane, Rockville, MD 20857.
    Comment: Two commenters requested clarification regarding the 
reference to the CDC standards. They noted that the CDC guidelines were 
published as guidelines, not rules. They inquired if inclusion in 
Sec. 485.304(i) (now Sec. 486.306(i)) sets these guidelines as 
standards of practice for the entire transplant community.
    Response: Section 486.306(i) requires that an OPO's system of 
distribution of organs among patients be consistent with the CDC 
standards. For the most part, these CDC standards relate to screening 
potential organ donors and organs recovered for Human Immunodeficiency 
Virus (HIV) infection. We believe that the monitoring for HIV infection 
is critical and is an essential element for Medicare certification of 
OPOs. In fact, in section 371(b)(3)(C) of the PHS Act, the Congress has 
specifically required that OPOs evaluate an organ for HIV infection.
    Exclusion of prospective blood donors based on their acknowledged 
risk factors for HIV infection began in 1983. In 1985, when the test 
for the HIV antibody became available, screening of prospective donors 
of blood, tissue and organs began. Both measures have reduced 
remarkably the transmission of HIV via these routes. A 1991 
investigation, however, determined that several recipients had been 
infected with HIV by an organ/tissue donor who had negative HIV 
antibodies at the time of the donation. This occurrence raised 
questions about the need for additional Federal oversight of 
transplantation of organs and tissues.
    A work-group was formed by the Public Health Service (PHS) to 
address transmission of HIV through transplantation of human tissue. 
This group produced a set of recommendations that were included in the 
CDC Guidelines that we have included as an appendix to subpart G of 
part 486 and referenced in the OPO regulations. OPOs must abide by the 
CDC guidelines to qualify for Medicare and Medicaid certification.
    In developing the recommendations, the PHS sought assistance from 
public and private health professionals and representatives of the 
transplant community, public health and other organizations. A total of 
37 external consultants and 18 government staff formulated the 
recommendations. These recommendations address issues such as donor 
screening; quarantine of tissue from a living donor; inactivation or 
elimination of infectious organisms in organs and tissues before 
transplantation; timely detection, reporting, and tracking of 
potentially infected tissues, organs and recipients; and recall of 
stored tissues from donors found after donation to have been infected. 
Factors considered in the development of these guidelines included 
differences between the screening of living and cadaveric donors; time 
constraints due to organ/tissue viability that may preclude performing 
certain screening procedures; differences in the risk of HIV 
transmission from various organs and tissues; differences between 
systems for procuring and distributing organs and tissues; the effect 
of screening practices on the limited availability of organs and some 
tissues; and the benefit of the transplant recipients.
    The CDC guidelines are intended to promote public health and 
safety. They were not arrived at without appropriate assessment of the 
risks and benefits for the public health of Americans. We fully support 
the CDC guidelines and have attempted to assure compliance with them 
through inclusion in the Medicare conditions of coverage. Thus, the 
inclusion of the CDC guidelines as a requirement for OPOs does give the 
CDC guidelines regarding organ allocation the force of regulation. That 
is, any OPO found to be failing to conduct appropriate screening or 
distributing organs that are not in compliance with the CDC guidelines 
for organ allocation can be found out of compliance with the 
qualifications for becoming a Medicare- or Medicaid-certified OPO and 
have its certification terminated.
    However, we acknowledge that the reference to the CDC guidelines 
contained in the interim final rule with comment period is not 
sufficiently clear on this point. Consequently, we are revising 
Sec. 486.306(i) to specifically incorporate by reference the CDC 
guidelines. The guidelines were issued as one of the CDC Morbidity and 
Mortality Weekly Reports, ``Guidelines on Preventing Transmission of 
Human Immunodeficiency Virus Through Transplantation of Human Tissue 
and Organs,'' Vol. 43, No. RR-8, May 20, 1994.
    We did not receive a formal comment on the application of the CDC 
guidelines during the public comment period for the interim final rule. 
We understand, however, that OPOs have taken the position that 
acceptance of recovered organs is a matter of patient choice. Some 
patients are so dangerously close to death while on the waiting list 
that they are willing to risk receiving an organ potentially infected 
with a fatal virus rather than risk the chance of not finding in a 
timely manner an appropriate healthy organ. Some OPOs support the 
patient having the opportunity to make this choice for themselves and 
believe the CDC guidelines prohibit this practice.
    The law at section 371(b)(3)(C) of the PHS Act is clear regarding 
testing for infection with the etiologic agents (HIV-1 and HIV-2) for 
acquired immune deficiency syndrome and taking steps to prevent 
exposure to HIV through transplantation of these organs. Regardless of 
the personal preference of a potential recipient or the opinion of the 
OPO staff, the law requires that potential donors be tested for viral 
markers for HIV-1 and HIV-2, and if found to be infected, organs from 
that donor are not to be transplanted.
    The CDC guidelines, however, do permit some measure of judgment for 
organs tested negative for HIV etiological agents, but procured from 
donors who have demonstrated high-risk behaviors. The recommendation in 
the CDC guidelines on donor screening state that ``* * * Regardless of 
the HIV antibody test results, persons who meet any of the high-risk 
criteria should be excluded from donation of organs or

[[Page 19730]]

tissues unless the risk to the recipient of not performing the 
transplant is deemed to be greater than the risk of HIV transmission 
and disease. In such a case, informed consent regarding the possibility 
of HIV transmission should be obtained from the recipient. * * *''
    Thus, while compliance with the CDC guidelines requires OPOs to 
conduct screening of donors through asking questions about the 
potential donor's behavior relative to HIV-risk factors, the guidelines 
do not unilaterally prohibit transplantation of the organs from donors 
found to have high-risk behavioral criteria who have negative HIV-1 and 
HIV-2 serologic tests. The OPO may procure the organs from such donors 
and make the information concerning HIV-risk factors available to the 
transplant surgeon. The transplant surgeon will then assess the risk 
factors for HIV against the risk associated with delaying 
transplantation and together with the potential recipient (and his or 
her family if appropriate) make a decision to accept or reject the 
organ. It is imperative, however, that full information regarding the 
risk factors be disclosed by the appropriate transplant surgeon to the 
potential recipient.

C. Provisions of this Final Rule With Comment Period

    We are including the specific CDC guidelines cited in the interim 
final rule as appendix A of part 436 subpart G. We are also clarifying 
the reference to the CDC guidelines in Sec. 486.306(i). As a result of 
these revisions, we are making the guidelines required standards for 
OPOs.

V. Testing of Organs (Sec. 486.306 (q) and (s))

A. Background

    In the proposed rule, we added a new Sec. 485.304(r) (now 
Sec. 486.306(q)) to require OPOs to assure appropriate tests consistent 
with OPTN standards and CDC guidelines are performed to prevent the 
acquisition of organs that are infected with the HIV-1 and HIV-2 
etiologic agents for acquired immune deficiency syndrome. In the 
interim final rule, we redesignated the contents of paragraph (r) as 
paragraph (q) and the contents of paragraph (q) as paragraph (r) and 
added a new paragraph (s). Revised paragraph (r) required OPOs to 
assist hospitals in establishing and implementing protocols for making 
routine inquiries about organ donations by potential donors. New 
paragraph (s) required OPOs to ensure that serologic testing for HIV-1 
and HIV-2 viral markers is performed on potential donors consistent 
with OPTN rules and CDC guidelines for solid organ donation.

B. Public Comments and Our Responses

    Comment: One commenter recommended that we include standard 
provisions that are required for all hospital donation protocols. The 
two provisions the commenter specifically suggested were that (1) 
hospitals refer all potential donors to the OPO before donation has 
been mentioned, and (2) a trained professional be involved in all 
donation requests.
    Response: We believe that the suggested protocols are good and are 
likely to work quite effectively for many OPOs and hospitals. However, 
it is inappropriate to regulate specific donation protocols at this 
time. There are many different protocols that can be highly effective 
in organ donation. We do not wish to stifle the development of 
innovative means of increasing the procurement rate by regulating 
specific methodologies or protocols.
    Comment: One commenter expressed concern with the requirement in 
Sec. 485.304(s) (now Sec. 486.306(s)) regarding CDC guidelines for 
preventing transmission of HIV through transplantation of human tissue 
and organs. The commenter noted that an OPO has no knowledge of what 
information the transplant center provided to the potential recipients 
regarding their informed consent to the risks of transmission of 
infections. The commenter suggested alternative language describing an 
OPO's responsibility to make information available to the transplant 
center. This language would state that an OPO is not responsible for 
the decision to transplant high-risk organs in life-threatening 
situations.
    Response: Section 485.304(s) (now Sec. 486.306(s)) requires that 
OPOs ``Ensure that donors are tested for human deficiency viral markers 
consistent with OPTN rules and CDC guidelines for solid organ 
donation.'' Similarly, Sec. 485.304(i) (now Sec. 486.306(i)) requires 
that the OPO allocate organs in accordance with these guidelines. OPOs 
are responsible for testing and allocating organs in accordance with 
these guidelines.
    If an OPO only allocates organs that comply with the guidelines to 
a transplant hospital, a transplant center would receive a high-risk 
organ to transplant to the recipient only on a very rare and carefully 
selected basis. The OPO is required to ensure that informed consent of 
the recipient is obtained. Thus, while the commenter is accurate in the 
statement that an OPO does not formally have direct contact with the 
recipient, we do not agree that such a situation in any way alters the 
responsibility of an OPO to follow the CDC guidelines regarding testing 
and allocation of organs. We expect that in these rare cases the OPO 
will work closely with the transplant center to impress upon the center 
the importance of getting informed consent documentation to the OPO 
timely. We expect hospitals will cooperate with the OPOs in meeting 
this requirement.
    An OPO's responsibility does not stop with testing the donor and 
making information available to the transplant center. The regulations 
go beyond this to require the OPOs to allocate organs in accordance 
with CDC guidelines. We believe it is appropriate to continue to hold 
OPOs responsible for compliance with the CDC guidelines for allocation 
as well as testing. Therefore, we are not modifying the regulations as 
recommended by this commenter. However, as we stated above in 
discussing Sec. 486.306(i), we believe that the nonspecific reference 
to the CDC guidelines could be confusing. Thus, we are clarifying the 
regulations to include a reference to the CDC guidelines in 
Sec. 486.306(s). The guidelines are also included as an appendix to 
part 486 subpart G.
    Comment: One commenter suggested we also require OPOs to use the 
guidelines and recommendations of the PHS workgroup on the testing of 
organ donors for the presence of hepatitis.
    Response: Unlike the requirement for testing for HIV viral markers, 
which is contained in section 371(b)(3)(C) of the PHS Act, there is no 
express legislative authority to mandate a requirement for hepatitis 
testing. Although we believe that hepatitis testing is not precluded by 
the law, there is no clear indication in either the statutory language 
or the legislative history indicating the Congress intended that the 
direction provided for HIV testing be expanded to other infectious 
diseases.
    We believe that it would be permissible to issue a regulation 
requiring hepatitis testing for potential organ donors. However, we 
believe that it would be imprudent to proceed with such a requirement 
without the benefit of a prior public comment period to solicit the 
input of the industry and other interested parties. We recognize that 
there are significant OPO concerns that must be considered before we 
proceed with any proposal to require testing for hepatitis. We 
especially want to consider any cost impact and potential for decline 
in organ donations before we develop a regulatory change of this 
nature. Consequently, we are inviting public comment on this issue at

[[Page 19731]]

this time. If, after considering any comments we receive, we believe 
that change in the regulations is appropriate, we will issue a new 
regulation.

C. Provisions of the Final Rule With Comment Period

    We have revised Sec. 486.306 (q) and (s) to include a reference the 
CDC guidelines as standards in this final rule with comment period. We 
have also included the CDC guidelines as an appendix to part 486 
subpart G.

VI. Qualification Data (Sec. 486.306(t))

A. Background

    In the interim final rule with comment period, we added 
Sec. 485.304(t) (now Sec. 486.306(t)) to enable us to verify an OPO's 
compliance with the performance standards. Section 486.306(t) requires 
an OPO to submit accurate data to us within 15 days following the end 
of a calendar year (unless otherwise notified), giving information on 
the--
    <bullet> Population of designated service areas based on the most 
recent U.S. Bureau of the Census data;
    <bullet> Number of actual organ donors;
    <bullet> Number of kidneys procured;
    <bullet> Number of kidneys transplanted;
    <bullet> Number of extrarenal organs by type procured; and
    <bullet> Number of extrarenal organs transplanted.

B. Public Comments and Our Responses

    Comment: One commenter believed that there are multiple 
interpretations for the terms for ``actual donor'' and ``procured'' 
that are used in the performance standards. The commenter recommended 
that HCFA adopt the definitions that have been developed by the OPTN 
contractor.
    Response: Because, in the case of the OPO performance criteria, we 
are using criteria that are based on the performance of peers, it is 
important that all OPOs use the same data definitions to report data 
uniformly. We surveyed the use of various terms within the industry, 
including the OPTN contractor, and developed the following definitions:
    <bullet> Kidneys recovered--The number of kidneys recovered is the 
actual number of kidneys the OPO recovers with the intent to 
transplant. Kidneys recovered that are intended for research are not to 
be included in the count. However, if a kidney was recovered with the 
intent to transplant but was not actually transplanted due to 
unforeseen circumstances, it may be counted. Kidneys recovered en bloc 
are counted as two kidneys.
    <bullet> Kidneys transplanted--The number of kidneys transplanted 
is the actual number of kidneys that were transplanted into recipients. 
Kidneys transplanted en bloc are counted as two kidneys. Kidneys 
transplanted as part of multiple organ transplants, for example, 
kidney-pancreas transplants, are counted as both a kidney transplant 
and an extrarenal transplant.
    <bullet> Extrarenal organs recovered--The number of extrarenal 
organs recovered is the actual number of hearts, livers, lungs, and 
pancreas the OPO recovers with the intent to transplant. Each organ is 
counted individually regardless of the number of organs transplanted 
into the same recipient.
    <bullet> Extrarenal organs transplanted--The number of extrarenal 
organs transplanted into recipients. Each organ is counted individually 
regardless of the number of organs transplanted into a single 
recipient.
    We had initially collected data from the OPOs using alternative 
definitions that may have disadvantaged some OPOs serving hospitals 
that frequently engaged in multiple organ transplants, such as heart-
lung transplants, bilateral lung transplants, and kidney-pancreas 
transplants. We believe these revised definitions treat OPOs fairly. We 
note that the OPTN contractor has agreed to use these common 
definitions in its data gathering activities. Consequently, the 
feedback that the OPTN contractor provides to an OPO throughout the 
performance period to monitor an OPO's performance against its peers 
should be consistent with the HCFA performance standards. Moreover, 
based upon our impact analysis, we believe that changing the 
definitions from those contained in the interim final rule with comment 
period will not adversely impact any OPO's ability to meet the 
performance standards.
    We defined ``donors'' in our previous collections as ``the number 
of cadavers from which the OPO actually recovers at least one viable 
organ.'' Some OPOs advised us that differences in OPO protocols may 
result in unintended differences among the OPOs through the use of this 
definition. They recommended that we alter the definition to count only 
those cadavers from which at least one organ was ultimately 
transplanted.
    Unlike the changes in other definitions that increase the number of 
organs counted for nearly all OPOs, this recommendation for the change 
in the definition of ``donors'' would decrease the count of donors for 
many OPOs. Further, in conducting an impact analysis, we found at least 
one OPO that would have met the performance standard under the 
previously announced definition would not meet the standard under the 
recommended revision.
    We do not want to change the standard without benefit of comment 
from the full industry, particularly in light of the fact that OPO 
representatives differ in their views of the most appropriate 
definition. Similarly, we are concerned that making a change in the 
definitions that would adversely impact some OPOs at this late time in 
the performance period without providing those entities an opportunity 
for comment is not equitable. Consequently, we are retaining the 
definition of ``donors'' that we used when we initially collected data 
to calculate performance standards for the 1996 designations. We are, 
however, open to altering the definitions for the 1998 recertification 
process. Therefore, we specifically invite the public to comment on 
this provision. If, after analysis of the comments, we believe that 
changes are appropriate, we will advise the public, including all OPOs, 
of these changes on a timely basis.
    We advised OPOs of these definitions in our letters to them 
regarding the collection of data throughout the performance period. 
Similarly, we intend to include these definitions in the manual 
instructions being prepared on the OPO conditions of coverage. We 
believe that this way of proceeding will give us more flexibility in 
adopting more appropriate definitions that become evident through 
continued work with the data. We are also soliciting comments on 
whether changes in the definitions should be made through rulemaking.
    Comment: Several commenters objected to our requirement that organs 
procured and transplanted en bloc, such as a pair of kidneys or lungs, 
be counted as a single organ. The commenters believed that each organ 
should be counted separately.
    Response: We had intended that the organs be counted in accordance 
with industry standards. Mistakenly, we utilized the HCFA standard for 
counting organs that is applied during the cost reporting process. We 
have now changed our definitions to be consistent with industry usage. 
Each organ will be counted separately. OPOs are not able to influence 
the transplantation of multiple organs and therefore should not be 
penalized for serving centers that engage in this practice at a greater 
frequency than the national average.
    We note that we have already clarified this in our operational 
instructions to the OPOs in verifying the performance data. Thus, the 
performance standards

[[Page 19732]]

applied for the 1996 recertification process have been calculated based 
on these revised definitions. Moreover, we are deleting any regulatory 
reference to how organs are to be counted. We believe that this type of 
detailed operational instruction is more appropriately placed in a 
manual where it can be revised more easily as appropriate.
    Comment: A few commenters recommended that HCFA use only verified 
data from the OPTN contractor to monitor performance.
    Response: We have analyzed portions of the OPTN data relative to 
organ recovery and transplantation. We found the donor data reasonably 
consistent with that reported to HCFA directly. Thus, the idea of using 
the OPTN data for calculating performance standards is very appealing. 
This method would reduce the reporting burden on the OPOs and is 
consistent with the Administration's goal of reducing the Federal 
regulatory burden. If we make such a change, we will, of course, first 
notify all OPOs timely.
    However, we have two concerns before we can implement such a 
strategy. First, to make the performance standards as current as 
possible while still meeting the recertification schedule, we require 
that the calendar year data be reported as close to the end of the year 
as possible. Currently, we require the OPOs to report this data to us 
by January 15 annually. Because of the lag time of hospitals notifying 
the OPTN of recipient registrations, the OPTN contractor questions if 
the data reported by the 15th of the following month through routine 
channels are comprehensive.
    Second, we are concerned that OPOs have an avenue to request 
adjustment of the data or to provide any necessary explanatory 
material. For example, all of the performance criteria are population 
based. Due to hospitals dealing with OPOs other than the one designated 
for the service area or census changes, changes in the actual 
population data for an area may be necessary. The OPTN data on 
population is not, to the best of our knowledge, specific to the actual 
hospitals served by OPOs. Thus, to use the OPTN data without the 
benefit of adjustment could unfairly penalize some OPOs.
    We established a process for collecting data from the OPOs. Each 
OPO has been asked to submit its data in accordance with our directions 
defining the variables. OPOs have the opportunity to identify necessary 
adjustments to the population for its designated service area to take 
into account hospitals that deal with multiple OPOs or an OPO other 
than the one designated for the area. When an OPO requests a population 
adjustment, we will work with the alternative OPO and our regional 
offices using appropriate census data to accurately apportion the 
population in question.
    National averages and performance criteria are calculated and 
forwarded to the OPOs, along with our recorded data from that OPO, to 
provide an opportunity to review the data recorded. The OPO has an 
opportunity to assure that data entry errors or other mistakes have not 
been made and provide any necessary corrections to the data base. We 
believe it is essential to provide OPOs this form of opportunity for 
input before we use the data for purposes that could potentially result 
in termination of the OPO from Medicare and Medicaid participation.
    Initially, we were concerned that this opportunity for input would 
not be available if we were to use the OPTN data. However, we 
anticipate that once the initial population for the OPO service areas 
has been calculated, future changes or adjustments, or both, will be 
minor and infrequent. Thus, we may be able to develop a process that is 
based on calculation of the standards using OPTN data, yet incorporates 
a process for individual OPO adjustment requests.
    Despite these concerns, we are supportive of the concept of using 
the OPTN data to calculate the performance standards. We, together with 
the OPTN contractor, will work with the OPOs and the transplant centers 
throughout the year to obtain the necessary data as timely as possible 
and develop a process for appropriate adjustments to achieve this goal. 
We intend to test the 1995 and 1996 OPTN contractor data submissions 
and analyze differences between the OPTN data and the OPO data. If the 
OPTN data prove satisfactory, we will begin using them to set the 1998 
standards rather than collecting the data individually from the OPOs. 
We would, however, continue to allow OPOs to review the data and 
request changes as appropriate. We note that adopting the OPTN data may 
require revisions to the regulation or paperwork requirements or both. 
We invite OPOs to participate with us in this process during the 
ongoing evaluation.
    Comment: One commenter believed that the requirement that the data 
be submitted within 15 days of the end of an calendar year is 
unreasonable. The commenter recommended that OPOs be given 60 days in 
which to submit data.
    Response: We acknowledge that a 15-day period for submission of 
data after the end of the year may appear unnecessarily onerous. But, 
upon closer examination, we believe that the request is quite 
reasonable. The data are for items routinely collected by nearly all 
OPOs, there are only six data elements, and the data for the first 11 
months may be gathered in advance of the due date with the final 
month's data added at the end of the year.
    In addition, we believe that it is impractical to extend this 
timeframe because of the work that must be done to determine the 
performance standards before the recertification process which, for 
most OPOs, begins in April. Prior to the beginning of April in the 
years in which the recertification process takes place, we must review 
the data submitted by the OPOs, make any necessary adjustments, enter 
the data into a database, and calculate the performance standards. This 
work must be completed as early in the year as possible so that the 
OPOs can be notified of the standards, be afforded an opportunity to 
verify the accuracy of their data, and make any changes to the data 
prior to the recertification process. Because, the performance 
standards are based on averages, a change in a single OPO's data can 
result in a change in the standard that could impact upon other OPOs. 
We believe that it would be inequitable to OPOs to delay having the 
performance standards available to them until immediately preceding the 
recertification.
    Additionally, we must also have estimates available as early as 
possible of those service areas currently served by OPOs that do not 
appear to meet the standards so that any OPO interested in moving into 
a service area of a poorly performing OPO has an opportunity to prepare 
a plan for operating in the service area.
    The only alternative we have to collecting data within 15 days of 
the end of the performance period is to change the base years from 
which we calculate the standards. That is, we could calculate the 
performance standards for the 1996 redesignation using data from 1993 
and 1994 rather than 1994 and 1995. We find this alternative 
unsatisfactory. We believe that it is important that the data used to 
evaluate an OPO's suitability for redesignation reflect the most recent 
performance of an OPO. The use of old data could result in our 
terminating the agreement of an OPO that has just completed an 
outstanding performance year because the OPO did not meet the criteria 
2 or 3 years ago.
    We note that very few OPOs appear to have difficulty with the data 
collection process and due date once they have gotten used to the 
process. For example, only six OPOs did not file their data

[[Page 19733]]

timely in response to our 1995 collection effort. Further, none of the 
OPOs called us to complain that the timeframe was unworkable or 
unreasonably difficult.

C. Provisions of the Final Rule With Comment Period

    We have not made any revisions to Sec. 486.306(t) in this final 
regulation with comment period. We have, however, removed the 
introductory paragraph of Sec. 486.310 containing operational 
instructions regarding the counting of organs. We are removing these 
instructions from the OPO regulations because they will be more 
appropriately placed and more easily updated in an operational manual.

VII. Performance Standards (Sec. 486.310)

A. Background

    Section 485.306 (now Sec. 486.310) lists the performance standards 
for OPOs. In the proposed rule, we proposed revisions to this section 
to state that we would not ``redesignate'' any OPO that fails to meet 
the performance standards contained in this section. We also revised 
Sec. 485.306(b) (now Sec. 486.310(b)) to distinguish between an OPO 
which has not previously been designated by us for a particular service 
area and a redesignated OPO with respect to the exemption from meeting 
the performance standards in Sec. 485.306(a) (1) and (2) (now 
Sec. 486.310(a) (1) and (2)) for 2 years.
    In the interim final rule with comment period, we revised the 
proposal to add the performance standards that OPOs must meet beginning 
January 1, 1996. An OPO must meet the primary performance standard by 
achieving at least 75 percent of the national mean for four of the five 
performance categories over 2 calendars years before the year of 
redesignation. The performance categories are:
    <bullet> Actual donors per million population.
    <bullet> Kidneys recovered per million population.
    <bullet> Extrarenal organs recovered per million population.
    <bullet> Kidneys transplanted per million population.
    <bullet> Extrarenal organs transplanted per million population.
    In addition to the primary performance standard, the interim final 
rule provided for three additional performance standards. An OPO must:
    <bullet> Procure organs from an average of at least 24 donors per 
calendar year in the 2 calendar years before redesignation.
    <bullet> Maintain an average procurement ratio of three organs per 
donor.
    <bullet> Enter into a working relationship with any hospital or 
transplant center in the OPO's service area that requests a working 
relationship.
    For the purpose of measuring adherence to the performance 
standards, organs removed en bloc and transplanted en bloc are counted 
as a single organ.
    In addition, Sec. 485.306 (now Sec. 486.310) permits an OPO to 
submit corrected information if it believes the data used to apply the 
performance standards were inaccurate. It also allows us to grant an 
exception from some of the performance standards to OPOs operating 
outside the contiguous United States.

B. Public Comments and Our Responses

    Comment: One commenter suggested that performance measures be 
reevaluated annually to ensure that the system can incorporate a 
superior model for assessing underlying donor potential that is under 
development.
    Response:  We intend to continually reevaluate the performance 
standards as new data become available. We believe it is unnecessary to 
commit to an annual reevaluation because it is unlikely that new 
measures will surface at a rate that would indicate that the existing 
standards are antiquated that quickly. Nonetheless, readers can be 
assured that we will continue to monitor research and experience to 
further refine and perfect performance standards. Any proposed changes 
in the standards will be published for public comment before being 
effectuated.
    Comment:  One commenter noted that performance standards based on 
potential would be more accurate and effective than the ones specified 
in the regulation.
    Response:  We do not agree with the commenter that standards based 
on potential performance are superior to standards based on actual 
performance. We believe it would be inappropriate for us to certify any 
except a new OPO based on its potential to perform at a certain level, 
if the OPO is not achieving a certain level of that potential. For 
example, an OPO could service an area with the potential to produce 100 
organ donors and significantly higher than average organs per million 
population. However, if that OPO does not actually achieve 24 donors 
and 75 percent of the national average organs per million population, 
we believe strongly that it would be inappropriate for us to ignore the 
actual performance and continue to certify the OPO based on its 
potential performance.
    Comment:  One commenter expressed concern that the performance 
criteria disproportionately accentuated recovery over transplantation. 
That is, the commenter noted that three of the primary performance 
standards related to recovery (that is, donors per million, kidneys 
recovered, and extrarenal organs recovered), while only two related to 
transplantation (that is, kidneys and extrarenal organs transplanted). 
The commenter believed this emphasis on recovery over transplantation 
does little to accomplish the primary goal of OPOs--providing 
transplantable organs for thousands of waiting recipients. The 
commenter was concerned that such an emphasis may result in increased 
discard rates.
    Response:  We believe that both organ recovery and transplantation 
are critical areas of OPO performance that need to be monitored. We 
acknowledge that the commenter is accurate in noting that the primary 
performance criteria do slightly emphasize recovery over 
transplantation. One of the primary reasons for this is that an OPO can 
more directly influence the recovery rate than the transplant rate.
    While we acknowledge that a small portion of the organs discarded 
are within the control of the OPO through tasks such as thorough 
medical history taking, we believe the majority of organ discards occur 
for reasons that are beyond the OPO's control. For example, surgical 
nicks, damage to the organ during removal, and diseases that were 
unknown to the family or not reported in medical records account for 
many discards.
    While we believe it is important to hold OPOs accountable for 
making every effort to avoid unnecessary discards, we believe it is 
unnecessary and inappropriate to accentuate the transplantation over 
recovery. After all, an organ must first be recovered before it can be 
transplanted. Given that there are but five criteria in the primary 
performance standard, we continue to believe that it is appropriate to 
have three recovery-related criteria and two transplant-related 
criteria. We note that, for the most part, the OPO industry widely 
supports this division.
    Comment: Another commenter expressed concern that the primary 
performance criteria were antiquated in that they emphasize kidney 
transplants almost to the exclusion of other tissues and organs.
    Response: We do not agree with the commenter that the primary 
performance standard disproportionately emphasizes kidney transplants 
``almost to the exclusion of'' other tissues and organs. Three of the 
five primary standards are not related to kidney transplants. However, 
since the

[[Page 19734]]

number of kidney transplants significantly outweighs other organ 
transplants, we believe it is appropriate to establish separate 
standards that look solely at the kidney recoveries and transplants as 
part of overall OPO performance. Of the 19017 transplants in 1994, 
11,391 or 59 percent were for kidneys. We believe this high incidence 
of kidney organ transplants justify standards that concentrate 
exclusively on that organ. We welcome comments on whether this emphasis 
on kidney transplants is the best course for the future, given the 
science of transplantation.
    Comment: One commenter stated that some OPOs may not meet the 
extrarenal organ standards for reasons beyond their control, such as 
geography or availability of transplant surgeons. The commenter stated 
that there are no pancreas, lung, or heart/lung programs in the 
commenter's State so the OPO often did not recover these organs due to 
unavailability of transplant surgeons. The commenter suggested that if 
an OPO is able to demonstrate that it cannot meet the standard due to 
such reasons, it be given credit for unrecovered organs.
    Response: Although we can sympathize with this OPO's concerns, many 
OPOs are faced with this situation. Some have developed mechanisms to 
facilitate procurement of extrarenal organs for transplantation in 
patients listed at transplant centers outside their States. Many OPOs 
are meeting these goals by utilizing local surgeons to perform 
excisions. Other OPOs are developing relationships with extrarenal 
programs to facilitate placements without impediment from geographic 
boundaries.
    It is an OPO's responsibility to recover all viable organs from all 
acceptable donors and facilitate their placement in suitable 
recipients. The performance standards are designed specifically to 
encourage more effective organ retrieval and transplantation. We 
believe it would be irresponsible, given the number of persons awaiting 
organs, to modify the performance standards in any way that would 
validate the failure to retrieve transplantable organs. Therefore, we 
are not altering the regulations as suggested by the commenter. We note 
that in areas where geographical boundaries present real obstacles to 
placement, such as noncontiguous States and territories, the 
regulations now located at Sec. 486.310(c)(1) already adequately 
address this issue through an exception process.
    If it is true that viable organs are going unrecovered because 
there is no transplant program for a specific type of organ in a State, 
we find a severe problem exists that should certainly be corrected. We 
do not want to encourage the continuance of the problem by altering the 
performance standards.
    All organs can be transported at least 500 miles without 
significant chance of damage. With few exceptions, this 500-mile radius 
goes significantly beyond State and, generally, OPO service area 
boundaries. Consequently, an organ should be recovered even when the 
organ cannot be transplanted in the State or within the OPO's service 
area. We strongly encourage any OPO that has adopted the practice of 
not recovering organs that it cannot transplant locally to alter that 
practice immediately.
    Comment: One commenter suggested that HCFA include data from all 
OPOs, including new OPOs, in the calculation of the national mean.
    Response: We intend to include all OPOs in the calculation of the 
national mean, including new OPOs and those in noncontiguous States and 
territories. However, we believe it is unnecessary to amend the 
regulations to specify this intention. Since the regulatory language 
does not restrict the calculation, we believe it already supports our 
position to include all OPOs in the calculation.
    Comment: Several commenters suggested that we substitute deaths per 
year as the denominator in the primary performance criteria is lieu of 
population. They believe that logically this denominator is more 
directly correlated to the potential donor pool and would produce 
better performance standards.
    Response: The objective of the performance standards is to 
establish an appropriate measure that would enable us to assess how 
well OPOs are maximizing organ resources and therefore warrant 
certification by the Medicare/Medicaid program. As such, it is 
important that the data we use to develop these standards provide an 
accurate measure of OPO performance. Clearly, the use of hospital 
deaths versus area population in the denominator from which these 
standards are derived warrants further investigation. We agree that 
since OPOs deal with cadaveric donors, deaths per year (particularly 
hospital deaths per year) is a more targeted measure of an OPO's actual 
potential donor pool. Therefore, we surveyed the OPOs in an attempt to 
collect death data from them for 1994 so that we could study the 
feasibility of using deaths per year as the denominator. In nearly 
every State, OPOs reported problems obtaining timely data. In at least 
one State, the data are not available at all. We were able to 
determine, however, that national death statistics are available from 
the National Center for Health Statistics (NCHS) and the Social 
Security Administration (SSA).
    Although we have decided to proceed with the use of population as 
the denominator for a number of reasons discussed below, we are 
soliciting public comments on which approach--population or death 
statistics--would best achieve our objectives with respect to measuring 
OPO performance.
    <bullet> Population Data:
    For purposes of developing the performance standards, we use the 
latest census data. In addition, adjustments are made in the population 
data to account for hospitals that deal with OPOs outside the 
designated OPO service area.
    These data are relatively easy to obtain at minimal, if any, cost 
to the OPOs. We are soliciting comment on the timeliness, cost, and 
quality of these data and adjustments to these data.
    <bullet> NCHS Death Data:
    NCHS produces a public use data tape that contains deaths by county 
for all U.S. counties. This tape contains approximately 2.2 million 
records per year. Although death data are available universally, there 
are some data elements that may be missing for certain areas. The OPO 
industry has suggested the use of in-hospital deaths rather than 
general death data, and while this could be obtained from the NCHS 
tape, certain areas, such as Oklahoma, do not make fine distinctions in 
the hospital site. Also, we are not certain about the availability of 
death data for the United States territories. The NCHS tape may allow 
some finer analysis based on demographic characteristics that may 
better reflect the viable organ pool.
    In the United States, the collection of these vital statistics data 
is a State responsibility. Data are gathered by the States, and each 
State establishes its own definitions for terms and coding rules. 
Although NCHS conducts a quality review of the data, it uses the 
individual State guidelines to verify the data were coded 
appropriately. This approach, especially in terms of the definition of 
``hospital'', could affect the OPO performance standards. In addition, 
there is approximately a two-year delay in the availability of death 
data from NCHS.
    The NCHS public use tape can be purchased for $590 per year. Since 
performance standards utilize a two-year average to avoid penalizing 
OPOs for short fluctuations in organ donation, it would cost an OPO 
approximately $1200 per redesignation cycle to obtain

[[Page 19735]]

the tapes. At this time, the data file is only available in mainframe 
medium. We expect that most OPOs do not employ the staff that would be 
required to abstract data from the NCHS tapes, although we would 
welcome comment on this point.
    The NCHS data does not identify individual hospitals for any State, 
and there may be confidentiality issues that preclude States from 
collecting hospital-specific information. Lack of hospital-specific 
data would create a problem in adjusting the performance data for those 
hospitals that deal with OPOs outside of the designated OPO service 
area. While for most OPOs the impact of hospitals dealing with 
alternative OPOs is minimal, there are several OPOs where the impact of 
such hospital choices is very significant.
    <bullet> SSA Death Data:
    Although we may be able to obtain timely death data through the 
Social Security Administration, we know through experience that there 
are a small number of deaths that are not reported accurately. Our 
experience with using these data in our intramural research indicates 
it is approximately 98 percent accurate. However, we are very concerned 
with use of data that the OPOs cannot verify. We are further 
investigating the timeliness, cost and quality of the SSA mortality 
data. We are interested in receiving public comment on this data 
source.
    <bullet> Other Policy Implications:
    We are concerned about the impact of using death as the denominator 
for those OPOs servicing large urban areas. Urban areas may have a 
higher death rate among apparently suitable donors, however, there is a 
lower donor consent rate among the minority population and a higher 
likelihood that a potential donor will be an HIV risk or present a 
history of substance abuse. Therefore, in these cases, the death rate 
may not accurately define the potential donor pool and may 
disproportionately affect OPOs serving large urban areas. We may not 
want to establish a performance standard that may systematically bias a 
particular group of OPOs.
    We conducted an impact analysis comparing the use of 1991 death 
data (the most recent data available at the time of our analysis) and 
population data as denominators in calculating performance standards. 
We determined that the use of death data would not significantly alter 
performance outcomes compared to using population data. However, three 
OPOs servicing major urban areas would not meet the performance 
standards if death data were substituted for population data, provided 
that the performance standards is not also changed. We acknowledge that 
if the denominator used to measure performance were changed, the 
performance standard itself could in principle be changed, and solicit 
comments on this issue.
    While research is being conducted on determining adjustment factors 
that would allow for normalization of death or population data to 
account for demographic factors, we are not aware of a generally 
accepted adjustment methodology at this time.
    In summary, we are soliciting comments on the approaches discussed 
above with respect to use of population versus death statistics (from 
either NCHS, SSA or some other national source) as a denominator for 
measuring performance. Specifically, we are interested in comments 
concerning the timeliness, cost, and validity of the various data 
sources. We would also appreciate suggestions concerning possible 
adjustments to account for varying demographic factors across areas, as 
well as any other potential changes in the performance measures that 
could be used in conjunction with death data.
    Comment: One commenter suggested that any adopted performance 
standards include adjustment for demographic risk factors related to 
the population of the service areas. The commenter suggested historical 
consent rates and medical suitability rates of potential donors.
    Response: We acknowledge that intuitively it would seem to be more 
difficult to achieve performance standards in some service areas than 
in others. However, the impact analysis we conducted based on 1994 AOPO 
data does not support the assumption that the unadjusted population-
based performance standards would disproportionately impact on those 
population bases that have higher demographic risk factors. Rather, it 
appears that the selected performance standards appropriately identify 
those OPOs that have not achieved designated performance standards 
based on factors that are within the OPO's control. For the most part, 
those OPOs with high demographic risk factors do not appear to have 
difficulty meeting the standards. For example, the California 
Transplant Donor Network exceeds the mean of all five of the 
performance standards while servicing San Francisco, which has one of 
the largest HIV populations in the country. Similarly, most OPOs 
servicing populations that have historically had low consent rates also 
appear to meet the standards.
    Finally, the commenter did not propose an empirical value to be 
used to adjust for these risk factors. Although we are aware of ongoing 
research in this area, we have not found literature that unequivocally 
supports a method to calculate exact demographic risk factors that 
would appropriately adjust the planned performance standards. We are 
interested in any empirical research in this area. We intend to 
continue to monitor the research and will consider any significant 
findings for future refinement of the standards.
    We are very interested in the development of alternative 
performance criteria that would be consistent with our goals of 
increasing organ donation, setting achievable threshold levels of 
acceptable performance that are realistic and fair to all the OPOs. 
Unfortunately, we have not been able to ascertain empirical evidence 
regarding the correlation between adjustment factors and donation. That 
is, to the best of our knowledge organ donation is influenced by a 
myriad of factors. An area that has a high incidence of some factor 
that would seem to decrease donation may also have a high incidence of 
another factor that would seem to increase donation. We are not aware 
of any regression analysis or other statistical studies that would 
allow us to appropriately adjust performance indicators for 
idiosyncracies of a geographic area.
    Nonetheless, we are very interested in further refining the 
performance standards. We specifically invite the public to comment on 
any alternative performance measures that are supportable by empirical 
evidence.
    We should point out, however, that it appears that the rigorous 
performance standards we have selected are providing the appropriate 
incentives to increase organ donation. Based on the unverified 1995 
performance data reported, there has been an increase of 262 donors in 
1995 over 1994, resulting in over 1100 additional organs being 
procured. We find these statistics very gratifying and may demonstrate 
that the use of rigorous performance standards significantly benefits 
the public awaiting transplantation.
    Comment: Two commenters noted that many OPOs deal with hospitals 
outside of the designated service area. They asked if we would 
calculate the appropriate, actual population served by an OPO in 
applying the performance standards.
    Response: As noted above, we believe that approximately 200 
hospitals deal with OPOs outside their service areas. We recognize that 
this arrangement can contribute to an OPO's failure to meet the 
performance standards based on servicing a designated area. The

[[Page 19736]]

regulations at Sec. 486.310(c)(3) specify an OPO may provide 
documentation to us to support an adjustment in its population rate if 
one or more hospitals in its designated service area have agreements 
with alternative OPOs.
    Operationally, we have implemented this provision by soliciting 
actual population data from each OPO. We asked the OPOs to advise us 
when a population adjustment is appropriate. We then ascertained 
appropriate population adjustments through discussions with the 
alternative OPOs, the hospitals in question, and the HCFA regional 
offices. We note that effective January 1, 1996, a hospital may deal 
with only one OPO. We believe this requirement will make it easier to 
allocate population as the entire hospital service area will be 
designated to the one OPO with which it has an agreement. As noted 
above, we calculated the performance standards based on the reported 
data, asked OPOs to verify the accuracy of their submitted data, and 
provided OPOs an opportunity to request further adjustments.
    We believe that the process we developed provides an opportunity 
for equitable adjustments to the population data and holds an OPO 
accountable for all of the hospitals it serves--including hospitals 
outside of its designated service areas.
    Comment: One commenter noted that research currently underway at 
the Harvard School of Public Health could potentially lead to a more 
accurate methodology for measuring OPO performance. The commenter 
requested that the current performance measures be reevaluated annually 
to ensure that more current research does not produce a superior 
mechanism for evaluating performance.
    Response: We are pleased to see that there is research ongoing in 
this area. We will be very interested in the results and will consider 
them fully when the research is complete. While we are always open to 
improving the mechanism for evaluating OPO performance from any 
interested source, we believe it is unnecessary and inappropriate to 
commit to an annual reevaluation in the regulations. OPOs must know in 
advance to what standards they will be held, so that they can make 
appropriate plans and changes in their procurement strategies. If the 
research proves to be superior as the commenter believes, we will issue 
a proposed notice in the Federal Register for public comment. Changes 
in the performance standards will only be made after the public has had 
an opportunity to review and comment on the proposal.
    Comment: Two commenters suggested that we develop more appropriate 
criteria for the noncontiguous States and territories. They noted that 
Puerto Rico has historically had extremely poor success with organ 
procurement and would fail to meet the planned standards of 50 percent 
of the national mean.
    Response: We acknowledge the historically small number of organ 
donations in Puerto Rico. We note, however, that other noncontiguous 
areas such as Hawaii have had higher donation rates. We feel challenged 
to develop a standard that would provide an incentive for improvement 
for Puerto Rico without being so lax as to fail to present any 
challenge to Hawaii at all. We note that the performance standards for 
the noncontiguous States and territories are limited exclusively to 
kidneys procured and transplanted. For this single organ, the standard 
is 50 percent of the national average.
    During 1994, a new OPO assumed responsibility for Puerto Rico. 
Under the guidance of this new OPO, we are optimistic that Puerto Rico 
will eventually meet this performance standard. In the meantime, we do 
not intend to allow a service area that contains a hospital to go 
unserved. Thus, we have revised the regulations to specify that an OPO 
that does not meet the performance standards will not be terminated as 
long as another OPO does not compete for the territory 
(Sec. 486.310(c)). Given this change in the regulations, we believe it 
is acceptable to retain the standards for the noncontiguous States and 
territories. An OPO may continue to be designated for Puerto Rico even 
if it does not meet the performance standards as long as no other OPO 
competes for the service area. If another OPO demonstrates that it can 
achieve better performance in the area, we believe that it is 
appropriate to terminate the low performing OPO and give the 
alternative OPO an opportunity to achieve higher organ donation.
    Comment: Several commenters were concerned that the primary 
performance standard of achieving at least 75 percent of the national 
mean for four out of the five performance categories is absolutely 
mandatory. They believed that OPOs should have an opportunity to 
provide a corrective action plan for the primary performance standards 
rather than be terminated. Another OPO suggested that OPOs not meeting 
the primary performance standard be placed on probation for one year.
    Response: We, together with staff in the Health Resources and 
Services Administration, have long believed that there are many more 
potential organ donors available than are currently being identified by 
the OPOs. For example, there are nearly 5,000 hospitals in this country 
that have not identified a single organ donor over a 3-year period. 
Based on recent research from the Johns Hopkins University, we believe 
that approximately 850 of these hospitals have donor potential. While 
there are a myriad of reasons for failure to identify all potential 
organ donors and to convert all potential donors to actual donors, a 
major influence on organ donation is unquestionably the OPO.
    We believe that the establishment of primary performance standards 
at 75 percent of the national average is a reasonable standard. We hold 
no OPO accountable to an arbitrary number but rather look only to its 
peers. We are not aware of geographical factors that by themselves make 
it impossible for an OPO to meet the standards in certain service 
areas. Rather with a 25-percent margin of error off the mean, we 
believe that the most influential factor to performance is the OPO 
itself.
    We intend these performance standards to serve the people on the 
transplant waiting lists in all areas of the country by fostering the 
most efficient OPO service for them. We believe that all Americans, 
regardless of whether they are Medicare or Medicaid beneficiaries, 
deserve to be serviced by OPOs that make every effort and use every 
skill available to procure transplantable organs so that lives may be 
saved or improved through timely organ transplants.
    Consequently, we believe it is important to hold each OPO 
accountable for meeting the primary performance standard. If the OPO 
that is assigned to a service area is not achieving appropriate organ 
donation rates, we would be acting irresponsibly to the Americans on 
the waiting list to allow that OPO to continue to serve that area 
rather than replace it with another better-performing OPO.
    However, we equally believe we would be acting irresponsibly to 
allow an area to go unserved rather than to permit an OPO an 
opportunity for improvement. Therefore, we are altering the regulations 
to permit an OPO that does not meet the performance standards to retain 
its certification and submit a corrective action plan, if no other OPO 
that is performing acceptably is willing to assume the service area.
    When an OPO does not meet the primary performance standard, we will 
solicit interest in assuming the territory from other OPOs. When 
another higher-

[[Page 19737]]

performing OPO wants to assume the service area, we believe that we 
should make the potentially superior service available in that area. In 
those cases where no other OPO expresses an interest in assuming the 
service area, we will allow the poor-performing OPO to submit a 
corrective action plan and retain its certification for an additional 
2-year period.
    Comment: Several commenters thought that the performance standard 
requiring OPOs to maintain an average procurement ratio of three organs 
per donor should be eliminated. Many of them thought that the standard 
would discourage innovative practices by OPOs, particularly those 
related to procuring organs from older donors.
    Response: We had originally intended the use of a static number 
standard, such as the 3 organs per donor and 24 donors per year 
standards, as part the performance standards to ensure that the 
standards remained rigorous over time. We wished to safeguard against 
the industry as a whole becoming lax in performance and driving the 
national average to artificially low numbers.
    Upon further reflection, we believe that the use of static number 
performance standards is unnecessary and could result in a burden on 
the OPOs if we required the submission of justification or corrective 
action plans when these standards are not met. In conducting an impact 
analysis of these performance standards, we found that all OPOs that 
did not meet the three organ per donor standard also failed to meet the 
primary performance standard. Consequently, we anticipate that this 
standard in and of itself would have no immediate impact.
    We also recognize that industry changes that could result in these 
static number standards not being met may not necessarily be 
detrimental. For example, innovative practices, such as procuring 
organs from older donors, can result in a net increase in organs 
available even though the standard may not be met. We do not wish to 
discourage aggressive organ procurement practices as long as they 
promote safe organ acquisition and show respect for the families of 
potential donors. Our principle goal in the development of performance 
standards is to increase the total number of organs transplanted. 
Standards that could potentially deter an OPO from obtaining every 
viable organ available are contrary to our goal. Consequently, we 
believe that our goal is best served if we eliminate the static number 
standards and proceed with the primary performance standards alone.
    Comment: One commenter requested that newly merged OPOs and OPOs 
acquiring significant new territory be granted a grace period for 
compliance with the performance standards, similar to what we permit 
for newly formed OPOs. The commenter believed that failure to provide a 
grace period would deter an OPO from expanding its territory.
    Response: The concept of granting a grace period for merging OPOs 
and OPOs acquiring significant new territory is a difficult one. We 
recognize that significant changes in OPO management, administration, 
or new service areas could potentially result in a temporary decline in 
performance as the organization adjusts to the change.
    On the other hand, we are extremely concerned that permitting a 
grace period could instill a perverse incentive into the program. That 
is, allowing a grace period could provide an incentive for two poorly 
performing OPOs to merge merely to avoid termination or for OPOs to 
enter into bidding wars over service areas to avoid application of 
performance standards. Policies that promote frequent major changes in 
the OPO structure could be counter to our goals by resulting in 
decreased rather than increased organ donations.
    After considerable thought, we have decided to retain our current 
policy of not permitting a grace period for newly merged OPOs or OPOs 
with significant changes in territory. We believe that this will 
encourage OPOs to undertake such changes judiciously using careful 
thought and extensive planning. It is far less likely that big OPOs 
will overstep their capacity for expansion if they must maintain high 
performance standards.
    We note, however, that the above change in policy, related to the 
failure to terminate an OPO's provider agreement when there is an 
absence of interest by another OPO in assuming the service area, would 
apply in the case of newly merged OPOs. That is, a newly merged OPO 
will be allowed to continue in the program even if it does not meet the 
performance standards when no OPO with acceptable performance levels is 
interested in servicing the area.
    We expect that, in most cases, there would be a reluctance on the 
part of competing OPOs to move into the service area of a newly merged 
OPO before that OPO has had an extended opportunity to demonstrate its 
ability to perform. We base our expectation on the realization that 
repeated changes in OPO personnel and organization practices are 
disruptive to organ donation and are likely to make it more difficult 
for the second OPO to meet its performance standards as well.

C. Provisions of this Final Rule With Comment Period

    <bullet> We have added new Sec. 486.310(c)(2) to provide that an 
OPO that is performing below standards may be redesignated for a 
service area if no acceptably performing OPO is willing to accept 
responsibility for the service area and if the designated OPO submits a 
corrective action plan.
    <bullet> We have reorganized Sec. 486.310(c) for clarity.
    <bullet> We have moved the requirement at Sec. 486.310(b)(4) 
(formerly Sec. 485.306(b)(4)) that each OPO enter into a working 
relationship with any hospital or transplant center in the OPO's 
service area that requests a working relationship to 
Sec. 486.304(b)(8).
    <bullet> We have deleted Sec. 486.310(b) (2) through (4) (formerly 
Sec. 485.306(b) (2) through (4)) relating to the non-primary 
performance standards for redesignation after January 1, 1996. We are 
making conforming changes to various other sections to delete 
references to these sections.

VIII. Definition of an Open Area (Sec. 486.302)

A. Background

    In the proposed rule, we added the definition of ``open area'' to 
Sec. 485.302 (now Sec. 486.302). We defined ``open area'' as a service 
area for which we are accepting applications for designation. A service 
area becomes open for competition once the normal 2-year designation 
period or brief interim redesignation period has expired, when the 
designated status of the existing OPO is terminated, or when no OPO 
previously has been designated for the area. In the interim final rule 
with comment period, we modified Sec. 485.308(a) (now Sec. 486.316(a)) 
to clarify that, based upon the language in Sec. 485.302 (now 
Sec. 486.302), it is the OPO's provider agreement with HCFA (not the 
OPO itself) that can be terminated.

B. Public Comments and Our Responses

    Comment: A few commenters requested clarification of the concept of 
an open area. The commenters believed that, if an OPO meets the 
performance criteria, no other OPO should be allowed to compete for its 
service area.
    Response: It is the intent of the law to encourage the most 
effective organ procurement and allocation system. During various 
Congressional hearings on transplant issues, the Congress has made it 
clear that it supports as

[[Page 19738]]

equitable a system as possible. We believe it is the Congress' 
expectation that we establish conditions in the Medicare and Medicaid 
program that provide incentives for OPOs to operate as efficiently and 
effectively as possible in procuring lifesaving organs.
    Consequently, we believe that the law does not in any way intend to 
assure OPOs a monopoly simply because they barely meet the Medicare 
performance criteria. The structure of the statute, which allows only a 
single OPO to be designated in any given area, sets up an inherently 
competitive system. Thus, it is appropriate and in keeping with the 
principles of our national economy to permit competition regardless of 
the fact that an OPO is meeting the performance criteria.
    We intend to designate the best performing OPO for each service 
area. We believe it is inappropriate to designate a marginally 
performing OPO for a service area simply because it has operated in 
that area previously if a peak-performing OPO is also competing for the 
area and has the support of the hospital community. However, we 
recognize that organ donation is a voluntary action. Therefore, to 
perform well in an area, any OPO must have the support and cooperation 
of the community. The ``tie-breaking'' criteria we will use to 
adjudicate the competition are specified at Sec. 485.308(a) (1) through 
(6) (now Sec. 486.316(a) (1) through (6)). These criteria emphasize the 
relationship between the OPO and the hospitals in the service area, the 
proximity of the OPO to the area, and past performance.
    With regard to the explicit request for clarification of the open 
area designations, every county in the country is open for competition 
at redesignation time. Currently, most OPOs are in two-year designation 
periods that end April through June 1996 and every two years 
thereafter. Thus, an OPO may compete for any county, or all counties in 
an MSA, that it believes it can serve better than the existing, 
designated OPO at that time. To bid on an open area, the OPO must 
notify the HCFA regional office of its intention. The regional office 
will advise the existing, designated OPO of the competition and request 
the necessary information to evaluate the proposals.
    In addition to the open area competition that may occur at 
redesignation time, an area will be declared open if the provider 
agreement with the OPO serving the area is terminated or if no OPO has 
been designated for the area. There are a number of counties that do 
not contain hospitals. Consequently, no OPO had been designated for 
these counties in prior designation periods. We believe that every 
county should have a designated OPO to work within the community. 
Therefore, we instructed our regional offices to designate these 
counties based on the affiliation of the hospital from which the 
majority of the residents seek care. That is, we asked the Regional 
Offices to designate these counties to the OPO servicing the hospital 
that is used routinely by the majority of the residents.
    We had considered designating the county to the hospital furnishing 
trauma care to the locality. However, we decided to designate the OPO 
of the local hospital because the nearest trauma facility may be 
located very far away. We believe that designating the area to an OPO 
that is a great distance away is likely to be a deterrent to the OPO's 
ability to serve the community.
    Finally, we point out that the final regulation states explicitly a 
policy HCFA has applied administratively in implementing the OPO 
redesignation process. We have historically allowed competition for OPO 
service areas designations at time of redesignation. Further, we would 
accept a bid for a service area for undesignated counties or the 
service area of a terminated OPO at any time should an entity apply. 
Such competition has been minimal. We do not expect this to change with 
the inclusion of this policy in the regulations. It is generally 
accepted that OPO-hospital relationships may make procurement more 
difficult during the transition. Since OPOs acquiring new service areas 
will continue to be held to rigorous performance standards, we do not 
believe OPOs will seek expansion without considerable thought and 
planning.
    Comment: Another commenter noted that the interim final rule did 
not list the factors that would be used to adjudicate the designation 
of a service area that is being contested. The commenter suggested the 
following factors: procurement rate, satisfaction of transplant centers 
with service provided by the OPO, organ procurement costs, response 
time to donor referrals, extent and effectiveness of professional and 
public education, established patterns of organ donor referrals, organ 
discard rate, and donor hospital satisfaction.
    Response: We did not reprint the factors that would be considered 
in adjudicating contested service area designation because we did not 
intend to change the regulations. As noted above, the factors are 
listed at Sec. 486.316(a) (1) through (6). Many of the factors noted by 
the commenter are included in these regulations. These factors follow.
    (1) Prior performance, including the previous year's experience in 
terms of the number of organs retrieved and wasted and the average cost 
per organ;
    (2) Actual number of donors compared to the number of potential 
donors;
    (3) The nature of relationships and degree of involvement with 
hospitals in the organization's service area;
    (4) Bed capacity associated with the hospitals with which the 
organization has working relationships;
    (5) Willingness and ability to place organs within the service 
area; and
    (6) Proximity of the organization to the donor hospitals.
    As noted above, we have not heretofore experienced a significant 
amount of competition among the OPOs. Thus, we have only limited 
experience with these criteria. If competition increases among the OPOs 
as a result of this final rule with comment period, we will consider 
revising the factors in the future. In that regard, we will give 
consideration to the factors noted by the commenter. We will also 
publish a proposed notice of these changes in the Federal Register and 
invite public comment on the proposal.

C. Provisions of This Final Rule With Comment Period

    As we stated above, we are making no revisions in the definition of 
``open area'' at this time.

IX. Termination of an OPO's Provider Agreement (Sec. 486.325(b))

A. Background

    In the interim final rule, we added Sec. 485.311 (now 
Sec. 486.325(b)) to specify the conditions for both voluntary and 
involuntary termination of an OPO's provider agreement. For a voluntary 
termination, we required that the OPO provide us with a written notice 
of its intention with a proposed termination date. We will take action 
to approve the request as submitted or take other action to ensure that 
there is no disruption in services in the affected service area.
    For an involuntary termination, we may terminate an agreement if we 
find that an OPO no longer meets the conditions of coverage. Under 
Sec. 485.311(b) (now Sec. 486.325(b)), we indicated we would give 15 
days notice of termination. We also set forth an OPO's appeal rights, 
the requirement that an OPO give prompt public notice regarding the 
voluntary termination, and reinstatement provisions.
    We made editorial changes to this section as part of the interim 
final rule

[[Page 19739]]

with comment period but we did not make any significant changes in the 
substance.

B. Public Comments and Our Responses

    Comment: One commenter believed that a 15-day notice of 
termination, if used, could lead to serious disruption of organ 
procurement efforts. The commenter urged a minimum notice requirement 
of 90 days.
    Response: The added the 15-day termination notice is included in 
the OPO regulations to be consistent with the treatment of providers 
under the Medicare program. It is common practice in the Medicare 
program to give providers a 15-day notice of termination of their 
agreement to participate in the Medicare program for failure to comply 
with the conditions of coverage.
    However, upon further reflection, we can see some significant 
differences between certification of Medicare participating providers 
and certification/designation of an OPO that may warrant an alternative 
policy for OPO termination. Most notably, providers are generally 
terminated for serious and imminent health and safety reasons, while 
OPOs are most likely to be terminated for failure to meet performance 
standards. While it is possible for an OPO to be terminated for a 
health and safety reason, such as procuring organs from HIV-infected 
donors, such a termination has not occurred to date. Consequently, we 
expect that such an occurrence would occur very rarely, if at all. 
Thus, in the case of serious health and safety issues, it is important 
to protect the health and safety of our beneficiaries by proceeding 
with termination expeditiously. However, we believe that because no 
serious harm is likely to befall anyone if we move more cautiously with 
termination of an OPO's provider agreement, we can consider an extended 
termination notification period.
    In addition, Medicare beneficiaries generally have easier access to 
alternative health care when a provider of health care services is 
terminated. That is, while a Medicare beneficiary is no doubt 
inconvenienced somewhat when the provider of choice is terminated from 
the program, 15 days is generally enough notice for the beneficiary to 
locate an alternative source of care within the area. In the case of an 
OPO, however, the situation is significantly different. That is, an OPO 
does not furnish health care services directly to the beneficiary, and 
there are no generally available alternative OPOs within easy access. 
Thus, in the case of OPOs, expeditious termination of the entity could 
present a significant problem to the providers who have an agreement 
with the OPO.
    We note that we are changing the process for termination somewhat 
from that in the interim final rule with comment period. That is, we 
have concluded that we will not necessarily terminate an OPO that does 
not meet the primary performance standard if no other OPO is willing to 
assume the territory. Rather, we will solicit interest from other OPOs 
in assuming the service area. Thus, it seems only practical to allow 
for a period in which to solicit such interest from competing OPOs 
before terminating the OPO that does not meet the performance standard. 
To do otherwise would place an OPO in the anomalous position of being 
terminated 15 days after notification of failure to meet the 
performance standards only to be reinstated within a month or two when 
we discover no alternative OPO is willing to assume the territory. 
Consequently, we have modified Sec. 485.311 (now Sec. 486.325) to 
provide that termination of OPOs will occur 90 days after the 
notification by the Secretary that the OPO does not meet the standards.

C. Provisions of this Final Rule With Comment Period

    We have revised Sec. 486.325(b) (formerly Sec. 485.311(b)) to 
provide for a 90-day advance notification before a termination of an 
OPO's provider agreement becomes effective. Similarly, we have revised 
Sec. 486.304(e)(3)(ii) (formerly Sec. 485.303(e)(3)), relating to 
interim designation periods, to extend the length of such designations 
to 180 days to take into account the longer advance notification period 
to effectuate terminations.

X. Effective Dates

A. Background

    In the September 1994 interim final rule, we noted that, although 
the regulations were effective 30 days after publication, we would 
apply the new qualification and performance standards for the first 
time with the recertification of OPOs that takes place in the spring of 
1996 (for most OPOs, June 1, 1996). For purposes of the 
recertification, we would use data from calendar years 1994 and 1995.

B. Public Comments and Our Responses

    Comment: Several commenters suggested that we delay the effective 
date of the regulations to provide for 2 full years of advance notice 
before we apply the standards.
    Response: Although the actual regulations were not issued until 9 
months into the 24-month performance period (1994 and 1995), we believe 
that OPOs have had adequate advance notice of the intent to improve 
performance through both the law and the notice of proposed rulemaking 
that was issued in June 1991. That is, since 1991, revisions in the 
statute relating to OPOs that were discussed in the interim final rule 
have expressed the intent of the Congress that OPOs be held to rigorous 
performance standards. Moreover, while the 1991 notice of proposed 
rulemaking did not specify detailed qualification and performance 
standards, it included a discussion of the exact standards we included 
in the September 1994 interim final rule.
    We believe that OPOs have had adequate advance notice that 
performance would be monitored and should have taken appropriate steps 
to ensure that they are performing to the best of their ability. In 
addition, the interim final rule was issued only 9 months into the 
performance period. Thus, even if an OPO had not been planning for the 
rigorous performance standards, it still has approximately 63 percent 
of the performance period remaining to make up for any past performance 
problems.
    Finally, we note that the primary performance criteria are based on 
national averages. All of the data that are used to set the actual 
performance standards numbers come from actual performance of OPOs. 
Since the content of the interim final rule was not released until 
publication, all of the OPOs are treated equally with regard to 
knowledge of the standards. Thus, it is reasonable to assume that no 
OPO is unfairly treated by reliance on standards that are based on the 
performance of its peers. We collected the 1994 performance data from 
the OPOs. National averages were calculated and distributed to the OPOs 
in 1995. Thus, each OPO had an indication of what the performance 
standards would be and if it needed to significantly alter its 
performance to achieve performance equivalent to its peers. In 
addition, the AOPO has published peer performance data for OPOs to 
review and monitor their own performances throughout the performance 
period.
    We are anxious to implement meaningful performance standards for 
OPOs. We believe that implementation of these standards will promote 
organ availability and result in additional lifesaving transplants for 
not only Medicare and Medicaid beneficiaries, but for all Americans in 
need of organ transplants. The 1996 recertifications are for a 2 year 
period. Thus, if we delay implementation of the standards beyond

[[Page 19740]]

the 1996 recertification, the standards will not be fully effective 
until June 1998.
    Nonetheless, we recognize that the move to a system of performance 
and qualification standards that are objectively measured and strictly 
enforced is a major transition for the OPO community. Consequently, we 
are providing for a transition mechanism for OPOs that do not meet the 
standards for the 1996 redesignation period but are making progress 
towards meeting them. Therefore, we are providing transitional 
standards for both the service area size designation qualification 
standard and the performance standards for the 1996 redesignation 
period.
    We will grant an exception to the 24-donor service area size 
criterion during the 1996 redesignation process for those qualified 
OPOs that meet the performance standards in Sec. 486.310. To qualify 
for the exception, an OPO must submit a written request to HCFA that 
includes a narrative description of its plans for meeting the standard 
by the 1998 redesignation period. We emphasize that this is a one-time 
exception opportunity that will not be repeated for any OPO after the 
1996 redesignation process.
    We are also providing a one-time exception process for OPOs that do 
not meet four of the five performance standards at the time of 
redesignation. This exception is limited to those qualified OPOs that 
meet three out of the five performance criteria in Sec. 486.310(b) (1) 
through (5). Similar to the exception process for the qualification 
standard, an OPO must submit a written request to HCFA accompanied by a 
detailed, narrative description of the OPO's plans for ensuring that it 
will meet the performance standards by the 1998 redesignation.

C. Provisions of This Final Rule With Comment Period

    We are not making any changes in the effective dates of the 
provisions of the interim final rule with comment period. We are, 
however, as explained above, adding two one-time exceptions for the 
1996 redesignation process only.
    <bullet> We are adding Sec. 486.307(d)(4) stating that HCFA may 
grant an exception to the 24-donor criterion in paragraph 
Sec. 486.307(d)(2)(ii) to an OPO that can demonstrate that (1) it meets 
the performance criteria in Sec. 486.310(b), and (2) it has a specific 
plan to meet the service area size criterion in paragraph 
Sec. 486.307(d)(2)(ii) by the 1998 redesignation period.
    <bullet> We are adding Sec. 486.310(c)(3) to provide that for the 
1996 designation period only, HCFA may continue to designate for a 
service area an OPO that does not meet the standards under paragraph 
(b) of this section if the OPO (1) meets three of the five criteria in 
Sec. 486.310(b)(1) through (b)(5); and (2) submits an acceptable 
corrective action plan in accordance with Sec. 486.310(d).

XI. Waiver of Service Area Designations

A. Background

    Section 1138(a)(1)(A)(iii) of the Act had required hospitals 
participating in the Medicare program to notify an OPO of potential 
organ donors. The use of the article ``an'' indicated that a hospital 
need not have an agreement with the OPO whose designated service area 
includes the county in which the hospital is located. Thus, a 
significant number of hospitals, for various reasons, have chosen to 
have agreements with a Medicare/Medicaid-certified OPO other than the 
OPO designated for their areas. In fact, several hospitals have 
agreements with multiple OPOs.
    Sections 155 (a)(1)(A) and (a)(1)(B) of Public Law 103-432 amended 
sections 1138 (a)(1)(A)(iii) and (a)(1)(C) of the Act to add 
requirements that a hospital have an agreement for notification of 
potential organ donation only with the OPO designated for the area in 
which the hospital is located. Public Law 103-432 also provided for 
waiver of the requirements under certain circumstances. Section 
155(a)(1)(C) added new section 1138(a)(2)(A) to the Act. Specifically, 
the Secretary must approve waiver requests if (1) the waiver is 
expected to increase organ donations and (2) the waiver will assure 
equitable treatment of both those patients within the service area 
served by the hospital's designated OPO and those patients within the 
service area served by the OPO with which the hospital seeks to enter 
into an agreement under the waiver.
    The law is quite specific in identifying the factors that HCFA may 
consider in adjudicating waiver requests. That is, section 
1138(a)(2)(B) provides that in making a determination on a waiver 
request the Secretary may consider the factors that would include, but 
not be limited to (1) cost effectiveness; (2) improvements in quality; 
(3) any change in a hospital's designated organ procurement agency due 
to a change made on or after December 28, 1992, in the definitions for 
MSAs (as established by the Office of Management and Budget); and (4) 
the length and continuity of a hospital's relationship with an organ 
procurement agency.
    Sections 1138 (a)(2)(C) and (a)(2)(D) of the Act are quite specific 
in detailing the process for the waiver requests. Effective January 1, 
1996, any hospital seeking a waiver must submit an application to the 
Secretary. Within 30 days of receipt of a waiver request, the Secretary 
will publish a public notice of the request offering interested parties 
a 60-day period to comment on the request. Allowing HCFA only 30 days 
to evaluate the comments and render a decision would result in a 
minimum time period of 120 days for processing a waiver request.
     Section 155(a)(2) of Public Law 103-432 contains a grandfathering 
provision for hospitals which on October 31, 1994, the date of 
enactment of Public Law 103-432, have existing agreements with OPOs 
other than the OPO designated for their service areas. Any hospital 
that has an agreement with an OPO other than the OPO designated for its 
area on October 31, 1994, may continue the agreement until HCFA has 
adjudicated its waiver request, provided the hospital has filed a 
waiver request by January 1, 1996. This provision was included because 
it would be disruptive to a hospital to force it into an agreement with 
the OPO designated for its area while a waiver request is being 
processed.
    We believe the provisions of section 155 are self-implementing. 
Thus, we proceeded with implementation prior to modification of the 
regulations or prior public comment. In October 1995, we issued Program 
Memorandum A-95-11 to our intermediaries outlining the process for 
making a waiver request. We instructed each intermediary to notify 
every hospital that it serviced of the opportunity to request a waiver 
to deal with an OPO other than the OPO designated for the area. We 
advised the hospitals that we intended to adjudicate the requests using 
the criteria set forth in the law. We advised the hospitals that, to 
retain their existing out-of-area OPO agreements that were in effect as 
of October 31, 1994, their waiver requests must be received by January 
1, 1996.
    The law did not address the impact of changes in OPO service areas 
on future waiver requests. That is, we note that changes in OPO service 
areas are ongoing events. We anticipate that, with the implementation 
of the provisions contained in the September 8, 1994, final rule with 
comment period, such changes may become somewhat more frequent. Often 
these changes occur through mergers or cooperative means. Some changes, 
however, are the result of competitive actions among the OPOs with HCFA 
awarding the service areas

[[Page 19741]]

based on the criteria in Sec. 485.308 (now Sec. 486.316). When these 
changes in service areas occur, the hospitals in the affected counties 
must enter into agreements with the newly designated OPO or request a 
waiver to deal with an alternative designated OPO.
    As noted above, the minimum period of time necessary to process a 
waiver request is 120 days. We believe it is unproductive and contrary 
to the goal of increasing national organ donation to force the 
hospitals in affected areas into new working relationships with a OPO 
and then to approve a waiver request and allow an alternative agreement 
a few months later. Such a system would be disruptive to the hospital 
and to effective organ procurement nationally.
    Consequently, we are adding a new provision to the regulations at 
Sec. 486.316 to permit the grandfathering of existing agreements 
between an OPO and a hospital when changes in a service area occur 
pending resolution of the hospital's waiver request.
    To be eligible for the grandfathering, a hospital must have had an 
agreement with the OPO prior to the changes in service area and the 
hospital must have requested waiver from the provisions of section 1138 
(a)(1)(A)(iii) and (c) of the Act within 30 days of the effective date 
of the change in service area. Of course, if HCFA denies the waiver 
request on its merits (the request does not demonstrate that it is 
expected to increase organ donation and assure equitable treatment of 
patients), the hospital must enter into an agreement with the new OPO 
for the area. The regulations provide that such new agreements must be 
executed within 30 days of notification of the determination on the 
waiver request.
    We recognize that this grandfathering provision is not explicitly 
stated in the law. Nonetheless, we believe the provision is authorized 
under section 1138(a)(2)(A) of the Act which vests broad authority to 
HCFA to waive the new requirements of sections 1138(a)(1)(A)(iii) and 
1138(a)(1)(C) of the Act. The provision is also complementary to the 
grandfathering provision specified in section 155 of the Social 
Security Act Amendments of 1994. We believe that allowing such a 
grandfathering policy during the processing of the waiver request is 
the only means to ensure a smooth transition and promote organ 
donation. Nonetheless, we are providing an opportunity for public 
comment in this final rule with comment period.

B. Provisions of This Final Rule With Comment Period

    We have revised Sec. 486.316 (formerly Sec. 485.308) by adding new 
paragraphs (c) through (f) to implement section 1138 (a)(2) of the Act 
and the grandfathering provisions of section 155(a)(2) of Public Law 
103-432. These revisions permit grandfathering of a hospital to the OPO 
with which it has an historical working relationship while the 
hospital's request for waiver is being considered when changes in the 
OPO designated for the service area in which the hospital is located 
occur beginning January 1, 1996. We are soliciting comments on this 
provision of the final rule with comment period.

XII. Technical Revisions

    We have made the following technical revisions to the regulations 
for the purposes of clarifying and reorganizing the OPO regulations.
    <bullet> We amended Sec. 405.2163 by removing the reference to part 
485, subpart D and replacing it with a reference to part 486, subpart G 
to reflect the earlier published redesignation of the OPO regulations.
    <bullet> We revised Sec. 486.301 to add section 1138(a) and (b) of 
the Act and section 371(b) of the PHS Act as the statutory bases of the 
OPO regulations.
    <bullet> We reorganized Sec. 486.310 to include the exceptions and 
exemptions to the OPO standard requirements under paragraph (c).
    <bullet> We deleted Sec. 486.310(e) (previously designated as 
Sec. 485.306(e)) as it is unnecessary and has created confusion among 
the OPO industry. This provision provides that an OPO that has not 
previously been designated by HCFA for a particular service area is 
exempt from meeting the performance standards for its first 2 years of 
designation as the OPO for that area. However, the performance 
standards are used to measure the OPO's qualifications to be 
redesignated beginning 2 years after the OPO has been first designated 
for any portion of a service area.
    Since there is no data on the OPO's performance in the area when it 
is newly designated, it would be impossible to apply the performance 
standards at the time of initial designation. Thus, we believe it is 
unnecessary to maintain an exemption of this nature. The remaining 
portion of the provision merely states that we will apply the normal 
performance standards at the time of redesignation. Therefore, this 
portion of the regulation is also unnecessary since, without it, we 
would have no alternative but to apply the normal performance 
standards.
    <bullet> We revised the cross-reference in Sec. 486.314 (formerly 
Sec. 485.307) to reflect the reorganization of the material.

XIII. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite public comment before issuing a final 
document. Most of the provisions of this rule were open for public 
comment through both the June 21, 1991, proposed rule and the September 
8, 1994, interim final rule. We are now publishing these provisions as 
final rules. Because they have previously been open for comment, we are 
not inviting further public comment on these provisions.
    The Social Security Act Amendments of 1994 were enacted subsequent 
to the September 8, 1994, interim final rule with comment period. 
Section 155 of these amendments, relating to OPO hospital 
relationships, are inextricably linked to this final rule. The 
provisions of section 155 are self-implementing and do not require 
rulemaking.

XIV. Regulatory Impact Statement

    We generally prepare a regulatory impact statement that is 
consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 
through 612) unless we certify that a rule will not have a significant 
economic impact on a substantial number of small entities.
    For purposes of the RFA, we consider all providers and suppliers of 
health care as small entities. Individuals and States are not included 
in the definition of a small entity. Also, section 1102(b) of the Act 
requires us to prepare a regulatory impact analysis if a rule may have 
a significant impact on the operations of a substantial number of small 
rural hospitals. Such an analysis must conform to the provisions of 
section 604 of the RFA. For purposes of section 1102(b) of the Act, we 
define a small rural hospital as a hospital that is located outside of 
a MSA and has fewer than 50 beds.
    This final rule with comment period sets forth changes required by 
Public Law 100-607, Public Law 101-616, and Public Law 103-432. In the 
September 1994 interim final rule with comment period, we provided an 
impact analysis on the provisions of Public Law 100-607 and Public Law 
101-616. In that analysis, we stated that we expected that, while OPOs 
may incur some additional costs, those costs would be minimal. We 
invited public comment on the impact statement in the interim final 
rule with comment period. We did not receive any public comments.
    The provisions of section 155 of Public Law 103-432 included in 
this final rule with comment period conform to section 1138(a)(2) of 
the Act to provide for a waiver of section

[[Page 19742]]

1138(a)(1)(A)(iii) and (c) of the Act under certain circumstances. 
Section 1138(a)(1) requires that a hospital have an agreement for 
potential organ donations only with the OPO designated for the area in 
which the hospital is located. We expect any additional costs related 
to this provision to be minimal. Any hospital wishing a waiver must 
file a request with us. We believe, however, that any additional costs 
are minimal compared to the improvement these provisions will have on 
the quality of health care for organ recipients.
    We have determined and we certify that this final rule with comment 
period will not have a significant economic effect on a substantial 
number of providers and suppliers. Also, OPOs (independent and 
hospital-based) are not considered small rural hospitals since OPOs 
generally service large geographical areas. Therefore, a regulatory 
flexibility analysis under the RFA and a rural impact analysis under 
section 1102(b) of the Act are not required.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

XV. Information Collection Requirements

    Under the Paperwork Reduction Act of 1995, agencies are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. This 
final rule with comment period contains information collections that 
are subject to review by OMB under the Paperwork Reduction Act of 1995. 
The title, description, and respondent description of the information 
collections are shown below 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 collecting and reviewing the 
collection of information.
    We are, however, requesting an emergency review of these 
regulations. In compliance with the requirement of section 
3506(c)(2)(A) of the Paperwork Reduction Act of 1995, we have submitted 
to the Office of Management and Budget (OMB) the following requirement 
for emergency review. We are requesting an emergency review because the 
collection of this information is needed prior to the expiration of the 
normal time limits under OMB's regulations at 5 CFR. Part 1320 to 
permit recertification of OPO's as required by statute. Failure to 
issue these rules in time for the 1996 redesignation process may result 
in the termination of OPO agreements. As a consequence, persons in need 
of organ transplants may not receive them. The agency cannot reasonably 
comply with the normal clearance procedures because public harm is 
likely to result if normal clearance procedures are followed. Without 
this information, we could not ensure compliance with this 
Congressional mandate.
    We are requesting that OMB provide a 21-day public comment period 
with a 7-day OMB review period and a 90-day approval. We will publish a 
separate Federal Register notice for an emergency request for the OPO 
manual requirements.
    Type of Information Collection Request: New Collection.
    Type of Information Collection: Conditions of Coverage for Organ 
Procurement Organizations.
    Form No.: HCFA-R-13.
    USE: Organ Procurement Organizations are required to submit 
accurate data to HCFA concerning population and information on donors 
and organs on an annual basis in order to ensure maximum effectiveness 
in the procurement and distribution of organs.
    Frequency: Annually.
    Affected public: Not-for-profit institutions.
    Number of Respondents: 66.
    Total Annual Responses: 66.
    Total Annual Hours Requested: 4,096.
    To request copies of the proposed paperwork collections referenced 
above, call the Reports Clearance Office on (410) 786-1326.
    The sections in these final regulations with comment period that 
contain information collection requirements are:
    <bullet> Sections 486.304 (c)(2), (c)(4), (c)(7), and (c)(8) 
require that an OPO submit documentation to HCFA as part of the 
conditions for payment. These requirements include cost reporting, cost 
projection, and data to show the number of organs procured and 
transplanted. The OPO must maintain data in a format that can readily 
be continued by a successor OPO.
    <bullet> Section 486.306(d) requires that an OPO document that it 
meets the service area requirements at Sec. 486.307.
    <bullet> Section 486.306(t) requires that an OPO submit to HCFA 
within 15 days following the end of the calendar year information on 
the service area population, number of donors, number of organs 
procured, and the number of organs transplanted.
    <bullet> Section 486.307(a) requires that an OPO make documentation 
available to HCFA to verify that it meets the requirements for boundary 
designation, service area location, and service area size.
    <bullet> Section 486.307(d) requires that, for the 1996 
transitional redesignation period only, an OPO that does not meet the 
qualification standards in Sec. 486.307(d)(2)(ii) may submit a request 
to HCFA for a one-time exception to the standard if it can demonstrate 
that it meets the performance criteria in Sec. 486.310(b) and has a 
specific plan to meet the 24-donor standard by the 1998 redesignation 
period.
    <bullet> Section 486.310(c)(3) requires that, for the 1996 
transitional redesignation period only, HCFA may continue to designate 
for a service area an OPO that does not meet the standards of 
Sec. 486.310(b) if the OPO can demonstrate that it meets three of the 
criteria in Sec. 486.310(b)(1) through Sec. 486.310(b)(5) and if the 
OPO submits an acceptable correction plan in accordance with 
Sec. 486.310(d).
    <bullet> Section 486.310(d) requires that an OPO that does not meet 
the performance standards may continue to be designated for a service 
area if no acceptably performing OPO is willing to accept 
responsibility for the service area and if the OPO submits a corrective 
action plan that is acceptable to HCFA.
    <bullet> Section 486.316 requires that an OPO submit an application 
to HCFA if it wishes to be designated as the OPO for a service area. 
Applications are only accepted if the area is an open area.
    <bullet> Section 486.318 requires that a designated OPO notify HCFA 
if it is considering a change in ownership or service area. It must 
submit the same information that it supplied at the time of 
designation.
    <bullet> Section 486.325(a)(1) requires that an OPO that wishes to 
terminate its agreement with HCFA send written notice of its intention 
with the proposed termination date to HCFA.
    The information collection requirements concern quantifiable data 
for submission to us that document an OPO's performance. The 
respondents for the information collection requirements are the 66 OPOs 
participating in the Medicare program. The OPOs are required to keep 
performance data on an ongoing basis and submit a yearly report. The 
reporting burden for the collection of all of this information is 
estimated to be 1,000 hours per submission.
    Other reporting requirements for special circumstances such as 
termination of agreements and requests for exceptions and exemptions 
rely on the same information that an OPO must submit in its annual 
report. Consequently, no extra collection of

[[Page 19743]]

information is required. Since these submissions depend on special 
circumstances, we cannot give the exact number of submissions. However, 
since there are only 66 OPOs participating in the Medicare program, we 
expect the number of these submissions will be extremely small.
    These information collection and recordkeeping requirements are not 
effective until they have been approved by OMB. The agency has 
submitted a copy of this final rule with comment period to OMB for its 
review of these information collections. A notice will be published in 
the Federal Register when approval is obtained. Interested persons are 
invited to send comments regarding this burden or any other aspect of 
these collections of information, including any of the following 
subjects: (1) The necessity and utility of the information collection 
for the proper performance of the agency's functions; (2) the accuracy 
of the estimated burden; (3) ways to enhance the quality, utility, and 
clarity of the information to be collected; and (4) the use of 
automated collection techniques or other forms of information 
technology to minimize the information collection burden. Comments 
should be sent to HCFA, OFHR, MPAS, C2-26-17, 7500 Security Boulevard, 
Baltimore, Maryland 21244-1850.

XVI. Response to Comments

    Because of the large number of items of correspondence we normally 
receive on a final rule with comment period, we are not able to 
acknowledge or respond to them individually. However, we will consider 
all comments that we receive related to the waiver process discussed in 
section XI of this preamble, Sec. 486.316, and the definition of 
``donor'' by the date and time specified in the DATES section of this 
preamble, and, if we proceed with a final rule, we will respond to the 
comments in the preamble of that rule.

List of Subjects

42 CFR Part 405

    Administrative practice and procedure, Health facilities, Health 
professions, Kidney diseases, Medicare, Reporting and recordkeeping 
requirements, Rural areas, X-rays.

42 CFR Part 486

    Health facilities, Medicare, Reporting and recordkeeping 
requirements.

    42 CFR Chapter IV is amended as set forth below:
    A. Part 405, subpart U is amended as follows:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

Subpart U--Conditions of Coverage of Suppliers of End-Stage Renal 
Disease (ESRD) Services

    1. The authority citation for part 405, subpart U continues to read 
as follows:

    Authority: Secs. 1102, 1138, 1861, 1862(a), 1871, 1874, and 1881 
of the Social Security Act (42 U.S.C. 1302, 1320b-8, 1395x, 
1395y(a), 1395hh, 1395kk, and 1395rr), unless otherwise noted.

    2. Section 405.2163(f) is amended by removing the reference to 
``part 485, subpart D'' and replacing it with a reference to ``part 
486, subpart G.''
    B. Part 486 is amended as follows:

PART 486--CONDITIONS FOR COVERAGE OF SPECIALIZED SERVICES FURNISHED 
BY PROVIDERS AND SUPPLIERS

Subpart G--Conditions for Coverage: Organ Procurement Organizations

    1. The authority citation for part 486 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

    2. Section 486.301 is revised to read as follows:


Sec. 486.301  Basis and scope.

    (a) Statutory Basis. (1) Section 1138(b) of the Act sets forth the 
requirements that an organ procurement organization must meet to have 
its organ procurement services to hospitals covered under Medicare and 
Medicaid. These include certification as a ``qualified'' organ 
procurement organization (OPO) and designation as the OPO for a 
particular service area.
    (2) Section 371(b) of the PHS Act sets forth the requirements for 
certification and the functions that a qualified OPO is expected to 
perform.
    (b) Scope. This subpart sets forth--
    (1) The conditions and requirements that an OPO must meet;
    (2) The procedures for certification and designation of OPOs; and
    (3) The terms of the agreement with HCFA, and the basis for, and 
the effect of, termination of the agreement.
    3. In Sec. 486.304, the introductory text of paragraph (b) is 
republished, new paragraph (b)(8) is added, and paragraph (e)(3)(ii) is 
revised to read as follows:


Sec. 486.304  General requirements.

* * * * *
    (b) Requirements for designated status. To be the designated OPO 
for a service area, an entity must do the following:
* * * * *
    (8) Enter into a working relationship with any hospitals, including 
transplant centers, in the OPO's service area that request a working 
relationship.
* * * * *
    (e) Designation periods
* * * * *
    (3) Interim designation.  * * *
    (ii) The interim designation period does not exceed 180 days after 
the normal designation period has expired.
* * * * *
    4. In Sec. 486.306, the introductory text and paragraphs (d), (f) 
introductory text, (i), (q), and (s) are revised to read as follows:


Sec. 486.306  Qualifications for designation as an OPO.

    To be designated as the OPO for a service area, an organization 
must, at the time of application and throughout the period of its 
designation, meet the following requirements:
* * * * *
    (d) Document that it has a defined service area that meets the 
requirements of Sec. 486.307.
* * * * *
    (f) Have a board of directors or an advisory board that has the 
authority to recommend policies relating to the donation, procurement, 
and distribution of organs. While an OPO may have more than one board, 
the members specified in paragraphs (f)(1) through (f)(5) of this 
section must be members of a single board. The board of directors or 
advisory board must be composed of the following:
* * * * *
    (i) Have a system to equitably allocate donated organs among 
transplant patients that is consistent with--
    (1) ``Guidelines for Preventing Transmission of Human 
Immunodeficiency Virus Through Transplantation of Human Tissue and 
Organs'' issued by the Centers for Disease Control and Prevention (CDC) 
that are appended to this subpart; and
    (2) Rules of the Organ Procurement and Transplantation Network 
(OPTN), see Sec. 486.308.
* * * * *
    (q) Ensure that appropriate donor screening and infection tests, 
consistent with OPTN standards and the CDC guidelines that are appended 
to this subpart, are performed by a laboratory that is certified in the 
appropriate specialty or subspecialty of service in accordance with 
part 493 of this chapter, including tests to prevent the

[[Page 19744]]

acquisition of organs that are infected with the etiologic agent for 
acquired immune deficiency syndrome.
* * * * *
    (s) Ensure that donors are tested for human immunodeficiency viral 
markers consistent with OPTN rules and the CDC guidelines appended to 
this subpart for solid organ donation.
* * * * *
    5. A new Sec. 486.307 is added to read as follows:


Sec. 486.307  OPO service area size designation and documentation 
requirements

    (a) General documentation requirement. An OPO must make available 
to HCFA documentation verifying that the OPO meets the requirements of 
paragraphs (b) through (d) of this section at the time of application 
and throughout the period of its designation.
    (b) Boundary designation. The defined service area either includes 
an entire Metropolitan Statistical Area or a New England County 
Metropolitan Area as specified by the Director of the Office of 
Management and Budget or does not include any part of such an area.
    (c) Service area location and characteristics. An OPO must 
precisely define and document a proposed service area's location 
through the following information:
    (1) The names of counties (or parishes in Louisiana) served or, if 
the service area includes an entire State, the name of the State.
    (2) Geographic boundaries of the service area for which U.S. 
population statistics are available.
    (3) Total population in service area.
    (4) The number of and the names of acute care hospitals in the 
service area with an operating room and the equipment and personnel to 
retrieve organs.
    (d) Sufficient size requirements. (1) Before January 1, 1996, an 
OPO must demonstrate that it can procure organs from at least 50 
potential donors per calendar year or that its service area comprises 
an entire State.
    (2) Beginning January 1, 1996, an OPO must meet at least one of the 
following requirements:
    (i) Its service area must include an entire State or official U.S. 
territory.
    (ii) It must either procure organs from an average of at least 24 
donors per calendar year in the 2 years before the year of 
redesignation or request and be granted an exception to this 
requirement under paragraph (d)(3) or (d)(4) of this section.
    (iii) In the case of an OPO operating exclusively in a 
noncontiguous U.S. State, a U.S. territory, or a U.S. commonwealth, 
such as Hawaii or Puerto Rico, it must procure organs at the rate of 50 
percent of the national average of all OPOs for kidney procurement per 
million population and for kidney transplantation per million 
population.
    (iv) If it is an entity that has not been previously designated as 
an OPO, it must demonstrate that it can procure organs from at least 50 
potential donors per calendar year.
    (3) HCFA may grant an OPO an exception to paragraph (d)(2)(ii) of 
this section if the OPO can demonstrate that--
    (i) It failed to meet the requirement because of unusual 
circumstances beyond its control;
    (ii) It has historically maintained a service area of sufficient 
size to meet the criterion in paragraph (d)(2)(ii) of this section; and
    (iii) It has a specific plan to meet the size criterion in 
paragraph (d)(2)(ii) of this section in the future.
    (4) During the 1996 redesignation process only, HCFA may grant an 
exception to paragraph (d)(2)(ii) of this section to an OPO that can 
demonstrate that--
    (i) It meets the performance criteria in Sec. 486.310(b); and
    (ii) It has a specific plan to meet the service area size criterion 
in paragraph (d)(2)(ii) of this section by the 1998 redesignation 
period.
    6. Section 486.310 is amended by removing the introductory text, 
adding a heading for paragraph (a); removing paragraphs (a)(3) and (e); 
and revising paragraphs (b), (c), and (d) to read as follows:


Sec. 486.310  Condition: Adherence to performance standards.

    (a) Standards before January 1, 1996.
* * * * *
    (b) Standards beginning on January 1, 1996. Except as specified in 
paragraph (c) of this section, each OPO must achieve at least 75 
percent of the national mean for four of the following five performance 
categories, averaged over the 2 calendar years before the year of 
redesignation:
    (1) Number of actual donors per million population.
    (2) Number of kidneys recovered per million population.
    (3) Number of extrarenal organs recovered per million population.
    (4) Number of kidneys transplanted per million population.
    (5) Number of extrarenal organs transplanted per million 
population.
    (c) Exceptions and exemptions.
    (1) Exception based on location. OPOs operating exclusively in a 
noncontiguous U.S. State, a U.S. territory, or a U.S. commonwealth, 
such as Hawaii or Puerto Rico, may be granted an exception from the 
performance standards of paragraph (b) of this section because of 
special geographically related characteristics, such as difficulty in 
transporting organs to the mainland, that impede satisfaction of the 
national rate of organ procurement. They must meet a standard of 50 
percent of the national average of all OPOs for kidneys recovered and 
transplanted per million population.
    (2) Exception because of lack of competition for a service area. 
HCFA may continue to designate an OPO that does not meet the standards 
under paragraph (b) of this section for a service area if no OPO that 
meets the performance and qualification requirements is willing to 
accept responsibility for the service area and if the designated OPO 
submits an acceptable corrective action plan in accordance with 
paragraph (d) of this section.
    (3) Exception for 1996 transition period. During the 1996 
designation period only, HCFA may continue to designate for a service 
area an OPO that does not meet the standards under paragraph (b) of 
this section if the OPO:
    (i) Meets three of the criteria in paragraphs (b)(1) through (b)(5) 
of this section; and
    (ii) Submits an acceptable corrective action plan in accordance 
with paragraph (d) of this section.
    (d) Corrective action plans and corrected information.
    (1) Corrective action plans. (i) If a designated OPO does not meet 
the standards of paragraph (a) of this section, it may submit to the 
appropriate HCFA regional office a corrective action plan explaining 
why it failed to meet them and specifying the actions it will take to 
ensure it meets those standards in the future.
    (ii) HCFA will not accept corrective action plans from an OPO for 
failure to meet the standards specified in paragraph (b) of this 
section unless the OPO continues to be designated under paragraph 
(c)(2) or (c)(3) of this section.
    (2) Corrected information. An OPO may request correction of the 
information required by Sec. 486.306(e) from HCFA throughout the two-
year designation period. HCFA will evaluate the OPO's request and may 
seek input from other sources, such as hospital personnel, neighboring 
OPOs, the OPTN contractor, and the Census Bureau as necessary to verify 
the OPO's information before making the changes requested by the OPO. 
In addition,

[[Page 19745]]

HCFA will notify an OPO if it does not meet the performance standards 
based on the information reported. Any OPO so notified may provide 
corrected information for consideration within 30 days of receipt of a 
notice of failure to meet the standards.

(e)  [Removed]


Sec. 486.314  [Amended]

    7. Section 486.314 is amended by removing the reference to 
``Sec. 485.310 (a) and (b)'' and replacing it with a reference to 
``Sec. 486.310''.
    8. Section 486.316 is amended by adding new paragraphs (c), (d), 
(e), (f), and (g) to read as follows:


Sec. 486.316  Designation of one OPO for each service area.

* * * * *
    (c) After January 1, 1996, a hospital must enter into an agreement 
only with the OPO designated to serve the area in which the hospital is 
located unless HCFA has granted the hospital a waiver under paragraphs 
(d) through (g) of this section to be serviced by another OPO.
    (d) If HCFA changes the OPO designated for an area, hospitals 
located in that area must enter into agreements with the newly 
designated OPO or submit a request for a waiver in accordance with 
paragraph (e) of this section within 30 days of notice of the change in 
designation.
    (e) A hospital may request and HCFA may grant a waiver permitting 
the hospital to have an agreement with a designated OPO other than the 
OPO designated for the service area in which the hospital is located. 
To qualify for a waiver, the hospital must submit data to HCFA 
establishing that--
    (1) The waiver is expected to increase organ donations; and
    (2) The waiver will ensure equitable treatment of patients referred 
for transplants within the service area served by the hospital's 
designated OPO and within the service area served by the OPO with which 
the hospital seeks to enter into an agreement.
    (f) In making a determination on waiver requests, HCFA considers:
    (1) Cost effectiveness;
    (2) Improvements in quality;
    (3) Changes in a hospital's designated OPO due to changes in the 
metropolitan service area designations, if applicable; and
    (4) The length and continuity of a hospital's relationship with an 
OPO other than the hospital's designated OPO.
    (g) A hospital may continue to operate under its existing agreement 
with an out-of-area OPO while HCFA is processing the waiver request. If 
a waiver request is denied, a hospital must enter into an agreement 
with the designated OPO within 30 days of notification of the final 
determination.


Sec. 486.325  [Amended]

    9. In Sec. 486.325, in paragraph (b), ``15 days'' is removed and 
``90 days'' is added in its place.
    10. Appendix A is added to subpart G to read as follows:
Appendix A to Subpart G of Part 486--Guidelines for Preventing 
Transmission of Human Immunodeficiency Virus Through Transplantation of 
Human Tissue and Organs

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(Catalog of Federal Domestic Assistance Programs No 93.774, 
Medicare-- Supplementary Medical Insurance, and No. 13.714, Medical 
Assistance Program)
    Dated: April 15, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.

    Dated: April 25, 1996.
Donna E. Shalala,
Secretary.
[FR Doc. 95-10901 Filed 4-30-96; 8:45 am]
BILLING CODE 4120-01-C